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Transcript: Sens. Bayh, Coburn on 'FNS'

The following is a rush transcript of the April 12, 2009, edition of "FOX News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: Well, on this holiday weekend, there is some good news on the economy but continuing concerns about rogue nations pursuing nuclear weapons and pirates hijacking ships.

Here to talk about it are two leading senators — Evan Bayh, Democrat of Indiana, who joins us in studio, and Tom Coburn, Republican of Oklahoma, who's in his home state.

And, Senators, happy Easter and welcome to "FOX News Sunday."

SEN. EVAN BAYH, D-IND.: Thank you, Chris. Happy Easter to you.

WALLACE: Thank you.

SEN. TOM COBURN, R-OKLA.: Thank you, Chris. Good to be with you.

WALLACE: Senator Coburn, let me start with the economy. President Obama said Friday that he's starting to see glimmers of hope about the economy.

Senator Coburn, do you? And are the Obama policies starting to work?

COBURN: Well, I think nobody knows. The hopeful sign would be that we would be successful in stopping the decline and starting the growth. Nobody knows the answer to those questions.

We still have major problems in front of us. But our hope is — is that that's accurate.

WALLACE: Senator Bayh, do you see glimmers of hope in the economy? And to what degree can you attribute it to the Obama policies starting to kick in?

BAYH: Chris, there are some signs that perhaps the worst is almost behind us. Retail sales ticked up. Refinancing of mortgages increased.

Most encouragingly, some of the banks, which as you know have been hard-pressed, are starting to report they're making some money. And the real key to getting this behind us is for them to start lending to businesses and individuals once again.

So my bottom line is — is there any reason to stop, you know, acting aggressively? No. This is going to take longer than we would like. There's no magic answer. But there is some reason for hope.

And you know, to the extent confidence is important, which — I think it does play an important role — the Obama policies have helped to buttress that.

WALLACE: Senator Bayh, you were one of only two Democrats to vote against the Obama budget, and you have started to form something called the Moderate Democrats Working Group.

Is Mr. Obama going too far not only on spending but also in government intrusion into the private sector?

BAYH: I've been a fiscal conservative throughout my career, Chris. It's nothing personal to the president.

One year when I was governor, I vetoed the state budget even though it had been passed by members of my own party because I thought it was out of balance and spent too much, and I voted against several of President Bush's budgets because thought the deficit and the debts were too large.

So in the short run, I agree with the president. We do need to stimulate the economy. The government needs to step in. Even conservative economists agree to that.

In the long run, I think the deficits and the debt are too high. We need to get those under control. So that was the reason for my vote there.

The moderate working group is simply a collection of individuals from different parts of the country who care about fiscal responsibility, economic growth, and we would like to make our voices heard, working with the president, as a positive force to get this country heading in a better direction.

He inherited some real problems, as you know, fiscally and economically. We'd like to help him solve those.

WALLACE: Senator Coburn, you go much further. First of all, you have a nickname around Washington, Dr. No, for your opposition to government spending, and I want to put up on the screen something that you wrote recently, Senator.

You said, "I believe President Obama has proposed the most significant shift toward collectivism and away from capitalism in the history of our republic."

Question: Where do you see the president taking this country in terms of government's role?

COBURN: Well, I think he intends to expand it, and there's nothing wrong with having the philosophical debate about which way is best.

The question is — is are we efficient as a government, are we making any of the hard choices, and are we sacrificing rather than transferring the sacrifice to the next generation?

You know, if you move health care to the — to the public sector, which — all the plans that are out there, other than truly making a competitive health care system — we'll eventually move that to government control.

And I would just posit that we're very inefficient as a government in accomplishing anything. And when we move more things to the control of the government, we're going to spend a whole lot of money.

Second point would be that the problems that we have today — moving it to government control transfers a cost, a generational cost, to the generations that follow us that is going to be tremendous and unsurvivable. We cannot carry the load.

So we're not making any of the sacrifices for the — that we should be making today in terms of spending cuts, refining programs, efficiency, eliminating waste (inaudible). There's over $300 billion a year in pure waste and fraud in the federal government.

You haven't seen any action on that anywhere in terms of the Congress or with the president yet.

WALLACE: Senator Bayh?

BAYH: Chris, I think we need to separate the short run from the long run. The Chamber of Commerce, the manufacturers association, many groups that aren't for, you know, socialism in this country called for federal action to stabilize the financial system and supported the president's stimulus plan because of the nature of the crisis that we're in.

