This is a rush transcript of "Special Report With Bret Baier" from July 21, 2009. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

OBAMA: We are closer than ever before to the reform that the American people need, and we're going to get the job done.

JOHN BOEHNER, (R-OH), HOUSE MINORITY LEADER: Mr. President, it's time to scrap this bill. Let's start over in a bipartisan way. There are some members on the Democrat side that got both arms broken during the cap and trade fight on the floor. Now there are no more arms to break. That's why they're having problems.

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BAIER: There you see the president in a Rose Garden ceremony, another event, the ninth event in as many days, pushing health care reform. You would think there it was between the president and Republicans that's holding this up, but actually it's blue dog Democrats, conservative Democrats. Take a listen.

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BOREN: I think we need to slow things down. I think this is a very important issue that we need to tackle. I've got a lot of folks in my district who are uninsured. So I think what we need to is take our time on this. If it means going into the fall, it means going into the fall.

MIKE ROSS, (D-AR) BLUE DOG COALITION: Before we consider any kind of new revenue, they want us to squeeze every ounce of savings that we can out of the current system. That's what we're demanding.

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BAIER: The House Energy and Commerce Committee scrapped a markup session today and has scrapped it tomorrow.

Where are we with health care reform? Is the president's plan in trouble? Let's bring in our panel, Steve Hayes, senior writer for the "Weekly Standard," Mara Liasson, national political correspondent of national public radio, and syndicated columnist Charles Krauthammer.

Mara, let's start with you.

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: Well, we're down to the wire, and we're running out of time. The House has two more weeks and the Senate has three more weeks, and they have a lot of work to do if they're going to meet the president's original deadline, which was that each House has a bill done by the August recess.

BAIER: Although he has since said that it could slip.

LIASSON: He has since said it could slip. He doesn't say August anymore. Now he says we want it by the end of the year, the whole thing. Originally he said October.

The problem is that this is a war inside the president's own party. And already the speaker of the house and the president have been trying to make amends, or at least make some offerings to these conservative Democrats in the House, and the blue dogs in the Senate. They are people like Ben Nelson and Mary Landrieu.

And what he said is that he wants this IMAC commission — this is something that is very important to blue dogs — an independent commission that would take away from Congress the power to set Medicare reimbursement rates. It became a form of pork. And it would be an independent panel and they would do that.

That doesn't solve the problem of paying for the plan and making it deficit neutral. But it does, the IMAC commission would bring costs down.

Now, the problem on the paying for it side is that the House presented a way to pay for it — raise taxes on people making over $280,000. A lot of Democrats freaked over at that, and now the speaker, Nancy Pelosi is saying, OK, we'll just raise taxes on people who make $1 million, millionaires, that sounds a lot better. OK, if you do that, then where are going to get the rest of the money?

They're really struggling with this.

STEVE HAYES, SENIOR WRITER, "THE WEEKLY STANDARD": Well, and the amazing thing about Nancy Pelosi argument on raising taxes just on millionaires is that it was an entirely political argument. I mean, she was very naked about how she put it. She said I can sell this better. This sounds better. People down the street don't know people who make $1 million, but they might know people who make $280,000. It was an incredibly political argument, which goes back to the point I was going to make about the president. President Obama said the other day, this is not about politics, but it really is all about politics. And as you pointed out in the introduction, his problem is with his own party. And yet the White House has spent the last two days attacking Republicans and attacking Republican strategists. I'm bewildered by the White House strategy on this at this point. It makes zero sense to attack Republicans when Democrats are the ones who he is having these problems with. BAIER: At the same time, the Democratic National Committee is running ads against some of these moderate Democrats in their states — Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Look, it is about politics but it's mostly, despite what Obama also said yesterday, it's about him. It is entirely about him. It's not about cost controls, because all of the plans are going to raise the costs.

It's not about improving quality. If anything, these machinations are going to decrease the quality of American health care. t surely isn't about efficiency. And it surely isn't about efficiency, the inefficiency that has accrued in the health care system as it developed over the decades, because it's going to introduce all kinds of new commissions, new regulations, all kinds of inefficiencies. It is about Obama. This is his signature achievement he has promised. If he doesn't have it, if he doesn't have a bill, any bill, at the end of the year, his presidency is going to be seriously damaged, and all the mystique will disappear, which is why...

BAIER: Sounds like you are saying it is a Waterloo.

KRAUTHAMMER: But therefore it won't be a waterloo. Therefore I'm absolutely sure that at the end of the year, he will have a bill, it will have the words "health care reform" on it, it will be extremely watered down, all of the ballast that the blue dogs were protesting against, including, I'm sure, the public plan, is going to be thrown overboard.

And it will be a very weak version of what we have now, probably even harmless, which will be a great American achievement. But he's going to have something. He won't have it in August, but he will have to have it at the end of the year.

Democrats understand his presidency is over if he gets nothing. BAIER: If that's the case, Mara, and it's much watered down, how tough is that for the left to handle with a president that has a Democratic Congress, House and Senate, and started out with approval ratings in the high 60's?

LIASSON: I think on this one, the left is just fated to have their hearts broken. And the president will tell them all the things they got instead of single-payer or a Medicare-style public option. They got universal coverage rolled out over time. They got everybody to keep their health plans. They won't be denied because of preexisting conditions.

There will be lots of things to mollify the left wing of the Democratic Party if he gets this. There is a lot of struggle... BAIER: A lot of road to get there.

LIASSON: I think that is the least of his problems right now.

