This is a rush transcript from “Special Report” November 6, 2020. This copy may not be in its final form and may be updated.

BRET BAIER, FOX NEWS ANCHOR: Welcome to New York. This is Fox News continuing coverage of DEMOCRACY 2020. I'm Bret Baier.

MARTHA MACCALLUM, FOX NEWS ANCHOR: And I'm Martha MacCallum. Good evening, everybody.

BAIER: Breaking tonight, a special report was becoming a historic and titanic battle for the presidency inching closer perhaps to some kind of announcement as Joe Biden picks up votes in undecided swing states and President Trump deploys legions of lawyers to challenge the numbers in court.

MACCALLUM: During the last several hours, Joe Biden has taken the lead in Georgia and in Pennsylvania. He maintains an advantage over the president in Arizona and Nevada as you can see at the side of your screen right now.

The Trump campaign is making arguments in Nevada late this afternoon alleging voter irregularity.

BAIER: Biden is expected to address the nation tonight. We will break it all down for you in the next two hours with reporters in the key locations and analyst here to offer perspective.

MACCALLUM: We begin tonight with chief White House correspondent John Roberts and the latest from the Trump campaign. Good evening, John.

JOHN ROBERTS, FOX NEWS CHIEF WHITE HOUSE CORRESPONDENT: Bret, Martha, good evening to you. They'll call what's called a lid here at the White House, so it's not likely that we're going to hear from the president tonight, but the president preempting Joe Biden's speech. In a couple of hours tweeting, "Joe Biden should not wrongfully claim the office of the president. I could make that claim also. Legal proceedings are just now beginning."

On the legal front the Republican National Committee has dispatched legal teams to four states to investigate alleged voting irregularities and problems with the vote count. And as those numbers as you mentioned, inch closer toward Joe Biden and a potential declaration, the president is digging in his heels.

(BEGIN VIDEOTAPE)

ROBERTS: President Trump is in it for the long haul according to his campaign. Sources telling Fox News he has no intention of conceding.

In a statement the president saying, this is about the integrity of our entire election process. We will pursue this process through every aspect of the law to guarantee the American people have confidence in our government.

President Trump insists that every legal vote should be counted. The argument is over which ballots may be illegal. The president believes any vote that came in after polls closed on Tuesday, should be thrown out.

In Nevada today, a federal judge taking up a suit filed by Silver State Republicans, alleging what they claim is voter fraud and the lack of access to the vote counting.

MATT SCHLAPP, CHAIRMAN, AMERICAN CONSERVATIVE UNION: I want every ballot that's a legal ballot to be counted. I just want to make sure that there's not a systematic fraud process where you can't pull out the fraudulent ballots.

ROBERTS: As he has for months leading up to the election, in the White House Briefing Room last night, President Trump alleging widespread voter fraud in the mail-in ballots.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Democrat officials never believe they could win this election honestly. I really believe that, that's why they did the mail-in ballots where there's tremendous corruption and fraud going on.

ROBERTS: Democrats not surprisingly think the president should throw in the towel.

SEN. BOB CASEY (D-PA): You should act like a president and comply with the constitution or accept the will of the people by virtue of our constitution.

ROBERTS: While there have been plenty of claims of voting irregularities sweeping the internet and the Trump campaign has a voter fraud hotline set up, the only hard evidence presented to law enforcement so far were letters and lists sent by the Trump campaign to the Clark County Nevada district attorney and Attorney General Bill Barr. The campaign claiming more than

3,000 people who were ineligible voted.

As to the president's claims of fraud, Republican Congressman Adam Kinzinger tweeting, we want every vote counted, yes every legal vote of course. But, if you have legit concerns about fraud, present evidence and take it to court. Stop spreading debunked misinformation. This is getting insane.

While the vote count in several states keep slowly marching in Joe Biden's direction and may soon lead to a call, the Trump campaign believes there is still a lot of playing field to cover between where we are now and when the electors meet on December 14th to officially anoint the winner.

LARRY KUDLOW, DIRECTOR, NATIONAL ECONOMIC COUNCIL: I did speak to him this morning and I believe he intends to fight for what he believes in. Yes, the president intends to fight, that I can tell you.

(END VIDEOTAPE)

ROBERTS: But even some Republicans who are in the fight with the president are concerned about how far he's going to take this and what that might do to the country. Other Republicans are concerned about the president's claims of widespread fraud saying at the moment, there is little concrete evidence to back it up, Bret, Martha.

MACCALLUM: Thank you, John. John Roberts at the White House.

