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


DOUGLAS HOLTZ-EAKIN, FORMER CONGRESSIONAL BUDGET OFFICE DIRECTOR: You're going to put two kinds of people into the system who are not in it right now, people with preexisting conditions with chronic healthcare costs. They are expensive. And in principle you are going to put in the young and healthy. They're cheap.

If you only put in the first group and you don't get the young and the healthy, you just made it a much more expensive place to operate, and insurance companies are going to have to raise the rates.


BRET BAIER, HOST: And that was the conclusion of a new Price Waterhouse Coopers report commissioned by the health insurance companies which essentially said that because the mandates were lifted or made less restrictive by the Senate finance committee in their back and forth over this bill, they essentially will drive up premiums because insurance companies will pass the additional costs on to consumers.

So what about this on the eve of the Senate finance committee vote on that bill? Let's bring in our panel, Steve Hayes, senior writer for The Weekly Standard, Juan Williams, news analyst for National Public Radio, and the syndicated columnist Charles Krauthammer.

Steve, the impact of this new report on this vote tomorrow.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Well, I don't think there will be a significant impact, actually. Last week we had the Congressional Budget Office report that is seems to be something of a shot in the arm for supporters of the Baucus plan.

I didn't think that was actually going to have much of an impact for the same reasons that I don't think this will have much of an impact.

It gives opponents of the legislation something to talk about and it gives them a number. It says, look, in 2019, these plans will cost $4,000 more per family. And it is a talking point that the average American family can understand.

But at this point, it does little to change the overall dynamics of the debate, which I think largely written in stone. You have seen these proposals generally understood as increasingly unpopular, and you still have yet to resolve the fight between Democrats among the various proposals.

BAIER: Here is what the White House said about this report. Linda Douglass, communication director for the Office of Health Reform said this -- "This is a self-serving analysis from the insurance industry, one of the major opponents of health insurance reform. It comes on the eve of a vote that will reduce the industry's profits. It is hard to take seriously."

Juan, they also point to subsidies that are aimed in this bill to help people afford insurance and they say this report didn't take that into account.

It seems, however, that people are raring that it was cut and dry. When the mandates were lifted or made less harsh, if you will, it opened the door to where is this money going to come from?

JUAN WILLIAMS, NEWS ANALYST, NATIONAL PUBLIC RADIO: That's a legitimate question. The question is, if you don't force people into the plan, and as you just heard, then there will be a problem with paying for the plan. Everybody has to be in, especially those who are young and healthy and who don't have medical problems.

The issue here is really a political one, though, Bret. I think what you heard when the CBO scored it and scored it well was a roar of jubilation and celebration coming from the Democrats who knew that the cost issue in this time of great deficits was something that was driving public opinion away from support for healthcare reform.

Now you get the insurance companies coming forth with their own, and you have some who are the strongest critics on the Hill saying wait, what about this?

The problem is it is not sponsored by the insurance companies and the insurance companies have long been the bad guys in the White House targets. And they're the ones seen as having limited accessibility to health care portability, done stuff that would hurt people in terms of their ability to afford health care.

BAIER: Because the mandates were taken out, does this now embolden people like Senator Rockefeller and Senator Schumer who want the public option to force the competition basically the across the board healthcare mandate?

WILLIAMS: In fact with the public option it would in fact then weaken -- one of the criticisms in the insurance company analysis here is that this will force more people into the public sphere and therefore take them away from the insurance companies, take them away and increase costs for families, increased taxes on premium plans.

Those are things that would drive up costs.

BAIER: Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I think the report is obvious and intuitive. If you don't have the young and healthy in the system, you weaken the mandate, you can either have a huge increase in premiums on the rest of us or the insurance companies will go bust.

So there will be an increase in premiums. It's typical of the station that it attacks the messenger and not address the message.

But I think the point that Steve and Juan have talked about, the CBO report. I think that was an extremely important political event. The report today will not have an effect on the debate in the long run but the CBO was the first time that you got a favorable ruling which said that the plan in the Congress is not going to explode the deficit.

The problem is that it was not intentionally, but it is extremely misleading, and the reason is that the taxation that will support the plan starts almost immediately, but the benefits only kick in in three years.

That means that if you calculate over ten years, you've got ten years of revenues into the system, only seven years of expenditures, so of course you're going to have a surplus.

But if you do it -- if you look at each year after the benefits have kicked in, it runs a deficit. So the CBO report, which is extremely helpful to Democrats and the administration, has inside of it a contradiction which hasn't been exposed. And that is why I think it is misleading in this debate.

BAIER: Quickly.

BAIER: I think Charles is exactly right about the math, but I think you're wrong about the politics of it. I don't think it matters.

That would have mattered if Obama had gotten support of a Baucus- type bill, if there had been a Baucus-type bill back in June or July and the CBO report had come out and addressed that, at that point it might have created some momentum. I think we are far beyond the point where it can create momentum.

BAIER: Down the line, it passes tomorrow?

HAYES: Probably.

WILLIAMS: Yes. And then you get into a long argument with the other Senate committee and conference, and now the game begins.


If I could just add, the CBO reports in the summer that were negative really helped the opposition. The CBO report last week really helped Obama.

BAIER: As you may have heard, the White House is not too happy with us here at Fox News. The panel takes up that after the break.



