This is a rush transcript of "Special Report With Bret Baier" from March 2, 2009. This copy may not be in its final form and may be updated.
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PETER MORICI, ECONOMIST: Unfortunately, the Obama administration is continuing the failed policies of the Bush administration. The difference between Geithner and Paulson is like the difference between the sixth floor and the seventh floor at Goldman Sachs.
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BRET BAIER, HOST: That's economist Peter Morici talki ng about the bailout to AIG, the fourth bailout, really, a rescue package today — $30 billion line of credit, adding to the $150 billion already provided by the U.S. government. This as the Dow tumbled today below 7,000 — the lowest since 1997.
Let's bring in our panel: Fred Barnes, executive editor of The Weekly Standard, Mara Liasson, national political correspondent of National Public Radio, and syndicated columnist Charles Krauthammer.
Fred, let's start with you. Overall, the economy, where it stands and this administration's take?
FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: The economy is terrible. And even just AIG, once you start bailouts, it's hard to stop.
But look at how the stock market reacted to that and everything else today, and still the absence of any credible bank bailout plan. We still haven't gotten one.
Look, President Obama's policies in this incredible array of new programs which he has outlined in his budget last week are going to cost a lot of money. And he's going to need a great deal of economic growth to produce the revenues to support them.
And so what is he doing? He has an anti-economic growth policy of raising taxes on exactly the people who produce economic growth: the investors. And he's raising taxes on capital, investors, entrepreneurs, innovators.
And it is incredibly anti-growth. It doesn't work. What he needs revenue-wise, what he needs tax-wise, with what he is doing to the people who would provide that money.
And look, all he has to do is look at Europe. Now, I know the people in the Obama administration dismiss this idea that we're getting like the social democracies in Western Europe, but just look at what has happened over the last 25 years. There they have high taxes, a lot of government and relatively high unemployment.
Here, we've had something quite different. We've had lower taxes. We've had less government and much lower unemployment. And what's the difference in the last 25 years? In the U.S. under Republicans and Democrats, we have created 40 million jobs. And how many in Western Europe? Approximately zero.
MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: I agree with Fred that economic growth is the key for Obama. If he is going to pay for everything he wants to do, he has to have a growing economy.
And I think one of the problems is that he has laid out an incredibly ambitious agenda to solve a whole bunch of problems — whether it's the lack of universal health coverage, he wants energy to be redirected to renewable sources, he want to do something about income inequality, but without having a credible plan to bail out the banks.
All they had was Tim Geithner's placeholder, that kind of outline, concept that he laid out. They can't get the markets to feel confident, that the Obama administration will go in and either let some of these companies go into bankruptcy, if that is what has to happen in some kind of managed way. And we're still waiting for the details.
Right now, it's firm by firm, company by company. It's still pretty ad hoc.
CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I think what's really scaring the markets is a lack of confidence, obviously, in the financial system, but, b, a lack of confidence in the Obama administration.
Looking at last year, they said the Bush administration was running around with its hair on fire, bailing out here and there, without logic, without — extremely ad hoc — it saves a Bear Stearns and lets Lehman go down. It proposes a TARP, a rescue on the basis of purchasing toxic assets. It changes its mind. It ends up injecting the money in banks.
It's running around without a plan and yet, and yet, the system held together.
What was hoped was that there would be a new team, new people, fresh ideas, who have a year — '08 — in which to study and learn what went wrong and would have a plan in place. It is what Obama had said he had, they knew what to do and would do it.
It looks as if they have no idea what to do and they won't.
When Obama had his first press conference, he promised it would be a detailed plan by Geithner the next morning. There was none. The market tanked.
It looks as if this administration is entirely at sea on what to do on the principle element of our collapse — the banks — and they may not have any idea is what is scaring the markets. If they don't, we are all at sea.
BAIER: Mara, you were at the briefing today. Is there a sense, and every administration says that they don't come up with policy by the market, but at what point do they say we need to do something different than what we're doing, or what we're projecting?
LIASSON: I think that if they do something that's decisive and clear, the markets will feel that they know what's going on. Markets react to surprises.
And, of course, they don't want to be judged by every one-day dip in the market.
