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Special Report

'Special Report' Panel on Fate of Government-Run Health Care

This is a rush transcript of "Special Report With Bret Baier" from September 29, 2009. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER, D-N.Y., SENATE FINANCE COMMITTEE: If the private in surance market is serving America so well, they have no public option to fear. If they're serving it poorly, the public option will force them to serve better. So it's a win-win.

SEN. CHUCK GRASSLEY, R-IOWA, SENATE FINANCE COMMITTEE: Slowly, but surely the government plan wo uld take over the market. Eventually all the promises about creating a level playing field have been broken, and we would be left with a single-payer government-run health insurance program.

(END VIDEO CLIP)

BRET BAIER, HOST: Well, some of the debate today in the Senate finance committee over two specific amendments about the public option. This is the government-run option that was trying to be inserted by Senators Chuck Schumer and Jay Rockefeller, both Democrats. Both of those amendments failed.

Here is how the latest polls stack up on the public option: The latest Rasmussen poll, do favor or oppose the public option? There you see how it stacks up. It continues to go down, 41 percent favoring now.

Let's bring in our panel about this and the status of health care reform legislation: Steve Hayes, senior writer for The Weekly Standard; Nina Easton, Washington bureau chief of Fortune magazine, and syndicated columnist Charles Krauthammer.

Nina, how about this debate today? One amendment failed with five Democrats opposing, all Republicans, the other one, three Democrats voted to kill the public option. Is it dead?

NINA EASTON, WASHINGTON BUREAU CHIEF, FORTUNE MAGAZINE: And one of those was Chuck Schumer sort of eased the pain of the amendment. He tried to soften the blow of the public option and it was still voted down.

I think the lead out of this is that you are not going to get a public option through the Senate without changing the rules of the Senate to just have a 50 percent vote, because what's going to happen is —

BAIER: The nuclear option reconciliation.

EASTON: The nuclear option reconciliation.

But what's going to happen is if you pass this through the Senate without the public option, though the Senate, it will go to conference in the House. There will be a public option in the House bill — we know that.

The liberals of the party are not going to stand down on the public option. It's going to come back to the Senate. And, you know, Democrats today clearly indicated that they are not going to vote for a public option, even after it has gone through conference.

BAIER: Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: The public option is dead. We have been saying it over and over again. It is a dead parrot.

BAIER: Was today the end?

KRAUTHAMMER: I think the parrot was nailed to the stake. When you have a three-vote majority, and you lose by five, and you know that there are a lot of Blue Dog Democrats in the House who are against it — it will pass in the House, but in the Senate it doesn't have a chance.

What I don't understand is why it is so important to the liberals. They can dangle the public option and drop it at the end, because if they do what I suspect they will do, which is to heavily regulate the insurance companies where they decide what monies are coming in and what monies are going out, by regulating if you can use preexisting conditions, for example, and by mandating individuals have to buy insurance, which will create a revenue stream, the government is going to control the insurance companies the way it controls utilities.

They're going to turn the insurance companies into utilities like AT&T in the past, and essentially insurance companies are going to have to go to government for rate hikes.

So if you can have the government-run health care through the guise and disguise of so-called private insurance, why do you need a public option? I think it's a lot easier to go around all this and simply heavily regulate insurance companies, which will produce government-run health care.

BAIER: Steve, some Republicans are saying, listen, if you're going to talk about the competition, and that's the bottom line to try to drive costs down, then why not allow across state lines health insurance companies to offer plans?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Well, look, there are all sorts of different kinds of proposals that we have seen from Republicans — both in the House and Senate — that would I think genuinely enhance competition.

The idea that that creating a public option, creating this government-run insurance body, would enhance competition is fanciful. It has always been fanciful. It doesn't work. The government is not there to create competition. The government is there when it intervenes in the free market to squelch competition.

The idea that this would end up creating more competition, I think, is false and what Charles Grassley said, this is likely just a step along the path to single-payer, is exactly right.

EASTON: I was just going to say, the other thing that developments in the last 24 hours have shown us is the president came in saying we have to control costs in the health care system, and you know, it's not only — it's a burden on taxpayers. It's a burden on business. It's a burden on people. We got to control costs.

And what we're seeing is shifting of costs instead. So we're going to expand Medicaid and shift the burdens to the states, who are going to have to cover those folks.

Senator Harry Reid has put in an exemption so that he protects his state of Nevada. He doesn't have to do it. He gets full coverage from the feds.

And then today Senator Kent Conrad raised the possibility of hospitals closing down in his state in a rural state because right now Medicare is subsidized basically by private insurers. They don't get enough money from Medicare to stay open. So if you put in a public option paying Medicare rates, his hospitals couldn't stay open.

So you're not controlling costs. You're just shifting the burden.

BAIER: Charles, when you come down to it, if you take out all of the controversial things that we have focused on, you take out the public option — the government-run plan — you take out immigration questions, you take out abortion, you take out death panels and all the legislation, there is almost still a $1 trillion bill that cuts $500 billion from Medicare and Medicaid and there are questions about how it is going to be paid for.

KRAUTHAMMER: The president had talked about waste and abuse in the $500 billion. Anybody who believes that will believe anything.

You cannot cut half a trillion out of Medicare and promise that you won't touch a hair on the head of a senior. Everybody understands it is a phony argument.

