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 OBAMA: Today after almost a century of trying, today after over a y ear of debate, today after all the votes have been tallied, health insurance reform becomes law in the United States of America.


SEN. JOHN CORNYN, R-TEXAS: The voters, the people always get the final say-so. And I think this is very important to remember as the president intends to take a victory lap on this bill. He is going to take a victory lap on a bill that the American people don't want because they know we can't afford it, because it'll raise their premiums, cut Medicare, and raise taxes on the middle class.


BRET BAIER, "SPECIAL REPORT" HOST: Well, the health care bill that passed the Senate on Christmas Eve is now the law of the land. The Democrats very happy about that in the East Room as the president signed that bill into law.

Before speaking and before actually signing the bill, Vice President Biden did the introduction and had a little introduction of his own to President Obama.



VICE PRESIDENT JOE BIDEN: This is a big f***ing deal.


BAIER: It was a big deal.

Let's bring in our panel, Steve Hayes, senior writer for The Weekly Standard, A.B. Stoddard, associate editor of The Hill, and syndicated columnist Charles Krauthammer.

I will just toss it to you, Steve. What do you think?


STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: What can you say after that? In a Washington, D.C. environment I think that needs a little levity for those of us that don't like what happened. I think it's a nice moment.

What's most interesting about the way that Washington has responded is in a way this whole process typifies Washington, what happened typifies Washington. The reconciliation that's going on in the Senate right now is typical of sort of Washington and Washington arrogance.

But the thing that I found most striking today was the abrupt reversal of conventional wisdom, because conventional wisdom all along as Democrats were getting pummeled about this in poll after poll showed that the American people don't like this, didn't want it, was that they were in trouble in November.

And now as this passes there is one Gallup poll today that suggests some people like it. And conventional wisdom has done a 180 and now the Republicans are in trouble, and are they going to pay for the fact that they were unified against health care?

It is the most amazing example of Washington as a fickle town where people actually can't think for themselves but follow polls wherever they go.


A.B. STODDARD, ASSOCIATE EDITOR, THE HILL: Well, I'm going to join in. I mean, I think that there are fresh polls since reform passed, showing the majority still oppose it, showing the majority still believes the Democrats passed it for political reasons and not because they thought it was the right thing to do.

But there are majorities who believe that President Obama now has a big accomplishment under his belt. So go figure.

I think that as the Democrats bask in the glow of their relief, mostly, and a little bit of triumph, we don't know whether or not they can muster the momentum to dig themselves out of a political hole, whether or not this will become a new season in America as President Obama said today, or whether or not it's just going to be the stimulus package and six percent of the country will like it in a few months. We don't know the answer to that question.

But I do think since Sunday night, I think that Republicans have made a mistake in concentrating so hard on this question of whether or not — they are fighting amongst themselves whether they are going to repeal and replace or just repeal. It's ridiculous.

What they need to do is focus on the provisions of this bill, this law that our bad 16,000 IRS agents, whatever they want to focus on, the fact that Medicare savings won't go to solvency. You could pick a lot of things and you could talk it up.

But to try to talk in the moment when Democrats are focusing on these very appealing consumer protections that are going to roll in right away, and try to talk about repeal is a mistake.

BAIER: One thing we know, Charles, is perhaps Vice President Biden will be more aware of open microphones here on out.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: And I think he is the man who, perhaps without intending, has given historical context to this presidency. After all, Obama sees himself as a successor to FDR and Truman, so now we have the historical procession, the New Deal, the Square Deal, and the "big deal."


BAIER: With an explicative in between.

KRAUTHAMMER: It would make a great t-shirt or bumper sticker.

BAIER: They're already out there.

KRAUTHAMMER: You can't make stuff up in this country.

Look, I think you guys are right. It's very interesting how you get a pivot in what people are saying today about who is going to win or who is going to lose.

I don't think it's the result of a single Gallup poll. I think it is that this town loves a winner. And today the president is a winner, and so all of a sudden he is hero, and all of a sudden he is a man of immense accomplishment, and all of a sudden the popular reaction to this will change in November.

