carolina tonight. >> brian: we have 11 seconds. i have no idea what to do. how do we fill that time? >> gretchen: log on to www.foxandfriends.com for our after the show show and i'll read an e-mail to john stossel give it to us. good morning, everybody. a fox news alert if you're just waking up. we thought we knew what happened in iowa, did we not, on the 3rd of january? the state party is about to certify the vote. that will happen in a matter of moments. it is being called a virtual tie between rick santorum and mitt romney in the caucus a few weeks back. south carolina is in two days. i'm bill hemmer. martha: good morning, everybody, i'm martha maccallum. as you remember on january the 3rd the iowa gop chairman came out. he announced a win by mitt romney by the slimmest of margins, eight votes. who can forget that night, right? the final tally. we were told it would come

in two weeks. the final tally, guess, what shows, rick santorum ahead by 34 votes, but, this is a major but, okay? eight preseats, out of 100 precincts, eight of them are mysteriously missing. person supposed to carry the bundle of handwritten votes, the eight precincts are gone. they will be never be found or certified. we wait aofficial announcement. a lot of crest what really happened in iowa. bill, go for wit. bill: if memory serves there are 1766 precincts in iowa. it is a lot of precincts. this was the total we were given back on the 3rd of january deep into the night about 2:30 in the morning. remember that, long, long night? romney a winwer by just a hair. this is what we believe the count according to "the des moines register" we checked in a short time ago. santorum has the edge on romney by 34 votes. how is this possible?

we'll go to the touch-screen on the bill board to show you what happens in iowa as they continue to tally different votes from various precincts in counties throughout the state. on the results board we show you the state of iowa based on the breakdown from 2012. it shows you 99 counties and what now is being considered. this is fayette, county. the margins are so small. they are perhaps 200, maybe 300, 400 votes in these three specific counties. this is not a lot when you consider 121 to 122,000 caucused two weeks ago. in fayette county, there were typos that changed the vote totals. romney was given 54 votes or he should have gotten five. or he picked up 45 votes when he should have been given four. that is the difference going in favor of santorum why some of these results are changing. down here in the apanose

county, southern part of the state. this did not change the county outcome. santorum won the county a couple weeks ago. he has still won the county now, however, he received fewer votes in the final tally. and romney also received fewer votes too. that really didn't change things much either. buena vista county, up in northwest iowa, this is interesting. santorum won the county a couple weeks ago. he won it again right now, but his margin of victory increased slightly but just a little bit more than romney. you got that now? i talk about the margins. we're talking only here about a couple hundred votes here, a couple hundred votes there. stephen hayes, senior writer, "weekly standard", fox news contributor. good morning to you. >> hey, bill. bill: may not tell us a whole lot about iowa. will it tell us what may happen two days in south carolina, steve? >> i think that's probably the most important thing in the changed results, it puts such additional emphasis what happens in south carolina.

think about it, monday afternoon, going into the fox debate in south carolina monday night mitt romney was thought of once again sort of the inevitable republican nominee. he had double-digit leads in the polls in south carolina. he was cruising to a victory. he won the historic victories in iowa and new hampshire. remember how many times we heard those headlines. no other nonincumbent both won iowa and new hampshire. he seemed to be coasting to the nomination with little in our mind to derail him. then monday night newt gingrich puts up a huge performance in the debate that a lot of people have said energized his supporters and conservatives on the ground in south carolina. now with these results coming out of iowa which shows rick santorum winning with an asterisk, but still winning it is now possible to believe that after saturday in south carolina you could have mitt romney having won one of three contests. it looked on monday if he were likely to win three of the first three contests. now he may actually have one of the first three contests.

bill: this is whether it hurts romney or hurts santorum more because he did not have the headline? >> yeah, i don't think it doesn't help santorum. i think the damage to santorum has already been done unfortunately for his campaign. he would have gotten a much bigger bounce. he got a lot of attention coming out of iowa overperforming this guy was in single digits. but, how many times again did we hear mitt romney won iowa by the slimmest of margins. that is the way it was characterized despite the fact he only won by eight votes. the romney people did a good job getting that talking point out so that people repeated it often. bill: it is breaking news. we'll get official certification in moments. i don't know how you win by 34 votes and call it a tie but we'll. martha: eight precincts disappeared. we don't know what happened to those votes. the man who walked out in the wee moments of the

morning and called the contest for mitt romney. iowa gop chairman matt strong in "america's newsroom" to make news on in "america's newsroom." we'll wait for that. we're waiting for newt gingrich in a town hall meeting in bluffton, south carolina, there are reports that "abc news" is planning to air an interview with newt gingrich's ex-wife, just two days before the south carolina primary. this is hot stuff, folks. gingrich addressed this issue in an interview this morning. buff this. >> i'm not going to say anything negative about mary ann. my two daughters, cathy and jackie, have sent a letter to the president of "abc news" saying from a family per speck they think this is totally wrong. they think abc should not air anything like this. intruding into family things that are, a decade, more than a decade old are simply wrong. now, i'll have my daughters speak for it. i'm sure they would be glad to chat with you about it. i'm not going to comment

beyond that. i'm focused on big issues that concern the american people. martha: former house speaker has been rising in the polls in south carolina. that race is tightening. we'll take an in-depth look how things are shaping up there in a few minutes. bill: mitt romney picking up a new endorsement from the newspaper, "the state" in south carolina. it is printed in columbia. the editorial board endorsed jon huntsman over the weekend. he bowed out the next day. they said that huntsman can work with the problems not simply score partisan points. martha: a bit of a scramble. bill: a redo. martha: exactly. so fox news of course is your source for complete coverage of the first in the south primary. a whole exciting new leg of this race as we head down south in the united states. this saturday we have breaking developments out of south carolina. special coverage gets underway here at 6:00 p.m. eastern. we will be here at 4:00 with

a bit of a preview on a special edition of america's election headquarters. bill: like the pregame on saturday afternoon. the president not waiting for a nominee to start his re-election campaign. his team releasing a new television ad they say is meant to education americans about the president's quote, strong energy record. it also slams, quote, secretive billionaires who have launched attacked as against the president. here's a sample. >> for the first time in 13 years our dependence on foreign oil is below 50%. president obama kept his promise to toughen ethics rules and strengthen america's energy economy. >> i'm barack obama and i approved this message. bill: it is a 30 second ad in total. called unprecedented. running in iowa, michigan, north carolina, ohio and wisconsin. keep an eye on those states as we move toward 2012. martha: tinseltown drawing a line in the sand, threatening to stop donations to president obama. according to reports hollywood studio chiefs are

furious over the president's refusal to the support the anti-piracy regulations for the internet. this is a hot controversy right now. they are refusing to give any money to his re-election campaign because of his lack of support for this. hollywood moguls are some of obama's top bundlers in the industry, giving a total of 55 million toward the 2012 election. 4.5 million of that comes from the entertainment industry. back in 2008 the entertainment industry gave more than $3.5 million while the industry as a whole ranked third in donations for that same year. we do have some brand new numbers for the economy we want to get out to you as we start off this morning. it is clearly showing some new signs of life in the job market. the number of people seeking unemployment benefits dropped sharply last week. much steeper than expected. 50,000 lower, to a seasonally adjusted rate of 352,000. you want to get below 350 to get into real genuine job