BAIER: One of the big questions in Washington tonight is just how long will Republicans back President Trump if he loses and refuses to concede. Senior political correspondent Mike Emanuel takes a look at that tonight.

(BEGIN VIDEOTAPE)

SEN. MITCH MCCONNELL (R-KY): I'm not going to answer any hypothetical to where we go from here.

MIKE EMANUEL, FOX NEWS HOST: Back home in Kentucky, Majority Leader Mitch McConnell did not want to field questions about next steps in the presidential race.

MCCONNELL: Of course, we've had a peaceful transfer of power going back to 1792. Every four years, we've moved on to a new administration.

EMANUEL: McConnell was more expressive on Twitter writing; every legal vote should be counted. Any illegally submitted ballots must not. All sides must get to observe the process and the courts are here to apply the laws and resolve disputes.

His colleague from the key battleground of Pennsylvania was much more blunt.

SEN. PAT TOOMEY (R-PA): The president's speech last night was very disturbing to me because he made very, very serious allegations without any evidence to support it. If it's happened, then the evidence needs to come out.

EMANUEL: Missouri Senator Roy Blunt offered a suggestion telling reporters today "I think the president should turn this discussion over to his lawyers and if they have a case to make, there's a process where they make that and that process is timely."

Texas Senator Ted Cruz expressed his concern.

SEN. TED CRUZ (R-TX): I am more than a little frustrated that every time they close the doors and shut out the lights, they always find more Democratic votes.

EMANUEL: But for leading Republicans, there's the challenge of being loyal to the president while also recognizing there could be a new president.

SEN. LINDSEY GRAHAM (R-SC): If Joe Biden is president of the United States, I'll fill in (INAUDIBLE) upon me to try to help him where I can and find common ground.

In terms of personal relationship, he's good. I've known the vice president for a very long time.

I'm here tonight to stand with President Trump. He stood with me. He's the reason we're going to have a Senate Majority.

(END VIDEOTAPE)

EMANUEL: Most Republicans sound like they're fully supportive of recounts in critical states with narrow margins but with the Senate returning next week, lawmakers may tire of being asked constantly about the election while needing to pass government funding and negotiate a COVID relief package, Bret, Martha.

MACCALLUM: Thank you, Mike.

BAIER: The Biden team is preparing for a live prime time address tonight, what he will say is unknown right now. Correspondent Peter Doocy in Wilmington, Delaware with the latest from the parking lot. Good evening, Peter.

PETER DOOCY, FOX NEWS CORRESPONDENT: Good evening, Bret. A Biden campaign official tells me that higher ups are instructing staffers to enjoy this moment. These staffers had apparently been told to stay away from the news and to keep their heads down, but now they're being told to watch the news about Kamala Harris poised to possibly become the first female, the first African-American and the first Asian-American vice president. She and her husband Doug Emhoff remain in the Wilmington area and she is expected to speak tonight before Biden for the first time since polls closed Tuesday.

Biden spent the day at home in Wilmington. And as he nears a potentially historic moment, he is surrounding himself with staffers who have been with him for years. Spotted at his event yesterday was Ron Klain the once and possibly future Biden chief of staff and his sister Valerie Biden Owens.

Airspace has been shut down over the Biden house and the location of tonight's event and that's something that curious locals have started to descend on, getting as close as they can.

And tonight's thing is being set up sort of like a tail gate. Jeeps and American pickup trucks, American-made pickup trucks with folding chairs in the flat beds are positioned in front of the stage access by two long cat walks and protected by a tall bulletproof barrier.

Joe Biden likes to joke that he used to be the third senator from Pennsylvania, the state right next door finally inched past President Trump there as more ballots from Philadelphia were tallied before dawn.

Biden also caught and passed Trump in Georgia narrowly. And in the data, Biden's lead has grown as more ballots coming from Clark County where Las Vegas is.

No real update about the Biden campaigns response to pending legal challenges from the Trump team and the campaign manager does not want to guess which state could put them over 270 electoral votes but remains confident that Joe Biden will be the next president once every ballot has been counted.

And if there is a call, then tonight, Joe Biden, a man who says that he has traveled more than two million miles by train is set to give the most important address of his life surrounded by cars, Bret.

BAIER: Good point, Peter, thank you.

MACCALLUM: (INAUDIBLE) that on the campaign trail this time around. So, the Trump campaign is challenging the vote in Nevada this evening. Chief correspondent Jonathan Hunt is live in Las Vegas for us tonight. Hi, Jonathan.

