This is a rush transcript of "Special Report With Bret Baier" from July 16, 2009. This copy may not be in its final form and may be updated.



DOUGLAS ELMENDORF, CONGRESSIONAL BUDGE OFFI CE: We do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount. And on the contrary, the legislation significantly expands the federal responsibility for health care costs.

REP. NANCY PELO SI, (D-CA), HOUSE SPEAKER: I believe that all the costs of the health care reform bill can come from squeezing more savings out of the legislative — out of the system.

JOHN BOEHNER, (R-OH) HOUSE MINORITY LEADER: When you look at what my Democrat friends are offering on health care, you have to watch what they do, not listen to what they say.


BAIER: Some of the sights and sounds in the debate over health care reform today. The biggest, really, bombshell was the Congressional Budget Office saying that the bills they are looking at would raise the costs and not lower them. That's a non-partisan office of accounting.

Also, the polls are going the other way for Democrats. The newest Rasmussen poll says that 78 percent believe it is likely that health care reform will mean higher taxes for the middle class. There you see, 56 percent very likely, and 22 percent somewhat likely.

So what about the chances that something gets passed? Let's bring in our panel, Fred Barnes, Executive Editor of "The Weekly Standard," A. B. Stoddard, associate editor of "The Hill," and syndicated columnist Charles Krauthammer.

Fred, the developments today, it was not a good day for Democrats on health care reform.

FRED BARNES, EXECUTIVE EDITOR, "THE WEEKLY STANDARD": No, it was not a good day, and their chances of passing a health care reform bill before the August recess, which is the goal, they're trying to get it through as fast as possible before President Obama's popularity sinks even further, they are not as good.

And Doug Elmendorf is one brave guy, because he is under enormous pressure from the Democrats and the White House —

BAIER: The director of the CBO.

BARNES: We just heard him talking about the health care reform bills, at least the ones in the Senate, are going to cost a lot more than Democrats have pretended. And that's one of the problems.

But there are so many others problems. The problems for Democrats are just piling up on health care reform. The spending, the surge in spending, it is certainly one of them, with no real savings.

Nancy Pelosi talks about — you notice how vague she was about the savings she is going to get from the health care system? I'd like to hear some specificity there.

Another thing is the tax hikes in the House bill are economically destructive, for sure.

Abortion is an issue, because it's clear from the House bill, it says, I think the language is they would fund outpatient hospital clinics and clinic services, and so on.

And then a board at HHS appointed by Obama and the secretary of HHS who are very, very pro-abortion, would decide whether abortion is covered. Well, everybody knows it would be covered, it would be covered, eliminating the whole (inaudible).

Then there is the public plan which is so controversial, which a lot of Democrats and several Republicans don't like.

And then there is this question of cutting into Medicare for some of the savings. Medicare is the single most popular government program ever. Cutting into it is dumb to even talk about. It isn't going to happen.

BAIER: A.B., one of the things the House speaker talked about was squeezing this savings. But she didn't then talk about why they're $600 billion in higher taxes in the House Democrats' plan. Then she was asked about that, and said that, well, if there's overflow, it could be used to reduce the deficit.

A.B. STODDARD, ASSOCIATE EDITOR, "THE HILL": And that didn't help her with conservative and moderate Democrats who don't to raise taxes anywhere in a recession.

What was interesting about her comments about she was sure she could find more savings from the system is that this issue has been studied for years, attempted at for 50 years. There are experts in the Obama administration, there are experts in both parties. If there could be savings found in the system, they would have been found already.

What was interesting about the testimony from the Congressional Budget Office director today was that, not only was it devastating, and he said these proposals on the table are not only going to save money, they're going to spend more. They're going to expand the cost of health care.

He then went on, not surprisingly, to propose taxing health — excuse me, employer-provided health benefits, a plan that was on the table in the Senate, a plan that most people say makes sense because it is a subsidy that grows the expense of the system.

And of course Senate Majority Leader Harry Reid said — just shot it right down and said maybe he should run for Congress.

This is a hole that Senator Baucus, the Finance Committee chairman, is attempting to hit, to fill, because he was going to use that pay-for, and President Obama told him no, I can't break a campaign pledge.

Look, I speak to the blue dog Democrats in the House every 24 hours on this. They have become increasingly opposed, not increasingly supportive of this bill. They see the polls. They see the concern about spending deficits and debt in the polls. They see the loss of support for President Obama.

They believe the leadership poisoned the well with the cap and trade bill, and this is — I agree with everyone here — this really imperils the deadline of getting it done by August.

BAIER: You mentioned Senator Baucus, who's the chairman of the Senate finance committee, and really, many people believe that's the only way anything can come out.

However, today he was asked about taxing health benefits. Here is what he said.


BAUCUS: The president is not helping us. He does not want the exclusion. That's making it difficult, with these taxes moved off the table, it is still difficult to come up with the revenue measures and other savings measures.


BAIER: That's a top Democrat saying the president is not helping.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: That's not a good sign. But the worst today, I think, was what emperor's new clothes moment, which occurred with Senator Conrad, who is a Democrat, chairman of the budget committee, and, as we saw, you had the impartial Congressional Budget Office exploding what is the central contradiction of the Obama idea.

