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Special Report

'Special Report' Panel on Progress of Health Care Reform

This is a rush transcript of "Special Report With Bret Baier" from July 8, 2009. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

JOE BIDEN, U.S. VICE PRESIDENT: Folks, reform is coming. It is on track. It is coming. We have tried for decades, for decades to fix a broken system, and we have never in my entire tenure in public life been this close.

SEN. MIKE ENZI, (R) WYOMING: We need to know more about the cost — 70 percent of the people that have insurance are happy with t heir insurance. And we have to be worried about that 70 percent as well as the ones that are run insured at the moment.

(END VIDEO CLIP)

BRET BAIER, "SPECIAL REPORT" HOST: Health care reform legislation is making its way across Capitol Hill, various different types of it percolating across the House and the Senate. The big questions, how much does it cost? How will it be paid for? And will there be a federal public option?

Here's what the White House Chief of Staff Rahm Emanuel told The Wall Street Journal,: "The goal is to have a means and a mechanism to keep the private insurers honest. The goal is non-negotiable. The path is negotiable."

What about that? Let's bring in our panel, Steve Hayes, senior writer for the Weekly Standard, Mara Liasson, national political correspondent of National Public Radio, and Jeff Birnbaum, managing editor digital of the Washington Times.

Jeff, it seems that this White House through Rahm Emanuel is signaling maybe a public option is not a be all, end all.

JEFF BIRNBAUM, MANAGING EDITOR DIGITAL, "THE WASHINGTON TIMES": I think in general President Obama will have to become the compromiser in chief if he is going to get his health reform or something that he can call health reform, and the public option, or which is really a government-run health insurance plan, is one of those things that he may have to compromise on.

He says he prefers that, but Rahm Emanuel, I think, is giving a real signal that he understands that there may not be the votes for it in the Senate, and he may back off.

Now, the president issued a statement from abroad supposedly backtracking on Emanuel's statement, but I really wasn't persuaded by what the president had to say. I don't believe it backed off.

The president is going to have to compromise on the public option. He's going to have to agree to accept some sort of tax increase, even though he says he would prefer not to. He has set out some proposals that would allow a shifting of spending rather than tax increases. I don't think you can get to $1 trillion by doing that.

But even with that, it will be a tremendous ordeal to pass this. And we hear from the Senate today that Senate Majority Leader Harry Reid has said that there's flexibility on the deadline for getting the health reform done by the August recess, meaning all of this may take longer and be more difficult to accomplish.

BAIER: Mara?

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: I think that's right. I mean, the president really wanted a bill out of both Houses by the August recess, and then they could spend the fall in conference committee. The House, I think, will probably pass something, and it will be a liberal version with a public option in it. The White House has been pretty clear. The president has signaled an openness to this non-profit co-op idea instead of a Medicare-style public option. Rahm Emanuel now has signaled his openness to a trigger, in other words, a public option that would only be enacted if certain circumstances were —

BAIER: Let's explain those two things. The co-op means —

LIASSON: It's a non-profit, private co-op. And it wouldn't be run by the government.

BAIER: It could be run by the states or by a group that's outside of government.

LIASSON: Right. And maybe it would have some kind of federal subsidies to get started, but it would not be a Medicare-style public plan.

BAIER: And the trigger?

LIASSON: The trigger is that you set up a public plan, but it wouldn't actually go into effect in unless private plans were proven to not be able to provide enough choices or no coverage in certain regions.

The Medicare Prescription Drug benefit has a trigger. It has never been triggered. In other words, it has never need to have a trigger. Now, the left wing groups and a lot of liberal Democrats want a Medicare-style public option. When Rahm said this to the "Wall Street Journal," they got very upset, and that's why you had to have the president from Europe issue this statement saying I really prefer a public option in his plan. He never said a public option was a line in the sand. He has never said he would veto a bill without one.

BAIER: And he wants to sign something.

LIASSON: He wants to sign something. And, you know, success is "non-negotiable" is the Rahm Emanuel watchword here, and I think that as long as they can get a bill, he will take almost anything that meets his broad, sometimes abstract goals.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: I think that is exactly right. They are now working back, I think, from the political goal of being able to pat each other on the backs and have the White House say we passed this.

This is an accomplishment, something that Democrats can take to voters next fall that the White House will be able to campaign on in 2012. They are working back from that.

But look, from the beginning, I think there were essentially three options in the way that this was going to go. There was going to be a bipartisan bill that would likely not be a strong enough to appease the left wing Democratic groups. There was going to be a largely Democratic bill, or they were going to have to do this piecemeal.

It seems to me increasingly, though, the White House is intent on doing this bipartisan bill, and they're willing to make the kinds of compromises that Jeff and Mara have laid out.

It's also clear, I think, given the fact that Harry Reid said yesterday, apparently gave an ultimatum to Max Baucus saying, look, you need to stop going for Republican votes here. This is not the goal anymore. The goal is to pass a good plan.

With Harry Reid doing that, you have Harry Reid and the White House I think in a certain sense, pulling in different directions, and the White House, I think, is going to have to ultimately make a decision as to where they're going to go with this.

BAIER: And Harry Reid telling Max Baucus, saying maybe you should eliminate the taxing of health benefits.

HAYES: Right.

BAIER: Which is a big deal. How do you pay for it?

LIASSON: Because the thing that's interesting about that — I go back and forth on whether or not I think that is an inevitable part of this bill. Taxing health benefits or capping the deduction on employer-provided health benefits is something that policy experts from across the spectrum will say is a good idea.

This is already a regressive tax. It benefits all the high- income people who get gold-plated plans.

BAIER: Candidate Obama didn't say that.

LIASSON: Candidate Obama didn't say that, but John McCain did.

