This is a rush transcript of "Special Report With Bret Baier" from August 12, 2009. This copy may not be in its final form and may be updated.


PRESIDENT BARACK OBAMA: We have the AARP onboard because they know this is a good deal for our seniors. AARP would not be endorsing a bill if it was undermining Medicare.

JOHN ROTHER, AARP: On behalf of our members, I think it's important that we continue to say in public and to the president, no, we have not yet endorsed it.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: They have been supportive of comprehensive health care reform for a long time. They have not, as they said, endorsed a specific piece of legislation.

QUESTION: So you weren't trying to mislead anyone?

GIBBS: No, no.

QUESTION: You just misspoke?

GIBBS: Right.


BAIER: He just misspoke in that town hall in New Hampshire according to the White House press secretary. The president and his pitch — what about the fact checking of the president, as the White House wants to fact check all the fishy statements about health care reform?

Let's bring in our panel, Steve Hayes, senior writer for the "Weekly Standard", A.B. Stoddard, associate editor of "The Hill," and Jeff Birnbaum, managing editor digital of "The Washington Times."

Well, this was about the AARP and whether in fact the group endorsed or did not endorse, and of course they haven't yet. Jeff, what about the president's pitch and fact checking what he is saying on this stump?


Let me just explain. AARP is the most powerful organization in policy sense in a political sense in the country. The only rival might be the National Rifle Association.

The AARP is second in size — in any organization in the country to the Catholic Church. It can, if it wants, kill health reform. And it remarkable to me that the AARP, which has been working so closely with the White House and the Democrats, actually made the statement slapping back the president on his mistake in New Hampshire.

This was a very big deal. They monitor closely their members and their views, because they nearly had a catastrophic situation in the 1990's when they backed catastrophic health care on Capitol Hill and their members hated it, and they still went ahead and pushed for it. And they vowed never to make such a mistake again to defy their members. And so it's clear to me their members are now telling them in their own polls they don't like what they see, and this is a real problem for health care reform.


A.B. STODDARD, "THE HILL": Well, the interesting this is the AARP was helping several days back to debunk this myth that these optional consultations that would be paid for if you wanted one about end-of-life care were not, in fact, a plan to use euthanize seniors, and they were taking many calls from their member, seniors, and telling them it was a flat-out lie.

Throughout this process, many stakeholders, as they are called, have been at the table. And once again, I will repeat myself, the main problem for President Obama in selling his health care reform is that he doesn't have a plan that he's selling. It is fluid.

So stakeholders now, as the rhetoric pivots from now beating up on insurance companies or the bogey man before it was necessary to economic survival and ultimate improvement, as he shifts in his message, you see — and the proposals themselves are fluid, you see the stakeholders leaving the table.

And he needs to keep them onboard desperately whether it's the AARP or PhRMA, the drug industry, or the insurance companies.

STEVE HAYES, SENIOR WRITER, "THE WEEKLY STANDARD": Well, this was the problem with it from the beginning, I would argue, was that the reason he was able to bring these stakeholders — and let's call them what they are, special interests — to the table was because he wasn't specific. He wasn't saying which of these proposals that might drive them away from the table that he was actually going to embrace.

Now that he is being forced to do that, because these things are appearing in legislation, it is making him nervous.

And there was a very interesting aside that I think very few people picked up on yesterday when the president talked about this deal that essentially the White House cut with the big pharmaceutical companies in which essentially the pharmaceutical companies agreed to savings of $80 billion and the White House brought them to the table and essentially said we won't cut more.

Well, the president said yesterday said in an aside, we may go beyond that. And I think that got people on Capitol Hill, their ears perked up. I think certainly the pharmaceutical industry representatives in Washington, the lobbyists here are nervous about that.

And the question is, can he keep all of these people at the table at the time he starts to embrace specific proposals? I think it's tough.

BAIER: You're special interests if you are not at the table, stakeholders if you are.


You mentioned end of life issues, and one of the concerns that people have that I hear is something that the president talked about in that town hall meeting about his grandmother who was diagnosed with cancer and then she broke her hip and had to get a hip replacement. There you see his grandmother, a picture of her. He told "The New York Times" magazine this, "So that's where I think you just get into some very difficult moral issues. But it's also a huge driver of cost, right? I mean, the chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care bill out there." You know, he said that if somebody told him his grandmother couldn't get the hip replacement and she was going to be in pain, he would pay for it. It just raises questions, whether it's mandatory or not in that bill as it's written where it heads. Am I right?

BIRNBAUM: You're exactly right. And it raises the specter of government telling people what they can or cannot do.

Now there is more flexibility, they think. Most people don't like that the insurance companies are telling them what can be paid for, but they certainly don't trust that government will tell them anything better.

And so I do think that this is a serious problem that he has in part because he is talking about these issues.

Why he is raising this issue is very hard for me to understand, because it's not anything that is going to benefit the health care plan that he is pushing, whatever that is, talking about end-of-life issues, scaring seniors. The last group that he should be scaring are seniors.

HAYES: But he has to raise these issues precisely because they account for so much of the cost of these proposals and these expenditures.

BIRNBAUM: You know what this reminds me of? It reminds me of Bill Clinton, really, who is willing to talk about almost anything. And Obama is, in his overexposure, I think has been talking about everything.