creation on this number. this is the biggest drop we've seen in more than six years. charles payne joins me from the fox business network to tell us the underlying meaning of all this. good morning, charles. >> good morning. martha: what is the meaning of it? >> meaning maybe we're turning a corner. there is a lot more hope out there. it is not just today's numbers but a whole lot of economic data from a whole lot of areas from manufacturing to housing. of course more important than anything else, employment. it feels like we were just getting there. just turning a corner a little bit. i've got to tell you, martha, one of the interesting things about this number this morning, it was so good there was almost a muted response by the stock market because these numbers, they are government numbers. they are adjusted and do funny gimmickry with them so they tend to be a little more volatile. that makes people uneasy. but the overarching narrative we're getting a little bit better. i think everyone was a little bit more optimistic, albeit cautiously optimistic. martha: you can't underestimate though the market psychology impact of

a number like this. if people start to feel like things are getting better, that in of itself kind of greased the wheels, doesn't it, charles? >> you hit the nail on the head. people talking about 8.5 unemployment. not talking about the participation rate, 60%. toe put that in proper perspective. participation rate where it was when the president was inaugurated. our unemployment would be 11%. people have to believe to make this economy go. they have to want to get back to the jobs market. martha: a number of major cities have not gotten back jobs they lost in the recession. check this out, 90% of the country's major metropolitan areas have not recovered the jobs by end of the 2011. only 26 of those 363 big metro areas are expected to get those jobs back by the end of this year, by the end of 2012. and also, when you look at it this way, households in these larger cities saw their income take a dip. some 2.2% from 09 to 2010.

charles, talk a little bit what that means. you certainly feel it in the new york area as they do in so many of the metro areas. >> there is a whole lot of reality, it is a reality check what you just mentioned. real wages even adjusted for inflation haven't budged at all. they start to drift a bit is a little stinger. it will get better this year. cities in metropolitan areas near export areas should do very well as we begin to export more. we're starting to see manufacturing pick up again. report out earlier this week, general motors, now moving to three shifts. so it's going to be better this year than last year. i think somewhat of a shocker considering how much money has been thrown at the problem and how many promises have been made such a paltry amount of metropolitan cities have been able to rebound. goes to show you. this is very, very long-term problem. really if you want to get even deeper into this, the big-time jobs in these cities are going to people who have the right kind of education. other than, not really a lot of high-paying jobs.

martha: some of those you wonder if the dynamic changed forever at least for our lifetime? >> i think it has. martha: charles, always great to see you. bill: great point you make especially in the middle part of the country. they have been ravaged. those are some of the stories we're watching. in a moment, president obama has struck down the keystone pipeline. it will not happen for now. supporters say that would have created thousands and thousands of jobs. our next guest says that decision is pure politics, plain and simple. we'll talk about that. martha: dig into that. the search for survivors happening right now off the coast of italy. we have the latest coming in. brand new information what is going on with that right now. bill: you've seen him stump on the trail for his friend mitt romney. so what did chris christie say about the former governor and taxes that resulted in this response? >> i think they understand i will say what i really think. i say that to governor romney privately and i'll say it publicly. are you receiving a payout from a legal settlement

or annuity over 10 or even 20 years? call imperial structured settlements. the experts at imperial can convert your long-term payout into a lump sum of cash today. bill: there is a lot of fallout over this decision

to reject the keystone pipeline project that was slated to run from canada down into the u.s. gulf coast bringing thousands of jobs and millions of barrels of oil in the process. the state department defending its decision. republicans say it is all politics. roll this. both sides. >> in nebraska, in particular we had very, very strong views about, about the environmental issues, about the routing et cetera. and it was on the basis of that that we decided that more work needed to be done. >> the president had said he will do anything that he can to create jobs. that promise was broken. bill: georgia congressman tom price is the chairman of the house republican policy committee. he is on the house budget committee. sir, good morning to you. i imagine you're none too happy about this decision. what do you think? >> this is exactly what the american people are sick and tired of, that is putting politics ahead of appropriate policy. look at a couple of facts. the price of gasoline at the pump has nearly doubled since the president got into

office from 1.68 a gallon to $3.34 a gallon. the unemployment has been over 8% for 4 straight months. we have thousands and thousands of jobs up to 200,000 jobs and decrease our reliance on foreign oil and the president turns his back on it for purely political reasons. bill: here are specs own the pipeline. cost of $13 million. we've gone over time. talk about jobs that would move crude oil about 1600 miles and create 20,000 jobs many predict in the united states according to some estimates. what the white house says this deadline was arbitrary and it was rushed. what do you say to that? >> well it is just in inaccurate. the fact of the matter all the work has been done over last three years. in essence everybody signed off on this. look, there are hundreds of pipelines running, crisscrossing this country. this is simply another one to allow for the crude from canada, to move to the gulf to be refined. if there is anything that is

not arbitrary it is the calculation of the president to say, he is not going to make a hard decision on this pipeline until after the election. that is all politics. what we're interested in is more jobs for the american people and less reliance on foreign oil. this project would do it. we urge and call on the president to reverse his decision. bill: even canadians are a bit confused about this apparently the prime minister talked to the president this past week and encouraged him to go forward that did not happen. the oil industry, they're up in arms. this is jagger regard. he has been quoted continuously for some time in the american petroleum institute. what he is saying is the following. there is clear abdication of leadership on part of the president. how can you say you are for jobs and reject the largest shovel-ready project in america. mr. president, what are you thinking? he is echoing what you're saying here. here is the from the white house on call. if gas goes goes to five buck this is summer, this is hot, hot political issue, is

it not? >> that's why it is all politics. no reasonable individual across the country who thinks this ought not be built. this is all politics by the president. there is no reason why we ought not to proceed with this. the president is shunning american jobs and increasing jobs in china because what the canadian government will have to do, they're going to have to negotiate with china and that's where this crude is going to go. that's bad, bad, bad, for the american people. which is why the president again ought to reverse his decision. say, look, we made a mistake. it is time to build this pipeline. time to increase american jobs and decrease our reliance on foreign oil. bill: we'll see whether that happens. tom price out of georgia on the hill. thank you for your time. >> thank you so much. bill: martha. martha: the white house has a new message for those fighting for the president's health care law. we'll tell you what it is. we'll get reaction from a very influential business group suing over that question. bill: they are digging out from a major snowstorm. it shut down schools and knocked out power and why the problems may only just be starting.

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martha: all right. this is a fox news alert, folks. reports this morning that rick perry will now suspend his campaign. we do expect that there will be some sort of announcement coming on this shortly. we want to bring steve hayes back in, senior writer for "the weekly standard" and fox news contributor. this was something called for by a lot of folks. erick erickson from red state, a popular conservative blog as well as laura ingraham on her radio show calling rick perry to make room an endorse newt gingrich. there are reports that is what he plans to do. what do you think? >> that is interesting. rick perry doesn't have a lot of actual votes. he doesn't have a lot of

support. he has a good number of state legislators and members of congress from south carolina who were supporting his bid. if he took what he had worked on as a ground game in south carolina and turn it over to newt gingrich could that yield some results? perhaps. he is polling in the 5 to 7% range in south carolina. this is not as if somebody 15 to 20, a bigger share of the vote. it will mean this flood of support to newt gingrich, but, given gingrich's surge over the past few days, given fact he seems to pick up momentum, this could help. martha: it clearly might. might be sort of a tidal wave he might need to push him into closer range with mitt romney. let's put up the numbers in the control room. this is "real clear politics" average. look at south carolina. this is average of a group of polls down there. you can see what range looks like right now, with gingrich at 26 and romney at 33.6. you have 4% perry, if all those votes went into romney's column, went into