So in some ways, to keep, you know, thousands of businesses from failing, millions of people from being thrown out of work, some action in this moment of crisis was called for. That's in the short run.

In the long run, though, we've got to start unwinding some of these things. We don't want the government in the business of owning our banks. We don't want the government intruding any more than it has to in the private sector, so we've got to start reversing some of this once the momentum is in the economy to grow the economy once again, to stabilize situations.

And I do agree with Tom — when it comes to health care, we don't want socialized medicine, but there is an appropriate role for government to expand coverage, to make it more affordable for people who don't have the means. That actually enables the private sector to meet the challenges that face the country.

WALLACE: Well, let's talk about that specific area. And we should point out to our viewers that — Senator Coburn, you're not only a senator. They'll be much more impressed to find out that you're a family doctor who's delivered thousands of babies.

Is there a compromise out there that can cut costs, that can expand coverage, without turning health care into a government program?

COBURN: Absolutely. We'll be introducing a bill that will actually lower the percentage that we spend on GDP — or GDP on health care, and we do it. We don't need more money in health care. What we have is a very inefficient system, and we haven't allowed market forces to allocate resources.

We also haven't emphasized prevention. Three-quarters of the money that we spend in this money are on five chronic diseases that are preventable.

If we really want to improve access — and I think everybody should have access — and control costs, then we need to emphasize prevention, and we need to have real market forces. And we don't have that today. And that's one of the reason that everybody wants to see us change it.

But the ultimate plan, a public plan, ultimately results in a Medicare program for everybody. And that is exactly the opposite way.

One other point I'd make — we spend twice as much on health care as any other nation in the world with the exception of Switzerland, and we — and we have great physicians, great care, great hospitals and great research, but we can't afford to continue to spend 17 percent of our GDP. And the Obama plan moves it to 19 percent.

So we don't need more money. What we need is true markets that will allocate this resource and create a way for everyone to have access.

WALLACE: I want to bring Senator Bayh in.

And I want to ask you — because there really does seem to be momentum, bipartisan momentum, and even from the industry, from health care providers, from insurance companies, to do something this year about health care reform.

But the one big concern a lot of the private sector has is the president, in his program, has as a — supposedly as a provider of last resort a government program, and the concern is they'll be able to do it so much more cheaply, or at least in terms of the cost, that everybody will end up in the government program.

BAYH: Well, it's a debate we need to have, Chris. And I'm agnostic on that as we sit here this morning. I think in the Medicare Part D — to use plain English, the drug program for senior citizens...

WALLACE: The prescription drug benefit.

BAYH: ... there was a provision that some people were concerned about that allowed the government to step in and offer that coverage in areas of the country where private — you know, the private sector did not step forward and offer the coverage.

So it has not had the kind of adverse impacts that some had been concerned about. We need to have a debate about that.

My own preference would be — and you may have found common ground here this morning on Easter, which is appropriate — deal with the inefficiencies, figure out a way to make the private marketplace accomplish our public good, only have the government role as a backstop, as a last resort, if the private sector has just failed to meet the challenge.

WALLACE: Let's move on to a subject that I did not expect to be discussing today, gentlemen, and that is pirates.

Senator Coburn, how should the U.S. respond not just to the hostage standoff involving that one poor unfortunate American captain, but also to the larger problem of criminals taking advantage of the chaos in Somalia to threaten one of the world's major shipping lanes?

COBURN: Well, I think you're seeing the military move a lot more resources to that area. And I think we're going to have to be much more aggressive as we channel that.

But we can't do it by ourselves. We're going to have to have the rest of the world commit resources so that we can patrol and control that.

The other thing is — is that you have to — you have to have a tough approach, which means you have to be strong. We're not going to give in to blackmail, and we're not going to allow them to continue to do what they're doing.

So that's going to require tremendous increase in resources. But it can't be just us. It has to be everybody, because everybody's affected by it, but — which leads to the situation — is there's chaos in Somalia. And how do we solve that?

We made an attempt and withdrew. We just had the Ethiopians that also withdrew. So it's another one of the difficult situations in the world where we can't, by ourselves, control it. We need to work with others.

WALLACE: Senator Bayh...

COBURN: And that's one area where I compliment — I would compliment the president — is I think his outreach in terms of foreign policy has been tremendously positive.

WALLACE: Senator Bayh, you are both — you and Senator Coburn — on the Senate Intelligence Committee. Do you know of any links between these pirates and Islamic terrorists, any sign at all that they're using the multi-million-dollar ransoms they're getting to finance Islamic extremists?

