The following is a rush transcript of the September 6, 2009, edition of "FOX News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: First, some news that's probably not in your morning paper. Van Jones, President Obama's special adviser for green jobs, resigned late last night amid growing controversy over off-color remarks he made about Republicans and a petition he signed suggesting a government role in 9/11.

Still, in his resignation, Jones took a parting shot at his critics. "Opponents of reform have mounted a vicious smear campaign against me. They are using lies and distortions to distract and divide. But I came here to fight for others, not for myself."

We'll have more on Van Jones later in the program.

Now to our top story: When President Obama addresses a joint session of Congress Wednesday night, his goal of major health care reform will be on the line, so let's start with the main question. What does the president need to say?

Former House Speaker Newt Gingrich, give us a brief overview. What should the president say?

NEWT GINGRICH, FORMER SPEAKER OF THE HOUSE: Well, I think the president's had a month in which the American people have said they don't want a governor plan. They would like health reform. They would like it in a way that they trust.

And he's at, I think, a strategic crossroads. If he comes in Wednesday night with a better version of what they've said for the last three months, I think that clearly the country will conclude that he is not listening, and I think that they will then have to try to ram a bill through in a very partisan way, and I think that that will, frankly, be a tragedy for the administration and for the country.

WALLACE: Lamar Alexander, as the number three Republican in the Senate, anything you want to add to that?

SEN. LAMAR ALEXANDER, R-TENN.: Yeah, I think he should say, "My fellow Americans, let's start over and let's focus on cost, cost to you when you buy your health insurance, cost to the American people for their government, and let's do it step by step. Let's don't try to change the whole system at once."

There are some things we can do to reduce costs. For example, we can buy insurance across state lines. We can allow small businesses to pool with each other. We should be able to agree on that. Let's work step by step to re-earn the trust of the American people.

WALLACE: Howard Dean, as a former governor, as the former Democratic Party chair, as a doctor yourself, what does the president need to say to Congress Wednesday night?

HOWARD DEAN, FORMER CHAIRMAN OF THE DNC: Well, I disagree with Newt. I know it's a big surprise. I think that the polls show that the public does want an option to get into a government plan.

The insurance companies have been really terrible to the American people and to doctors, and I think the public wants some kind of a choice between the private insurance industry and what people over 65 have.

So I think he should stay the course. We already know this is going to be a big partisan fight in the Senate. The senators aren't going to be interested in helping put something together on the Republican side. They haven't — they've indicated so over the — over the summer recess.

So I think he's got to stand up and lead and be strong. What people value more in a president than anything else is strength, and that's what we've got to see on this week.

WALLACE: John Podesta, as the head of the Obama transition team, as chief of staff to — under President Clinton, anything you want to add to what Governor Dean said?

JOHN PODESTA, CHIEF OF STAFF TO FORMER PRESIDENT CLINTON: Well, you know, I think he needs to do, really, two things. He needs to redefine the debate, get back to where we've been, to tell people what's in it for them — more access, lower costs, that they won't lose their health insurance when they need it the most.

And then he's got to be specific, I think, and say what he wants in the bill. We've had a summer of, to some extent, both distortion on one side but also confusion with a lot of different plans on the table. He's got to say, "This is what I want to see in the final bill."

WALLACE: Before we get to the specific issues, I want to go back to this question of approach and pick up on something, Senator Alexander, you said.

You said he needs to slow things down and go smaller, go incremental. You think that's the way? And if he goes for comprehensive — pushes for comprehensive reform, that's a mistake?

ALEXANDER: I do think it's a mistake, and I think that's something we've learned. We saw with the immigration bill we don't do comprehensive very well. We're seeing it with health care. We're about to see it with energy and climate change.

These 1,000-page bills that try to change complex systems don't work. And what we saw in August is this has gone from being an issue to being personal, from preaching to meddling. We have 250 million people who think their health insurance is being dramatically affected, many in a worse way.