I think the Republicans were wrong to overemphasize in all of the closing arguments in Congress on the weekend about how unpopular it was. You ought to oppose it on principle on detail, about how it will affect our economy, et cetera.

It is unpopular, but I think Obama was right when he spoke to his caucus and said, look, if the bill dies, it will always be considered a bad bill. If it lives, then we will have it actually happening. It will unfold and people will make a judgment as its provisions are enacted.

I think on balance it's a negative if you are a Democrat, but it's not as negative as Republicans have pretended, and they will discover that.

BAIER: Well, the Senate now is trying to fix this bill in the reconciliation process. And here are a few amendments Republicans have offered in this process as we go through the week. One of them is the no expanding Medicare without Medicare savings, essentially no double-counting Medicare savings. This is what we've talked about, about the $500 billion not being used twice.

No erectile dysfunction drugs to sex offenders. Bureaucrat cap-and-trade — this is a amendment that would ensure no provisions in the health care bill increase the size of government bureaucracies in Washington, and repeal new powers given to the secretary of HHS — 1700 in the new law now give new authorities to write regulations and issue definitions for the secretary of HHS.

This is going to be a long process, Steve, over the week. And we could have what's called vote-o-rama on all these amendments on Friday. What about this effort?

HAYES: It's an interesting effort, obviously, and some of those are serious and some are not. But what Republicans are trying to do is get Democrats to vote in favor of something so that the bill changes. And then it gets kicked back to the House.

Obviously, you know, it's going to be embarrassing for Democrats who have to vote to give erectile dysfunction drugs to sex offenders. It's a terrible thing to have to vote for. I don't expect that that one that's likely to come up in campaign commercials.

But a more serious amendment is one that John McCain offered shortly before we came on here which wants — which seeks to take out all of the sweetheart deals that were in the final Senate bill.

BAIER: Because now they are law.

HAYES: They are law.

BAIER: This is, as of today, all those deals are the law of the land.

HAYES: Exactly right. And John McCain, who has a history of fighting against pork and things like that, received a phone call from Mitch McConnell saying I think you should be the one to offer this amendment.

So McCain went out and gave a speech and detailed all of these sweetheart deals once again that are familiar to our viewers. He is asking Democrats to vote against the sweetheart deals so people like a Blanche Lincoln or others who are in political jeopardy potentially in the fall are going to have to be voting in favor of sweetheart deals, something that their opponents can use against them.

BAIER: A.B., quickly, where do we go in this process? Does it actually happen? Is it actually fixed? And does the Senate get the 51 votes without sending it back to the House?

STODDARD: It really depends what these amendments end up being. It's going to be very tough. They have more than 51 Democrats to play with so that they can let some people off on some of these votes. They don't want to change the bill. The House has said they can take the bill back just with minor changes, but anything major it would be really a huge problem.

I think that the most major challenge fell last night for Republicans, and that was on a Social Security provision. From now on I think it's sort of a good side show. It might go back to the House on something small, but I don't think that they imagined that it will be Swiss cheese.

BAIER: Don't forget, you can follow us on twitter. Go to twitter.com/Bret_Baier for updates throughout the day. And please go to our home page on Foxnews.com/specialreport. Tonight's poll asks what the U.S. should do with Israel. We will talk about that with the panel in three minutes.



ISRAELI PRIME MINISTER BENJAMIN NETANYAHU: The Jewish people were building Jerusalem 3,000 years ago, and the Jewish people are building Jerusalem today. Jerusalem is not a settlement. It's our capital.


HOUSE SPEAKER NANCY PELOSI, D-CALIF.: We in Congress stand by Israel, something we have a joint bipartisan commitment.


No separation between us on this subject. In Congress we speak with one voice on the subject of Israel.

REP. MIKE PENCE, R-IND.: I just never thought I would live to see the day that an American administration denounces the Jewish state of Israel for rebuilding Jerusalem.


