• With: Steve Hayes, Juan Williams, Charles Krauthammer

    This is a rush transcript from "Special Report," Janaury 3, 2011. This copy may not be in its final form and may be updated.

    (BEGIN VIDEO CLIP)

    REP. FRED UPTON, R-MICH.: Watch what happens. As part of our pledge, we said that we would bring up a vote to repeal health care early.  That’ll happen before the president's state of the union address.

    REP. DEBBIE WASSERMAN SCULTZ, D-FLA.: For the Republicans to right out of the gate in the 112th Congress focus on a pointless, harmful attempt at repealing health care reform which is never going to pass the Senate and be vetoed by the president if it did, that’s totally irresponsible.

    (END VIDEO CLIP)

    BRET BAIER, HOST OF “SPECIAL REPORT”: That is agenda item number one in the incoming Republican House. We have learned today the Republicans will vote on January 12th for a repeal of Obamacare.  Here is what Democrats sent to the incoming House speaker, a letter talking about the health care repeal effort, writing, quote, "If House Republicans move forward with a repeal of the health care law that  threatens consumers benefits like the ‘donut-hole fix’, we will block it in the Senate. This proposal deserves a chance to work. It is too important to be treated as collateral damage in a partisan mission to repeal health care."  So we start there with the incoming Congress. Let's bring in our panel, Steve Hayes, senior writer for the Weekly Standard, Juan Williams Fox News contributor, and syndicated columnist Charles Krauthammer.

    Steve, a vote next week, the rules committee will meet Thursday to set this whole thing up. What about this?

    STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Posted on line tonight so people have a chance to see what they are voting on.

    I think this is a good move by House Republicans. It’s smart to do it; it’s smart to do it early and smart to post it. I think it's interesting that Democrats are taking a strong stand against it, and Debbie Wasserman Schultz saying it was irresponsible even to on hold such a vote, I mean, the horrors.

    And then you had the Senate Democrats not allowing a vote on this.  I wonder what they are afraid of. Why is it they feel the need to come out in advance and say they won’t do this? I think people in Washington are underestimating the significance of this kind of a vote. You have 242 new House Republicans and 25 of the 39 house Democrats who voted against Obamacare still in the House.

    So you are going to have upwards of 260 or 265 or 267 people voting against 60 percent, more than 60 percent potentially of the House of Representatives voting against this at this time. I think it gives tremendous momentum of the political case against health care reform.

    BAIER: Juan, there are some in this town who say the vote will be symbolic because it will meet a brick wall in the Senate. However, you have a number of Democrats that are up for reelection in 2012 in red-leaning states or red states, for example, Claire McCaskill in Missouri. Does this pose a problem for those Democrats in the Senate if it passes the House in big numbers?

    JUAN WILLIAMS, FOX NEWS CONTRIBUTOR: I think it would create a problem for conservative Democrats who oppose health care. But the bigger problem is for Republicans who are going to have to explain to the American people that this is their business that they are all about repealing health care and there are so many other issues on the table and Republican votes with the Tea Party momentum could make a difference beginning with jobs in America today.

    So I think Democrats are not only going to say you are involve would in a totally active of political posturing. I think they will say here is the argument for health care reform in this country. We are on the offensive now. Republicans had us on the defensive, and now Democrats say we are delighted to make the case for the American people for individual aspects of the health care plan and get in that fight more aggressively than President Obama was over the past two years.

    BAIER: But there are many Democrats who concede there are big problems with the health care law.

    WILLIAMS: Absolutely. It is not saying that the health care reform plan is flawless. To the contrary, there are big problems.

    CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I don't think Democrats are delighted to engage in this debate. If there is a lesson from the midterm elections, it was that if you are on the wrong side of health care reform and you are not in a safe Democrat district you have a problem.

    The reason the Democrats wanted to end the debate in June 09 and March of 10. They wanted it behind them. And they had the illusion once it was law it would be dead as an issue. The Republicans want to pass this and they should as soon as possible to set the predicate for the 2012 election.

    Health care reform is a sixth of the U.S. economy and it's probably the one area in which the government meets the individual at the most intimate level and is extremely unpopular. One of the reasons Clinton won reelection in 1996 after his debacle in the midterms was because Hillary-care failed, so he didn't have the millstone around him in the election.

    Obama unfortunately from a political perspective, it passed, which means he has to defend it and Democrats have to defend it for another two years. It is increasingly unpopular and the kind of debate Democrats want to have in and of itself and because it is a symbol of this huge expansion of government that Democrats have undertaken.

    BAIER: And we've talked about dual tracks here, the one that Republicans are trying to repeal, one, defund it, two, and then in the courts, the fight to challenge the constitutionality.

    Here is another question -- the debt ceiling increase, the vote that will come sometime. Take a look at the weekend sound on that.

    (BEGIN VIDEO CLIP)

    SEN. LINDSEY GRAHAM, R-S.C.: I will not vote for the debt ceiling increase until I see a plan in place that deals with our long term debt obligations, starting with Social Security.

    AUSTAN GOOLBEE, WHITE HOUSE COUNCIL OF ECONOMIC ADVISORS: This is not a game. The debt ceiling is not something to toy with. If we hit the debt ceiling that is defaulting on our obligations, which is totally unprecedented in American history. The impact on the economy would be catastrophic.

    (END VIDEO CLIP)

    BAIER: What about the fight, the rhetoric versus the reality?

    KRAUTHAMMER: The Republicans have to be careful here. In the end the debt limit will be raised. You can't not pass it. It is catastrophic.  It means American debt is in question. It can't happen.

    So when Republicans make demands on this, they have to have it in the back, if the demands are seen as unreasonable and too far of a reach, Obama could call their bluff. And then the reaction would be to blame the Republicans.  You have to be careful. Neither side wants their bluff called, but it has to be a reasonable request, like a return to '08 levels of spending, or have the Republicans pick 10 programs which they would cut and say we want this cut or we will not raise the debt limit. An example is ethanol, of a cool $6 billion a year every year of waste. 

    BAIER: Juan, Goolsbee was laying the battlefield.

    WILLIAMS: Correct. I think there is an opportunity not just for Republicans but everybody on Capitol Hill to use it as a come to Jesus moment so to speak and say, hey, it is time to be serious about serious cuts in terms of entitlement spending.

    HAYES: I think if you look at what Goolsbee said, it is hypocritical because President Obama as a senator in 2006 voted against raising the debt ceiling and then didn't bother to vote in 2007 and 2008. If it is insane now it was insane then.

    It is a very interesting debate developing. There are members particularly Tea Party types that tie it to a balanced budget amendment of one kind of another. I think there is resistant in each of the caucus and I expect you will see it even beyond what Charles said to something that is institutional and trigger automatic cuts in the levels of spending year over year.

    BAIER: So either way, you're saying the debt ceiling vote provides a backstop to more spending cuts.

    HAYES: They have to use it as leverage, and I think they will use it as leverage, and I think they'll be serious. And I think President Obama has to be careful. He's the president. He has to be careful about not giving into Republican demands.

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