But it also has been polled to be unpopular, because, and here is why, this is so interesting, people have no idea what their health care benefits are worth, and they are all afraid they will be taxed.

Now, the way that one of proposals that Max Baucus was toying was we set the bar very high, and any benefits worth over $17,000 will be taxed that. Well, that doesn't hit a tremendous amount of people, and he would even grandfather in the unions. If you have a contract with high benefits, we wouldn't touch you for the life of your contract.

But people are worried that it is going to affect him.

BAIER: How much it will cost overall is a big debate as well. You have Henry Waxman in the House saying that the Congressional Budget Office is way off with their estimate of $1.5 trillion.

BIRNBAUM: It is the job of the Congressional Budget Office not to be way off. They are the official scorekeepers. It will be at least $1 trillion dollars. And you can't pass health care or anything major in the Senate without Republican votes. That's the bottom line.

BAIER: Does the president sign something this fall?

BIRNBAUM: No.

LIASSON: Yes.

HAYES: Something.

LIASSON: Yes.

BAIER: We have talked a lot about a possible second stimulus package. What about the money from the first one? Where is it? The panel weighs in on that, next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ROBERT NABORS, OFFICE OF MANAGEMENT AND BUDGET: We have obligated $57 billion.

REP. JEFF FLAKE, (R) ARIZONA: $57 billion, and you say 150,000 jobs have been created. That's some $380,000 per job, where the goal was $92,000 per job.

NABORS: I think that there is a discrepancy of $57 billion to date. I would have to go back and look at when the job creation number was actually calculated.

REP. DAN BURTON, (R) INDIANA: How can you square blowing all this money when it's not creating jobs?

(END VIDEO CLIP)

BAIER: Some of the debate in the committee hearing today about the first stimulus package. The Government Accountability Office reporting that the vast majority of stimulus money spent of the 10 percent that has been spent of the $787 billion so far has been spent on Medicaid and also protecting teachers' jobs.

What about the first stimulus package, and talk about a second? We're back with the panel. Mara, you are shaking your head, no way.

LIASSON: There is not going to be a second stimulus package. There just isn't.

Now, there is some liberal economists and some Democrats in Congress who say there should be one. But the public doesn't want one, because it's really concerned about the deficits. It doesn't want more spending. It wants more jobs, that is for sure.

And there is no appetite in Congress, whose agenda is completely overloaded by the White House for doing that.

Now, as to defending the current stimulus project, that's a real difficult thing for the administration to do because, number one, they said they were going to spend this money very quickly.

Well, only about 14 percent of it has been spent. Unemployment is going up. It is now at 9.5 percent. And don't forget, the administration issued a report in January where its best economists said if we pass the stimulus, we can keep unemployment to 8 percent by this point. And they have been wrong.

And the vice president, you know, had the guts to say we misread the economy, like many other people did. He said that on Sunday, and of course, now everybody has had to walk it back and say no, no, that wasn't true.

But it's really hard. The big critique of the stimulus plan originally was it wasn't stimulative enough. It was packed full of stuff that had nothing to do with creating jobs. Here we have it.

BAIER: I don't know how many stories we did about the stimulus package.

LIASSON: And here we have it.

LIASSON: The GAO says half the money for road and bridge repairs is being used for repaving instead, and most of the infrastructure projects won't get underway until next year — Steve?

HAYES: It's hard to imagine that a bill that spent so much money with so little oversight is actually being misspent. It's really hard for me to figure out how that would happen.

Look, this is a moment where Republicans should be standing with megaphones on every step of the Capitol saying we told you so. This is exactly what we predicted was going to happen, and it is now happening.

And we remember that the mantra at the time was it is not timely, it is not targeted, and it's not stimulative. Well, it's not, and it hasn't been.

The big question I think now for Republicans is how do they best shine the light on the fact that there are Democrats, an increasing number of Democrats who are uncomfortable defending this, because we're seeing all these stories about misspent money. We're seeing it hasn't been stimulative. The job numbers are awful.

Joe Biden is trying to say they misread the economy. It's nice, sort of breath of fresh air, it's Joe Biden candor, but it's also preposterous. They were saying at the time, remember, President Obama was saying and then candidate Obama was saying this is the worst recession since the Great Depression.

So it is a total rewriting of history.

BAIER: So Jeff, the president has to say that he is not taking anything off the table to feel sympathetic, empathetic with the unemployed out there as unemployment rises. But there's no chance of a second stimulus package?

BIRNBAUM: No. There are not the votes in Congress to pass it. There is no stomach in the White House to suggest it, because they know that there aren't enough votes.

I think the president has reason to worry, because he — there is not much he can do here, and yet his poll numbers going down. His job approval rating, when looking at economic matters, are declining because he promised stimulation, and all he has is rising unemployment that he admits will be 10 percent, and experts believe could go as high as 11 percent by the end of the year.

BAIER: Mara, you are so convinced there won't be a second stimulus package. However, if unemployment continues to rise, what does this administration do?

LIASSON: Extend unemployment insurance.

BAIER: And not call it a stimulus?

LIASSON: And not call it a stimulus.

BIRNBAUM: Right, exactly.

HAYES: Well, the other thing they could do, and I don't expect them to do this. They could actually adopt some Republican proposals and do things like cutting taxes, take certain tax-cutting measures that would make Republicans potentially take ownership of some of this, which Democrats would love.

BAIER: But the likelihood of Democrats in this Congress taking Republican ideas —

BIRNBAUM: It hasn't happened. This has been bipartisanship promised and none delivered. And I think that would be the case here.

LIASSON: If they get to the point where they have to do something and they have extended unemployment insurance, and there is no more spending available to them politically, maybe they will do tax cuts.

BAIER: That's it for the panel, but stay tuned for one reporter's very tough assignment.

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