gingrich's column, would put him around 30 something% in south carolina. says so much, steve, does it not, momentum, remaining desire to find somebody who can compete head-to-head with mitt romney? >> he think that is the key point, martha. if you look at polling that was done by marist for instance, they did a poll, it started on monday. debate was monday night and finished the poll on tuesday, newt gingrich closed the gap by 10 points in the difference between the first day of polling and the second day of polling. clearly the debate has contributed to the sense that newt gingrich was developing momentum in south carolina. if rick perry were to drop out of the race as it seems he is preparing to do and then back newt gingrich, again, it does give sort of another push in the back of newt gingrich, another nudge, another thing that people will will mention when they talk about newt gingrich picking up steam. martha: by most accounts in the fox debate the other night newt gingrich had a very good night. it was not the best night for mitt romney. he has had a lot of good

nights out there in the debating field. but it puts pressure more on tonight. there is another debate tonight in south carolina. there will be one less man if the reports are true. we no reason to think they aren't. one less man out there tonight and less pressure on newt gingrich and mitt romney, right? >> i think that's right. the fact there is one less person on stage doesn't seem like a big deal but i think it is and here's why. nobody has taken their advantage of time on the debate stage than newt gingrich. i agree mitt romney has had several great performances. he didn't have a great performance monday night. newt gingrich really did shine on monday night. one of the difference on monday night, than previous debates, candidates were given 90 seconds rather than 60 seconds to give initial answers. newt gingrich does a well when he has a longer time to talk. he can build a point and does that very well. one less candidate on the stage, that means newt gingrich will have still more time to make these

arguments. martha: you know, so interesting on a lot of levels. you think about sarah palin, who basically gave sort of an own doorsment. she endorsed newt gingrich in south carolina. she said if i were there, that's who i would vote for. so you have this kind of momentum coming from places like that. you wonder what the tea party folks, very strong in south carolina, how they will interpret all this. we'll speak to one in, sorry for the long question, 11:00 we got the news there will be a news conference from rick perry. we want to get that in there. go ahead. >> ironically for rick santorum, unfortunately for rick santorum i think the fact he wins iowa basically doesn't do much to his advantage at this point basically because he hasn't been doing well in polls in south carolina but it does take a little something away from mitt romney, probably sort of a bank shot benefits newt gingrich oddly enough. martha: unbelievable because when you think about rick perry, governor of one of the biggest states in the country, there was so much

promise for him to get into the race and so much momentum, it did not go well him in terms of campaign. a lot is talked about as we head through the next hours. steve, thank you so much for hopping back on with the breaking news this morning. we appreciate it. bill: fox news confirming that rick perry is going to suspend his campaign. here is where the players are this moment. newt gingrich is in bluffton, south carolina. at 11:00 a.m. he has an event in buford, south carolina, near hilton head. rick perry will hold a news conference 11:00 a.m. eastern time. will they be together? we'll see if the reports are true that he will endorse gingrich. before we go, i want to bring in carl cameron talking to folks in south carolina. good morning. what have you gathered? >> reporter: rick perry will take a decisive test, some suspend canada sis for legal reasons and financial reasons closing out the account. rick perry will say he is done. there is no suspension here. he is quitting. it is a full on and full out

from the texas governor. he will do it 11:00. there is a news conference at hyatt a few blocks from where we are in charleston. mitt romney has a event at his local headquarters. definitely adds to the intrigue what is surely to be crucial if not desigh sieve south carolina primary. runing into this with newt gingrich catching up to mitt romney but still a little bit off the pace, still trailing. for rick perry to pull out does raise questions where his supporters might go. starting out --. bill: carl, i apologize for interruption. be precise about it as best you can at the moment. why would rick perry withdraw 48 hours from the vote? >> understanding probably will not going to go his way. he is likely to come in last. there is a debate taking place tonight in charleston. his debate performances while they have improved dramatically have been in the aggregate determined to be one of his weaknesses. rather than put himself through the embarassment of

standing on a stage knowing he is likely to come in last in the field, it is time to pull out. and it follows actually precisely what jon huntsman did, recognizing he was in jeopardy of essentially being odd man out on the debate stage with his weakness in the polls and recognizing he would not do well he pulled out hours before the debate on monday. perry avoids the debate problems this evening and he will still be on the ballot. that won't change. as a matter of fact both michele bachmann and herman cain will be on the ballot and they're out as well. it avoids, his recognition that it is time to go back to austin and continue on being longest serving governor in texas and longest serving governor in the country. bill: does it make sense to you that he would endorse gingrich? >> reporter: i don't think there is any position to be talking about that as a matter of fact early this morning when the perry campaign, when it was decided by the governor and his wife they would be getting out of the race a lot of his senior staff spread across the country

weren't entirely sure the decision had actually been made yet. perry does have supporters. in south carolina particularly, the state he announced in had a infrastructure to some extent atrophied over last month because he didn't perform particularly well in iowa and new hampshire but it is here. were he choose to endorse or not, there are organizational people that in the last 48 hours, they make a slight difference for one candidate or another, but in all likelihood as the undecideds in this state, and there still one in three, one in four voters likely to change their minds here, and again, a debate and another day of campaigning in south carolina anything can happen. if newt gingrich continues with the debate performance he had on monday and were to repeat something like that and it would be enough rough night for mitt romney this evening, trajectory of the polls, when you look at trendlines, suggests that gingrich is catching up perhaps after pace that could catch mitt romney and surpass him, particularly

what happens next 36 hours. if rick perry were to endorse, that could have an effect that would turn the tables. bill: what gingrich is saying the polls show him closing that gap as you refer to there. by perhaps as close as five points on mitt romney. if the polls are right, that would go to the point you're making about the trajectory where the undecideds are going at the moment. listening to you, it is not clear that a perry with drawl would have any impact on the outcome of saturday's vote vote, would it? >> reporter: south carolina is very can tanker russ elect tore rat. they -- electorate. they don't care what happens in eye. they don't care what happens in new hampshire. most notably they care about character. rick perry started his candidacy in south carolina the as a southern governor he thought he would do well here. it didn't resonate. it is unlikely anything that will have a dispositive effect on the outcome here in south carolina other than

voters themselves. they have been hungry for this race. the curiosity they show for rick santorum and newt gingrich as a possible come from behind alternative to beat mitt romney is pronounced. it is palpable. you can't escape it. even if romney rallies themselves there are people who are still chomping and thinking about going elsewhere. this is likely to be going right down to the wire. it is true as we head into the weekend romney is a little bit ahead in the polls but gingrich seems to have the momentum and santorum does too. so, it is, could be a very late night on saturday. bill: i see you. one more quick question. perry has money. we knew that coming out of iowa. it appears he still has a bank account based on everything we've learned so far here. what part of the state would perry tend to do well? would it be in the low country along the coast or would it be up state where it is more conservative, more evangelical? >> reporter: absolutely the up state, more conservative.

