This is a rush transcript from "Hannity," August 3, 2009. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: Now, the president is running into lots of problems when it comes to passing health care reform, but the main one may be his numbers just don't add up. Now, he promises that his bill won't require raising taxes and will, in fact, decrease the nation's debt over time. But we found different.

Ainsley Earhardt is here to explain what health care would really cost — Ainsley.

AINSLEY EARHARDT, FOX NEWS CORRESPONDENT: Well, thank you, Sean. We've added up all the numbers. I think you're going to be shocked.

Reforming health care in the middle of a recession of course is a risky proposition, but White House budget director Peter Orszag, he insists the Obama administration's health care effort is "deficit neutral for the first decade," at least.

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But that doesn't make sense if you add up all the facts. Orszag himself is a former director of the Congressional Budget Office, the independent, nonpartisan government agency which provides economic data to Congress. And what does the CBO say about the plan currently pending in Congress?

Well, first, none of the health plans pending would control long-term spending, and most would add around one trillion dollars to the deficit over the next 10 years.

Yes, that is just another trillion dollars to the deficit. So let's do the math. Let's look at what the CBO say about the White House plan.

The projected 10-year cost of the bill's insurance coverage provisions would be more than $1 trillion, but Medicare direct spending would be reduced by $219 billion. And then there's that income tax surcharge on high-income individuals, who would increase revenue by $583 billion. Once up add in all the other costs, in the end, we are left with a net deficit increase of about $239 billion. And that's just in the first 10 years.

What about after that. Well, the CBO says, relative to current law, the proposal would probably generate "substantial increases in federal budget deficits. During the decade beyond the current 10-year budget window."

The White House argues that the CBO estimates don't take into account potential future savings that the expanded health care coverage would bring, like savings because of disease prevention, let's say. Well, President Obama pledged not to sign any bill that would increase the deficit but, Sean, if you look at the CBO estimates, that seems impossible at this point, because the numbers aren't adding up.

HANNITY: And thanks, Ainsley.

And joining me now to discuss all of this is the former economic advisor to the McCain campaign and the former director of the Congressional Budget Office, Doug Holtz-Eakin.

Doug, good to see you. Thanks for being with us.


HANNITY: All right. Let me start, because it was really — I think - - one of the things that got the ball rolling is the failed stimulus package, the false promises about unemployment, and the — what impact it would have on the economy.

And the next blow to the Obama administration was the CBO scored up the first health care bill, and it was a disaster. Tell everybody what the process is as they go through that. You were there.

HOLTZ-EAKIN: All right. It's very simple. Each time a bill is reported to a committee, the CBO takes a look at it and says, "What will this do to the federal budget?" What happens to federal spending? What happens to federal taxes? What happens to the debt that we leave behind for our children?

And on the health care front, what we have seen is an acceleration of the mountains of debt that we would be leaving behind for our children.

HANNITY: And one of the problems, why would this have taken the Obama administration by surprise the way that it did, considering this is the bill that they wanted? Did they not — did they not anticipate this or even examine the possibility that this would be a debt increaser, not what they were saying?

HOLTZ-EAKIN: I find that really surprising. No one should be shocked about what the CBO is saying. They have been very clear. And indeed, it is in the law that created them that they have to be clear with the Congress about where the estimates come from.

So they've been laying the groundwork for these estimates for months, and what we've seen is a fundamental problem in the bills that are delivered, not in the way the CBO is scoring them.

HANNITY: All right. One of the things that bothered me is the CBO, the Congressional Budget Office, is supposed to be nonpartisan. Now, there was a report out that CBO chair Elmendorf actually met in the White House with the president, in the Oval Office. That's troubling to me, because that sounds to me like he might be trying to exert political pressure. Is that possible? Could that happen?

HOLTZ-EAKIN: Well, it certainly has that appearance. And I think the White House did him a tremendous disservice to invite him to the White House. It's hard to say no to the president. He is the president of the United States. If he invites you, you can't say, "No, sir."

But the CBO director works for the Congress. He works for both Republicans and Democrats in the Congress, and the White House should not have put him in that position. It does lend a bad appearance to lobbying the CBO.

HANNITY: All right. Let's — from people that — look, Ainsley is going through these numbers for us. We're actually trying to get to the bottom line. It's troubling to me that, you know, I have a list here of talking points by the Democrats. "This is good for you. This will — you won't have to pay a co-payment." This is the bumper sticker sloganeering that's going on out there, the platitudes.

But the reality is, as scored by the CBO, this increases the debt. The promises that they're making are false and that none of these things are going to come true. Am I reading it right? Is it — is it the disaster that I read it to be?

HOLTZ-EAKIN: Yes. This is bad health policy. It's obviously bad budget policy to accelerate the amount of debt. It's bad economic policy. These bills are full of job-killing provisions, mandates and new taxes. It is time to step back and put this on the right track.

And if they want to demagogue insurance companies, let's remember, insurance companies are as good as the markets they're in. So let's make them compete for your services and your money, give you better services. A government monopoly's not going to produce that.

HANNITY: One of the things that bothers me, too, is whenever — whenever they estimate what the cost is going to be, it always turns out to be six, seven, eight, nine, 10 times what they predict. I think one of the great examples of that would be Medicare.

I mean, it ended up being, correct me if I'm wrong, seven or eight times what they originally projected it would be in 1990, for example. Now it's headed to bankruptcy. You know, what happens if all of their estimates are wrong? Doesn't that guarantee rationing will follow? Doesn't that guarantee that we're going to see long lines, long waits, inferior care follow, as well? And what are the possibilities they get it wrong?

HOLTZ-EAKIN: As a former director I promise you they'll get it wrong. And I have a lot of sympathy for how difficult it is to do these estimates.

But my own feeling is that there are two kinds of mistakes you make. When I ran the CBO, we did the prescription drug bill, which relied on private firms bidding to deliver this to our seniors. We estimated it would cost 30 percent more than it did. Market forces drove down the cost.

The places where underestimates of the cost are in big-government programs, because Congress always layers on new benefits, and there's no incentives to reduce costs. That's the kind of mistake, I'm afraid, we'd make here.

HANNITY: Yes. All right. Well, we appreciate it, Doug. Thanks for being with us. Thanks.

HOLTZ-EAKIN: My pleasure.

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