But I do think that the bank bailout plan is still a work in progress. They haven't finished it. They need to do that. Geithner basically said "I'll be back when I have details." And it's been a number of weeks, and he still hasn't come back.
KRAUTHAMMER: And remember, the election was four months ago. This administration was essentially in power, at least partially so, during the transition. It was the earliest sort of accession to power ever. You had Obama giving a speech on economics even before he was sworn in.
So they have had now, four months, and the market has gone down almost 3,000 points in that interval, and yet it still has no idea.
I agree with Mara — any announcement, any plan, any outline, I think, will have an effect. But announcing that we will have stress tests is doing nothing.
BAIER: The DOW is down 38 percent since September of last year. Last word, Fred?
BARNES: It's down 1,400 points just in the 40 days since Obama has been president.
He has to do more than just be credible with the banks. He has to have a plan that's going to promote economic growth, not suppress it.
BAIER: President Obama announces his candidate to lead his healthcare reform effort, and says she can bridge the partisan divide.
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MITT ROMNEY, FORMER PRESIDENTIAL CANDIDATE: A big government takeover of health care is the next thing liberals are going to try, and it's the last thing America needs.
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BAIER: The FOX all-stars give us their take on health care after the break.
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KATHLEEN SEBELIUS, HHS SECRETARY DESIGNATE: This isn't a partisan challenge. It's an American challenge, and one that we can't afford to ignore.
This election was a vote for change. And nowhere is that change more important than in reforming the healthcare system of America.
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BAIER: The new nominee for Health and Human Services Secretary, Governor Kathleen Sebelius at the White House today. What does this tell us about health care as an issue going forward for this administration?
We're back with the panel. Charles, what about Sebelius and where this issue goes from here?
KRAUTHAMMER: The Obama administration has made it a central issue. You heard about it in his address to the joint session of Congress, prominent in the budget. He's going to have a healthcare summit at the White House on Thursday.
What's odd to me is that the economic system, the economy of the country, and the financial sector is essentially on fire.
And what he is doing, and he did this in his speech he made, is to pretend that the reason for our economic difficulties today is deficiencies in health, education, and energy over the years and neglect of those, and that he is going to cure our problem by nationalizing health care, cap and trade on energy and by federalizing education.
This is a complete non-sequitur. You may want to do energy education and health, but this is not the cause of our problem. It isn't the cure of our problem. And the fact that he is putting all this energy on this and doing nothing on financials is scaring the markets.
LIASSON: You know, I don't think that it's nationalizing healthcare.
What he does argue is that it's a tremendous fiscal problem, that the rate of increase and the cost of health care is causing tremendous problems for entitlements, it's for our economy, it's a crippling fiscal problem.
And that's why he is selling this plan unlike the way the Clintons sold their plan, which was as a moral imperative — we have to cover all these people. He is saying if we don't do this, our economy will never be able to recover, if we don't bring health care costs down.
And that's what he is trying to do with part of this, the reforms he has in his budget, capping payments for Medicare, cutting subsidies elsewhere.
He has also proposed, I think, a more minimalist approach than the Clintons did. You can keep your healthcare if you have employer health care. Maybe there might or might not be an individual mandate for children, not for everyone. It depends on what Congress writes.
And he is leaving the bills more or less to congress. He is not coming with some kind of Rube Goldberg thing that he is going to try impose on them.
I think this has a better chance of passing than the Clinton plan did. He has a lot more stakeholders on his side this time. Wal-Mart is inside the tent instead of outside the tent. So are some of the insurance companies.
BARNES: Yes, they just want to get a better deal, because they are going to want to shuck all their health care expenses. That's why there will be a government health insurance plan that anybody can get in.
And so what are businesses going to do to get rid of their healthcare costs? They are going to raise the premiums on their employees and so on, so we will be more attractive for them to go in the government plan. I think that's what Charles was talking about. It will be gradually nationalized.
I think the problem in the first place is simply that Obama wants to cover more people, and he wants to do it at a lower cost, and, as a result of that, everybody will get better health care. I'm afraid it doesn't work that way. It's just impossible.
And even Kathleen Sebelius, who seems like a very nice woman, and didn't get health care stuff through in Kansas Republican legislature — obviously would have a better chance up here. But the one thing I don't understand — why let Congress write this? That's what happened with the stimulus. It didn't turn out well.
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