that is where rick perry's base was. that is expected where he would do well. bill: that is where santorum could gain with a perry withdrawal? >> reporter: perry supporters were never mitt romney leaners. it is very clear what is left of the texas governor's support in the palmetto state is inclined to be choosing between santorum and gingrich. there is an awful lot of unresolved business on the campaign trail. revelations continue to come about mitt romney's wealth and he continues to play defense, not with standing origin of most of these criticisms being democratic national committee and not his actual republican rivals. newt gingrich is facing all kinds of last-minute problems. criticism by romney and conservatives by his attack on quote, free enterprise going after romney's bain capital days but also the possibilities one of mr. gingrich's ex-wives will say something or do something in a network interview elsewhere by the end of tonight that could make things difficult for

him. south carolina is not -- [inaudible] character and integrity and those types of issues play very, very heavily here. there is questions being raised about mitt romney's character and integrity for record of flip-flopping as massachusetts former governor and there are questions about newt gingrich that go back to his days as speaker and before. so -- public in both cases. this is increases level of volatility, bill. anything in the next 36 hours could be a defining moment in the election. you haven't seen it just jet and that is the beauty of it. bill: some variables, 48 hours before the vote. carl, we'll cut you lose. talk to more folks. we'll bring you back at top of the hour. carl cameron on the road in south carolina. martha has more. martha: carl had a lot of good analysis of south carolina and dynamics at play. let's talk more with gretchen hamel, former spokeswoman for the house republican conference and christopher hahn a recall follower aide to senator charles schumer and fox news

contributor. welcome to both of you. good to have you here. gretchen, start with you. your reaction to news about rick perry. >> wow, what a debate that changed the game for newt gingrich and romney monday night on fox debate. newt gingrich's wife coming out in abc interview. perry coming out of the race. i mean i think this is the most dramatic day we've seen on the campaign since and it does shake things up. martha: it sure does. chris, let's get your thoughts on this my mind goes back to some of the early faults in the perry campaign including the three agencies he couldn't remember. >> yeah. martha: he was out there for 159 days on the campaign trail which began for him and ended for him in the state of south carolina. your thoughts? >> it is 159 days i think he would like to forget and he hopes america forgets four years ago so he might have another shot. he leaves the race with a lot of money in the bank quite frankly still the governor of a very big and important state. but this has got to benefit newt gingrich especially with the debate tonight.

the problem he has every time newt gingrich take as step forward it seems he take as step back. one has to wonder what is going to happen when his wife goes on "abc news", if reports are correct, she is going to say newt basically wanted to be a swinger when they were married. i don't know if i believe that. i don't know if america is going to believe that but south carolina tend to be a little bit more conservative than other states. that said, they don't tend to pick the most conservative candidate. remember, pat robertson finished third there. huckabee fell short there four years ago. they tend to go with the moderate, next in line kind of guy. is newt that guy or is mitt that guy if we'll have to find out on saturday. things are getting tight there and it is very exciting. martha: it is exciting and nasty. south carolina has been in the past and promised to be. your mind goes back to previous elections and some of stuff came out and john mccain and ad against him with reference to his children. we've seen some of this kind of stuff. we don't know what will come out of the abc report we

should. going back to the sort of dynamic what would happen, what happens to the votes rick perry would have, 4.4% according to real clear? gretchen, carl cameron made a compelling argument in some of these areas in south carolina may resonate more with voters if we get some of the scandal stuff on newt gingrich side. that will not help him in south carolina. >> you're absolutely right. rick perry voters are more likely to be santorum and gingrich voters. what will come out today in this interview is little bit different because it is coming from the former mrs. gingrich herself. >> right. >> this isn't just a report by "abc news" on some digging up they have done or an ad by a super pac. this is coming directly from the source and that does make a big difference here. and especially with the population of voters that you have in south caroline and where their values are. >> you know, i got to disagree a little bit. i'm not a big fan of newt

gingrich, we've heard a lot from this ex-wife over the years and now for this to come out now and for it to be a sensational as being billed, i have to think the voters of south carolina are going to think twice about believing some of it. newt is basically said i made a lot of mistakes in my prior marriages. martha: you may be right. there always the possibility, chris, this could backfire. his daughers are coming out. we'll be speaking with they will tomorrow. they have said any divorce is a tragedy for a family. and i think so many people in this country can sympathize with that notion. and maybe people will view this in a different way. why would she after all these years, why would she do this. >> right. >> you can't completely discount it. you can not completely discount it. >> no. >> this is someone in relationship with hill and no him better than most people get to know a candidate. you can't completely discount it and impact it may have. martha: ultimately it is up to the people. and we will see. that is what the most

important thing is in south carolina right now. what a couple of days. thanks so much. >> it will be fun. martha: stay tuned, folks. this is getting very, very interesting in south carolina. bill: news is breaking in south carolina. earlier news is breaking to iowa. want to get back to carl cameron right now. we can now confirm what perry will say in about an hour and 19 minutes, carl, what's happening? what do you have? >> reporter: he will confirm it and say he is out of the race. in a move that is sure to fully roil the south carolina campaign trail texas governor rick perry will with draw from the race and endorse newt gingrich. this is development. the support newt gingrich gotten in south carolina in wake of the myrtle beach fox news debate. endorsement by rick perry, a southern governor who cast himself as outsider, railed against washington will decide the former speaker newt gingrich is best suited to be the republican party nominee to go up against barack obama. gingrich has been closing in

the polls behind mitt romney in last few days. he did pick up some momentum after the last debate. it has shown at events. the romney campaign where we are now at his headquarters in suburban charleston has been taking notice of mr. gingrich and pounding him back for the first time really since before iowa, recognizing that gingrich is surging and is a threat. polls expected later today are likely to show the trend for gingrich putting him within the margin of error and in some cases perhaps surveys will show that gingrich is now leading and we will have rick perry on the campaign trail, not on the trail really but at least supporting newt gingrich. so a major development. the loss of another candidate from the roster and support to newt gingrich. bill: only two days ago, gingrich said perry and santorum should both drop out and support him. at the moment, carl, he is getting half his wish. >> reporter: rick santorum is infuriated by that. he promises he will campaign on past south carolina into

florida regardless. santorum gives no ground to newt gingrich. newt gingrich gets the nod today from rick perry. bill: carl, thank you for that. we'll see perry at 11:00 a.m. eastern time. we'll see gingrich moment mem terrell. martha: what a day for rick perry. what a day for newt gingrich and the dynamic is very volatile folks in south carolina. rick perry calling it quits after 159 days. bret baier joins us to weigh in on this after the break, right here in "america's newsroom." stay tuned.

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who emailed it to emily, who sent it to cindy, who wondered why her soup wasn't quite the same. the recipe's not the recipe... ohhh. [ female announcer ] ...without swanson. the broth cooks trust most when making soup. mmmm! [ female announcer ] the secret is swanson. martha: all right, folks we're back mere in "america's newsroom" with the breaking news this morning that rick perry announced he will drop out of the race for presidential nomination. and here's the kicker. he will come out and back newt gingrich in the south caroline race and beyond we assume. bret pair joins me from special report. bret, your response? is this a good move for rick perry in terms of the timing? >> well, martha, a lot of

his support had already gone to newt gingrich in south carolina particularly. he was seeing some prime, some prominent supporters leave his campaign and we're told there have been multiple conversations between gingrich and perry, actually for the last couple of weeks and there was some kind of get together yesterday in which this digs was made, a final decision was made. it was in the cards because he was only polling 5, 6% in most polls. and it was believed that a lot of his supporters were going to gingrich anyway. this is a big development for newt gingrich who is already closing the gap in a lot of polls with mitt romney in south carolina. while we're still waiting to see what the fallout is about this abc interview with maryian gingrich, this momentum today seems to make

a difference at least on the ground in south carolina very interesting, you're reporting they had been speaking newt gingrich and rick perry over past couple weeks. you love to be a fly on the wall of those conversations. i guess we know something of the outcome. rick perry will be seen taking one for the team. the team in this case being those out there on the conservative side who have been looking for a nonromney candidate and maybe that will preserve sort of his reputation as he moves forward in the republican party to a certain extent. that will remain to be seen. >> i think there was a risk for rick perry if he didn't do what he is doing today and he took in 5, 6, 7%. and someone like newt gingrich lost by 5, 6, 7% there would be -- roo repercussions. >> backlash perhaps. martha: give me a quick thought on iowa. half a minute left, bret. up to 3:00 in the morning and now we have slightly different outcome. >> maybe we should have gone until 4:00? i think it is a big moment for rick santorum but

