This is a rush transcript from "Hannity," December 27, 2010. This copy may not be in its final form and may be updated.

TUCKER CARLSON, GUEST HOST: Remember those infamous death panels who supposed to have died before the passage of the Democrats health care bill? It looks like they're alive and kicking.

I'm Tucker Carlson, happy to be in tonight for Sean Hannity. The Democrats took end-of-life planning which critics called, "death panels," out of the health care bill. But now, they've been made part of a federal regulation. The old idea, if you can't legislate it, enforce it.

According to the New York Times, this new regulation may provide Americans, quote, "advanced directives to forego aggressive life-sustaining treatment." In other words, the government will now pay doctors to counsel patients to opt-out of medical treatment that might prolong their lives.

But the Democrats don't want you to know that. The author of the health care bill's controversial provision, Democratic Congressman Earl Blumenauer of Oregon is celebrating its victory but he's also urging his supporters to keep it quiet. An e-mail from his office said, quote, "We would ask that you not broadcast this accomplishment out to any of your lists. The longer this goes unnoticed, the better our chances of keeping it."

Why do you think that is? Maybe because when Americans hear about this, they won't be impressed.

Joining me now with reaction, Fox News contributor Kirsten Powers and former White House political director Matt Schlapp. Welcome to you both. Kirsten.


CARLSON: Why would you imagine -- just broaden your imagination here for a second. Why do you think that Congressman Blumenauer is asking his supporters to keep secret this great accomplishment?

POWERS: Well, I don't know Tucker, maybe it's because people like you call them "death panels," even though it was called -- that was a PolitiFacts lie of the year actually that these were "death panels." So, I assume that's why he's doing it, the reality is...

CARLSON: This is such a great accomplishment that he can defend it, is that what you are saying?

POWERS: Look, it is hardly an accomplishment. It is the extension of something that was done under Bush. They passed a law in 2008 saying that Medicare would cover end-of-life counseling. It's not the same thing that was in the health bill, it's far less specific, though, I had no problem with what was in the health care bill, and you're just scarring old people Tucker. That's what is going on. You know perfectly well.


CARLSON: No, actually Kirsten, I'm bringing to light something that our government is doing to us. Something that our elective representatives are asking those supporters to keep quiet. That is the duty of the press -- you ought to be ashamed of asking them to keep that quiet.

POWERS: No -- they're doing -- you ought to be ashamed that you're calling them "death panels", when they are not.

CARLSON: I'm not. I'm exposing this to the light of day and you know it.

POWERS: That is not what you're doing.

CARLSON: Now, Matt -- that's exactly what I'm doing.

POWERS: No, you're not. Tucker --


POWERS: These existed under Bush, you can get reimbursed for this under Bush. So you know this is a completely made-up political game that you are playing. I mean, come on, Tucker.

CARLSON: Kirsten, there's nothing made up about it. You will concede Matt that this is a regulation that will apply to all Americans that is in effect -- taking effect in the middle of the night beyond public view, no?

MATT SCHLAPP, REPUBLICAN STRATEGIST: That's right. Because if this was current law, then why did they have to pass a new rule?

CARLSON: Exactly.

SCHLAPP: Very simple question.

POWERS: No, it was current law that you could get reimbursed for end of life planning when you went for -- when you signed up for Medicare. What I'm saying is the government already did this. The Bush administration already was saying that you could get reimbursed for end of life counseling. Now they are saying basically, when you are on your death bed, if you want to talk to a doctor about how to set up an advanced directive, it is completely voluntary, nobody is making anybody do anything. Tucker, I don't know why you are saying that? Why are you saying that our government is making someone do --


CARLSON: Here's what I'm saying Kirsten.


CARLSON: I'm saying, this is the kind of change, this is the kind of regulation that ought to be passed, by Congress, in legislation, in public. So, the rest of us can debate it and not after Christmas in a dark period in a federal regulation that the guy behind it is asking people to be quiet about. I really think, there's a stealth factor here that suggests creepiness. They're not the government you want.

POWERS: I will give you that. I will give you that, I don't think the people should be trying to downplay it. But I also think that there was such dishonesty and the fact that you are still calling them "death panels" shows that you guys aren't really being honest about what this is.


CARLSON: I'll be totally honest.

SCHLAPP: The dishonesty here is that the president had section 1233 in his bill and he pulled it from the bill because it was widely unpopular, he talked to Catholics bishops and other folks that were concerned about these issues, and they removed it from the bill and they did what is incredibly dishonest, which I believe they intend to do the whole time, they pulled the language out of the bill, but then just did it through rule-making. So, who is being dishonest here?

POWERS: Do you know that it's not the same language? I mean, do you guys know that?

