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Special Report

Will Tax Cut Bill Pass House?

This is a rush transcript from "Special Report," December 13, 2010. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

PRESIDENT OBAMA: I recognize that folks on both sides of the political spectrum are unhap py with certain parts of the package and I understand those concerns and I share some of them. But that's the nature much compromise -- sacrificing something that each of us cares about to move forward on what matters to all of us.

So I urge the House of Representatives to act quickly on this important matter, because if there’s one thing to agree on, it's the urgent work of protecting middle class families and removing uncertainty for America's business and giving our economy a boost as we head into the new year.

(END VIDEO CLIP)

BRET BAIER, HOST OF “SPECIAL REPORT”: President Obama in the White House briefing room as the Senate moved to cloture and essentially wrapping up the debate on the compromise plan and the final vote probably expected tomorrow. It was an overwhelming vote 83-15. Senate Minority Leader Mitch McConnell put out a statement right after the vote was finished saying in part this, "We now urge the House leadership to bring this bipartisan agreement to a vote without political gains or partisan changes designed only to block this bill's passage in the House." Going on, "If the House Democratic leadership decides to make partisan changes, they will insure that every American tax payer will see a job- killing tax hike on January 1st."

Let's bring in our panel, Steve Hayes, senior writer for the Weekly Standard, Fox News contributor Juan Williams, and syndicated columnist Charles Krauthammer. Steve?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: An interesting development and probably a larger vote margin than most people thought. I think what I expect to have happen it will eventually pass the House and probably the same version that passed the Senate.

You will try do see House Democrats to something procedure whether it is the same legislation and allows House Democrats who are unhappy with the compromise to vote against it and to be on record to say we have done this and we don't like this and then they will take a vote on the actual substance of the deal which has been the deal since last Thursday and posted on the Internet since last Thursday. It will not be materially changed by that point.

BAIER: You hear Juan, Mitch McConnell saying if anything has changed, this is a done deal. Take a listen to this back and forth between the Republicans and Democrats on Capitol Hill.

(BEGIN VIDEO CLIP)

CHRIS VAN HOLLEN, D-MD.: Our Republican colleagues are going to hold off tax relief for millions of Americans in order to get $25 billion for the 6,600 wealthiest estates.

JEB HENSARLING, R-TEXAS: If they want to bring down this negotiated agreement and explain to the American people why on January 1 why almost every single American who pays income taxes gets a tax increase, fine, they can explain it to them.

(END VIDEO CLIP)

BAIER: They are talking there about the estate tax. That's what the Democrats have the biggest problem with in this compromise deal, the deal that the president and administration made on the estate tax going forward?

JUAN WILLIAMS, FOX NEWS CONTRIBUTOR: The problem with the estate tax deal was the tax that expired and everything was gone and now imposing in a 55 percent and new deal has it down to 35 percent. What I am hearing from House Democrats, you talk about giving away to the store to the rich this really is it.

It speaks of the dynamic that you saw in the cut. Democrats feel that president Obama is negotiating on Republican terms. As a Republican narrative that says you are threatening the economy unless you give tax breaks to people who make more than $250,000. And in fact, if you look at polls, they have shifted with more Americans saying they support the deal.  Previously most Americans did not support giving the tax breaks to people who made more than $250,000.

What you heard from Hensarling there is if this thing gets held up, it will be the fault of the Democrats. And in the current political atmosphere, that's the way it is playing out. House Democrats pulling their hair out because they feel like they are pushed aside by Republicans who had previously been antagonistic to the president but by the president.

BAIER: Charles, Steny Hoyer, the majority leader said today that he expects there will be some tweaks. Do you expect tweaks on the house side? The Senate ping ponging back to the Senate after a massive vote 83- 15. Doesn't that give it momentum heading into the House?

KRAUTHAMMER: I think absolutely. There are no tweaks back in the Senate of any importance. I think what Democrats are going to do; liberal Democrats will do what they did with health care when they bluffed about opposing the bill if there were no public option. In the end of course they supported the bill.

This is also a bluff. There is no way they will undo this with the president on the line and where they will be the ones that is will be responsible if taxes are raised on January 1 and kill the bill over the estate tax.

I think what they will do, they will hold a demonstration vote or two which everyone understands it will be meaningless and they will show that they opposed the estate tax, and then they will have a vote afterwards which includes the compromise on the estate tax and they will support it.

But I must say when you heard those congressmen arguing it sounded like a schoolyard fight in which one said you are holding hostage.  The other said, no, you're hosting hostages. Look, it depends on how you want to look at it clearly neither side is prepared to see the taxes rise on January 1 and that's why you got the so-called compromise, which I am not sure it is it a compromise.

BAIER: Let's assume for a second that it does get through the House. Then the rest of the agenda and Senator Reid, the majority leader in the Senate has already said he wants to keep the Senate in session through the next week up to Christmas Eve here. We still have the START treaty and DREAM Act, the House version, and possibly a standalone bill on "don't ask, don't tell."  What do you think?

HAYES: I think the most likely thing to see the forward move would be the START treaty. It looks like there are the votes there now to pass the START treaty. There has been going back three weeks, was there some kind of a de facto or unspoken deal on top of the deal where Republicans said we will at least allow a vote START if not give you support in exchange for this compromise deal? We don't know if that happened.  Leadership, Senate leadership on the Republican side denies the deal was ever cut and so does the White House.

WILLIAMS: That's the word around town. That is heavy and that's what is antagonizing the house Democrats who think it was more about that START treaty and again why they are so mad at David Axelrod for accusing them of being immoral --

BAIER: You think START gets through, DREAM act?