unfortunately for him the headlines, the impact were the day after, not now. and even today, they're saying a few precincts still can't be confirmed but he is up by 34 votes. so it is just not that satisfying although the santorum campaign will try to capitalize. martha: clearly they want to translate that into strength for sure in south carolina which it may be too late to change that as well. bret, thank you so much. we know you're going to be all over tonight on "special report". we'll look forward to that this evening. >> see you, martha. martha: thanks, bret. bill: there are a lot of things moving right now. we expect to see rick perry in one hour. he is in south carolina. we expect to see newt gingrich shortly. he also is campaigning today in the palmetto state. we don't know if ring rich and perry will appear together. we do know perry is expected to endorse gingrich. got that? back in a moment here. busy moment here on "america's newsroom." things are changing fast two days before the big vote in the

palmetto state

bill: back to our breaking news. if you're just joining us, circle this day on the calendar because this is the day for the fight on the nomination for the republican side certainly has shifted. in which direction we can not say. rick perry set to drop out of this race. he has dropped 10 points since getting in the race. about 159 days ago. john roberts traveling in south carolina, live in charleston this morning where the governor, nikki haley, will be at an event there in a moment. she has endorsed romney. the news is breaking fast, john. good morning there. >> reporter: boy, how things change in a matter of minutes bill, yeah. we're outside of the arena where the southern republican leadership convention will be taking place over next couple days. governor nikki haley participating right now with the heritage foundation, family research council in a kickoff drive to get values

voters out to the polls. values voters were encouraged by this conclave in texas over the weekend to go for rick santorum. but a lot are breaking for newt gingrich. nikki haley being here with this push, she as you said endorsing romney. we hope to get her back on camera live on fox in couple minutes. we asked her how she thinks affect the race. there is no question with values voters remember what happened in 2008, where they split between mike huckabee and fred thompson and john mccain the moderate ran right up the middle. is that going to happen again here in 201. might they split between rick santorum and newt gingrich and allow romney to run up the middle? will they coalesce around one candidate? right now the heritage foundation, family research council, they're neutral in all of this. a lot of people working behind the scenes. they're supposed to be working for rick santorum. a lot said hey, wait a minute. we got railroaded on all of that. our person is gingrich. now there is real fight for

these voters going on in south carolina, bill, that will intensify over the next couple of days. will they coalesce behind one candidate caroline gop leaders they thought it was in the wind monday when huntsman pulled out. they didn't see much reason for perry to stay in being in the low single digits there has been rumblings last couple days. the big how will those voters with perrigo. will their go with gingrich or go to santorum. bill: we'll find out saturday. talk to you nix hour.

john roberts on the trail in charleston. martha: what a difference a day makes to be sure, right, folks? some of rick perry's most memorable moments were during debates. no doubt he thought back on those and wondered if he could do things differently. here is one of those as we head to break. we'll be right back. >> the state of texas is under assault by the federal government. i am saying also that south carolina, is at war with this federal government and with this administration. [applause] wake up!

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martha: we got a big morning cooking here, folks, and the political front. the news breaking this morning rick perry dropping out of the presidential case. he is scheduled to endorse newt gingrich this morning. we will take you their live here in "america's newsroom." we will get a formal announcement about all of that during a news conference at 11:00 this morning eastern time. when that happens we will take you that way as soon as that

gets underway. that's how we start a brand-new hour of a hospitalizin a hopping america live. bill: the race has potentially a seismic shift when you look back on history. perry has been under pressure to get out. according to bret baier, conversations with newt gingrich, gingrich went public a few days ago asking perry and santorum to get out. he gets half of that. let's go to our chief political correspondent carl cameron on the road in charleston now. what are you hearing, carl? >> reporter: the way it's framed in south carolina is, and now there are four. and the question is whether or not rick perry's withdrawal from the race will in some way reduce the split of conservative voters in south carolina that newt gingrich was concerned could inhibit his ability to cast

himself as the alternate to romney, the conservative ante mit candidate. the evangelical christians, the traditional values voters of south carolina have bon less choice anone less noise and that may make it possible for newt gingrich to coalesce the vote behind him. santorum has significant momentum of his own and should not be counted out. he's worked hard in south carolina after his iowa now tie, the certification obviously said that santorum got more votes than mitt romney, although it's not minding. as a practical matter santorum won the expectation game in iowa that's what made him credible and relevant in south carolina. he is knocking on the door for third. can't rule out ron paul giving rick santorum we will headaches for the third and fourth place

slots. for rick perry to withdraw and endorse newt gingrich is very, very significant. we are here at what is romney's headquarters in charleston on the sea coast in south carolina. this is not a fired up crowd. the withdrawal of rick perry for them is not good news because of the endorsement of newt gingrich. the idea that gingrich is surging, has pulled in some polls within the margin of error has the romney campaign rattled. they were looking at 2-0 and the possibility of winning south carolina for an historic 3-0. now romney has the new hampshire win, a virtual tie with rick santorum in iowa, and he's looking at the very real possibility of a debate tonight in which he's the center of attention and getting pounded by his rivals. newt gingrich is well-known as a stand out debate performer gaining more momentum going into saturday. it's a remarkable turn around. bill: thank you for that. we'll get back to all you

mentioned here including the relevance of iowa right now because that is changing as we speak. carl, back up a little bit for me here, layout the reason as to why perry would not go forward, knowing the votes only 48 hours away? >> reporter: well a couple of reasons. one there is the aspect of him having come into the race back in august around the ames straw poll and immediately soared to the top of the polls and not lived up to expectation and the anticipation of his candidacy. he announced here in south carolina and had a series of very poor debate performances by his own accounting and made tactical errors and misstatements that really tripped him up. there was a pretty tough and definitive backlash against him at that point. he never recovered. a lot of time candidates like newt gingrich will have an implosion or near death experience and causes them to come back and say, i've been through trials and tribulations and lived through it. perry wasn't able to. he never got a second look.

rather than stand on a debate stage tonight and come in fifth in a field of five, he takes himself out of the play, he's no longer in it and newt gingrich gets the benefit of his endorsement. bill: thank you, carl we'll be back with you a little bit later this hour. carl is in charleston. martha: back to new york and back to charleston again, john roberts is standing by speaking with governor nikki haley and getting her reaction to a very volum volatile situation on the ground, john. >> reporter: governor nikki hayley is here. you've supported mitt romney. what do you make of rick perry dropping out of race and throwing his support behind newt gingrich. >> this is what primaries are all about. they decide who they like. certainly the voters will be the ones who decide on saturday. if they are looking at the person who is the only one who has business experience and the only one who has been on the other side of government they

will go with mitt romney. he's the only one that is not attached to washington. we can't have anyone that is a part of the chaos of washington any more. was polling 5, 6%. if all those voters go to gingrich's side that puts him even or ahead of governor romney. how do you foal that swing could be realized on the ground on saturday. >> i don't think that is realized. voters don't move in a block or vote in a block. they look at the candidates and make up their own mind and decisions from that. i think that 5% will split up across the board and they will decide who is best for them. the main issues in south carolina are jobs, spending and the economy. we need a businessman in the white house. we need someone that is not a part of washington. i think mitt romney its going to take it in south carolina. >> reporter: you're here with the heritage foundation, part of a push to get voters out to the

polls. there was a co conclave where a number of christian valu values pushed for santorum. do you think they will go tore santorum and not nor gingrich. >> governor romney says marriage is between a man and woman and he said he's going to vote on the side of life. i think this is anyone's game. perry's percentage splits up across the board. do they want a person in the white house o or a politician in the white house. >> some say anybody with mitt romney. >> i've already talked some some day that are jumping on board with mitt romney. >> reporter: any names you can mention. >> no, we've been getting calls all week.