BAYH: Well, Chris, there are published reports that there have been some loose ties between — well, al-Shabab — that's a different group. The pirates? No, not the pirates. Al-Shabab, which controls some part of the country — there is some loose ties there — no evidence that they're planning attacks on the U.S. But the pirates, no.

And I kind of — I agree with what Tom was saying. I think a tough approach is in order here. What was it — Thomas Jefferson, dealing with the Barbary pirates of his day, said millions for defense, not one dime for tribute. And I think that's a pretty good philosophy to follow.

WALLACE: So what does that mean in a practical sense in this standoff?

BAYH: Well, once we've resolved the situation with the captain — we don't want to imperil his life — we've got to make them pay a price for this kind of activity that is larger than the ransoms they're extracting so they'll discontinue it.

In the long run, though, Chris, this shows when you have a failed state — there's no government in Somalia capable of controlling that coast — that leads to all sorts of problems, whether it's the Taliban in Afghanistan or these pirates in Somalia.

So we've got to try and foster some forces of control and governance there, because ultimately we can't run these countries for them.

WALLACE: But you're certainly not talking about going back into Somalia, are you?

BAYH: No, no. I'm talking about helping responsible elements — and they're hard to find — within Somalia, eventually have a government there that's capable of controlling its own territory so we don't have to.

In the time — in the meantime, we may have to take some punitive action against these people after the captain is released to send a pretty clear signal you take an American vessel hostage, you're going to have some real problems.

WALLACE: Senator Coburn, let me turn to another foreign policy subject. You point out that President Obama has been reaching out to other countries. He certainly has reached out to Russia and China to try to help pressure Iran and North Korea to stop their nuclear programs, but so far that doesn't seem to be working.

Senator Coburn, what do we do now? And how much more time do we have before these countries, especially Iran, acquires a nuclear weapon that we'll be unable to take out?

COBURN: Well, I think there is some movement at the United Nations — I think I heard this morning or late last night that it will come before the Security Council Monday — that will toughen the sanctions on North Korea.

Talk isn't going to do it. It has — there has to be consequences. And there's ways for us to make it very painful for Iran. They only produce about 30 percent of their consumable gasoline, and yet some of our allies continue to supply them with refined distillates.

There ought to be a price for what they're doing and their continued progress — I'm talking about Iran — in terms of trying to develop enriched uranium.

And doing what we've done in North Korea has not been highly successful since we've seen three launches in the last three years of long- range missiles. So there has to be significant sanctions on North Korea, and that can be stiffened as well.

WALLACE: But of course, the problem is aren't — and I know you're planning to introduce some new legislation on sanctions. Aren't we kind of sanctioned out, the United States?

BAYH: Well, we haven't — the sanctions have not had much teeth. We've done some things in the financial arena to cut off their access to the global banking sector.

But as Tom pointed out, Chris, their real vulnerability is the import of refined petroleum products. And Senator Kyl and I, Republican from Arizona, are going to be introducing legislation to really crack down on companies doing business with Iran, to increase the cost of that business, to drive up the price of violating these sanctions on the part of the Iranians, and perhaps to cause some domestic concerns within Iran.

So I'm a little skeptical about whether that will work in the long run, but we've got to try it, and we've got to mean business, and that's where the president's diplomacy helps, because ultimately we need the cooperation of Russia, China and Europe to make it — to make it work.

WALLACE: Now, you're talking about sanctions on energy companies that sell petroleum, refined...

BAYH: Into Iran, and...

WALLACE: Are those American companies or are those...

BAYH: ... and on insurance companies that insure the tankers — I mean, across — there are things we can do, Chris, to substantially increase the cost to Iran.

WALLACE: Are those...

BAYH: We need to do that, and we need to do that now, because the clock is ticking.

WALLACE: Are those American energy companies, or are we talking about foreign companies? And are we going to get in trouble with our allies if we do that?

BAYH: Well, they're primarily foreign. Some of them do business in the United States. And we've got to make them choose. Do you want to be on good terms with the United States? Do you want to do business in America or do you want to continue to enable this kind of irresponsible behavior on the part of Iran?

We've got to crack down now, because if we allow things to just continue the way they're going, we'll wake up one morning and they will have a nuclear weapons capability. And at that point, Chris, as you point out, with regard to North Korea, your scope for acting is a lot more constrained.

WALLACE: Senator Bayh, Senator Coburn, we're going to have to leave it there. I want to thank you both for sharing a part of your Sunday with us.

BAYH: Good to be with you.

WALLACE: Thank you, gentlemen. Happy Easter.

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