This is a rush transcript of "Special Report With Bret Baier" from August 20, 2009. This copy may not be in its final form and may be updated.


PRESIDENT BARACK OBAMA: I would love to have more Republicans engaged and in volved in this process.

I think early on a decision was made by the Republican leadership that said, look, let's not give him a victory and maybe we can have a replay of 1993, '94, when Clinton came in. He failed on health care and then we won in the midterm elections and we got the majority .

And I think there are some folks who are taking a page out of that playbook.


BAIER: President Obama on a radio talk show broadcast from the White House today, talking about Republicans and their motives in this health care he reform debate.

He later went on to tell a listener "I guarantee that we will have a health care reform bill this year."

So what about this? Let's bring in the panel, Fred Barnes, Executive Editor of "The Weekly Standard," Juan Williams, news analyst for National Public Radio, and the syndicated columnist Charles Krauthammer.

Charles, your thoughts on the president's appearance today. We haven't seen him for about three days, which is rare in this health care barrage.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: This is typical Obama. He speaks for truth and justice, and anybody who opposes him is a radical partisan who does it for personal partisan reasons.

Look, this is disingenuous, and it's dishonest. He knows that the reason his proposals are in trouble is because of two things -- Democrats in Congress, and the non-partisan Congressional Budget Office.

In Congress, he's got the blue dogs in the House and he's got the moderates in the Senate. And the reason that he's in trouble is because, for example, as we just heard in the public option, it's liberals who are going to hold it up in the House unless you have a public option, and moderates in the Senate who are going to stop it unless it doesn't have it. And those are Democrats, not Republicans.

BAIER: In fact, and I'm going to interrupt you here, nothing illustrates that more than these sound bites from the House Speaker and Senator Kent Conrad. Take a listen.


PELOSI: There is no way I can pass a bill in the House of Representatives without a public option.

CONRAD: It's very clear that there are not the votes in the United States Senate for a public option. That's why I was given this assignment to try to come up with an alternative.


BAIER: So no way I can pass it without it, no way it passes the Senate with it, two sides.

KRAUTHAMMER: And it is all because of Democrats. Democrats have the super majority in the Senate and a huge majority in the House. So that's number one.

And the second thing is the CBO. The president's ideas and proposals are in trouble because he said he did this because health care costs are threatening our economy, and the CBO has said it's going to cost a fortune. It is going to do the exact opposite.

And that's what is hurting him. It's not Republicans. This is all a strawman.

BAIER: Juan?

JUAN WILLIAMS, NEWS ANALYST, NATIONAL PUBLIC RADIO: First, let me say that Republicans aren't playing. They're out of the game.

I guess there are some arguments left and right among Republicans when you see John Boehner going after Billy Tozan and you see Dick Armey having to resign from his lobbying firm because the lobbying firm says why are you fighting against it when we want some kind of health care reform in place.

BAIER: Billy Tozan, former congressman who is not the head of PhRMA.

WILLIAMS: Right, and Dick Armey, the former head of the House of Representatives, who is now working as a lobbyist in town and was representing hospitals that want some kind of health care reform, but at the same time opposing it in terms of his political voice.

But in terms of the elected Republican representatives and senators, they're pretty much unified in opposition to this thing. And Charles Grassley, on the Senate finance committee, I think is caught in a very difficult place.

On one hand people say he doesn't represent all Republicans, and on the other hand he feels compelled at some point to speak for Republicans because he is at a critical point in revising the system.

BAIER: But do you think people are buying what the president is selling when he starts talking about Republicans being the main cog in the wheel here?

WILLIAMS: No. I do think people think, why aren't Republicans willing to do any work with president on such an important issue as health care?

But at the moment, that's not the story. Charles is right. The story is what is going on among Democrats.

Unless you want to say we're going to go for the nuclear option and the Democrats are just going to force it down the throats of the American people, that's just not a winning ticket for the Obama administration. That's why I think we have seen something of a circus over the last few days with the flip-flops on public options, with the whole notion of Sebelius saying one thing, Obama saying one thing, now Pelosi -- not only Pelosi, but Chris Dodd saying we got to have that public option.

This, to me, is evidence that they're trying to gain traction, the president today that Michael Murcanah show, a conservative talk radio show.

BAIER: Although he is not that conservative. He supported President Obama in the election, and on his show.

WILLIAMS: Most of his listeners are conservative I think it's fair to say.

KRAUTHAMMER: He's a liberal's idea of a conservative.

WILLIAMS: So here is the president trying to reach out to conservatives, and now is going to get religious conservatives. But it looks like a circus. It looks desperate. That doesn't help him.

BAIER: Fred?

FRED BARNES, EXECUTIVE EDITOR, "THE WEEKLY STANDARD": You're right about that. It does look like a circus because it is a circus.

Look, if President Obama wants to get Republicans more engaged, why doesn't he tell Nancy Pelosi bring the Republicans in? They have been shut out in the House.

They have been brought in the Senate Finance Committee. You mentioned Chuck Grassley, the Republican Senator from Iowa, and there are a couple of others who are negotiating. If you want to attract them and Republican votes, why doesn't President Obama offer them compromises?

He told that faux conservative today on the radio today that he's willing to compromise. Well, what is he offering? Has he said -- there are two things, and you could get a ton of Republican votes in the House and Senate if he said, look, no public plan.

Conrad is correct, it can't pass the Senate anyway. And Nancy Pelosi says she can't pass a bill in the House unless it does have a public plan. That's nonsense. Of course she can pass it.

BAIER: Government run health insurance is the public option.

BARNES: Yes, that's the public option. Of course she could pass the bill without it.

