This is a rush transcript of "Special Report With Bret Baier" from March 23, 2010. This copy may not be in its final form and may be updated.


PRESIDENT BARACK OBAMA: This is a patients' bill of rights on steroids. Starting this year thousands of uninsured Americans with preexisting conditions will be able to purchase health insurance, some for the very first time.


Starting this year, insurance companies will be banned forever from denying coverage to children with preexisting conditions.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: We believe the law is clear, the regulations will clear up any ambiguity from those experts.


BRET BAIER, "SPECIAL REPORT" HOST: Well, that's one effort. The administration scrambling to try to make sure that children with preexisting conditions are, in fact, covered by health insurance companies because that is not the way it is read in the law according to experts who are looking at this. They say that children with preexisting conditions really wouldn't be covered until 2014. So the Health and Human Services secretary is working on regulations that would patch that up.

In the meantime, the Senate is looking to fix the health care law. As you look live at the Senate floor, the vote-o-rama continues on Republican amendments. So far the ones that have been voted on have gone down on the party line vote, and it doesn't look like they are going to get any wins, the Republicans, that is.

Let's bring in our panel, Steve Hayes, senior writer for The Weekly Standard, Nina Easton, columnist for Time and Fortune magazines and syndicated columnist Charles Krauthammer.

OK, let's start, Steve, with this, well, gap, I guess, in coverage for children that they are scrambling to fix.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: It's hard to imagine in a 2,700 page bill there would be gaps, things that people didn't think about. Really, it's shocking in Washington.

This is economics 101. This is why Fredrick Hayek wrote "The Road to Serfdom." These are the unintended consequences that come following any government intervention. It's natural. And the problem is intervention begets intervention.

You have intervention like this on a massive scale talking about 15 plus percent of the U.S. economy, potentially running 15 percent of the economy, and, of course, there are going to be these kinds of mistakes. The problem is figuring out where the unintended consequences are and how you are going to fix them.

The problem on top of the problem is that you fix them with additional intervention. So I think this is exactly why conservatives were warning about the scope and the magnitude of this legislation from the outset. It's a vindication one day later.

BAIER: Nina, there are other things that are coming to light here. Senator Max Baucus, Democrat, went to the floor of the Senate and said "One other point I think that is very important to make is that it's true in certain cases taxes will go up for some Americans who may be making less than $200,000."

So, there are other things that are being talked about now about this law.

NINA EASTON, WASHINGTON BUREAU CHIEF, FORTUNE MAGAZINE: They are being talked about on the floor of the Senate as we speak. This exercise that's going on right now, it's somewhat, I think it's playing overtime in a football game that's over. They are playing overtime solo, so none of this stuff is going to pass.

But they are able to frame the issue with these amendments that are being offered, that are going to be voted down. But you can bring them up again in November. The point that you are talking about is exactly right, there is going to be an amendment offered —

BAIER: But this is a Democrat, this is Max Baucus saying — and the Republican amendments, obviously —

EASTON: One of the Republican amendments is to say to report back to Congress with a commitment that people who make less than $250,000 a year won't be taxed. There is another amendment by Judd Gregg that says you are not allowed to raid Medicare to pay for this entitlement, which, of course, the bill does.

So you can one by one by one get Democrats on the record voting against these amendments and use it in November.

BAIER: Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I think one of the problems with the bill is not just the drafting errors, as we saw in this particular case with the children's preexisting condition, or even the unintended consequences.

I think the real problem is there is so much in the bill that is delegated to the bureaucrats, to the department of Health and Human Services, for example.

For example, we don't know what will be the required basket of coverage that any plan is going to have to have in order to be "acceptable" to the federal government and thus to people who receive a subsidy if you buy it. That's going to be determined in the future by the secretary of HHS, and that could be arbitrary.

I mean, if you are a 70-year-old widow, are you going to need drug abuse-rehab coverage? If you are a single male, are you going to need obstetrics? Of course not. But all of this will be decreed by a bureaucrat, unelected. It's not in the law now, it will be decided. And there is a lot of this which is going to be decided.

And the other example of this, and the one that people are really worried about, is these committees that will decide which is acceptable or the best treatment. Once you have a committee like that, as of now it's advisory, but in the future it could easily become compulsory as costs rise, as happened in Britain, which has the National Institute for Health and Clinical Excellence, the NICE committee, it's called, which decides who gets drugs and cancer — if it's expensive, you don't get it.

And that's what's in the bill but not written in detail today. It will all be decided in the future by unelected committees and bureaucrats.

BAIER: Quickly down the line, there have been charges by Democratic lawmakers and specific incidents that are being investigated about threats. Congressman Bart Stupak from Michigan released specific phone calls and faxes. There have been a couple of other incidents from other lawmakers who have reported this.

And officials are investigating all of these. What about this issue down the line and how it plays out, and what about it?

KRAUTHAMMER: I'm sure a lot of this is trumped up the way of the unruliness of some of the crowd on the day of the voting in the House was trumped up. You are always going to have a kook and a nut here and there.

It's being used by supporters of Obama-care to tar opponents with threats, violence, being un-American in general. I think it ought to be denounced, as the Republicans have. It should be. But it's not reflective of those who oppose the bill.

BAIER: Nina?

EASTON: Yes, but I disagree, Charles. I mean, these sound like real threats. People — and it risks the credibility of the opposition to let these threats go without answering them. I was pleased to see that Boehner and others answered them today.

I think they are going to need to continue to answer them because the passions do run high, and there is a sense among some people that, you know, that they want to go after, you know, they want retribution on some level. You hear that on the airways at times. And I think it behooves everybody to calm things down and say go vote in November.