So I think we have to take these things step by step, and the president is the president. He should say, "I'm going to clear the deck. Health care is what we're going to work on. I'm going to stay on it for as long as I need to to get it done, and here are the four or five things that we can get done, and we can do them in a bipartisan way."

WALLACE: Mr. Podesta, there does seem to be this issue of approach, either go smaller, incremental, maybe go with the things that everybody agrees on, like insurance reform, private insurance reform first — or do you take advantage of the big Democratic majority and try to push a comprehensive bill through now?

PODESTA: Well, you know, I think there is a lot of agreement — much more agreement, for example, than there perhaps was in 1993 — about the need for insurance reform.

But there also is agreement that you've got to get people in the system. You've got to get the growing number of uninsured with real insurance so that they can both lead healthy lives but also the system will work more efficiently, more effectively, with an expansion of coverage. So I think...

WALLACE: So you're saying go for the whole shebang.

PODESTA: Well, I think he's got to decide what he wants in this bill. And I would say that he wants to go for as much expansion of coverage as is possible to get through the Congress.

WALLACE: I think it's fair to say that the biggest issue on Wednesday night is whether or not the president is going to call — maintain support for the public option, the idea of a government-run insurance plan.

Governor Dean, if the president on Wednesday night says, "Look, we just don't have the votes to pass the public option, we're going to have to go for co-ops or a trigger that some years down the line, maybe three, four years down the line, would trigger and initiate a public option," is that unacceptable? Is that a defeat for health care reform?

DEAN: Well, the problem is it won't work. It doesn't add anything. If you're going to do that, just do the insurance reform. Then I would agree with Senator Alexander that if you're going to do that, then don't pretend you're doing reform. There's no point in spending $600 billion and giving it to the insurance industry. We know what they'll do with it. So you know, I'm very hopeful that he will stick to his guns and that we'll have the reform we were promised in the campaign.

But if, for whatever reason, he chooses to go in a different direction, then I'd scale back the bill. I wouldn't spend 5 cents on it.

You know, we've done that insurance reform here. We did it 15 years ago. We didn't have — it didn't cost a nickel to do it. So if you're going to scale the bill back, then just — let's just not call it health care reform, because it won't be. It will be insurance reform, and insurance reform is a good thing.

WALLACE: Mr. Podesta, let me bring you back into this, because this is less a debate between Republicans and Democrats than between Democrats and Democrats.

If the president says he's going to go for the trigger — and the idea would be private insurance companies would have, let's say, till 2013 to offer an affordable insurance policy to 95 percent of Americans; otherwise, the public health option kicks in. But if they do offer that, there is no public health option.

If he goes for the trigger, can and should Democrats live with that?

PODESTA: Well, look. I think that I agree with Governor Dean about one thing. We've got to have affordable coverage that — and we have to have competition in the system that doesn't deny you coverage when you need it, that doesn't — isn't built around excluding people with pre-existing conditions.

I think the best way to get there is with a public option. I hope the president stays with that because I think it provides effective competition and will produce the best result.

But if he chooses to look at the overall bill and say that there's another way to get there, then so be it. We've talked about this a lot. It's time for people to get in and vote and see where the votes are in this Congress.

But I think the idea of expanding coverage — I think what I would disagree with Governor Dean about is that spending money to give people — we have 14,000 people a day losing their health insurance coverage. Spending some money to cover more people is worth doing.

DEAN: Well, the only problem is I don't think he'll end up covering more people. I think he'll just drive the system into chaos because of the expenses.

Look, this is an industry that — its costs have gone up at 2.5 times the rate of inflation. The private insurance industry is not the salvation or the solution to American health care reform. It just isn't. And so I think you're going to have to expand public programs in some way.

I thought the Democrats and the president did a great thing as soon as they expanded SCHIP, as soon as President Obama took the oath of office. That kind of stuff is important. And public programs have a role. I know that Republicans disagree with this, but Medicare has been incredibly successful.

