This is a rush transcript of "Special Report" on October 27, 2021. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

REP. JOSH GOTTHEIMER, (D-NJ): If we can get to that agreement, to that framework, we can vote, according to some of the folks in my party, we're holding up a vote on the infrastructure package, the roads and the bridges. They're holding it up until we get that agreement. Somehow, for some reason, it's being held hostage by this other bill.

REP. PRAMILA JAYAPAL, (D-WA) CHAIR, PROGRESSIVE CAUCUS: Let's make absolutely sure that everyone is one the same page, and then we'll vote both bills. Let's be very clear about where the issue is in terms of getting a deal. It is with those two Senators.

SEN. JOE MANCHIN, (D-WV): Basically trying to agree to a framework. And the president has been very clear. He'll go over to the House, and he'll basically explain to the House that I have a framework, but there's still an awful lot of work to be done.

UNIDENTIFIED MALE: Is getting a deal by tomorrow still realistic?

JEN PSAKI, WHITE HOUSE PRESS SECRETARY: Yes.

(END VIDEO CLIP)

BAIER: Not so sure. House Speaker Nancy Pelosi puts out a letter asking the Rules Committee to meet tomorrow. "As we have insisted, we are close to an agreement on the priorities and the top line of the legislation, which can and must pass the House and Senate. At the same time we are facing a crucial deadline for the bipartisan infrastructure framework to pass. To do so we must have trust and confidence in an agreement for the Build Back Better Act." That's the reconciliation bill, and as you can hear, there are all kinds of reactions from all kinds of congressmen and senators.

So where are we? Let's bring in our panel, Harold Ford Jr., former Tennessee Congressman, CEO of Empowerment and Inclusion Capital, David Drucker, senior Congressional correspondent for "The Washington Examiner," and the author of the new book "In Trump's Shadow, the Battle for 2024 and the Future of the GOP," worth a read, and Jonah Goldberg, editor in chief of "The Dispatch."

David, let me start with you. You live and breathe up there on Capitol Hill a lot of the times. I'll tell you what, I have seen some legislative sausage, but this is really an ugly process up there. And late tonight we are hearing that paid family medical leave may be yanked out of the reconciliation bill. We are hearing that the pay-fors, the billionaire's tax that they were touting yesterday, is dead, it looks like, now. So things are changing, and people don't know where things stand. Where do they stand?

DAVID DRUCKER, "WASHINGTON EXAMINER": Yes, Bret, this thing is still a mess. And I think the Democrats are having problems because they are trying to pass legislation built for majorities they don't have. The biggest thing they are dealing with here is that they are in control of a 50-50 Senate. So it's not even a majority, but it's a majority because they have the vice president's tie breaking vote. In the House they have a five seat majority. That is nothing. It is not a governing majority.

And what they can't get over is that they have centrists and liberals on opposite sides of the page, and nobody wants to give and nobody wants to meet in the middle, and everybody is dug in in positions that they feel very strongly about, that they are very passionate and principled about. But until they reach the conclusion that they don't have the margins to play with, and if and until they ever realize that their inability to show the American people they can govern is putting their majorities in further risk than they already are, meaning you can lose 10 seats and lose the House majority or you can lose 40 seats and lose the House majority. You can lose a couple of Senate seats or you can lose a lot of Senate seats. Until they wrap their arms around this and finally put this thing to bed, which I think they will do eventually, then they are going to be stuck.

And one final thing here, Bret, on this. If Glenn Youngkin beats Terry McAuliffe on Tuesday, this thing is going to get even harder to button down, because you are going to have a lot of centrists who look over their shoulder at their voters back home, and they're going to be saying to themselves this agenda is a mess. The leadership we have a mess. And I have got to protect myself. So they're really up against an artificial deadline, but a deadline that matters.

BAIER: Right. And the deadline that they set out there, Harold, was because the president is going overseas, he wants to have something on climate to talk about in Glasgow. But in reality, they just have to get something. They have to get the "W."

It does seem like Nancy Pelosi has always in the past pulled rabbits out of hats when it comes to legislative maneuvers. However, she is essentially saying to the Rules Committee go ahead, start this process, but we don't have any texts. We have nothing to really have a committee hearing on. We have nothing to give you. But go ahead and hold the hearing.

HAROLD FORD JR., FORMER TENNESSEE REPRESENTATIVE: Thanks for having me. You're right. I think David Drucker shared it well, and I think I'm looking forward to reading the book. Washington needs a reset. The victory is right in front of Democrats on this, as we have shared, as I have shared, and others have shared. They have become a caricature of themselves in so many ways.