BARACK OBAMA, (D) PRESIDENT OF THE UNITED STATES OF AMERICA: I've got one television station that's entirely devoted to attacking my administration. That's a --

UNIDENTIFIED MALE: I assume you're talking about Fox.

OBAMA: That's a pretty big megaphone.

ANITA DUNN, WHITE HOUSE COMMUNICATIONS DIRECTOR: The reality is that Fox News operates almost as either the research arm or the communications arm of the Republican Party. Obviously he will go on Fox because he engages with ideological opponents and he has done that before. He will do it again. I can't give you a date, but frankly, I can't give you dates for anybody else right now.


BAIER: Here is the response by Fox News senior vice president Michael Clemente to Anita Dunn's remarks -- "An increasing number of viewers are relying on Fox News for both news and opinion, and the average news consumer can certainly distinguish between the A-section of the newspaper and the editorial page, which is what our programming represents.

So with all due respect to anyone who might still be confused about the difference between news reporting and vibrant opinion, my suggestion would be to talk about the stories and the facts rather than attack the messenger, which over time has never worked."

This is a battle that the White House has launched on Fox News. Anita Dunn says the president will appear on FOX News sometime, possibly before the end of the year. But we have been told that all of our requests have been denied. We will continue to request, and he is welcome here on "Special Report."

We are back with the pane. Charles, what about this?

KRAUTHAMMER: This is a president who got so used to the hagiographic, enthralled coverage that he had last year that he can't stand a network that in the words of one analyst is "insufficiently obsequious."

We don't have anchors here at Fox who get a thrill up their leg in the middle of an Obama speech. I don't recall it ever having happened, at least while I was on the set.

The problem is for the administration is I'm not sure how smart it is to attack Fox. There are a lot of independents the president has lost in public opinion. A lot of independents watch FOX and they know as the average American knows that there is a difference between the A-section and the editorials, between opinion shows and news shows like this one.

One example that I think this show is incredibly scrupulous and analytic in looking at health care reform. Your correspondents, like Jim Angle have gone so far out into the weeds that we needed search and rescue to get him home alive.

So the administration is an administration that is losing confidence in itself and does not like opposition. You know, last year in the Bush years, dissent was the highest in the form of patriotism and now it is in the form of sedition.

BAIER: Juan?

WILLIAMS: Well, the case that the White House is making is largely that some of the personality driven shows on Fox go over the top, that they are trying to say that the president wasn't born in the country or that the president is a racist or he's socialist, he’s a communist.

And then there is the tea parties, and then there is he born in the United States?

And I think what they have done is they have conflated in their mind Fox News with all of this static, and especially paid attention to the large personalities that drive our primetime programming.

Now what they have lost in this is, first of all, a lot of those programs, people know exactly what to expect when you're watching prime time Fox. We're a conservative audience-oriented programming. And I don't think anybody is going to debate that.

And I think what they also miss is who is watching. It is amazing to me.

BAIER: First of all, I think Bill O'Reilly would debate that he is a conservative oriented program. He would say that and he would say that he has different views on various issues and that sometimes he supports President Obama.

So I don't think you could paint with a broad-brush.

WILLIAMS: I am painting in general terms, and I think even from the White House perspective, they would think that Bill O'Reilly is right of center, not center, although I think O'Reilly is pretty much independent and unpredictable on a lot of issues and I can tell you -- because I'm on O'Reilly's show regularly, and people come to me, and these are conservatives, and say "what is O'Reilly doing now"?

But here is my point -- if you look at a recent Pew study of who watches this news channel, you may be shocked to realize it is a third of the audience of people who self describe themselves as liberal.

And not only that, in terms of racial groups, you will be surprised, again I think it is a high percent, more than of a quarter of our audience is people of color. These are people who did get a thrill Charles, by President Obama's election but want to know exactly what the opposition is and what everyone is saying. They want to be part of the debate.

And now for the White House to pull themselves off of this powerful station, what the president calls a large megaphone, seems to be self-defeating.

HAYES: They're looking for a villain, and they're trying to find a foil because it is politically useful.

But let me just pick up something that Juan said and expand on it a little bit. In that interview that Anita Dunn did, she specifically talked about Fox News, news reporting and not the opinion shows, and made it sound like all of Fox News, the reporters and the anchors are conservatives or come from a conservative viewpoint.

And the example she used was the John Ensign affair story. And she said basically if you watch Fox, you didn't know about that story.

So I went back and looked at the month after the John Ensign story broke, and on this show, we discussed this 11 times, sometimes in extended reports, sometimes in a discussion like this. That's 11 times in 20 days. That's every other day.

It is a tremendous amount of coverage for a story that I would argue has some relevance. It was interesting, but is it defining the national agenda? So clearly she was wrong about that.

I think if you want to look at -- Juan suggested before that she may have been looking at a story in The New York Times last week, but we discussed that on the lightning round a couple of weeks ago.

The White House is wrong. They were wrong with their facts. And to have me do what I'm doing right now is called reporting. It is journalism. It is not ideological. You would think in a different political environment the White House might be familiar with it.

WILLIAMS: I think they're trying to stir up their base.

BAIER: Maybe so. This probably won't be the end of this.

That's it for the panel.

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