That is how you're going to get people covered. You're not going to do it by giving money to private insurance companies. It's just not going to work.

WALLACE: Let me bring Speaker Gingrich into this conversation.

First of all, I'd be curious to hear your take on what both of your Democratic colleagues here on the panel are saying. But also, the 2003 Medicare prescription drug benefit bill, which President Bush signed, had a trigger in it, a trigger that's never been pulled.

If President Obama now supports a trigger, you know, that would give private insurance companies, let's say, four years to provide an affordable insurance policy, would that be more acceptable to Republicans?

GINGRICH: I don't think so. I mean, the 2003 bill had a trigger which said specifically only non-governmental entities could be developed.

It did not have a trigger that led to government, because if you say to the government bureaucracy, "As long as you find it has failed, you get to build a brand-new bureaucracy," you have a guarantee the trigger's going to go into effect. I mean, you — you're only delaying for four years what will become a 100-year problem. But let me just make a — and I agree with Senator Alexander from this standpoint. Mrs. Clinton came to see us in 1993, and we gave her our best advice, which is don't do a comprehensive bill. I said to her at the time, "Do one bill a year for eight years, assuming you get re- elected. After eight bills get through and signed, you'll have significantly changed the system."

No one can write a single bill. If the president comes in Wednesday night and says, "Instead of a 1,300-page bill, I want a 1,200-page bill" — and I think what Mr. Podesta said was very important. The country actually is not as interested in what the president wants as what the country wants.

The country has for two months been trying to tell the president it does not want government rationing, it does not want bigger spending, it does not want decisions centralized in Washington.

Now, the country's been clear in 1,000-person town hall meetings, in every poll I've seen — the Gallup data is devastating on this. If the president were to come in and say, "Let's try to get five bills between now and Christmas. Let's get litigation reform," which is the most popular single thing. "Let's get reform of paying the crooks in Medicare and Medicaid," which 88 percent of the country and Zogby said they would like to have as a first source of money — because our estimate is you've got 70 to $120 billion a year of theft.

There are a number of specific bills you could pass with huge bipartisan majorities. The country would calm down. The president would be much stronger by Christmas. And we'd get a lot done.

WALLACE: All right. Perhaps the most remarkable fact of this entire debate is that with a Democratic president, a pro-reform president, and big Democratic majorities in both houses that health care reform is in such trouble.

Let's take a look at the different ways that Mr. Obama has tried to sell health care reform over the last few months.


PRESIDENT BARACK OBAMA: It includes a historic commitment to comprehensive health care reform, a down payment on the principle that we must have quality, affordable health care for every American.



OBAMA: Over time, what we can do is bend the cost curve so that instead of having inflation go up a lot faster on health care than everything else, it matches everything else.



OBAMA: They're going to be more regulated so that they can't deny you care because of pre-existing condition, or because you changed jobs, or because they decided you're too sick and not a good risk.


WALLACE: Governor Dean, fair to say that when you offer three — and maybe there — I — maybe it's actually four or five different messages — that means you don't have one message?

DEAN: Well, let me just correct something the speaker said. You know, it is true that people don't want rationing. There is none in the bill. It is true that people don't want death penalties. There aren't any in the bill.

So a lot of the things that you heard at the town meetings were essentially straw men set up by the right and then knocked down by the right. But none of that stuff is in the bill.

Look, I think — I think all four of us would agree that the president needs to give a strong, clear message about what he wants.

WALLACE: And has he done so, Governor? Has he done so so far?

DEAN: Well, I think that he has, but, you know, that's — that was the whole purpose from the Republican side of trying to muddy the waters and bring up all these issues that had nothing to do with the bill over the summer.

And we got debate on those things, but that really wasn't debating about anything that was in the bill. So I think the president gets another chance to clearly say what's in the bill, what he wants, and that we're going to move forward.

