This is a rush transcript of "Special Report With Bret Baier" from December 23, 2009. This copy may not be in its final form and may be updated.


SEN. HARRY REID, D-NEV., SENATE MAJORITY LEADER: I don't see it as 60 Democrats versus 40 Republicans. I see it as 60 leaders who stood up to insurance companies and stood up for working families all across America. I see it as 60 leaders who know it is long pastime we declare health care a right and not a privilege.

SEN. JEFF SESSIONS, R-ALA.: I know a lot of members of the Senate who voted for the bill did so under the belief that it would be deficit neutral. They've said so publicly. The president has repeatedly stated and he did to the joint session of Congress that not one dime will be added to the national debt. And that is not so.


BAIER: Well, the final procedural hurdle happened. The Democrats got 60 votes to 39 to move forward to end debate on the health care reform bill. And right after that you see Senate Majority Leader Harry Reid getting all of the Democrats — he was hoping for 60 there. He didn't have Senators Byrd and Akaka behind him. But he also didn't have some folks who are in the middle of this. Here's who else was missing — Senators Ben Nelson, Joe Lieberman, Mary Landrieu, and Blanche Lincoln. These are the moderates who have been in the middle of all of this. They were not present at that news conference after the vote.

What about all of this today as we head towards final passage tomorrow morning at 7 a.m.? Let's bring in our panel, Juan Williams, news analyst for National Public Radio, Nina Easton, Washington bureau chief of Fortune magazine, and syndicated columnist Charles Krauthammer. Juan, your thoughts on today?

JUAN WILLIAMS, NEWS ANALYST, NATIONAL PUBLIC RADIO: Democrats are jubilant on the Hill today. Today was a real celebration. There is a sense you hear from Robert Gibbs at the White House and from Harry Reid up on the Hill that the game is over. They have moved ahead to schedule now for the final vote so that more people can leave town. I think there is just a sense of exuberance.

From the Republican side, as Mitch McConnell had to agree to change the time for the vote, from the Republican side, what you're hearing on is the focus on the CBO scoring, saying look at what the CBO is saying this, that this is double booking in essence.

You can't say you're going to save money from Medicare and spend it on something else and say that overall you are going to have a lower cost to this health care reform, that it's not true.

And secondly, talking to everybody who will listen about the high cost of what they call buying off or bribes, if you want to be extreme in your language, to some Democrats to get them onboard, some of whom you just saw pictured, those four who didn't show up for the press conference.

BAIER: Nina, let's talk a little bit more about the CBO released letter today that basically says that the savings from the Medicare trust fund, both improving the government's ability to pay for Medicare benefits an financing new spending outside Medicare, according to the CBO would essentially double count a large share of those savings, and thus, quote, "overstate the improvement in the government's fiscal position."

Republicans hopped on that letter today.

NINA EASTON, WASHINGTON BUREAU CHIEF, FORTUNE MAGAZINE: They hopped on that, but the CBO let's remember, didn't actually change its deficit projections.

All this does is add to the economic uncertainty of this bill, because what everybody can agree on, whatever it does to the deficit, what everybody — a large swath of people agree on, experts agree on, is that it does not contain health care costs.

And it is financing an expansion of health care to 30 million Americans through higher taxes, huge tax increases, and through cuts in Medicare.

And you have to step back and say, OK, what are the economic consequences of that? If you have higher taxes, does that mean there's going to be an impact on job creation, which means there is an impact on revenue to the government? That's a deficit question and an economy question.

The Medicare question, if you squeeze Medicare payments to doctors, providers and hospitals, will they really go out of business or stop serving Medicare patients, which means there's fewer, you know, it's a supply-demand questions. There are fewer doctors out there willing to supply Medicare, and does that affect costs?

So I think these are the questions. We are seeing this predawn vote, or dawn vote tomorrow morning. Yes, there is jubilance on the part of the Democrats on some level.

There is also fear. If they went home, I think, with all these questions, these economic questions really on the minds of voters — 51 percent of voters in the last NBC/Wall Street Journal poll opposed this — if they went home and had to hear all of that, I think there would be a lot more reticence about putting their name in concrete on this right now.