He needs to have a discipline to talk about just the things he says that need to be in the plan. Covering everybody is something that he isn't talking about as much.

HAYES: He should be talking about all of this stuff more, because when he does, people understand what the issues will likely be after this passes.

STODDARD: I think it's time to kill the public option, finally come out and do it. He knows go into law.

BAIER: You think the president should?

STODDARD: The president, if he wants a bill by September 15, we're talking on August 12 here about this sinking. This debate is in freefall. They have lost total control. They are not just on the defensive, it is in freefall.

If to turn this ship around he wants reform, he needs to be honest and forthright about the fact that there won't be a public option. It is the poster child of all these protest rallies.

It is a symbol for the bailout, for TARP, for the stimulus bill, for the House-passed cap and trade, it is the symbol for government intervention. And if he is honest about the fact that he doesn't have the vote for it and it's never going to be in there, he will be able to get this back on track, maybe.

BAIER: And we should point out, the bills that are written currently have public options. The one that is seen as the bipartisan vehicle hasn't even been written yet in the Senate finance committee.

BIRNBAUM: We don't even know what is in it yet.


HAYES: And when people learn the specifics, they like these things less.

BAIER: So is the recession over? The Federal Reserve made some news today. We will talk about the economy, next.



BARACK OBAMA, (D) PRESIDENT OF THE UNITED STATES OF AMERICA: So there is no doubt that the recovery act has helped put the brakes on this recession.

LAWRENCE SUMMERS, WHITE HOUSE CHIEF ECONOMIC ADVISER: The sense of freefall, of vertical decline, has been contained. We are beginning to lay a foundation for future growth.

SEN. MITCH MCCONNELL, (R-KY) SENATE MINORITY LEADER: I don't think the actions of the administration have had a whole lot to do with this. But look, if the economy is getting better, we're all happy about that.


BAIER: So, are we are out of the recession? A couple of news points today, the Federal Reserve saying the economy has essentially leveled out.

We also had new numbers on federal deficit released today. July, $181 billion was added to the deficit, year to date, $1.27 trillion, fiscal 2009, $1.84 trillion. That is a big-time record.

We're back with the panel. Steve, where is the state of the economy?

HAYES: I think we are out of the recession. I think we probably will find out eventually that we were coming out of it as early as June.

I think you can look at a number of indicators that suggest that the economy is strengthening or recovering. You've got construction up. You've got exports up. You've got the weekly unemployment numbers which we've talked about which have been down.

I think if you look at the broad range of economic indicators, most people agree and this "Wall Street Journal" poll suggests this, that we are now out of the recession and into recovery, which I think would be a perfect time to suspend the stimulus.

BAIER: Chances, zero — A.B.?

STODDARD: You know, I think that the administration, they're on the defensive about their deficit spending agenda, and they are going to take this news and try to make the case that the stimulus has worked and will continue to work.

And it is certainly the case that has to have saved state jobs. I mean, many people throughout the states have got to have been able to keep their jobs because of this. It might have helped unemployment there.

Obviously we can look at leading indicators like housing and the stock market and feel bad — better that we are back from the brink. I think the lagging indicator obviously will be the deciding one in terms of President Obama's political momentum capital support. Ultimately, you look into 2010 and when we're going to see, and when did jobs come back in previous recessions like 2001 or 1991, and you look at this, possibly, if we're in a worse situation with job loss, pushing into '11, maybe '12.

BAIER: So do people feel it, though?

BIRNBAUM: A.B. is getting to that point. And that is the point. Politically speaking, all of these numbers that Steve talked about are essentially meaningless. What matters is if people believe that they are going to keep their job, they're afraid they are going to lose their job.

The unemployment rate, even though it notched down slightly recently to 9.4 percent, that's still very high and in fact is likely to continue to rise. Income is not going to catch up. Inflation is coming back. That's one of the reasons why the Fed today did not tamper with interest rates at all. Commodity prices, gasoline prices are going to be going up. So politically speaking, the president can say all he wants that the worst is behind us, the recession is over, but people are not going to feel it, and they act on what they feel. And that means the economy is still job number one for the president, and that's one of the things holding back the rest of his agenda, in my view.

BAIER: They have been fairly careful at the White House to say that we're not out of the woods yet. They have always had this caveat in all of the statements. About the stimulus, you know, when you talk about jobs created, some of these part-time jobs. And the jobs saved is obviously tough to quantify. Do you really believe, Steve, that there is a chance, any chance, that they would do something with the remaining money of the stimulus? It is only 10 percent that has been out.

HAYES: Right. No, and I think that's the problem.

The White House is out there. You shoed the clips of them making the case that the stimulus is working, the stimulus is working.

The problem that they face, I think, is that they have been saying that when 3 percent of the stimulus was out, they were saying the stimulus is working.

But Republicans have to retool their talking points, too, because I think they're getting caught blaming the president for the economy, and you're likely to see some kind of uptick.

BIRNBAUM: I disagree. I think there is at least a 35 percent chance that some of the leftover money will be used, let's say, in health care to try to save it if the economy really starts rolling sometime soon. I think we should be aware of that possibility.

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