The president is the president. He was elected by a very big majority. We have very big majorities in the House and the Senate. My experience in politics is if you don't use your majorities, you lose your majorities.

WALLACE: Speaker Gingrich...

GINGRICH: Chris, I...

WALLACE: ... for a moment, forget policy. Just as a political professional, what has — over the last six months, what has Barack Obama done wrong in selling his program?

GINGRICH: Well, look. First of all, he's very talented and he's very articulate, and I think they're a very attractive family, so he has a lot going for him.

I think there are a couple of big things. One is James Carville's old line. It's the economy, stupid. The fact is this country is drifting towards 10 or 10.5 percent unemployment. They'd like to know — don't tell me about the next three issues, tell me what you're going to do about jobs.

Second, the reaction in this country to big government spending has been, even to me, amazing. The American people overwhelmingly are terrified of the level of deficit spending they see coming. They think it's giving away their future and their children's future, and so they're measuring everything that happens through these two prisms. Is it going to affect jobs? Is it going to affect debt?

And on the health plan, the president, as you just pointed out, offered a wide range of conversations, none of which came down to there'll be more jobs and we'll do it for less money. In fact, they're talking about doing it for a lot more money. And the American public is saying stop.

And I think this is a political problem. That's why I said a while ago very clever presidents like Roosevelt and Reagan listen carefully and modulate where they're going within the framework of what the American people will accept.

WALLACE: Let me pick up on that with you, Mr. Podesta. I mean, what about the argument people are — there's fatigue about huge government programs, huge government spending, deficits. And particularly at a time when people are mostly concerned about the economy, the last thing they want is another trillion-dollar program.

PODESTA: Well, look. The president inherited a lousy economy that was heading to a depression and huge deficits. And he's tried to do something about that.

WALLACE: But — all right. Even if you argue — even if you accept that, why make it worse?

PODESTA: He's tried to do something about that first with the recovery bill that he passed earlier this year that's beginning to show signs of working. The economy is bottoming out.

And it's essential that we fix this health care problem. And I think if you talk to CEOs, or small business people, or families who have seen their premiums doubled over the last eight years, they'll tell you, "My economic security depends on secure health care that's affordable." And that's what he's trying to accomplish.

WALLACE: Senator Alexander, I want to ask you about something the president almost certainly won't talk about in his speech on Wednesday night, and that is the idea that they — that Democrats may decide to just ignore the Republicans and push health care reform through the Senate through a parliamentary device associated with the budget called reconciliation, which means they won't need 60 votes to prevent a filibuster. They'll only need 51 votes.

You have said, and I quote, "That would wreck the Democratic Party and create a," quote, "'minor revolution in this country.'" Why?

ALEXANDER: Well, for two reasons. One, it would create a bad health care bill because under the provisions in the rules, the parliamentarian would write the bill, so all the senators would be voting on are tax increases or Medicare cuts, and you wouldn't get to put in the bill things like pre-existing conditions or buying insurance across party lines. So it would be a bad bill.

Second, it would be thumbing your nose at the American people who have been trying to say to Washington for the last several months, "Slow down. I mean, too many Washington takeovers, too much debt. You're meddling with my health care." Let's go step by step and do some things to reduce costs.

So thumbing their nose at the American people by ramming through a partisan bill would be the same thing as going to war without asking Congress' permission. You might technically be able to do it, but you'd pay a terrible price in the next election.

DEAN: See, actually, Chris, I disagree with that. I think this has been used 23 times before, including by George Bush's really controversial tax cuts when he first got in. And I don't think the American people care about the process. I think they care about the result.

WALLACE: Let me pick up with you, Governor Dean, on another issue. At a town hall meeting the other day, you explained why you think that some limits on malpractice lawsuits are not in the bill. Let's take a look at what you said.


DEAN: The reason that tort reform is not in the bill is because the people who wrote it did not want to take on the trial lawyers in addition to everybody else they were taking on. And that is the plain and simple truth.