When you think about the news ever the last seven to 10 days about China, a supersonic missile that can deliver a nuclear payload anywhere in the world, the fact that they continue to lead us in electric battery and solar panel technology and production, and all we can do is hurl insults, and mostly within my own party at one another. When a victory not only is in front of us, but we need it. We need this infrastructure package, and we come back and fight and litigate on the other things at a later time.

Anger and grievance cannot be the center point and cannot advance our economy. It won't help us compete with China on any level. I urge Democrats, Republicans alike, and particularly members of my party to think long and hard about David, what he said at the outset, not just the Youngkin race and the McAuliffe race, and I'm for Terry. But if we don't get this right, not only do you lose the majority, but we continue to let our biggest geopolitical adversary advance at the same time.

BAIER: But Jonah, progressives are holding, saying if we let, if we uncouple this, if we take them apart, the reconciliation never happens in this current environment.

But let me turn to that Virginia race, and Terry McAuliffe who is making this a national race. He is "noun, verb, Donald Trump," a lot on the stump. And if that is the case, then the focus becomes the national Democrats and their ability about how they govern.

JONAH GOLDBERG, "THE DISPATCH": No, I think that's right. We can tie these two things together pretty easily. In June, Joe Biden got 19 Republicans to agree to a massive infrastructure bill, something Donald Trump couldn't do in four years. Fulfilling his promise to bring the parties together, work with bipartisanship. And rather than take that win and call it a day on top of an additional $1.9 trillion he already got in COVID relief, he took the advice from Nancy Pelosi and a bunch of historians who Jedi mind-tricked him into thinking he could be FDR. And that's how we got to where we are.

He could have said that's it. I have done it. I've done what I campaigned on. Terry McAuliffe has tried to sort of follow a Nancy Pelosi style strategy in Virginia. And the amazing thing is that the Virginia electorate doesn't want to be nationalized. For the first time in any of our lifetimes, the Democrat is taking it in the neck on education issues because the way education is defined in Virginia now is on these culture war issues, on the pandemic stuff, on the feeling that parents are being frozen out of the process. And Glenn Youngkin has figured out a way to talk to those swinging moderate independent voters that Joe Biden said he cared about, that won him the election, that Terry McAuliffe, who is basically a vassal of the Clinton machine should have figured out how to talk to. And instead, that's why it's a close race.

BAIER: Last thing, David, quickly. For progressives, and you talked to them up on Capitol Hill, whether it's Bernie Sanders or any of the House progressives, they feel like they're always Charlie Brown and Lucy the football with taking it away at the last minute. But they haven't -- they didn't win the election on those progressive items. Joe Biden won almost plays against those items in the Democratic primary and in the general election. So do they really expect that these big, big things are going to happen with these slim, slim majorities.

DRUCKER: True believers on the left and right always believe that they have the voters behind them, and even if they don't, they are right on the policy and eventually the voters will come around.

But I don't think that they fully understand the fact that it was a very divided election, narrowly went their way. And the reason Joe Biden ended up as the nominee is even Democratic voters didn't want the progressive choice. And we saw Democrats deal with this, look, 10 years ago with Obamacare. And they had large majorities then. They barely were able to pass it, and it took them 10 plus years for the bill to finally get popular and people to like what was in it. And it's just the sort of thing where when you are so committed to a particular policy, you think that whatever the political cost is is worth it, and you don't believe it when people tell you they don't like it.

BAIER: Yes, and there was a Virginia's governor race back then and Obamacare, too, and Republicans won in 2009.

OK, up next, Attorney General Merrick Garland returns to Capitol Hill, and it's fiery.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. JOSH HAWLEY, (R-MO) SENATE JUDICIARY COMMITTEE: You have weaponized the FBI and the Department of Justice. It's wrong. It is unprecedented to my knowledge in the history of this country.

SEN. BEN SASSE, (R-NE) SENATE JUDICIARY COMMITTEE: It's about the politicization of DOJ, and you decided to submit as a vessel. And you know better.

SEN. JOHN CORNYN, (R-TX) SENATE JUDICIARY COMMITTEE: Did you consider the chilling effect that this sort of threat of federal prosecution would have on parents' exercise of their constitutional rights.

UNIDENTIFIED MALE: This testimony, your directive, your performance is shameful. Thank God you are not on the Supreme Court. You should resign in disgrace, Judge.

MERRICK GARLAND, U.S. ATTORNEY GENERAL: I don't believe it's reasonable to read this memorandum as chilling anyone's rights. It's about threats of violence, and it expressly recognizes the constitutional right to make arguments about your children's education.