JONATHAN HUNT, FOX NEWS CHIEF CORRESPONDENT: Hi, Martha. In about one hour, we're a due to get some more voting numbers from the Secretary of State of Nevada's office if they follow the path and we got earlier today, it does not bode well for President Trump.

Former Vice President Joe Biden increased his lead by almost double in those early of vote counts that were released today. He now has a lead of just over 20,000 over President Trump.

In the meantime, Republicans have gone to court hearing currently underway in federal court here. There are a couple of planks to this lawsuit.

First of all, claim that signature verification is inadequate, that is based on the single case of a woman who says her ballot was stolen from her and it was submitted by somebody who was not her.

Judge Andrew Gordon in the federal District Court here questioning Republican lawyers saying, well, the county registrar says they looked at that case, they investigated it, they compared the signature, they deemed it to be the correct signature, they gave that woman the chance to make a statement challenging that finding, she declined to do so.

Another plank of that, transparency of the counts, that again based on one individual an alleged credentialed member of the media who says he is not being able to adequately watch the counting of the votes here.

Again, the judge pretty skeptical asking the Republican lawyers what exactly are you asking for. Those lawyers replying, we want people to be able to go in, be within six feet of the counters to be able to see and hear what they are saying and doing. The judge replying, your asking me to allow anybody in the world to be able to go in and watch this count.

So, judge certainly seeming skeptical. We don't have a ruling on those as yet.

Another plank of the Republican claims, perhaps a media one is that they say they have found 3,062 votes cast by people who they say are not legally resident in Nevada. And therefore, they say, those votes are illegal.

Democrats say that that is meritless. They got some backing from the county registrar here today who said that there are several reasons why people may not be physically resident in Nevada but legally able to claim residency in terms of voting, listen here.

(BEGIN VIDEO CLIP)

JOE GLORIA, REGISTRAR, CLARK COUNTY, NEVADA: You don't have to live here in order to be eligible to vote here. This is a military town. We have Nellis Air Force Base, we also have several students. But it's not out of the ordinary at all for somebody not to live here but be eligible to vote here.

(END VIDEO CLIP)

HUNT: And again, they're hearing ominous Republican lawsuit is ongoing.

Bret and Martha, if we get a result or when we get any ruling, we will let you know about that. We'll also let you know about those new vote count numbers which are due out within about one hour, Bret and Martha.

MACCALLUM: Everybody watching and waiting for that. Jonathan Hunt, thank you.

BAIER: Pennsylvania absolutely essential to President Trump's hopes to keep his job, the state's 20 electoral votes would seemingly put Joe Biden over the top. As you look at the vote totals on the right side of the screen, let's get the latest on where things stand in Pennsylvania. Senior correspondent Eric Shawn in Philadelphia tonight. Good evening, Eric.

ERIC SHAWN, FOX NEWS SENIOR CORRESPONDENT: Good evening, Bret. The Trump campaign is right, the election is not over, the votes are still being counted even though it's the bottom of the ninth.

Here in Philadelphia, officials say they still have about 25,000 more mail- in ballots to count here at the Philadelphia Convention Center. They expect the result in this state perhaps in a few days because the absentee military ballots are not due until next Tuesday.

Let's now look inside at this convention center at where those votes here are being counted. You're looking at the room that is the center of those unfounded election fraud allegations from the president and the Trump campaign, claiming that illegal votes are being counted here. There is no evidence of that.

Officials here say the count is being conducted in an honest, transparent and legal manner.

(BEGIN VIDEO CLIP)

OMAR SABIR, PHILADELPHIA CITY COMMISSIONER: And as we stand here today in 2020, people still have access to democracy. And it's a beautiful thing, but we still want everyone to exert patience, ignore a lot of the noise that's going on. Allow us to complete the counting process.

(END VIDEO CLIP)

SHAWN: Now, the Trump campaign claims its poll watchers were prevented from observing the count because they were too far away from the ballots. But you know, Democrats are regulated to the very same spot, restricted to 25 feet away. Last night a federal judge cut that distance to six feet and set a limit of 30 watchers from each side.

Meanwhile, outside the building alarmed over two arrest last night connected to a Hummer that was parked outside the convention center right in the next block from where I am now standing.

Police charged the (INAUDIBLE) man from Chesapeake, Virginia with weapons counts for allegedly having hand guns and AR-15. The authorities had been tipped off that arsenal may be related to the election.

As for Philadelphia Mayor Jim Kenney, a Democrat, he says it is now time for the president to bow out gracefully.