WALLACE: Not take on the trial lawyers — Governor Dean, would tort reform be a reasonable way to cut health care costs? And would it also be a way to reach out to Republicans?

DEAN: First of all, I don't think if you put tort reform — I said — I went on to say if you put tort reform in the bill, you wouldn't get a single additional Republican vote for the bill, I mean, because there's going to be plenty of stuff — I mean, the speaker's already said he doesn't like even the trigger option.

So you're not going to get Republican votes for this bill. And I thought Senator Grassley and Senator Enzi made that pretty clear. We might get one. And I think to focus all our energy in the hope that we'll get one Republican to vote for the bill probably is a mistake.

I think when you're putting together a bill like this, you try not to take on every single interest group, but — and I think the president has done a terrific job with that, much to the dismay of some of the Republican senators.

He has worked closely with the AMA. He has worked closely with the pharmaceutical industry, the hospitals industry. The hospitals people have been denounced by the — by some of the Republican senators for working with the administration. But I think that he's done what he has to do to set the table for a bill.

Look, I don't think this bill is in bad shape at all. I've seen polls that show that we're in pretty good shape. The president has an opportunity to clear up a lot of the confusion that's been shown in some of these meetings. And I think when he does, people are still going to want real reform.

WALLACE: Let me — well, I just want to get Speaker Gingrich to respond quickly to that, and then I want to...


WALLACE: ... move on to other subjects.

But specifically, do you think that the president is going to end up - - given his majorities, given where the public is on all this, which you might disagree with Governor Dean on, do you think the president is going to get something substantial if he goes on the — on the route of comprehensive reform?

GINGRICH: I think he can probably get something through. I think the question, as Senator Alexander said — if they — if they accept the rules of the Senate and try to ram the bill through on reconciliation and accept an honest parliamentary decision, they're going to have a total mess, because you'll only be able to have spending cuts and tax increases. Everything else — all the real reforms will be out. If, on the other hand, Senator Reid is able to direct the parliamentarian to basically suspend the Senate rules and pass an entire 17 percent of the economy under one thing, I think you'll have an extraordinary explosion both in the Senate and in the country. So the president, I think, has got a real dilemma.

WALLACE: All right. While I have you all here, I want to ask you all about some other controversies — first of all, as we mentioned at the top of the show, the resignation of Van Jones, the president's adviser on green jobs.

Speaker Gingrich, did he have to go or was he, as he contends, brought down by the forces of reform?

GINGRICH: I don't know enough details. I simply presume this administration said to him privately, "We hope you have a better future somewhere else." And that's a judgment that the White House has to make.

WALLACE: Mr. Podesta?

DEAN: Chris...


DEAN: I'm sorry, go ahead. I know this guy, and I just talked to him about this, so I'd like to weigh in after John does.

WALLACE: Go ahead. Go ahead.

DEAN: Well, I was just going to say, you know, this guy's a Yale- educated lawyer. He's a best-selling author about his specialty. I think he was brought down, and I think it's too bad. Washington's a tough place that way, and I think it's a loss for the country.

WALLACE: Governor, how about the fact that he had made a series of statements and had signed this petition in 2004 indicating — suggesting that the government might have had some role or some complicity in 9/11?

DEAN: Well, he was told by the people waving those clipboards around that he was signing something else. I think that's too bad.

Look, all of us campaigning for office have had people throw clipboards in front of our face and ask us to sign. And he learned the hard way you ought not to do that. But I don't think he really thinks the government had anything to do with causing 9/11.

WALLACE: Senator Alexander, your reaction to the Jones resignation?

ALEXANDER: Well, I don't think he's the issue. I think the czars are the issue. We have about two dozen so-called czars — the pay czar, the car czar, all these czars in the White House.

And that really is an affront to the Constitution, because the Constitution was set up to say that the president is the executive, but the people who manage the government — the secretaries, the cabinet members, of which I was one — have to be approved by the Congress and have to report to the Congress.