already started to do that before perry got automatic. now they can fully jump on board. >> reporter: i talked with buster brown from the baptist church out there. he is leaning for a candidate. i don't think he wanted me to say publicly who he was leaning for. he did suggest if mitt romney were to win it would not be disaster for evangelicals because he believed he was a man of integrity. for so many other people it is like that. in 2008 we saw the case where evangelicals kphreut the vote. do you think that could happen again here in south carolina. >> the main issues are the job, spending and the economy. if you take that aside governor romney said marriage is between a machine and a wofplt i think people trust him on that side. they are not worried about that. right now, who is going to get us out of debt and trol control the spending and let the private sector do what it needs to do to

get people back to work. we want a president who is going to get people back to work and do it quickly. >> reporter: thank you very much. i know you're heading to a romney event. pleasure spending time with you. >> thank you. martha: john roberts on the ground there with nikki haley. clearly one of the biggest things has been electability. we will find out on saturday the biggest issues when we do the exit polls. i'll be able to tell you what people care about on the ground there. bill: we can report that kerry is going to endorse gingrich. we can report that kerry is going to head back to texas after this announcement today. that is coming up. what else is coming up, martha. martha: the man who made the announcement about iowa who came out and said, you know what it's about an 8-vote margin to mitt romney. he will join us now and talk about the unbelievable change of events in iowa and how that all works out.

we'll go back to the rick perry announcement, huge news. rick perry governor of the biggest state in the nation, longest serving nation, had all the krao credentials people thought is out of the race. we'll be right back. >> here is the issue for us, as republicans we cannot fire our nominee in september, we need to know now. so i hope you'll put your tax records out there this week so the people of south carolina that take a look and decide if, you know, we've got a flawed candidate or not. -one. -two.

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martha: fox news alert out of iowa. the final count from the caucus is in. rick perry will be at the top of the hour, 11:00 for that news conference. stick around for that. the other lead story going on in iowa. it turns out in the end that mitt romney did not win iowa by 8 votes. after anee figures alcount being

announced this morning rick santorum got 34 more votes than romney. but the caucuses we are being told are official wally being called a tie because the results from eight precincts are actually missing, no one knows what happened to those and will never be certified. the man involved in certifying the results is man stra u.n. and he joins us live. good to have you here. >> good morning, mart that. if thermartha. if there was any question about the relevancy of iowa with rick perry's announcement the first four finishers are the only four remaining candidates. i think the impact and influence of iowa continues throughout the presidential race. martha: understandable that you would want to make that point this morning especially given the fact that so much has been throep thrown in flux. we wait until 3:00 in the morning and we are told that mitt romney won by eight votes. now we are being told that rick santorum won by 34 votes.

why wouldn't you call this a win for rick santorum. >> we have a two-week certification process where we counted on our volunteer precinct leaders in 774 precincts to provide the original record of each of the votes that happened on january 3rd. last of yesterday's 5:00 deadline we had 756 of those official documents being able to be certified from the precincts. we wanted to make the totals accurately reflected ou i iowa voted. hrick santorum has 34 more votes. for the pr precincts that weren't able to get votes in i don't understand why they

wouldn't respond to our phone calls. we wanted to make sure that every iowa citizen had their vote reflected. martha: i hope you're hearing me okay and we don't have any problem with that. the rick santorum folks are upset when being told it's a tie when they have 34 votes ahead. the precincts weren't in the picture either when the win was called on election night for mitt romney. the santorum folks, because as you know the romney folks have said this is a historic win for a nonincumbent republican to sweep iowa and new hampshire. this would take away those boasting rights. it's a big deal if you've been a rick santorum supporters all along. what do you say to them? >> i looked at our job as making sure we were able to certify as many precincts as possible and provide accurate information. we'll let the pundits and the campaign officials spin it any

way they want. you can't take away that he received more certified votes than any other candidate on caucus night. you can't discount the tremendous boost that rick santorum got out of iowa coming out of caucus night. the fact that we had michelle bachmann drop out. the fact that today rick perry has left the race. all this started for stapb rick santorum on caucus night. regardless of how they think it's spinning. martha: you talk about spinning. i don't mean to split hairs here and i agree with you that everybody would look at the situation and say, gosh, i don't know it looks like a toss up. they might have said the same thing on election night, it would have been called for romney. then they call it a tie. don't you understand how they feel they are slighted "iowa. >> in the wee hours of january 4th when we reported

the unofficial reports we explained there was a certification process that all the precincts should go through. it won't be a surprise to anyone that the process is going on for the last two weeks. in any race that is decided by hundreds of percentage points there is always room for human error. we had two pre paints in one countprecincts, there was an over vote for romney. a 54 was entered it should have been a four. a 44 was entered it should have been a 4. martha: we did outline those earlier in the show. >> we have campaign officials at our headquarters going through the form. it's as open and transparent. martha: the eight precinct centers missing, these are handwritten ballots. how do you lose eight precincts full of votes? what happened to them.

>> those are questions for the volunteer chairs in those particular precincts. the way the process works is each of our 1774 precincts receive what is called a form e certification form which is the official record of the vote total in that precinct and that document is signed by the precinct chair and signed by the precinct secretary and delivered to the county chairman who then bundles all the precincts from within their county and gets that to republican headquarters so we can certify the verified forms. depending on which county we are talking about, some times the county chairman never heard to the precinct khaeufp. one chairman committed a plannin planning form with on it. there was nothing to certify. it's a great process, we did everything in our power to try to get the volunteer precinct leaders to submit the forms on time but they just weren't able to. martha: mr. stra u.n. thank you. it's quite a situation and it was a cliffhanger of an evening,

and that will lead to a lot ofee mowings on both sides of this. and a pwot of sroebgs will band a lot of sroebgs will be talki folks will be talking about it for a longtime. bill: rick santorum folks are coming out with a statement. this latest defea of governor romney in iowa is gus the beginning. he's continuing to fights the clear consistent conservative in this race. expect to hear that more from rick santorum and more tomorrow. we're waiting for rick perry. should mitt romney release tax returns now instead of waiting until april? with the latest nudge from alexis christoforous taoerbgs from chris christie and what that means. martha: the tennis meltdown that has everybody talking. we'll show you. [ male annouer ] juice drink too watery?