(BEGIN VIDEO CLIP)

JIM KENNEY, MAYOR OF PHILADELPHIA: What the president needs to do is frankly put his big boy pants on. He needs to acknowledge the fact that he lost and he needs to congratulate the winner.

(END VIDEO CLIP)

SHAWN: And because the margin seems to be so close, the Trump campaign certainly would possibly ask for a recount. As for those election and voter fraud allegations, the Philadelphia district attorney has established a special task force to investigate any allegation they say. We reached out to the office to ask them if they do have any active cases stemming from this election of voter fraud or election fraud, and the Philadelphia D.A.'s office did not yet get back to us. Bret?

BAIER: Eric Shawn, live in Philadelphia. Eric, thanks.

MACCALLUM: So, when we come back on SPECIAL REPORT, we'll go live to Atlanta we'll get an update on the vote-counting in Georgia, where it is very, very close. And how it affects the balance of power in the Senate?

(COMMERCIAL BREAK)

BAIER: Welcome back to our continuing coverage of "DEMOCRACY 2020". In North Carolina, Republican incumbent Thom Tillis maintains a lead of about two percentage points over Democratic challenger Cal Cunningham. We have not officially called that race, and actually, the vote in North Carolina has not moved at all. You can see the presidential at 76,000 plus.

MACCALLUM: And in Alaska, Republican incumbent Dan Sullivan still has a two to one advantage over democratic challenger Al Gross. That one also not called yet.

BAIER: And 54,000, the presidential, Georgia really may be ground zero in the struggle for control of the U.S. Senate. As of right now, both seats will be determined by a runoff if that holds, neither Republican incumbent getting more than 50 percent of the vote.

So, let's get the latest now from correspondent Jonathan Serrie in Atlanta.

Good evening, Jonathan.

JONATHAN SERRIE, FOX NEWS CORRESPONDENT: Good evening, Bret and Martha.

Both of the U.S. Senate races in Georgia are still in play and appears that both races will be heading for a January 5th runoff.

You have Republican incumbent, David Perdue, hovering just below the 50 percent threshold needed to avoid January 5th runoff. He faces a well- funded and well-organized challenge from Democrat Jon Ossoff. Take a listen.

(BEGIN VIDEO CLIP)

JON OSSOFF (D), SENATORIAL CANDIDATE OF GEORGIA: Georgia has become younger and more diverse every day of the last decade. And the effort that has gone in to registering voters, empowering voters is unprecedented unmatched anywhere in the country.

(END VIDEO CLIP)

SERRIE: The Perdue campaign issued a statement on the runoff, saying, "Jon Ossoff does two things well: burn through out-of-state liberal money and lose elections. Georgians will now get to watch him do both again."

Georgia's other U.S. Senate race to fill the unexpired term of retired Senator Johnny Isakson, packed 20 candidates of all parties into the same special primary, which practically ensured a runoff from the get-go. The two leading candidates to emerge for the runoff are Republican Kelly Loeffler, whom the governor appointed to fill the seat until the election, and the Reverend Raphael Warnock, the current pastor of Dr. Martin Luther King -- Martin Luther King Jr.'s Ebenezer Baptist Church in downtown Atlanta.

Perhaps, the person most impacted by two Georgia runoffs would be Senate Majority Leader Mitch McConnell. Take a listen.

(BEGIN VIDEO CLIP)

MCCONNELL: So, it makes a big difference who wins the two seats in Georgia.

If the Democrats going to win the two seats, Chuck Schumer would be the majority leader, and the significance of that job as we've discussed before is the majority leader, he gets to decide what the agenda is.

(END VIDEO CLIP)

SERRIE: So, even after the presidential race is resolved, people here in Georgia can expect eight more weeks of heavy political ads and aggressive campaigning by both parties in a state that has now proved itself to be a battleground. Bret and Martha?

BAIER: Jonathan, thank you.

MACCALLUM: Thank you, Jonathan.

We are going to speak with some journalists covering the ongoing election saga. Joining us is Greg Bluestein from the Atlanta Journal-Constitution.

And Candy Woodall, reporter for the U.S. -- for USA Today, and Michelle Rindels, reporter for the Nevada Independent. Great to have all of you with us.

Michelle, let me start with you. Give us -- give us on the ground there, and with all of your familiarity of this state and this race. How it looks to you this evening?

MICHELLE RINDELS, REPORTER, NEVADA INDEPENDENT: Yes. So, we've got upwards of 100,000 ballots that still need to be cast. So, Biden has a lead of about 20,000 votes here. It's a bit too close for us to feel comfortable to call it. But what's left to be counted really is a lot of mail ballots. A lot of them are in Clark County, the urban area around Las Vegas. So, those have trended all throughout this election cycle to trend towards Democrats.