SCHLAPP: It's worse. It's worse.


CARLSON: Kirsten, can we stop the pretending here and just be completely blunt since you're calling for an open and honest conversation.

POWERS: Please.

CARLSON: If we are going to control the cost, the growth of the cost of health care, that we need to address directly the cost of end-of-life care.


CARLSON: Anybody who looks at the numbers knows that. Certainly, the people behind Obamacare know that. The government has a financial stake in convincing people not to prolong their lives using very costly methods, you know that as well as I. So, at some point, if the government is going to try to contain the cost of Medicare, it will be in a position to encourage people to stop the treatment. You know that's true.

POWERS: Tucker -- I also know that you know that one of the biggest proponents of this is a Republican Congressman Johnny Isakson who actually said --

CARLSON: Look, my job is not to defend every Republican senator, I'm merely trying to speak the truth and you're like diverting it into some dumb partisan conversation.

POWERS: I'm not diverting it. I am acknowledging the truth. I'm saying, this is a basically bipartisan thing that you guys have turned into this hot potato that people who really care about this stuff and it seems family really suffer because they don't know how to set things up and how to do an advance directive, how to do a living will. You know, a lot of people don't have the resources that maybe you have.

CARLSON: -- patronizing the public. People are so stupid they don't know how to manage their own lives.

POWERS: No, they basically -- look, I would need it. If I was ill, I would need someone to counsel me on how to do this. And it's just saying that insurance will pay for it. You don't have to do it if you don't want it.

SCHLAPP: If it was so popular, then why did the Democrats take it out of the bill? They took it out of the bill because it was one of the things that was torpedoing the health care effort in the Congress.

CARLSON: It was a distraction.

SCHLAPP: And government itself, let me tell you, the language here right, the language is different. They made the language worse, instead of doing this once every five years, now the Obama administration is allowing this to happen every year and actually reimbursing doctors to do it every year. So, that's quite a slight of hand. And doesn't government -- aren't they a little conflicted here? They have to find this huge health care savings for seniors at the same time they've become the counselors to seniors in their end of care decisions?

POWERS: Where was your outrage in 2008 when the Bush administration said that Medicare would reimburse end of life counseling?

SCHLAPP: It was a veto that was overridden by the Democrats. So, I give President Bush credit for vetoing that bill.

POWERS: No, it was a 2008 law. I mean, I don't know what are talking about.

SCHLAPP: Yes, that became law over the president's veto.

POWERS: No, that's not true.

CARLSON: Can we get back to first principles and the core issues here?

POWERS: Yes. Please.

CARLSON: President Obama got up before the country shortly after he was elected and said two things, one, I'm going to provide universal care for the country that we've been trying for over 100 years, I will do it. And two, I will contain the cost, the exploding, the mushrooming cost of providing health care. To achieve the second, he is going to have to, the federal bureaucrats and planners and people who imagine they are in control of our medicine, are going to have to figure out ways to convince old people, the elderly and the sick to forego treatment and instead choose to shorten their lives. And choose palliative care over pointless treatment, you know that that's true. So, why don't you admit it, why don't you say it in public, why pretend? Why lie?

POWERS: Because I think -- first of all, I'm not lying. I think that the language that was in the health care bill actually was more to just what you just said, where they were encourage people to go into hospice, where they would encourage them to forego more expensive medical care. I will give you on that one that you could maybe try to come up with your conspiracy theory.

CARLSON: It's not a conspiracy theory, it's entirely true and you know it's true.

POWERS: On this one -- it is not true. I mean, I would want to have this type of counseling if I was terminally ill.

CARLSON: That's great, then why would you just admit it, that's what it is.

POWERS: And I think that you would want it too, Tucker. I think you would want to know what you need to do.

CARLSON: But that's not the point, you know what? That's not the point I'm making. The point I'm making is, government has an interest in convincing people not to continue treatment beyond a certain point and they are lying about it. They're pretending, oh, we have no interest in that but they do.

POWERS: But how are they lying? I mean, but how are they --

CARLSON: Because Congressman Blumenauer is telling his supporters, don't tell anyone we are making this regulation because they won't like it cause they're not smart enough to understand it's in their best interest.

POWERS: But they weren't lying about it initially, they are just basically are playing it down because of the "death panels." I don't think you are being honest here Tucker.


SCHLAPP: Let's get to the point here. Five hundred billion dollars in Medicare cuts in order to add 30 million dollars -- 30 million new people to Medicaid means they got to find ways to cut cost.


SCHLAPP: And they're going to ration care.

CARLSON: Thanks very much both of you for joining us.

POWERS: Thank you, Tucker.

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