BAIER: Charles, there's a question, though, about whether this bill is really deficit neutral. That's one of the things that the CBO letter at least started to point to and a lot of Republicans jumped on, because it could mean a swing of some $300 billion, not including the doctor fix, which is $200 billion plus, that is voted on outside of this bill.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Let me take a hack at this. The bill calls for cutting half a trillion out of Medicare. If you do that, you can either put the money away, squirrel it in a hole, in the Al Gore lockbox, and save it for the future cost of Medicare, and that would extend the life of Medicare by ten years.

BAIER: Which is what Senator Reid says.

KRAUTHAMMER: Right. Or you can take the same half a trillion, put it in the treasury, and have the treasury use it to offset the trillion dollar extra cost of the new entitlement of insuring the uninsured, because it costs a lot of money.

If you do the latter, you end up with a good number on the deficit, a surplus of $130 billion. Well, that involves a lot shenanigans as well, exclude all of the other shenanigans. However, the money is then already spent and you can't squirrel it away in Medicare, so you aren't extending it ten years.

So when you hear Harry Reid stand up there say we have, a, extended Medicare by a decade and achieved deficit neutrality, he's either obtuse or cynical. I suspect a modicum of both. You can do one or the other.

Now, the money generally for Social Security and Medicare ends up in the treasury and is spent. There is no trust fund. It is a depiction. It is a box in Virginia which has pieces of paper in it which means nothing. But you can't have a claim that you're going to extend Medicare and be deficit neutral.

The reason this is damaging is because if you do actually have to cut a half trillion and you spend it immediately as we are going to spend it on expanding on a new entitlement, insuring the uninsured, then a potential saving in Medicare in the future is taken away and Medicare will go over a cliff.

BAIER: Juan, for the president, he is going to sign this if it gets to his desk, obviously, despite saying he wasn't going to sign anything that was not deficit neutral. There are other senators who have said the same thing, Claire McCaskill on this very set on FOX News Sunday said absolutely would not sign it. So is it troublesome for Democrats, this math?

WILLIAMS: Well, the president, in an interview, you played segments of it here today, said that he believes it is deficit neutral, and then he said with regard to what Charles was talking about with Medicare spending, that it bends that curve in the right direction.

That doesn't rule out the idea that you would then have to do some changes in Medicare again to reduce the abuse and the wasteful spending. I don't know how much is there. I don't know why you are not doing it right now if you can do it.

But to answer your point, it does introduce this question, going towards the future and going toward, I think, the out-years for Democrats. If this doesn't prove to be deficit neutral, it is a huge weight around Democrats, because they have pointed to the Bush administration and everything else as the people who caused this deficit. This will cause a much larger deficit, potentially.

BAIER: Quickly, Charles.

KRAUTHAMMER: It bends the curve upwards and not downwards. It takes half a trillion in savings that you need in the future to keep Medicare alive, and you're spending it now on a new entitlement. And that's why it damages the deficit outlook and it is a threat ultimately to Medicare and to the budget.

BAIER: We'll talk about the politics at play here. Democrats may be close to passing health care reform. They are, but they are losing members in the House already. The panel will discuss it after it the break.



PARKER GRIFFITH, R-ALA. REPRESENTATIVE: Unfortunately, there are those in the Democratic leadership that continue to push an agenda focused on massive spending, tax increases, bailouts, and a health care bill that is bad for our health care system, bad for our patients, and bad for our physicians.


BAIER: The congressman from the fifth district of Alabama, Parker Griffith, was a Democrat. Now he is a Republican. He switched parties. That was the announcement.

Now we're getting word that Republicans are reaching out to another Democrat to switch parties. They're calling Democratic Congressman Chris Carney from Pennsylvania. We're told that John McCain talked with the congressman today, and no response yet from the congressman's office whether he, in fact, will switch to be a Republican.