So, the path for Trump looks pretty difficult at this point in time.

BAIER: OK. Candy, let's go to you and give us an update on the ground, where you are, and what you're seeing.

CANDY WOODALL, REPORTER, USA TODAY: Hi, I'm reporting from Harrisburg tonight, and it's been an election of a lot of change here in Pennsylvania.

We started election night with President Trump up about 618,000 votes as the mail-in ballots started to be counted. That lead diminished until this morning when former Vice President Biden overtook that lead. He stands at about 15,000 votes ahead. The state just started counting about 100,000 provisional ballots, and we still have to wait for military ballots to come in.

BAIER: Now, Candy, I just want to ask you, you know, you've heard the Republicans talk about transparency and the inability to get in for the count. Where do you think those legal challenges are going in Pennsylvania?

And also, that -- the segregated ballots that they're putting aside based on the Supreme Court decision or lack thereof.

WOODALL: Right. President Trump's campaign won that legal challenge yesterday about having his monitors closer to poll workers yesterday. He won that in commonwealth court, and Philadelphia made accommodations yesterday for those monitors to be able to get within six feet. I'm not sure what's left -- you know, on that. And there was talk of an appeal and the city of Philadelphia did appeal, but the court has not made a decision on that yet.

And then, the GOP, the state GOP has asked the Supreme Court -- the U.S.

Supreme Court to segregate any ballots that come in after Election Day.

This pertains to a challenge of the state Supreme Court allowing ballots that arrive by today but were postmarked by Tuesday to still count.

MACCALLUM: All right, Greg Bluestein, let's bring you into the mix here.

Tell us what's going on where you are.

GREG BLUESTEIN, ATLANTA JOURNAL-CONSTITUTION: Yes, just about 4,000 votes separate Joe Biden and President Trump here, the tightest presidential contest in the nation right now. And there's a range of ballots left, there's as many as 8,900 military ballots that could come in today. There's no guarantee they'll all come in, but that today's the deadline for them to come in. It could just be a handful of those, it could be all of them, and there's also some absentee ballots, provisional ballots, other overseas ballots that are still waiting to be tallied.

Democrats are very optimistic. They feel like they just got to bounce from suburban Gwinnett County, and they feel like they've got some other democratic absentee ballot -- democratic leaning absentee ballots from counties coming in as well. So, very tight here -- it's going to be very hard for prognosticators to make the call here.

BAIER: Yes, I heard the secretary of state, say it likely is going to a recount triggered automatically by state law. But when it comes to that Senate race, David Perdue, Jon Ossoff, where it's just on the line, is it possible in a recount or a challenge of paper ballots? Obviously, we had so many more mail-in ballots this year than ever before. That Perdue, somehow, gets over that 50 percent? Is that possible what you're saying?

BLUESTEIN: I -- we don't see those numbers projecting that way. And I'll say this, the Senator Perdue's campaign has pretty much acknowledged that there's going to be a runoff. They sent out two statements, one yesterday, another one today, saying they're ready for runoff, they're ready to defeat Jon Ossoff if it comes to that. So, they're signaling that they recognize that this thing is headed to overtime as well.

MACCALLUM: It such a tight race. Michelle, back to Nevada for just a moment, you know, all these discussions about irregularities, and you know, dead people voting, and people who moved out of the state. You know, what can you tell us about that?

RINDELS: Yes. So, yesterday, we were told that there were 10,000 potential issues that the Republicans had identified. But what we got yesterday was a list of 3,000 plus addresses of people that based on records for changes of address appeared to be living out of the state. We've gotten a couple of people reach out to us and say that they are military families that, you know, have full rights to vote from their new -- wherever they're currently stationed.

So, at this point, we're not sure Trump campaign will prevail on saying those were all illegitimate.

MACCALLUM: All right. Thank you, guys.

(CROSSTALK)

BAIER: Thank you all.

MACCALLUM: Good to have you all with us.

BAIER: Appreciate it.

When SPECIAL REPORT returns, we'll check the day's other headlines. There's other news besides the election. Believe it or not, we will get reaction to the election from House Speaker Nancy Pelosi.

(COMMERCIAL BREAK)

MACCALLUM: Welcome back everybody. This is our continuing coverage of Democracy 2020 on SPECIAL REPORT. Let's take a look at some of the other headlines that are out there tonight. The United states is -- this story has taken a little bit of a backseat over the last couple of days, but it certainly is not standing by at all -- 10 million mark for COVID-19 cases.