And the second thing is lawsuit abuse reform, so-called tort reform, which would be the one thing that would cut medical costs a lot and particularly eliminate so much defensive medicine.

Has the president offered those or anything else? His idea with compromise with Republicans is for Republicans to totally capitulate. And they're not going to do that.

WILLIAMS: Fred. BARNES: Look, what has he offered them?

WILLIAMS: Ok, here's my point to you then. Let's say he says no, we won't have the public option. We will go with co-ops, let's say. Do you see any rush of Republicans? I must of missed it. I don't see any stampede of Republicans saying, yes, Mr. President, we'll work with you.

BARNES: I'll tell you why, because they have heard what the Democrats have said, what Max Baucus, what Chuck Schumer has said and several other Democrats have said, oh, we can make the co-ops just like the public plan, just like the government plan. They will have the same funs. They have said that.

WILLIAMS: They say the function is to challenge the insurance companies and create competition so the insurance companies don't turn their back on the American people.

BARNES: There are all kinds of competition with the insurance companies. What are there, 1,300 of them in the country, and about 60 percent of them are not for profit already. So there is plenty of competition there. They don't need a government-run plan.

Let me say one other thing. Why does Obama want -- Republicans in particular won't give him anything. Why does he want it? Because they would be cover for the blue dogs and others Democrats to vote for his bill.

BAIER: Last word, Charles, tonight the gang of six meets, by the way, the Senate Finance Committee that's trying to hammer something out.

KRAUTHAMMER: You know, when Democrats are addressing liberals, they say the public option, the co-op really is a Trojan horse, a way to get a public option, and when addressing conservatives they say, as Obama says, it's only about creating competition. So it depends on the audience.

The obvious answer is it is a Trojan horse and it is a way to introduce a public option. And it's not going to pass.

BAIER: He won't do it here, but President Obama apparently has no problem with offshore drilling near Brazil. The panel gets all greased up over this one, when we come back.


BAIER: This story gained a lot of attention. The U.S. Export-Import bank has promised Petrobras, Brazil's state-owned oil company, $2 billion in loan guarantees to finance lucrative drilling off the shores of Rio de Janeiro.

President Obama of course campaigned saying drilling wasn't really the answer to the energy issues on the campaign trail.

Then there is the question of George Soros. He's the Democratic backer, the billionaire, who actually sold millions of shares in the Petrobras, the largest of his firm's holdings prior to this public disclosure of the Export-Import bank's offer of new credit guarantees.

No response from the White House, saying they really have to look into this story.

We're back with the panel -- Fred?

BARNES: I think they ought to look into this story, because it does catch the Obama administration with a great contradiction. Now the import export bank, or is it the import export bank?

BAIER: Export-Import bank.

BARNES: There you go. They say it is not with the taxpayers' money. Look, they have to get the money somewhere, and they borrow it, and the government gives the loan guarantee, and they give it to this Brazilian oil company.

Where does the money come from? What if they renege on the loan? Well, the federal government pays for it.

This is an agency of the Obama administration, and they're letting this money go to this Brazilian oil company to drill offshore, which they ought to be doing, because there is plenty of oil there. But why not do it in the United States? There are a number of states which want to have the drilling offshore, way, way offshore. It's not going to be that if you're lying on the beach you will see an oil derrick in the surf. You know, 100 miles offshore, why not do it here?

And the money would go a lot further. It would create more jobs in the United States than would ever be created in the United States by giving the money to some Brazilian firm.

So this is crazy. It is a hugely hypocritical position by the Obama administration.

BAIER: And, Juan, the Soros connection really gained a lot of attention online because he had 22 percent of his holdings were in Petrobras, and he sold millions of shares right before this announcement. I mean, the guarantee had already happened.

WILLIAMS: But clearly it looked like a quid pro quo, that he was in fact being enriched because he was pumping money into the Obama campaign and the Obama administration.

BAIER: And we don't know the answer there.

WILLIAMS: And we still don't know the answer. But to me, this whole thing is oil and water. I do not see Fred's analogy at all. The Brazilian government and the Brazilian people had to give permission for offshore drilling immediately adjacent to their shores.

The American people, even in states like Florida, Republicans, have clearly said we don't want that kind of drilling, North Carolina, just on vacation, they don't want that kind of drilling. That's the will of the voters and the American people.

In some cases they might want it, but I'm just saying, you know what, there was an election, President Obama didn't hide his feelings about drilling offshore off U.S. territory, and he won the election. That's the feeling.

It seems to me that what you have here is an opportunity for the U.S., the Export-Import bank, to put money into an investment that is likely to pay off. That's what they are doing, and we should be celebrating.

KRAUTHAMMER: the Ex-Im bank spokesman said it is all about American jobs. If it's all about American jobs, the payoff for drilling offshore in America is a lot higher. And if you're subsidizing or underwriting drilling offshore in Brazil, then you're completely undermining the reason to prohibit drilling offshore in the U.S.

The reason Obama opposes it and the reason the liberals oppose it is because of the environment. But by not drilling here, we simply end up have the drilling end up elsewhere, and it doesn't reduce pollution on the planet. It simply exports it into poorer countries where the safeguards are much less, for example, in Nigeria, where there are oil spills and siphoning and explosions all the time.

So the net effect on the planet of drilling elsewhere instead of here is that there is more pollution and despoiling of the environment, and it reduces American jobs. It makes no sense at all.

BAIER: How do you say drill baby drill in Brazil?


BAIER: As a PR issue, it doesn't look good.

BARNES: No, it doesn't look good.

Juan was entirely wrong about the American public. The American public is entirely in favor of offshore drilling, particularly in Virginia, where I live.

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