WILLIAMS: The DREAM act is on the edge because the Republicans there, I think what Steve just told you is exactly right. More Republicans are saying they are amenable to voting in support of START. I have not seen that on the DREAM act.

BAIER: And "don't ask, or don't tell." 

WILLIAMS: Yes, because Collins thinks that she has the votes.  As long as she doesn't feel like Reid is pushing something through, she thinks there are the votes are there.

BAIER: Final word. 

KRAUTHAMMER: "Don't ask, don't tell" could pass if it’s a standalone. START I think it is a deal there explicit or implicit, which I'm not sure is a good idea. Over a 10 percent difference in tax rates for estates do you want to gamble on national security? I wouldn't really be happy with that if that's what happened. But on the tax cuts that's a done deal.

BAIER: And DREAM act?

KRAUTHAMMER: I think it fails. 

BAIER: Do you think Congress will pass the tax rate unemployment deal this week? Vote in our online poll at Foxnews.com/specialreport.

Next up, today's big ruling on health care reform.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

KEN CUCCINELLI, (R) VIRGINIA ATTORNEY GENERAL: This case is not about health insurance, it is not about health care. It is about liberty.  The judge said as much in his order.  By the end of January I expect you will see for the first time in my knowledge over half of the states of the United States of America as parties to a lawsuit against the federal government to reign in their overstepping the boundaries of the constitution.  

(END VIDEO CLIP)

BAIER: Virginia attorney general Ken Cuccinelli speaking about the ruling today by federal district Judge Henry Hudson in which the judge found that the health care law is unconstitutional specifically as it exceeds the boundaries the constitutional power on the individual mandate to make sure that everyone's buys health insurance, saying that is unconstitutional.  The administration saying that this is one of three rulings on this issue. Two of them went the administration's way and one this way.  This appears step closer to the U.S. Supreme Court, of course, as all of these cases go before the district courts. We’re back with the panel.  Charles, the significance of the ruling and what it means in the big picture?

KRAUTHAMMER: This is a really big deal because it is the first time the court supported the idea it is not constitutional because it's a huge expansion of the commerce clause which allows the federal government to penalize you for inactivity and sitting still under the idea of promoting interstate commerce. That is a case that will surely be taken up in the Supreme Court.

It will not get accelerated treatment. That would require that the White House and Cuccinelli together support accelerated treatment in the Supreme Court. It will wait and get there in a year or two.

But I think what's really interesting if you're a conservative is this. What you have in conflict are two principles. If you strike the law down, you are going against the conservative idea that the justices ought to give deference to the Congress and the elected branches and not rule from the bench.

On the other hand if you don't strike it down, you are allowing a huge expansion of the commerce clause and you’re expanding it to the point where there is almost nothing that the federal can ever do that would be ruled unconstitutional.

And that I think undoes the very idea of a limited government of enumerated powers and meaning that the government has a set of powers that it can exercise but they are not unlimited. That's why in the end, the Supreme Court might overturn the law. 

BAIER: Juan, obviously there is another case with 20 states in federal court in Florida. The administration, do you think they are disheartened by the ruling or do you think they expected it? 

WILLIAMS: No, you clearly have previous rulings again in Virginia and Michigan in support of the very principle and everyone is looking to Florida, because there you have a collection of attorneys general making the case against it. But it looks like it will get to the Supreme Court.

But the larger point here, people in place have thought Henry Hudson is a Republican appointee and this was a political position and this is exactly contrary to what we saw in the clip where Steven Breyer held his finger up and said we don't tests the political winds in terms of making --

HAYES: I think when I read his decision; it certainly didn't read like a political decision. I think it was well reasoned. And one of the things coming out of this. He actually makes a serious constitutional case for the principles that Charles articulated, and if anything it gives it further heft. This is a serious guy who makes a very serious argument and gives it additional momentum.

I think the question is will Republicans wisely jump on this momentum and push forward in the beginning of the new Congress and try to run on this. I mean, you have numbers in favor of repeal higher than they have been. You have this momentum and it's time for Republicans to actually do something and try to push hard and early as they can.

BAIER: Charles, the administration and justice lawyers argued in part, and you mentioned the commerce clause, that this mandate is in fact a tax.  If you remember, this is what President Obama said about that in an interview a ways back.

(BEGIN VIDEO CLIP)

OBAMA: For us to say that you have to take responsibility to get health insurance is absolutely not a tax increase. 

UNIDENTIFIED MALE: Your critics say it is a tax increase.

OBAMA: My critics say everything is a tax increase. My critics say I am taking over every sector of the economy. You know that. Look, we can have a legitimate debate of an individual mandate or not.

UNIDENTIFIED MALE: You reject that it's a tax?

OBAMA: I absolutely reject that notion.

(END VIDEO CLIP)

BAIER: He rejected that notion there. Robert Gibbs, the White House press secretary was asked about the argument that the lawyers are making in court. And he said, "Again, I am not a lawyer and I've not had an opportunity to speak on the merits of some of what the judge ruled."  What about that disparity, Charles? 

KRAUTHAMMER: It is the largest disparity imaginable. It's the ultimate hypocrisy. In fact, it's never really in doubt. This is a penalty for inactivity, and that I think every court will look at it. And once it looks at it, it has to decide if that’s within the powers of the federal government.

But just an example of trying to get it to pass politically and doing a pivot, a complete 180 in order to have it ruled constitutional.  What is interesting I think is if you get a court saying, even a lower court saying it is unconstitutional that gives impetus to the popular opposition, and that's the fact that it isn’t only a bad idea but perhaps it's against the American ideal.

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