The current total is almost 9.7 million. The United States death count has surpassed 235,000. Globally, cases are nearing the 50 million mark, with almost one and a quarter million fatalities.

BRET BAIER, FOX NEWS ANCHOR: U.S. job markets showed a burst of strength in October with employers adding 638,000 jobs, the employment rate tumbling to

6.9 percent. That is down a full percentage point from September. Job growth was particularly strong in construction, retail, and a category that includes restaurants and hotels. It's great news. We're going to talk about it with Charles Payne in a second.

MACCALLUM: Stocks were mixed today. The DOW lost 67, S&P 500 fell one, and the NASDAQ finished ahead by four.

BAIER: For the week, all three exchanges had their best run since April, the DOW surging almost seven percentage points, the S&P 500 gained seven- and-a-third, the NASDAQ jumped nine.

MACCALLUM: House Speaker Nancy Pelosi under fire tonight from some in her caucus after Democrats lost seats during Tuesday's election. Now Pelosi is returning fire. Congressional correspondent Chad Pergram shows us tonight from Capitol Hill.

(BEGIN VIDEOTAPE)

CHAD PERGRAM, FOX NEWS PRODUCER: Democrats clung to the majority when they were expected to win back as many as 15 House seats. Instead their majority slipped as Republicans recaptured many seats Democrats flipped two years ago. Today, Pelosi seemed defensive.

REP. NANCY PELOSI (D-CA): We did not win every battle in the House, but we did win the war.

PERGRAM: But barely. Democrats will likely have the most narrow majority in the House in two decades.

UNIDENTIFIED MALE: South Florida was a disaster zone for Democrats on Tuesday night.

PERGRAM: The apparent reason, socialism. Republicans gained two seats in the Miami area alone. Talk of a leftist agenda scared off some Latino and Cuban-American voters. On an intense Democratic conference call, some moderate Democrats blasted their colleagues. Democratic Virginia Congresswoman Abigail Spanberger barely won.

REP. ABIGAIL SPANBERGER, (D-VA): We lost members who shouldn't have lost.

The number one concern I think that people brought to me, that I barely re- won, was defunding the police. And we need to not ever use the word "socialist" or "socialism" ever again.

PERGRAM: Liberal Democrats returned fire, saying don't blame them, quote, "There are swing seat Democratic incumbents who cosponsored the Green New Deal, Medicare for all, and if I'm not mistaken, every single one won reelection," said Alexandria Ocasio-Cortez." FOX News asked Pelosi if there was tension among Democrats.

PELOSI: I would say we have a healthy difference of opinion within our caucus, but not in any way to be problematic in how we legislate.

PERGRAM: Legislating could be the problem. Liberals will dominate the caucus because so many moderates lost.

(END VIDEOTAPE)

PERGRAM: But there's a paradox. A narrow majority means it's harder to pass progressive bills. That's because Democrats can only lose a few votes from their side. Bret, Martha?

BAIER: Chad, thank you very much.

MACCALLUM: So Charles Payne joins us with SPECIAL REPORT continues, coming up next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R-KY): The unemployment figure this morning at 6.9 percent is a stunning indication of a dramatic comeback of the economy.

That, I think, clearly ought to affect what size of any rescue package we additionally do.

PELOSI: They still have not agreed to crush the virus. If you don't crush the virus, we are still going to have to be dealing with the consequences of the virus. We have a responsibility to find our common ground, stand our ground where we can't.

(END VIDEO CLIP)

BAIER: Senate Majority Leader Mitch McConnell and House Speaker Nancy Pelosi. Majority leader McConnell is now taking over the negotiations from the treasury secretary on coronavirus stimulus. Let's talk about what a possible divided government means for Wall Street, your money. Charles Payne of FOX Business joins us this evening. Good evening, Charles.

CHARLES PAYNE, FOX BUSINESS NETWORK: Good evening.

BAIER: So a really good day on wall street.

PAYNE: Yes, it was a phenomenal day, it was a phenomenal week. Contrast that to last week, and you say what was the difference? I think it comes down unquestionably that there was no blue wave. Last week what you saw was a serious heavy deep selling, particularly of the stocks that had been the hottest of the year. So stocks Zoom or L Brands, or other names that had been up anywhere from 50, 60, even 100 percent for the year were the biggest losers last week.

I think a lot of investors were trying to get ahead of the notion of maybe a blue wave, higher capital gains taxes, take your chips off the table.