I mean, he is negotiating. One thing is that everybody said is the president had to get more involved. He is. He has had the blue dogs up. He has signaled to the Senate that he is open to all sort of different formulations of the public option, including ones that are not so robust. And I think in the end the probably will get something. The danger is if they don't get it by August, they have a whole month for the opponents of health care to go out there and shoot at what they think is going to be in the bill. They need something specific. BAIER: But millions of dollars in ads. The House Majority Whip Jim Clyburn just told our producer on Capitol Hill, "If we can do it next week without consensus or wait a week and do it with consensus, I would rather wait a week." So they seemed resigned that it won't happen up until the August recess.

LIASSON: And maybe they'll stay in. He said wait another week.

BAIER: Yes.

HAYES: This is part of their problem. I mean, I think this is not an original point, necessarily. We have been talking about this on this panel for weeks.

The problem with his plan, the health care plan, like the stimulus, was that if he doesn't rush it through, the more people see it, the less they like it.

You now have a new "Politico" poll that was out today about the public and the public plan, the views on the public plan. It's like 73 percent of Americans think that it won't lower costs. I mean, that is one of the fundamental tenets of his plan, and people think he is not going to deliver. That's a huge problem.

BAIER: We'll hear more from the president, of course, on health care and other issues during his primetime news conference Wednesday night at 8:00 p.m. eastern time. You can catch here on Fox News Channel. Up next, closing Guantanamo Bay is turning out to be a lot tougher than President Obama thought.

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MITCH MCCONNELL, (R-KY) SENATE MINORITY LEADER: The administration's task force on detainee policy has said it will miss its deadline for making recommendations.

It seems premature to announce a closing date for Guantanamo without knowing where these detainees may be sent. The most recent delay is even more reason for the administration to show flexibility and reconsider its artificial deadline for closing Guantanamo.

ERIC HOLDER, ATTORNEY GENERAL: I'm pretty confident — I'm very confident that we will be able to close the facility on the deadline that the president has given us.

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BAIER: Well, the deadline is January 22 of next year. But, as you heard the Senate minority leader speak about it, he wasn't talking about the billboard behind him. He was speaking about the closing of Gitmo, that the administration's review team is missing its first deadline saying it needs more time, another six months to work on the policy, another two months to work on interrogation policy. Where do we stand on Gitmo? We're back with the panel — Steve?

HAYES: Well, I think if you're the White House, you're in trouble, again.

This was an issue that they thought was going to be simple. He thought he could campaign on a policy to close Guantanamo Bay, he could ordered it closed two days after he was sworn in, and it would happen within a year. Well, it turns out that, as the Bush administration struggled with for seven years, this is a very difficult problem. The people in Guantanamo Bay are brad people, almost without exception. You have in some cases some 70 percent of the detainees who have been through some type of terrorist training. There have all sorts of flags that people have looked at these detainees one by one, have identified as being problematic. These are not the kind of people you want to set free. So the problem I think for the Obama administration at this point is now what? You have got six months. You have said you were going to delay for six months. Well, we're supposed to be closed in six months. How are they going to come up with a plan that does that without having made it through the individual detainee review yet? BAIER: Yes, and Mara, today Robert Gibbs said closure means closure, meaning we won't turn it over to something else and have a different name.

LIASSON: Well, no, but those detainees might be indefinitely detained somewhere else. They might not be detained in Cuba.

BAIER: Yes.

LIASSON: One of the things that the president has said is they are looking at indefinite detention. They are getting closer and closer to the Bush policy, but they'll call it something different.

But they said there was a very important distinction, which is if the president does do this, he won't do it by executive order the way President Bush did. He will consult with Congress.

So we're coming to a brand new consensus on Guantanamo that looks a lot like the old consensus.

BAIER: Is this his Waterloo?

KRAUTHAMMER: No. This is his — this is where he hands his sword over to the Bush administration and concedes that he was wrong. Of course, he never will. But, in fact, his deeds, as Mara indicated, will be a concession, because in the end he will end up at the same place as the Bush administration under a different name.

And this comes under the heading of the humbling of a singularly arrogant administration and president, having attacked Bush on interrogation and on Guantanamo for over a year and a half. As president he goes around and grandly announces he will close Guantanamo and he'll stop all of the torture.

And now his own commissions are stuck on this, and they're stuck because, in the end, Obama is going to have to commit what in the eyes of the left, his constituency, is the ultimate crime — indefinite detention.

Khalid Sheik Mohammed is going to die in American custody whether it's in Guantanamo or on American soil, it doesn't matter. And that's going to be under the Obama administration and its successor. And that was the main issue on which Democrats had attacked the Republicans, and now it's going to be a huge concession.

And as Mara indicated, the beauty of this is that we are going to end up with a national consensus. Democrats are going to agree tacitly by action and not in word that the Bush administration had it right, and they will end up with a version of the Bush policy.

BAIER: And politically, does it pay off for Republicans?

HAYES: The politics of this are fascinating. People didn't necessarily love Guantanamo Bay, but it turns out that they like releasing terrorists a lot less.

And you know who had the politics right from the beginning was Mitch McConnell. I remember interviewed him actually two days before Barack Obama was inaugurated, and he said to me, "He can't close Gitmo, and people understand you can't close Gitmo."

And it turns out he was right both, I think, on the policy, but also on the politics of this.

BAIER: Mara, last word. How does it end?

LIASSON: I think Guantanamo has to close, but some other facility will be set up to keep them indefinitely detained.

KRAUTHAMMER: It won't close in January, that's for sure.

LIASSON: No, it won't close in January. I'm with Charles on that.

KRAUTHAMMER: There's no way he'll meet that deadline.

LIASSON: Yes.

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