So when you take all these people and make policy close to the president and the White House to people who don't go to the Congress and aren't approved by the Congress, you're just adding fuel to the fire by those who think Washington is taking over everything.

WALLACE: All right. Let's talk about another issue that some people may say is about Washington taking over things. Conservatives and some concerned parents are upset about President Obama's speech to school kids on Tuesday.

Speaker Gingrich, back in 1991, when Democrats protested then- President Bush making the same kind of televised speech, you said the following. Let's put it up. "Why is it political for the president of the United States to discuss education?" Question: If it was all right for Bush 41 then, is it all right for Obama now?

GINGRICH: My daughter Jackie Cushman just wrote a column in which she said if the president gives a speech as a parent to students to encourage them to learn and stay in school, it is a great thing for him to do. It was a good thing for Ronald Reagan to do. It was a good thing for George H.W. Bush to do.

And I've been communicating with Arne Duncan and the team at the Department of Education. I believe this is going to be posted. People are going to see it in advance. It's going to be a totally positive speech.

And if that's what it is, then it is good to have the president of the United States say to young people across America, "Stay in school, study, and do your homework. It's good for you and it's good for America."

WALLACE: So should some of your fellow conservatives back off?

GINGRICH: Well, the president ought to post the speech, and people ought to read it.

WALLACE: Well, he says he's going to on Monday.

GINGRICH: And if he does on Monday, and if it's the kind of speech I just described — and Sean Hannity, by the way, has publicly said this is a good thing. I mean, I think if he — if what he says is entirely parent- oriented, it's good.

PODESTA: Chris, we finally have some bipartisan agreement.

WALLACE: We finally brought you together (inaudible).

ALEXANDER: I wonder if I could — I wonder if I could weigh in here. I was — I was education secretary, and I encouraged President Bush the first to make that speech. And I understand some of the concern, because, you know, people say, "Oh, here's another Washington takeover."

But of course, the president of the United States should be able to address students. And of course, parents and teachers should decide in what context. I mean, we're — Wednesday night the president's addressing the country. We don't have to watch it. We can watch news commentators. We can watch you.

Students don't have that choice. So parents decide what to do. And teachers do. And if I were a teacher, I'd take advantage of it, and I'd put up Lincoln and Eisenhower and Reagan and teach about the presidency, and then I'd put up the head of North Korea and say, "In that country, you go to jail if you criticize the president. In our country, you have a constitutional right to do it."

I think we need to have more teaching of American history and civics in our classrooms. But teachers and parents should make the decision.

WALLACE: All right. Let me get into one more subject.

Governor Dean, the president will reportedly decide in the next few weeks whether or not to send more troops to Afghanistan. As a leader of the anti-war movement when it came to Iraq, will the liberal wing of the Democratic Party — will you — support the president if he deepens our commitment in that war?

DEAN: I'm not so sure I'm the liberal wing, but I guess I'm the — I'm appointed by you the head of the liberal wing or whatever. No, I — look, I've supported the president on this one. I think this is different than Iraq. I think there are people who mean the United States harm over there.

I think — I was very pleased to say the — hear the president a few months ago say, "Look, we can't win this war militarily." He gets what we have to do here. And it is true that American public opinion is not supportive of the war effort anymore.

I think this does have something to do with security to the United States. I do believe it has something to do with the role of women in these kinds of societies. I think we ought to be supportive of the role of women and their ability to get an education and things like that. I don't think that's the only reason we're there.

But I'm supportive of the president, and I'm going to continue to be supportive of the president on Afghanistan.

WALLACE: Well, I'm glad we were able to reach these cross-party...

DEAN: Yeah.

WALLACE: ... and intra-party divide.

DEAN: You see, it can work. It can work.

WALLACE: I brought — I helped bring you all together. Thank you all for coming in on this holiday weekend, and especially giving the president some advice on what he should say on Wednesday night. We'll see whether he takes it.

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