This is a rush transcript of "Special Report With Bret Baier" from August 27, 2009. This copy may not be in its final form and may be updated.


REP. JOHN ADLER, D-N.J.: I have real concerns about the failure so far to in corporate the sort of cost controls that will make our system affordable for businesses and for taxpayers for years to come.

D. MARK WILSON, APPLIED ECONOMIC STRATEGIES: There are costs, and somebody has to pay for those costs. Health care reform is not going to be free.


BRET BAIER, HOST: OK, in a new study out today, the Heritage Foundation has commissioned a study. Economist Mark Wilson puts a price tag on the proposals that are out there as they exist now.

For American employers there are int eresting stats there. Under the pay-or-play mandate, it would require to offer health insurance to their employees or pay a tax to the federal government.

You can see here, the study shows the mandates will cost employers at least $49 billion a year — putting 5.2 million workers at ris k for unemployment or reduced work hours and another 10.2 million employees will face stunted wages as a loss — and a loss of benefits as their employers try to find a ways to fund the mandate, as the bills are written now.

So what about this element of the health care reform debate, how it factors into the bigger picture. Let's bring in our panel: Steve Hayes, senior writer for The Weekly Standard; Kirsten Powers, columnist of The New York Post and syndicated columnist Charles Krauthammer.

So what about this analysis, Steve? Do you buy it?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Yes, I think it's interesting. One of the things that has been missing, I think, from the broader health care debate has been a discussion of what impact it will have on small businesses and employers.

Anytime you're going to impose costs on small businesses, they're either going to have to cut the workforce or they're going to have to pass those costs on either to their employees or to their customers.

I think this study makes clear just how large a potential impact that will be and I think it should be — I think it should make the White House nervous to have these kinds of studies, this kind of discussion enter the debate.

BAIER: Kirsten?

KIRSTEN POWERS, COLUMNIST, NEW YORK POST: I think there are different studies depending on where you are coming from. Of course, Heritage is conservative, so they don't like this health care plan. I don't think it's a big surprise.

There are plenty of small businesspeople that feel the opposite, that they actually feel if this isn't health care reform they can't compete.

The people who are most affected by this pay-or-play mandate are people who are currently not offering insurance to employees. If you are a small business who is offering insurance to you employees, then you are competing with people who are not having the same costs. And there are small business owners who have a real problem with that.

It gets back to a little bit of what he we talked about last night, and Ted Kennedy talked about this, whether you think it is a moral imperative or not to provide health insurance.

And I think there are a lot of people who feel that way, and we're kind of moving into this system where employers don't have any responsibility to their employees. They just hire people as consultants and don't offer them health insurance. And that's not the direction Obama is going.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Look, it could be a moral imperative, but numbers are numbers. A moral imperative can have economic consequences and it's important to actually look at them.

I don't care who did that study, it's obvious if you are going to impose a mandate on employers, there's a cost. You don't have a free lunch anywhere. And it could be a cost in the cost of doing business or it could be a cost translated into fewer employees or unemployment.

What's killing the Obama health plan is not the Republicans, it's not the Blue Dogs, it isn't the rallies in the town meetings. It's numbers. It's reality.

Obama says I'm going to expand coverage and reduce the cost. And the CBO, the Congressional Budget Office, steps in and gives you numbers. It says no, it will not reduce. It will increase our costs by $1 trillion.

Obama says oh, yes, it's in the first decade yes, and then it will decline. The CBO says no. There will be an increase in the deficit in the second decade. It's the numbers and the reality that is sinking Obama-care.

BAIER: Here are the numbers in the polls: A new Rasmussen poll out today about health care reform proposed by the president and the Democrats, the favorability at 43 percent opposed, 53 percent, and you can see, roughly the same as it was a few weeks ago.

Here is another interesting element: These town hall meetings, there was one in Virginia for Representative Moran, Democrat from Virginia, he brought along Howard Dean, former presidential candidate, also former — a physician and the head of the DNC, to answer some questions about the bills that are on the table.

He was asked a question about tort reform and why that is not in there. Take a listen to this answer:


HOWARD DEAN, FORMER DNC CHAIRMAN: Here's why tort reform is not in the bill. When you go to pass a really enormous bill like that, the more stuff you put it in it, the more enemies you make, right?


And the reason tort reform is not on 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. That is the plain and simple truth.


BAIER: There is some truth serum at that town hall meeting.

KRAUTHAMMER: You got to love Howard Dean. He is our best friend. He speaks the truth — on this he did.

And it's, again, the more discussion in the town halls, the more discussion, you know, in the workplace, in private or on television, the more these truths are coming out — CBO on numbers, and Howard Dean on the hidden political realities.

It's a question — tort reform would save tens of billions of dollars. That is known widely. It is a question of between $60 and $200 billion every year, an enormous amount of money.

It is nowhere in the bills, never spoken about. Obama hasn't spoken a word. Why? It is because the trial lawyers own the Democratic Party.

BAIER: Kirsten, you talk about the Straight Talk Express, that was Howard Dean. Now Democrats think it is a benefit for all of these different events around the country that they're launching this next week for questions and answers. If the answer is that, is that a good thing?

POWERS: Not for Democrats, no.