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>> this is a great example of the insiders that are having a krufrpgs here. an conversation up here. the fact much the matter here is washington d.c. needs to leave the states alone and let the states decide these issues. bill: many argued that was rick perry best performance after getting a slow start in the debates we've watched for the past three months. what we wanted to show you is what's happened so far in the month of january and where the race has gone. on the touch screen billboard behind us we'll take you back to iowa, right, first yea week of the year. michelle bachmann withdrew on the 4th of january. a week and a half later, this

week when jon huntsman withdrew the day after he got the endorsement from the state newspaper down there in columbia, south carolina. in the same week we have lost two and now there are four remaining and the contest for the south carolina primary coming up in 24 hours. what happened four years ago that may give us an idea as to where the supporters for rick perry may go on saturday? on the map from 2008 this is -- this is the match up between john mccain and mike huckabee, as a reminder mccain was the winner four years ago by 3 points. where did the votes come from? on the map behind us mccain is in red and huckabee in pwhraoufplt the ark is in the northern heart, what they call upstate in south carolina. that's where huckabee saw so much strength, a strong conservative part of the state, evangelicals as well. mccain did well in the coastal counties where you have more moderate republicans, transplants from the northeast, military veterans, retired military as well.

don't forget about the center part of the state too especially on saturday. there is a population center here in places like rich land county where you find the capitol city of columbia. to be more specific, kharl mentioned this a moment ago. the rick perry supporters he believes can be found up here in places like greenville county, over here in spartanburg county. over here to the east in york county which is right near charlotte, mechani mecklanberg county. if that thinking is correct many of the voters who would have gone for rick perry perhaps now have a choice between rick santorum, newt gingrich, mitt romney. what will they do? chris wallace is host of fox news sunday. what is your expectation now. >> reporter: i don't think they'll go to mitt romney. the -- we need to put those in context, there aren't that many rick perry voters. he was about 5% of the polls.

there could be a difference if there was a very close race but otherwise know you would think that they would go overwhelmingly to gingrich and santorum not to paul or romney. there is a new poll just out, american research group which actually now shows gingrich in the lead 33% to 32% obviously within the margin of error. if we're talking about a one or two point race, you know, and you get some of those perry supporters going to beginning reufpt could be the difference between victory and defeat for newt gingrich. bill: bret told us that gingrich had been talking to perry's folks for some time might have been in the last 48 hours and the two men talked again and that's perhaps what convinced perry. if that plays out we might learn that in 34 minutes when peer recomes tout to talk. he was thought to have a war chest, some money remaining. whether or not he blew all that in iowa is something that we'll figure out down the road.

all signs seem to indicate that perry was going to give it another fight in south carolina, likely not ginning but still as a sittinwin, but as a sitting governor, do you go back to texas and say, let's get the job done where we started. >> reporter: absolutely. he's going to be quite a figure, not as much of a figure in austin east was. there are plenty of candidates that have lost but go become to their home state and go on with their careers. like some candidates he was never as popular and never as high on the polls as the day he announced. he immediately went up to about 39% in some of the polls, overwhelming favorite, an went to the debate stages an wasn't ready for prime-time and those debate. we did an interview with them in october for fox news sunday, gave him the whole first half of the show, did a very good job and was making the case, hey,

look at me again, i'm a better person, i thought he did a good job in our interest view, and about three days later he had the famous debate, the o orb p ops debate. an was finished after that. bill: does that drive home the point that if you want to play on the national stage you need to practice. >> reporter: absolutely. bill: the places to practice is iowa and new hampshire and you go there for a year and you workout your answers and work through the issues so when the big, bright lights are on there and chris wallace is sitting across the table with you you can sit him with that 12-second answer that gets a headline as opposed to what perry did when he stumbled on it a few times. >> reporter: we saw this twice. we saw this with perry and four years ago with fred thompson. this is a full time job and you really need to take a couple of years and hone your arguments, do a lot of interviews, do debates and you gets bette get better eight. it was kind of an exhibition

season in may and june when all the other guys were getting better at it and he came in right during the regular season in august. i guess his first debate was maybe in september an wasn't ready for it. bill: right out of the gate. i have about 20 seconds left here. santorum is competing in south carolina, ron paul is competing there however his presence there the last couple of days has not been significant. the poll you just sited. do we now have a neck-and-neck race possibly between gingrich and romney on saturday. >> reporter: except, real quickly we have a debate tonight and we also have a report that abc will have an interview with gingrich's e wife over the next new days. a lot could happen. maybe peeking 24 hours before the are primary is too soon. bill: very true. we were thinking about 2000 when mccain took the heavy hits from george wurb. 200 bush.

2008 when clinton went down there and klyburn jumped in. chris, manning you, we'll catch you this weekend. martha: it seems like such a nice place, south carolina when you visit, right? a big contract to build america's next generation of attack planes creates 1400 joss, so why is that contract going to brazil? got some answers on that in the next report. bill: good morning. mark wahlberg inserting his foot right into his mouth, what he said about 9/11 and why now he's apologizing. [ male announcer ] you love the taste of 2% milk.

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martha: >> i think they are looking at the person who is the only one who has business spoerpbs and the only one who knows what it's like to be on the other side of government, w they are going to side with romney. we can't have any one that is part of the chaos of washington any more. the main issues in south carolina are jobs, spending and the economy. we need a businessman in the white house. we need someone that is not a part of washington.

i think mitt romney is going to take it in south carolina. martha: that was just moments ago, nikki haley speaking with our own john roberts on the ground in charleston, south carolina. we are waiting, just about 27 or so minutes away from a news conference with texas governor rick perry, the big news of the morning. he is set to announce that he will drop out of the presidential race and throw his support behind newt gingrich, just 48 hours before the voting gets started in south carolina. all of that will happen in north charleston this morning. let's bring inned rollins, he managed president reagan's landside in 1984 and many other campaigns along the way. what is your reaction. >> big story. i think this narrows the race down to a romney, no disrespect to rick santorum wit but to a romne romney-gingrich. santorum's support will diminish

somewhat. the momentum has gone romney's way. he has to answer to his taxes and his off-shore accounts in the cayman's islands. i would not be shocked this morning if newt gingrich gets this and you have a two person race. martha: if people listen to rick perry when he comes out and says i want my voters to go to newt gingrich, and it gives gingrich the boost that he needs to south carolina and he edges out, as you say he could, mitt romney, then what? >> then we have florida, and the difference in florida is it's a -- as we talked yesterday it's a big media state, ten media parbgts, you've got to have ten million dollars and newt does not have that kind of money or organization. i assume romney with his big lead wins florida. it's proportional again, so newt comes in second he'll have della gather. at the end ever the day you then

get to february which is a bunch of caucuses and not any big states and gives you time to regroup and build an organization which beginning r-fnewt gingrich doesn't have and it gives romney time to readjust his machine. martha: we see who i nasty it gets between mitt romney and newt gingrich. there appears to be no loved lost. and you feel this continued searching for an anti-mitt romney candidate. you have this coalescing around newt gingrich which they've had a tough time falling in love with but they love him in these debates, it's clear. >> he's a very intelligence man, this guy is a street fighter. he can do well and get on the ground and wrestle and fight.

this is a vendetta. gingrich thought for a period of time six, eight weeks ago he was going to be the president and he thinks that romney took him out by unfair campaign practices and it's a hate match at this point in time. martha: he may have to wrestle. we are still waiting to hear whether or not they are going to air this on abc this interview with one of newt gingrich's former wives. how potentially damaging do you think it would be if it does air? >> well a lot of the stories have been out already. shy is a very vindictive person, not particularly well liked when he was the speaker, but my sense is she's as vicious as anybody that has before than an ex-wife. but i don't know what she can tell that basically is going to undue the momentum here. people know all the warts and all the scars that are on newt gingrich and they are still basically moving toward towards him. martha: it's always great to get your experience and thoughts on this. big day in this race to be sure, because the dynamic is shifting, you have the debate tonight, big vote overt weekend on south

carolina. we'll talk to you on the other side of that. thanksed. bill: romney is having an event in south carolina and we are monitoring that to see if there's been a reaction to the news of the hour. also, newt gingrich just wrapped up an event himself in south carolina, he was asked about the perry developments, no reaction from the former speaker at the moment. but at 11:00 eastern time we will see rick perry 21 minutes from now with his wife and son in south carolina. we will bring that to you live here on the fox news channel. in the meantime quickly, want to bring you a new report here about brand-new job numbers out today. 352,000 weekly unemployment claims. we get word that 1400 jobs, building america's next generation light attack aircraft are heading overseas to another country. the air force disqualified a kansas-base builder from bidding on the billion dollar contract. instead they gave it to a brazilian company. why are wondering why.