When it seemed like maybe that was not going to happen this week, you saw a mad dash to get back into those names, and so we had almost a complete reversal with all the major indices back to their all-time highs.

MACCALLUM: Charles, one of the things that has obviously driven the economy during the first term of the Trump administration is corporate tax cuts.

And Joe Biden talked about increasing them to 28 percent if he were to win the presidency. With the Senate, if the Senate holds, that would make that pretty difficult, right?

PAYNE: Absolutely. You need the Senate -- you need 51 votes in the Senate to do that. So that's why I guess those two runoff elections are going to be extraordinarily important. And listen, it wasn't just about corporations and the idea that shareholders made money. If you look at when those taxes went into effect, January, 2008, it corresponded with an amazing boom in year-over-year wages for blue college workers. As it stood, the months that President Trump was in office, blue colors were up almost 3.4 percent on average year-over-year, more than 50 percent over the eight years that Obama and Biden were in office. So I think there's pure evidence that there was a shared prosperity going on from wealth going up to poverty going down to record levels, and of course wages growing faster than inflation, something that had not happened in a long time.

BAIER: Charles, talk a minute -- we'll take a look at this bar graph of the monthly unemployment rate, and obviously, dealing with the coronavirus was devastating for the economy. And then it has been ticking until the news we got today. It's pretty remarkable how fast that has happened, even as coronavirus is still surging across the country.

PAYNE: Bret, if you Google anything about the economy, March, April, June, July, no experts, not a single person on Wall Street would have told you we would be at 6.9 percent unemployment. Here's the beautiful thing about it.

You can get unemployment down sometimes if people leave the workforce, which is why I don't like when they use the so-called U3 number, which we always talk about. Last month over 700,000 people came into the workforce, and the private sector hired 900,000 people. So these are legit numbers.

And by the way, for black Americans, 10.8 percent down from 12 percent, this is in a single month. Hispanics, 8.8 percent down from 10 percent, Asian-Americans, 7.6 percent down from 8.9 percent, white Americans down to six percent from seven percent. This is all in a single month, almost unheard of, these kinds of moves. It's great news.

Of course, there's bad news. I'll share that because I don't want to sound too one-sided -- 15.1 million American say they couldn't work because their boss or their employer either is out of business for good or restrictions won't allow them to work. And again, long-term unemployment ticked up 50 percent in 3.6 million people. We're concerned about those folks, because the longer you're unemployed, the harder it is to get a job back.

MACCALLUM: We see what's happening in Europe with the virus, more lockdowns. There was discussion from the New Jersey governor today about potentially locking some things down again. What would be the impact of that here?

PAYNE: It would just be devastating. It would be so heartbreaking and so devastating. And last Friday, University of Michigan, which is one of the best sources, if you ever want to know about consumer sentiment and confidence, came out with a special report on that. And people, of course, are worried about the health aspects of it, both what even went higher than the financial concerns were mental health concerns. The devastating one-two impact of losing your job, losing your livelihood, isolation. Even in the U.K. they made a special circumstance this time around that people who lived alone could somehow find and create groups with other people who lived alone.

And it's very devastating, and ultimately you have to learn how to live with the virus if you're not going to describe the economy as well, because we've already lived through that, and I don't think anyone, even Macron, even Angela Merkel, they've gone out of their way to say these aren't full lockdowns, go to school, go to construction. So keep that in mind.

BAIER: Charles Payne, that's always great stuff. If you ever want a really good show on economics and the markets, Charles Payne on FBN. Thanks buddy.

MACCALLUM: Absolutely. Thanks, Charles.

PAYNE: Thank you. Thank you both.

MACCALLUM: So when we come back tonight, the panel on where we are and where we are likely going.

BAIER: I'd like to know that.

MACCALLUM: Wouldn't you like to know the answer to that question? I'm going to stick around.

BAIER: Yes.

(LAUGHTER)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JOE BIDEN, (D) PRESIDENTIAL NOMINEE: In America, the vote is sacred. It is how the people of this nation express their will. And it is the will of the voters, no one, not anything else that chooses the president of the United States of America. So each ballot must be counted.

LARRY KUDLOW, NATIONAL ECONOMIC COUNCIL DIRECTOR: He intends to fight what he perceives to be some nonlegal problems. That's the way I'll phrase it.

I'm not the lawyer. Yes, the president intends to fight, that I can tell you.

(END VIDEO CLIP)

BAIER: And the fight is on, it's continuing as the count is continuing.