(END VIDEO CLIP)

BAIER: Wow, it was fiery today in the Senate Judiciary Committee, as you can see there. The attorney general testifying. We're back with the panel. Jonah, your thoughts on this. The National School Boards Association issues this apology, saying "We regret and apologize for this letter" about the school board's concern about domestic terrorists in the original letter. They say protecting the students is their top priority and educators. There remains important work to be done on this issue. There's no justification for some of the language included in the letter. But the attorney and the DOJ used that letter for their directive, and they were trying to get an apology out of the attorney general today.

GOLDBERG: Yes, and I think he should have apologized. I think some of the rhetoric from the Republicans was over the top. But this whole spectacle was a political self-inflicted disaster, with a parent or alleged collusion between the association and the White House, and somehow this got to the DOJ, and they took a very bad, badly written letter, way too seriously, and they broke a lot of norms and customs to weigh in heavily in a highly charged political debate. And Merrick Garland deserves his lumps on all of this.

BAIER: And it does have implications politically, Harold, especially with that issue, education, being so hot and heavy in Virginia.

FORD: Without question. The Critical Race Theory in education, as Jonah said from the outset, is the right thing. But I would take a little different approach than Jonah on this. If you look at the letter from NSBA, they did something that I wish everyone in public life, politics, business, and likewise, would do. They stepped back and said we made a mistake in how we expressed ourselves. We should not have been over the top. Senator Cotton should take a look at that letter and maybe do that tomorrow and apologize to Merrick Garland.

But I think the thrust of the letter was that elected officials are being threatened by people. The way you unseat, and the way you unseat a bad policy in politics is you unseat that elected official. You don't go and threaten violence on him. So I do hope Attorney General Garland does not back down from helping local and state law enforcement, much like the federal law enforcement helped local law enforcement when protesters turned to rioting back last summer. There is no place for violence in political expression. It should be robust. It should be serious. It can be repetitive. But it should never be violent. And Attorney General Garland should not step down or back down from that position.

BAIER: Yes, I guess, David, the crux of a lot of the questioning was that the DOJ memo came directly from the school board's letter and, quote- unquote, news reports. But not much else. There wasn't an investigation into some growing threats.

DRUCKER: Yes, look, I think the Department of Justice had a lot to answer for here. But two things. One, I have no doubt that senators like Ted Cruz and Tom Cotton were looking to create some viral moments that would help pad their campaign war chest as they look toward 2024. It's something I have been covering for the past year-and-a-half.

The other thing, though, is they are speaking to a large concern that parents have around the country. And I spoke to Republicans all day about this that are knee deep in campaigns, that they don't like the curricula coming out of their schools. They don't like the way their school districts are handling COVID. They don't like the way school boards have been responding. And because of the pandemic, and because the pandemic forced them to be more engaged with the curricula that their students are learning and with the way schools are being run, you have parents that are just so much more engaged. And Republicans believe that this going to help them recover a lot of lost ground in the suburbs that they lost throughout the Trump years and cost them the House majority in 2018.

BAIER: We'll see. The Tea Party had its own power and attention. This could be the school board moms and dads who have that power this time. We'll see.

When we come back, tomorrow's headlines with the panel.

(COMMERCIAL BREAK)

BAIER: Finally tonight, a look at tomorrow's headlines with the panel. David, first to you.

DRUCKER: Well, I think it's going to be, or should be, Biden and the Democrats race to reach a deal before Virginia votes on Tuesday. This thing goes sideways for Democrats in Virginia, it's going to be even harder for them to reach a deal. I think they know it, and that's why I think they are trying to create, they're trying to make that happen this week rather than carry it into next week.

BAIER: Jonah?

GOLDBERG: Biden IRS says that under Democratic proposal to tax unrealized assets, Hunter Biden's paintings will be taxed at fair value, which is the cost of the paint and the canvases.

(LAUGHTER)

BAIER: All right, I knew I could count on you. All right. Harold?

FORD: Bret, my headline tomorrow is you.

BAIER: What?

FORD: Your book, "To Rescue the Republic," is number one on "The New York Times" bestseller list. Congratulations.

BAIER: Thank you very much. It's been a big goal, and thanks to all of those folks who purchased the book. I appreciate the mention there, Harold. It's a big moment. We're psyched about it. And thanks to all the shows who had me on.

David, I wish your book well. It's a great read.

(LAUGHTER)

BAIER: Sorry, but thank you very much.

Tomorrow on SPECIAL REPORT, we'll debut the latest FOX News polling on the Virginia's governor race, the last time we'll have the likely voter polls before the election next Tuesday. We're following this race closely, and also New Jersey as well.

Thanks for inviting us into your home tonight. That's it for the SPECIAL REPORT, fair, balanced, and still unafraid. "FOX NEWS PRIMETIME" hosted by Lawrence Jones starts right now. Hey, Lawrence.

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