It's been out there for months, and Democrats have pretended it doesn't exist. It is — Obama's says over and over again that our spending on health care is destroying our budget and is unsustainable. Now we have to cut it.

And his cure is to institute a huge new entitlement, which is going to be incredibly expensive. It always stood out there as insane.

And what we heard is that the CBO was asked about it, he said, well no — he was asked of the plan's coming out of the Congress, and his answer was they not only are not going to reduce the costs, they are going to increase it.

So it's not enough if they're revenue neutral, which would continue what Obama says is unsustainable. They are going to bend the curve upwards. And that, I think, is a fatal bullet to this entire idea.

BAIER: So down the line, does it get done by the August recess?

KRAUTHAMMER: Absolutely not.

STODDARD: I don't know how it does, but I think it has to. I think when President Obama says the status quo is unacceptable to Americans, the status quo on health care is unacceptable for the political future of the Democratic Party. If they go home on vacation, they pass nothing.

BARNES: People don't want all this spending, for one thing. I don't think it has a chance of passing. A bill in anything like the form we have seen so far could not possibly pass before the recess.

KRAUTHAMMER: They could pass an aspirational bill, which has no numbers and says revenue will be decided later.

BAIER: We'll see how that goes over.

We'll talk about the CIA's on again off again plan to kill Al Qaeda leaders with assassination leaders and why Congress wasn't briefed about it and where this goes next when we come back.



SILVESTRE REYES, (D-TX) INTELLIGENCE COMMITTEE CHAIRMAN: One thing he we do know is that we haven't always gotten the information. We haven't gotten it timely, and in some cases, it hasn't been accurate.

PETE HOEKSTRA, HOUSE INTELLIGENCE COMMITTEE: Why all of a sudden on this thing, where, you know, supposedly we didn't get briefed on a program that never happened, but the magic words "Dick Cheney" pop out, and then all of a sudden it becomes a priority issue?

I'm just concerned that this is nothing more than a partisan witch hunt by this House intelligence committee.


BAIER: Well, some Democrats are still pushing for an investigation about this program. We've come to find out that it was assassination teams to target Al Qaeda leaders. It was a plan that really hadn't taken shape yet when CIA Director Leon Panetta found out about it.

He then briefed Congress and pulled the plug on the program as it was moving towards, we're told by intelligence officials, a more operational status, that is, some training, apparently. And now there is a call for an investigation that possibly former Vice President Dick Cheney told the CIA not to brief Congress.

What about all of this? Charles, first let's start with you. Why would Leon Panetta pull the plug on the program, first of all? If it's assassination teams, we use predator drones along the Afghan-Pakistan border to kill Al Qaeda leaders.

KRAUTHAMMER: There are worries about capture, the sovereignty of allied countries. There are all kinds of practical issues, although I do agree that the real scandal here is after eight years we do not have a program of targeted assassinations. After all, what objection is there?

As you say, we have a predator program, which is extremely effective and nobody objects to ethically. If anything, a targeted assassination is more ethical because there would be a lot less collateral damage if you have a hit squad on the spot.

And if the issue is disclosure, what we know is this program had never happened. It had only reached a point of perhaps the beginning of training. And under the statute that establishes the CIA, the disclosure requirement is only for operational activities. This was not operational.

This is a non-story, a non-scandal. It is a way to retroactively protect Nancy Pelosi and her charges about the CIA lying.

BAIER: When you talk to people on the hill on the Democratic side, it's a very nefarious scheme.

STODDARD: Well, when it involves Dick Cheney and secrecy, it's always tempting.

I agree with Charles that the longer they drag this out — they have thrown a bone to the left wing of their party calling for an investigation, but to go any further is just going to result in Americans asking the same questions that Charles just asked.

I think this is a loser for them. I think that they need to focus on health care and energy. And if they lose those battles, perhaps they use this as a distraction.

But I think it would be a mistake. I think they would be provoking a fight on national security with Republicans that they could potentially lose.

I think that it was a hypothetical, non-operational program. If they want oversight of the CIA, that's one thing. They cannot run the CIA.

BARNES: That is a very good point.

And what would happen today if the CIA spotted Usama bin Laden riding in a car somewhere in Pakistan or Afghanistan, and maybe in other countries, but at least in those two? What would be the first thing they would do and should do, and I think they would? They would target it with a predator, they'd target the car.

There might even be some wives and children killed as well, but he is such a target that deserves that, his crime is so big, that they would go ahead and do it. That is an assassination of an Al Qaeda leader.

But I agree with Dick Cheney. It is like waving a red blanket in front of a bull, and the Democrats come charging out. It is amazing how much all these Democrats on Capitol Hill would like to see Dick Cheney in jail eating off a tin tray. I mean it is quite amazing that they feel so strongly about that.

They're wrong, and I think they are hurting themselves and not him.

BAIER: Quickly.

KRAUTHAMMER: And if you find Usama in Mauritania or Argentina or somewhere, you can't use a Predator, you want to have a means of capturing or killing him. This would have been the way to do it.

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