• This is a rush transcript from "The Journal Editorial Report," August 15, 2009. This copy may not be in its final form and may be updated.

    PAUL GIGOT, HOST: Up next, Obamacare and the death panel claims. Will his reform plan ration care for seniors. We'll separate fact from fiction.

    Plus, remember Fannie Mae and Freddie Mac? Meet their cousin, Ginnie, Uncle Sam's latest subprime mortgage lender and possible bailout candidate.

    And the Feds gear up for the 2010 Census. But they're not just counting U.S. citizens.

    "The Journal Editorial Report" starts right now.

    Welcome to "The Journal Editorial Report." I'm Paul Gigot.

    Claims are flying fast and furious that the Democrat's health care reform plan will institute what critics are calling death panels to deny care to sick seniors and children with birth defects.

    Former Alaska Governor Sarah Palin got in on the act recently writing on her Facebook page, quote, "The American I know and love is not one in which my parents or my baby with Down's syndrome will have to stand in front of Obama's death panel so his bureaucrats can decide based on a subjective judgment of their level of productivity in society whether they are worthy of health care," unquote.

    Trying to tamp down such talk, here's what President Obama had to say at a town hall this week.

    (BEGIN VIDEO CLIP)

    PRESIDENT BARACK OBAMA: The rumor circulating a lot lately is this idea that somehow the House of Representatives voted for death panels that will basically pull the plug on grandma because we've decided that we don't — it's too expensive to let her live anymore.

    (END VIDEO CLIP)

    GIGOT: Here to separate fact from fiction, Wall Street Journal columnist and deputy editor, Dan Henninger; columnist, Mary Anastasia O'Grady; senior editorial page writer Joe Rago; and WSJ.com columnist, John Fund.

    All right, Joe, who is right here, Palin or President Obama?

    JOE RAGO, SENIOR EDITORIAL PAGE WRITER: I think they're both right in a sense or they're both wrong. There's not really a death panel in this bill. I think that's pretty over the top. But I think Palin and seniors have a right to worry about the direction that American medicine will take under Obama Care. What we're likely to see this year is a big coverage expansion, government insurance for the middle class. And there's only so much tax revenue that can be had under this tax code. and once budgetary pressures start to explode we're going to have to start trimming and making choices and seniors might be the ones on the chopping block.

    GIGOT: On the point on the so-called death panel, this was a provision that said there would be end-of-life counseling that would be a part of any insurance reform plan. Now, that's been pulled out of the Senate Finance Committee part of the bill.

    RAGO: That's correct.

    GIGOT: After this controversy. But you're talking about basically the cost will get so big that ultimately it's unaffordable and you have to clamp down and ration care. And seniors are the first in line.

    Do you agree with that, Dan?

    DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: I do. One of the pieces of data that emerge from this, and everyone wants to become aware of, is Medicare spending over 25 percent. About 27 percent of Medicare is spent in the last year of life. OK? And that's where the savings are. This is coming down to a matter of trust. He, President Obama is trying to tell those people, we won't go into that 25 percent of Medicare spending and threaten your care. And people are sitting out there saying how am I supposed to believe that, if we're responsible for most of this Medicare spending. And he simply hasn't convinced people that the government won't, as Joe is suggesting, ultimately look for ways in that tranche to save money.