There will be paper regulations about mandating cuts in Medicare. We already have them in legislation from the late '90s where there's an outside committee which recommends the cuts in Medicare. In the last six years, every year, the Congress has waived these cuts and none of them have been instituted.

So we know it's not going to happen and we know that no government is going to cut senior care. What it's going to do is expand the deficit.

BAIER: All right, we have done this 100 times, but down the line, is there a consensus bill that actually passes both houses?

KRAUTHAMMER: Yes. The Congress will pass something because the president will sign anything.

EASTON: I was told by White House officials 60/40 percent chance that they will go with reconciliation in the Senate. So I think there is a good chance they will change the rules and get through the public option that they want.

BAIER: And the bill would be the Senate finance bill?

EASTON: It would have a public option. So no, it wouldn't be exactly that.

HAYES: I would be shocked if it had the public option and it passed.

If the president signs on to a bill that goes through reconciliation, I think he will be in serious political trouble because he ran as a candidate opposed to budget gimmickry and that would be sort of the mother of all budget gimmickry.

BAIER: Well, many believe President Obama is trying to move America to the political left, much of Europe is going in the other direction. We will look at the conservatives' win in Germany when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ANGELA MERKEL, GERMAN CHANCELLOR (via translator): We have achieved something great. We have managed to achieve our election aim of a stable majority in Germany for a new government.

SIMON TILFORD, EUROPEAN ECONOMIC EXPERT: There is a constituency in Germany that wants reform, that wants lower taxes, that wants to see a more deregulatory agenda.

(END VIDEO CLIP)

BAIER: German chancellor Angela Merkel had an impressive election victory on Sunday in Berlin. Her center-right party won, and she campaigned on lower taxes and a deregulatory agenda, as you just heard right there.

As you take a look at their campaign pledge, Germany wants to take the tax rate there from 45 percent down to 35 percent, compared to the U.S., we're at 35 percent, the highest rate there, up to 39.6 percent after the Bush tax cuts expire in 2011.

We are back with the panel. So, Charles, is everyone else going right?

KRAUTHAMMER: We're headed left into a kind of a social democratic model. Obama wants government involvement in health care and energy, et cetera. The Europeans who have lived under it for a few decades are moving the other way. They have seen it and they don't particularly like it.

In Germany, what was so interesting is that the big winner was a third party — the free Democrats — who are historically almost Anglo-Saxon. They were very much for the free market, lower taxes, and regulations. And they tripled the amount of their support.

The Christian Democrats of Merkel actually lost about 8 percent, but in coalition they had a majority and will have a strong stable center-right, the government that will try to deregulate.

The really interesting story is the Social Democrats. The socialists were massacred, the lowest total since the Second World War, and they are in the wilderness for a long time.

So what you have is Germany, France, Britain, the big three, all rejecting socialist parties. In France, of course, the socialists are reeling in disarray. And in Britain, the Labor Party today in a poll is running third. It isn't even running second. If you had an election it would be destroyed.

So what you have is interestingly Europe moving left, enough experience with socialism, and America is sort of undecided.

BAIER: Nina?

EASTON: I hate to throw too much cold water at Charles, but I will. I think before you get too excited about her new government, she also ran — she sort of stole the left clothes and left them without a script, as one commentator put it.

She came out in the financial crisis, she came out attacking big bonuses. She called for more international regulation of banks, and so on. She in the past has supported public service, boosting the pension, sorry.

And so I don't think she is — and she's a very cautious politician. And yes, they want tax cuts but they're also facing a large deficit there...

BAIER: So you don't see a major shift in Germany or elsewhere?

EASTON: I'm on a wait and see.

HAYES: I think it is a shift, but it is a gradual shift. And it's all relative, too. I mean, being a center-right government in Europe is a lot different than being a center-right government in the United States.

In France, a center-right government in France is in power right now and yet 70 percent of people in France support President Obama or approve of the job that he is doing.

So it's a very different — it's a very different thing. I don't think free-market types should go popping champagne corks quite yet.

The far left in Germany also gained in this recent election. So I think what you are seeing more than anything is a more dramatic polarization of the electorate, which is something that is familiar to those of us here.

KRAUTHAMMER: I would just open a beer on this one.

(LAUGHTER)

The winner in Germany, the Free Democrats, the Social Democrats, Merkel declined, in part because of her tie to socialism.

The improvement from 4 percent to 14 percent of the free Democrats is astonishing, and it will result in less regulation and taxes.

And look, the trend of the big three, of course, it won't end up like America, but it is a trajectory, it's a trajectory right as we are apparently headed left. We will cross somewhere around midfield, I think.

HAYES: But the Free Democrats, I would say that they are more akin to our Libertarian Party. They are certainly very free market on economic issues and then push for much dramatic cuts in regulation, dramatic cuts, far more than Merkel has.

But they are also on social issues are far more to the left of where, you know, conservatives here would be.

BAIER: So quickly, does any of this affect how the Obama administration deals with these administrations that appear to be going right?

EASTON: I think if you look at Afghanistan, at least it is good news for the president. He has got the support of the Merkel government on that front. So I think on that front...

KRAUTHAMMER: Sarkozy and Merkel are very pro-American. Given the history of their countries, it is going to help us in whatever we try to do.

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