But look, this is a real problem, because if Barack Obama was really trying to be bipartisan, he would have included tort reform, because you have to at least give that, you have to give something to the conservatives.

I mean, I don't think they were ever going to go along with the public option, but it is sort of indisputable that we need to do tort reform.

And it has become — I mean, what Howard Dean has said is absolutely true, and it's something that the White House was not willing to even to extend any kind of olive branch over and I think that they're paying a price for it.

HAYES: The Democrats are fun to watch in this health reform debate. The Republicans could just go away. They don't ever have to say anything.

You had Howard Dean making this comment today. You had a freshman Democrat from Colorado talking about the need for cuts to Medicare.

BAIER: Betsy Markey from Colorado.

HAYES: Right. You had California Democrat Pete Stark calling the moderates "brain dead" because they opposed the public option. It's just comedy to watch the Democrats on this.

BAIER: See where it goes.

Is the CIA being devalued by the White House, and what is that doing for morale in the agency? The panel will discuss all of this, next.



BILL BURTON, WHITE HOUSE SPOKESMAN: The president is responsible for any decision that gets made inside his administration. But there will be folks in the intelligence community who are making decisions about intelligence gathering.

RICHARD ALLEN, FORMER NATIONAL SECURITY ADVISER: The issues of the FBI, how it works and has worked traditionally with the CIA — not all that well, as we know.

So there are all sorts of bureaucratic and cultural impacts here and among them is the fact that the FBI is not experienced in terrorist interrogation.


BAIER: OK. If Osama bin Laden was captured tomorrow, he would no longer be questioned by the CIA. He would be questioned by a multi-agency unit that has been set up by the White House. It's called the High-Value Interrogation Detainee Group, or HIG.

Now, the new unit will have its own director and will be housed in the FBI.

Here is the question: There is a little confusion who has ultimate authority over it. Initially the White House said that the FBI director would. Today the Justice Department said that it's a group, not a subunit of the FBI or the Justice Department.

We're back with our panel. Steve, it's a little confusing.

HAYES: That makes you feel good, right? This new, High-Value Interrogation Group, and they don't know who is running it or what it's going to do.

I think really this is a big moment. I mean, the inspector general report that came out got a lot of attention, and it should have gotten a lot of attention. But really perhaps the bigger announcement as it relates to America's national security is this new method of interrogating detainees.

I think really we have now gone back to 9/10. This is now pre-9/11 mindset. You have the White House — President Obama campaigned as a law enforcement first candidate. But I don't think that even those who supported him thought that he was going to go this far.

Giving the FBI the lead on these things, on these interrogations, might, in fact mean, if they're going to try to prosecute terrorists in U.S. courts, might in fact, bring us back to this question of do we read Miranda rights to terrorists?

And I talked to a couple of legal scholars today who think that is all but inevitable. The practical effect of this will be Mirandizing terrorists and giving them rights, in effect, that Americans have.

BAIER: Kirsten, is this a slap at the CIA, this new unit?

POWERS: I think it is probably an attempt for them to try to consolidate interrogation and make sure it is done correctly. And there is a fundamental disagreement between conservatives and liberals, and me and both people sitting next to me, about what type of interrogations work the best.

And I don't think there is any reason that they can't have a new interrogation unit where they can interrogate people without breaking the law.

I don't necessarily buy into the idea that the CIA is just persecuted agency. You know, they didn't do a great job in terms of predicting 9/11 or a lot of other things like the fall of Soviet Union, Iranian Revolution.

I think there are a lot of problems with the CIA and I think that it needs to be overhauled.

BAIER: You're not suggesting that all the interrogations that they did were illegal?

POWERS: No. But I think there were obviously a lot of problems associated with the CIA and that perhaps you can lay that blame at the feet of the White House or the feet of the Justice Department if you want.

But I do think that they were sort of scam belling after 9/11. They knew they dropped the ball and were going a little further than they should have been going in trying to get people to confess to things, and in doing they got people confessing to things they didn't do and some people broke the law.

KRAUTHAMMER: But this new HIG unit, with no lines of authority, ostensibly FBI, all kinds of people in that committee with no one who decides, the White House apparently abjuring ultimate authority on this, is a disaster in the making.

If we capture Osama tomorrow, we will learn how he likes his lamb prepared and that's it. We will learn nothing else from him. And we are going to read him his rights.

And a White House official, reported by The Washington Post earlier in the week, said that we would not necessarily read all of the high-value terrorists Miranda rights. Is it even a question?

The idiocy of imagining that if you capture Aymen al-Zahiri, one of the cruelest terrorists in world history, you would actually think of saying to him you do — you know, that he doesn't have to actually tell you anything, is insane. Of course he doesn't have a right to remain silent. This man barely has a right to live. You capture him, you make him talk.

Now, it doesn't mean by all means, but if you stick him in a situation in which he is Mirandized, you are guaranteed you will learn nothing.

This isn't a game, and we are actually involved in two wars. It's incredibly irresponsible.

BAIER: So why would the White House roll out a program and be this vague about who has the ultimate authority?

KRAUTHAMMER: Because it hasn't been thought through; because it's a political reaction to their being upset about how the CIA has acted in the past, and because it wants to appease its left.

It's not thinking clearly. It's being incredibly irresponsible.

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