BAIER: Is this different than other big issues that on both sides where people, you know, extremes issued threats?

EASTON: That's fine. Then you should be doing it on the other side when it happens on the other side.

BAIER: I understand.

EASTON: But it's really important for leaders of the opposition of the bill to come out very clearly and separate themselves and state clearly that —


EASTON: And they did and they need to continue to do it.

HAYES: They shouldn't continue. They did it. They did it once and they should be the end. He said we don't approve of it. That's it. If you continue to beat him up, it continues to be a story and it's counterproductive.

The people who are making threats shouldn't make threats. The leaders of the Republican Party should do exactly what they did. But this happens all the time. But I could refer to you my own voicemail sometimes after appearances on other programs and other networks where the vitriol level was every bit as harsh as what I heard in Bart Stupak's voicemail.

BAIER: OK. We probably won't have the end of this one. We'll be back with this. But logon to our homepage, Foxnews.com/specialreport for an exclusive report from correspondent Claudia Cowan about how the issue of health care is affecting the restaurant business.

And we will be back to talk about the bumpy road for the U.S. and Israel in three minutes.


MUSTAFA, BARGHOUTI, PALESTINIAN LAWMAKER: The Israeli decision to build settlement in the place of Palestinian shepherd in East Jerusalem exactly at the time when Mr. Netanyahu was meeting Barack Obama was clearly a calculated act.

REP. TED POE, R-TX.: The American people support Israel and the U.S. government better get on board. The people I represent are not embarrassed or humiliated by the actions of Israel. Israel has the right to determine where their people live, including in Jerusalem.

GIBBS: There are areas of agreement. There are areas of disagreement. And that conversation is ongoing.


BAIER: Israeli Prime Minister Benjamin Netanyahu spent more than three hours at the White House meeting with President Obama once, taking a break, and meeting with him again. This as you heard, after the announcement of the building of a 20-unit apartment complex in East Jerusalem on that same day. No press coverage was allowed.

This whole event we didn't even get a picture. We're back with the panel. Charles, what about all of this?

KRAUTHAMMER: Well, what you said is what makes it so unusual and remarkable. They meet for several hours — no press, no pictures, no joint appearances, as if the prime minister of Israel is toxic, as if somehow he represents a pariah state.

It feeds into the perception around the world, particularly in the Arab world and in some elements in Europe of Israel as a pariah state. Over what? This example of the Shepherd hotel — Israel, the eastern part of Jerusalem is Jewish neighborhoods, Arab neighborhoods, and mixed neighborhoods. People are purchasing land, selling it all the time.

There are about 200,000 Jews in the eastern area of Jerusalem. Imagine a city in the United States of that size where you have every day construction, permits issued, as a matter of routine. So, of course, it's going to be an announcement here or there. It's a breathing, living city.

The idea that it — there should be no construction or no purchase or selling of houses is absurd. It would mean strangling the Jewish areas in Jerusalem and essentially extinguishing them ultimately.

And this idea that it's Arab but Jerusalem is only because it houses the Western Wall and the Jewish corridor. It's odd, isn't it, that you have the Jewish quarter in what people are calling Arab east Jerusalem? It has been — continually there has been Jewish habitation for over 2,000 years.

And the only reason it was Arab was for 20 years the Jordanian army expelled all the Jews. In '67 the Jews returned, and that's why it's a mixed area in the eastern side of Jerusalem, it's Jewish and it's Arab.

BAIER: Sure, but from the Palestinians point of view, the vice president goes on this trip and this announcement is made about east Jerusalem. Then the prime minister visits President Obama and this announcement is made about this apartment complex. They say, you know this is all calculated to throw a wrench into the thing.

KRAUTHAMMER: It's absurd. It's a large city with its own municipal governments and counties and councils. It's got construction transactions all over. Israel is incredibly bureaucratic. Every construction requires 20 approvals.

So on any afternoon you are going to have an announcement of some sort. It would happen in any city of that size anywhere in America.

BAIER: Nina?

EASTON: Well, it's interesting that this focus on settlements, in this case, 20 units, whatever — wherever you come down on this, the Obama administration has let the focus get off the big picture, which is that both sides actually — the Obama White House and the Israeli government actually support a two state solution. He is letting — we have clouded that big picture there.

And Netanyahu, who would have to stand up to his right in order to move forward on the two state solution the same way that he has to stand up to his right on settlements, somehow he is not getting the support he would need, I think, to move forward on either of those.

BAIER: Steve?

HAYES: I thought the end of Major's package was very striking, where he said the White House simply isn't willing to compromise or wait on settlements, on a decision.

I find that amazing. This administration has compromised with North Korea by allowing them to remain off the state sponsor of terror list. They've compromised with Iran by allowing the timeline to slide for discussions. And they won't compromise? I find it amazing.

I spoke to somebody who was in a session with Netanyahu late this afternoon who said that basically his demeanor was one of incredulousness. He sort of didn't understand how this happened, how this became such a big issue, and why the Obama administration continues to press the issue.

There has been at least as of an hour or two ago, no resolution to this. They are working on ways to sort of find things that might allow the parties to move on. But there is no resolution, and the basic attitude is one of a shrug of shoulders. What happened here?

BAIER: So is this a crisis? In ten seconds.

HAYES: If it's not yet, it could be soon.

BAIER: Quickly.

EASTON: I was just going to say, feeding the tensions is a sense by Israel that this administration is willing to let Iran go nuclear.

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