BAIER: Well, at this hour Prime Minister Benjamin Netanyahu is meeting with President Obama in the oval office. It is a closed event to the press. We may get a picture a bit later. But this settlement issue has been a big issue the past couple of weeks.

We're back with the panel. Charles, in his speech to AIPAC, the prime minister said everyone knows these neighborhoods will be part of Israel in any peace settlement, so it doesn't preclude the possibility of a two-state solution moving forward. Yet, he told lawmakers that there may be a significant delay in talks.

KRAUTHAMMER: Well, I think there is. We have already had a year delay in talks because of Obama interjecting the settlement issue in the first place.

Remember, for 17 years the Palestinians and Israelis negotiated, ever since Oslo, directly in the absence of a freeze in settlements. Palestinians never demanded it as a precondition.

In comes Obama, he demands a freeze of settlements. The Israelis say why should we make preemptive concessions in advance? Palestinians haven't made any. And the Palestinians answer and say, well, if the Americans are demanding a settlement freeze, we are going to demand it as well. And in fact, we won't even speak with the Israelis until there is a settlement freeze.

This is absurd. That's why we have had a year of the Palestinians essentially in a boycott of these negotiations.

So, then, Netanyahu works out a fig leave, a compromise in which he agrees to a 10 month moratorium outside of Jerusalem for a freeze. And then all of a sudden Obama re-imposes a new condition now of a freeze in Jerusalem, which no Israeli government will ever accept.

Jerusalem is the Israeli capital. Everybody understands that in a settlement, these neighborhoods of east Jerusalem, the ones that we are speaking about and where the construction is occurring as well as the Jewish quarter of Jerusalem are going to be the Jewish state under any understanding or settlement.

For example, in the Clinton parameters of the negotiations a decade ago, they would be incorporated into Israel.

So, no Israeli is going to accept a preemptive concession that Jews can't live in these areas of east Jerusalem. So unless Obama changes this new condition, talks again are at a standstill because of a blunder on the part of this administration. Everybody wants negotiations, this, inadvertently undermines them.

BAIER: A.B., what about this meeting that's happening right now?

STODDARD: There is no cameras because nobody is going to come out and say anything nice to each other in front of the media. The optics are terrible. We heard very stark messages from Secretary of State Clinton and from the prime minister yesterday at AIPAC, very, very different messages.

And anyone who is expecting him to come here and be more cooperative got it wrong. He is defiant. I have no idea where the administration can go at this point on — if they are going to buckle on the settlement request. It's really hard to tell because they're not going to get a re-set of relations from Netanyahu. That's for sure.

I mean, it's a real signal that they meet in private and won't even come out and have a public discussion or appearance.

And they share this common goal, obviously, of containing Iran. They have to continue to work together. They keep talking about the strength of the relationship. But this is a real freeze. I mean, this is really dramatic.

BAIER: on Iran, last night after our show, the prime minister, Steve, said, "Israel thus expects the international community to act swiftly and decisively with sanctions on Iran to thwart the behavior, but we reserve the right of self-defense." "Swiftly and decisively" is not something you have characterized the administration as being on Iran.

HAYES: I think that's a normative statement, not a declarative statement or a description of reality. I think they, in fact, probably don't expect the international community to act swiftly or decisively, perhaps even at all.

And I think there you have really the fundamental disconnect between what you are seeing from Netanyahu and what you are seeing from the Obama administration. The Obama administration is putting up phony obstacles in the way of these peace talks and lengthening the process, in effect while at the same time doing virtually nothing on Iran.

You know, Iran actually matters, and it matters right now. It matters quickly. The peace talks have been going on forever. They are going to proceed forever. The urgency is Iran. Israel feels that urgency. The Obama administration not only doesn't feel it but I don't think they actually think that they will stop Iran from getting a nuclear weapon.

BAIER: Quickly.

KRAUTHAMMER: There's a striking oddity here. This is a president who bows deeply to the king of Saudi Arabia, who's in a photo op with the dictator of Venezuela, and will not allow the press in when he has a meeting with the prime minister of the only democracy in the Middle East and the strongest American ally in the Middle East. It is odd, indeed.

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