william la jeunesse on this. what did you find out. >> reporter: you'd think our own federal government at the very least would buy american, especially on a defense contract? not any more. the air force picked this brazilian made attack plane against the hawker beechcraft at6 manufactured at a wichita, kansas factory. the air force award erred the $1 billion contract to brazil. that is going to cost this country 1200 high quality jobs. why are you sphrebgting an interior prod subgt are duct that costs more made outside the united states when it's u.s. traction dollars that is buying it. >> reporter: they say their plane is better. multiple deficiencies and significant weaknesses found in the hawker proposal made it technically unacceptable and resulted in an unacceptable

risk. with 700 already in use by the u.s. military, they say the american company is a victim of politics. >> in a global economy the ooh noted states and brazil should expand trade and investment so we create new jobs and new opportunities in both of our nations. >> reporter: the u.s. overlooked its u.n. voting record, the close ties with iran, and an investigation for bribery and corruption. >> that is absolutely wrong when you have people of american who understand that obama is out sources national security jobs they will be upset. >> reporter: they said that they won not because of politics but performance, that their plane was simply better in the air. we are told that hawk eris now taking their protest to federal court. bill: interesting we will follow it then. 19 minutes before the air. martha: governor chris christie responds to the attacks from mitt romney's rivals with regard to his personal finances. >> the fact of the matter is everybody knows that mitt romney

hasn't had an income-plea duesinproducing job for the last couple of years. he's been campaigning for president of the united states. ee know he's supporting himself from the investments he made. martha: is mitt romney properly handling the attacks from his rivals? bill: rick perry is going to talk in a matter of moments. the latest headline in a crazy primary season. do not move, south carolina is shaking it up again.

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and roll up your sleeves. 5-hour energy is faster and easier than coffee. man, does it work. you'll get that alert, energized feeling you need to get stuff done. a lot of stuff. wow. look at you go. 5-hour energy. when you gotta get stuff done. martha: good morning, folks, not the morning that rick perry had

ever wanted to come. he is moments away in charleston, south carolina to announce that he is pulling out from the g.o.p. race for the presidency of the united states. we understand his wife anita and one of his sons will be with him at the podium. we'll bring you there as soon as that gets underway. let's bring in chris stirewalt, our fox news politics editor for reaction to this. >> reporter: it's a pretty good deal for newt gingrich. as we think about this as opposed to other candidates coming out, you had michelle bachmann and herman cain drop out without endorsing and you had huntsman leave and endorse mitt romney. what makes perry different is that while republicans may not be convinced that he is the guy probably because of his terrible debate performances early son, while they may not be convinced he was the guy they like him. polls to show there is an a finance a tee for him, social conservatives like them.

if he can give a little bit of that in newt gingrich, give him the mo in south carolina, he could even beat mitt romney. martha: i think we'll see this as him sort of taking one for the team and it's a positive for him going forward to get out ahead of the vote sewing that his votes can go to some of these other candidates, mainly newt gingrich we understand is who he's going to endorse. mitt romney has been getting a lot of heat, chris, over the financial issues, the accounts in the cayman islands where some of the bain money is apparently invested. how does all this fare for him going forward? >> reporter: the deal for mitt romney is this. south carolina is too close for him to change the discussion very much, especially given the perry endorsement and the discussion there, we're just 36 hours away from the voting, but florida looms out in front. and mitt romney has to think about it this way, this newt gingrich gets a bounce coming out of south carolina from a close second-place, tie, first place, he's going to go down to florida with some juice, that

means that mitt romney is going to eventually release his tax returns, address the issue about the off shoring of money. he's got to do this because with florida coming up on the 31 of january he can't have this issue lingering. martha: would now be a good time for that? >> reporter: well, now actually might be a good time because it would tend to sort of get lost and blown-out by everything else. martha: a distraction, right. >> reporter: exactly. martha: we'll see if he decides to do this. chris christie this morning called for him to do that. rob portman has endorsed mitt romney today. those are two big names in the mix nor mitt romney, folks considered either of one of them as a vice president on the ticket with them. >> reporter: absolutely, absolutely. the biggest thing for mitt romney right noise surviving south carolina and getting down to florida, getting his feet under him and making sure he is ready to use his support from all of these well-known, well respected figures inside the national republican party and a significant cash advantage to turn florida into the stopping place for any sort of

neutmentum. martha: there is a lot of buzz about an abc interview with newt gingrich's former wife. we are waiting. they just released a piece of sound from that interview. as soon as we get it we will play it for u. ahead of that, chris, how significant is it. >> reporter: it was going to be very, very significant today. rick perry is considerably helping newt gingrich out by coming out and making the endorsement and sort of changing the discussion about. it's going to be lingering for newt gingrich to come out and make some sort of lured former allegations about the former speaker's conduct at end of their marriage and what he said in asking for a divorce. that is something gingrich will have to address before he gets to florida. the south carolina primary is always wild, this year is pretty clearly no exception. martha: no shortage of drama going on right now. chris, thank you so much. bill: you have four left, right, santorum, palm paul, romney

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. bill: we are waiting on the rick perry event we will see him and his wife and son griffin in about seven minutes or so. that is north charleston, south carolina. we have four now left in this race for the republican nomination, mitt romney, newt gingrich, rick santorum and ron paul to fight it out tonight in a debate in south carolina, then saturday the big vote for the primary down there. mike huckabee is well familiar with the state of south carolina, he's on the phone now. governor, how are you doing and good morning to you? there has been so many headlines

today, not just with perry in south carolina, but the iowa caucus as well, which apparently has given the nod to rick santorum by 34 votes, although not officially for whatever reason. apparently six or eight precincts have been lost. what do you make of the headlines now that this field is winnowing so quickly before the big vote on saturday. >> the big surprise is the timing of the announcement the fact that it was done before the vote on saturday. rick perry clearly knew he was not a contender an decided to pull out. i think the endorsements is not as important as the win. the fact this he's giving newt the bump this close to the primary is a lot more significant than pulling out. he needs this pump especially with the possibility of the interview of abc coming out tonight, that is bad timing. i'll tell you who this hurts more than it hurts mitt romney, it hurts rick santorum. he needed to really show some juice in south carolina. the perry endorse swinging

toward newt probably does more harm to santorum than it does to romney, because romney voters are pretty well established, they are not likely to go to newt. but perry's voters could have gone either to rick or newt, and the endorsement is a significant thing against santorum and for newt. bill: we had ed rollins on ten minutes ago. he says he sees a two-man race in south carolina between gingrich and romney and would not be surprised if gingrich pulls it out. do you see it that way? >> i think that's possible. there are still going to be some people that will vote for rick santorum because they like him and appreciate his convictions. i don't think he's out of this yet. and of course ron paul's voters aren't going anywhere, they are going to stick with ron paul. if there are 20 people in it or nobody in it they are going to stick with ron paul. bill: governor thank you. mike huckabee on the californi on the phone in california.

he knows about this because he was in a very, very tight race. it was mccain 33%, huckabee 30. we'll see what we get on saturday. martha: maybe it will be similar, who knows who will be in what spot. rick perry is about to make it official. he will hold a news conference. the podium is there as you can see. he will tell us he is quitting ougetting out of the g.o.p. race and throwing all his support behind newt gingrich. will it matter? we'll be right back. my name is ron orsini,

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martha: we're just leaving you as we watch the scene. rick perry about to come into the room. very busy day today. we'll be back tomorrow with more. bill: south carolina, iowa, what's next. stay tuned. "happening now" starts right now. jon: good morning. a fox news alert o