Here's what House Speaker Pelosi said about the upcoming election, "I think we will have a Democratic majority. I don't think there is any risk to that. I don't know if you've noticed, but I am in campaign mode. I'm always in campaign mode, but now that we've got our substantive work done, I can spend a little more time."

We are back with the panel. Are Democrats in trouble after this upcoming vote on health care for 2010, Charles?

KRAUTHAMMER: Oh, yes. What a difference a year makes. A year ago after the Obama victory and the sweep in the House and Senate, we were hearing about the great realignment, the death of conservatism, and the Republicans were in the wilderness, how this is going to be a generational thing.

It lasted not a generation but maybe eight or nine months. And what you see here is the tip of the iceberg. You've got a Democrat in Georgia in a seat that has been Democratic since 1866 switching. He knows what is happening now.

The centrists in the Democratic Party are being squeezed out. They are having to walk the plank on cap and trade, on health care, which is extremely unpopular, on the stimulus, and standing with the administration that has taken over the auto industry, and now they're actions are extremely unpopular and the wind is changing.

The problem is this — the Democrats over-read the mandate in the election of '08. They assumed it was for great change of American social policy and making America into a kind of European social democracy, radical changes in health care, energy, and in education.

That was not what happened in '08. It was rejection of the Bush administration, a weariness of war, and the rejection of an administration at a time of economic collapse. It was nothing more. They overreached. They have tried to push a centrist country to the left, and they're going to lose a lot of seats in the November election.

BAIER: Nina?

EASTON: I don't think you have to ask us the question are the Democrats in danger. Ask a Democratic pollster. I mean, they're worried.

Despite Nancy Pelosi's comments right there, you know, and the average — the average mid-term loss when a president falls below 50 percent in approval, it's 40 seats in the House. And I think we're in that range.

BAIER: Which is a different range than we were looking at just a couple of months ago.

EASTON: Just a couple of months ago when Charlie Cook, the nonpartisan, very esteemed analyst was saying 20 seats, that sounded like a lot.

I agree with Charles. I think this president read — he was right in reading that people wanted a change from the status quo. He wasn't right in reading where they wanted to go to. And Parker Griffith and others are going to be perfect poster children for the Republican Party.

Now, the Democrats' strategy, I think, is going to be claiming that the Republicans don't have a good brand, that the Republicans are still not popular, and so that a lot of this anger will be taken up by third-party tea party kinds of candidates. So that's their hope.

You're also going to see President Obama talking a lot about fiscal control, deficit control. They're going to try to get the upper hand on that. We'll see how that goes.

I think he will get a little bump in the polls after health care legislation passes, but I think that's going to be a very short term.

BAIER: Juan, the House Speaker says she's not worried about a risk of losing the majority, but you start talking about 40 votes, that's the magic number.

WILLIAMS: I don't think they're close to 40 by anybody's measure. It would really take a tsunami at this point.

And I think there are lots of people reacting to poll numbers. They are locked into the debates taking place on health care, and there are lots of people who have lots of questions, especially older Americans about the idea of Medicare cuts who find it unpalatable.

But I think that you get out from this and I think Americans start to think, wait a minute, you mean, insurance companies can't keep me out, especially children, because of preexisting conditions? Wait a minute, I have portability? Wait a minute, you mean there are more Americans that are insured?

BAIER: So we are in for months of a sales job?

WILLIAMS: A terrific sales job coming.

And the other thing is, this is all about — the entire news coverage right now is about Republican criticism of a Democratic plan. You get into a campaign season, they're going to start talking not only about the benefits, they are going to start talking about what Republicans did before and the absence of any action in terms of a national issue like health care.

BAIER: But it's a tough sell when the taxes start now and the spending starts in 2013.

WILLIAMS: Again, the taxes will be on people who make, I believe, more than $200,000. So even though it breaks President Obama's pledge, which is I think people who are over $250,000, it is not so radical.

And the thing of it is that many Americans, again, don't know the benefits and will only see the benefits down the road.

BAIER: That's it for the panel. But stay tuned for a tough time for one house bill specifically for Christmas.

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