Let's bring in our panel, Charles Lane, opinion writer for "The Washington Post," Kimberley Strassel, a member of the editorial board at "The Wall Street Journal," and Tom Bevan, Real Clear Politics co-founder and president. Kimberley, where do you see things now? Obviously, the Trump campaign is launching a number of different legal battles. We have a few states go into recounts. But the count is continuing in a number of states, as you see on the right side of the screen.

KIMBERLEY STRASSEL, WALL STREET JOURNAL: Yes, I'd say we're nearing the end of the first part. And it's an important part, and you could well see those states come out with Biden ahead. You could well see some networks and newspapers even call for him. But in our system, the next part of this is that you have a canvassing process in which you check out to make there were not clerical errors, to make sure all your tabulations are correct.

You have legal challenges, and then you have a recount mechanism.

And I think it's pretty clear at this point the Trump campaign is going to launch a lot of recount efforts. There are enough out there, states, that allow that to deny Joe Biden a certification until that process is done.

And so, buckle up, folks, because this takes a while. Most states have at least three weeks to get through canvassing and then the recounts, so we could be doing this for the next month.

BAIER: Thanks for that, Kimberley.

(LAUGHTER)

MACCALLUM: Tom Bevan, given what Kimberley has just and you look at all the numbers and all the data as it comes in, where do you think we are tonight?

TOM BEVAN, REAL CLEAR POLITICS CO-FOUNDER: I generally agree with Kimberley. All of this is precipitated by the Trump campaign. It looks like Nevada is maybe beyond, or getting beyond where a recount is, but in Arizona, I think the Trump campaign has to get the number, they have to move ahead in that count. And it's going slow. So if they're not able to do that, look, I think they're fighting an uphill battle as is. But Kimberley is right, there's more to go to the process.

BAIER: All right, Charles, where do you think we are?

CHARLES LANE, OPINION WRITER, "WASHINGTON POST": I think where we are is at the point where a normal, rational president, candidate, looking at these numbers, would be thinking about the good of the country and thinking about conceding, because the recounts that my colleagues are talking about are very far-fetched scenarios. For example, Pennsylvania, if Biden's margin is about 35,000 where it's headed, there won't be an automatic recount.

Arizona does not allow a request for a recount. And the president is launching an observed and destabilizing charges of fraud, which are making matters very difficult including for people inside his own party.

And I think where we also are is a moment of truth for a lot of Republicans who know exactly what's really happened here, which is that Joe Biden has narrowly won the election, and they need to stop up, just like the members of the House and Senate leadership in Pennsylvania have done by the state legislature there, refusing to go along with this far-fetched idea of naming new electors, and adjust themselves to the new reality, which is the Republicans really overperformed in the Senate and the House. They have a lot to be happy about and proud of. And President Trump has lost.

MACCALLUM: When you read the tea leaves of some of these statements a little bit, Kimberley let me ask you to do that, this is the one that came out earlier from the president. And he was talking about how this is no longer about any single election. This is about the integrity of our entire election process. And then he went on to say "We will pursue this process through every aspect of the law to guarantee that people have confidence in our government. I will never give up fighting for you and our nation."

But look at the most recent tweet, if we have that that we can put up as well, which has a bit stronger tone to it. "I had such a big lead in all these states late into election night only to see the leads miraculously disappear as the days went by. Perhaps these leads will return as our legal proceedings move forward." Kimberley, what you think president's mood is just gleaning from the statement and from the tweets tonight?

STRASSEL: Well, obviously, the president is very disappointed in the way things are turning out. And I think what's important is that Republicans do here, and you're seeing more and more members of his party do it, that presidential statement was a little closer to it as well, too, is to make the distinction. It's not good enough to go out and claim that ballots are being burnt in a garbage can out back if you don't have any evidence of that.

But there is a very different question to mount legal challenges to argue that certain categories of ballots, for instance, should not be counted because they weren't cast legally. That's a very different question. And so, that seems to be where the legal team, at least, is headed and a lot of the states. Look at Nevada, for instance, and its question of residency.

And so, that's the important question. And will they succeed? We don't know. But we have a system for this, and courts.

BAIER: Thank you very much, panel. I've said multiple times today in different interviews that we have not seen evidence of widespread fraud yet. But we promise that if we do see it, we're going to investigate. As journalists, we are going to go after that. And that is what this Trump campaign legal fight is all about. We'll see where it goes.

That's it for this SPECIAL REPORT coverage. We continue America's Election Headquarters after a short break.

MACCALLUM: Stay with us, everybody.

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