This is a rush transcript of "Special Report With Bret Baier" from December 21, 2009. This copy may not be in its final form and may be updated.


PRESIDENT BARACK OBAMA: The Congressional Budget Office now reports that this bill will reduce our deficit by $132 billion over the first decade and by as much as $1.3 trillion in the decade after that.

SEN. MITCH MCCONNELL, R-KY, SENATE MINORITY LEADER: This bill is a mess. It is a cobbled together, special deal-riddled package that just underscores what people tend to think of Congress anyway, and this certainly underscores that impression.


BRET BAIER, "SPECIAL REPORT" HOST: Well, just after 1:00 in the morning, the Senate voted 60-40 to end the debate on the Senate health care reform bill. It's the first and biggest hurdle for Senate Democrats to move this forward. Not a single Republican voted for it.

And you heard the president talking about the deficit cutting in this bill. It does that by removing the provisions to eliminate the cuts in doctor's reimbursements under Medicare, a separate $240 billion over ten years. The math is interesting as you look into this bill.

What is in it, what isn't? Let's bring in our panel, Steve Hayes, senior writer for the Weekly Standard, Mara Liasson, national political correspondent of National Public Radio, and syndicated columnist Charles Krauthammer.

Mara, no real surprise on the vote because we knew what was going to happen, but what about what is in this after we have now looked at it for a day?

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: Well, there are a lot of things in it. We know the public option isn't in it and the Medicare expansion isn't in it. But there are a lot of health insurance reforms that are in it that I think there is a consensus on — no lifetime limits, you can't cut somebody out for preexisting conditions, or it makes it a lot harder to.

The health insurance industry will become like utilities that are very, very heavily regulated — how much of the money they take in can be spent on health care and how much can go into profits. There is a lot of reform in there.

Now, there also are higher taxes. Medicare taxes will go up on people making over $250,000 by I think 0.9 percent, and there is a tax on tanning salons. There is a —

BAIER: They took out the cosmetic surgery tax.

LIASSON: And moved it to the tanning salons.

But there also are big Medicare cuts, as you just mentioned. The big question is will those cuts stand? The history of Congress suggests they won't, especially the doc fix, and that's really the lynch pin of this. If everything in this bill actually happens, then that CBO estimate will be correct. If it doesn't, it won't.

BAIER: Charles.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: That CBO estimate is completely wrong, and when Obama cites it, he is being completely cynical.

Number one, the only reason it ends up with a surplus is because it strips out — well, it assumes that there will be cuts in reimbursements for doctors of 21 percent next year with no increase over a decade. They're 100 percent certain that is not going to happen, but it's in the bill because it will be a separate provision that will strip it out. So once you calculate that in, you're already in the red.

Secondly, and this is the most important, it supposedly costs $850 billion over ten years. But 98 percent of the costs of the bill are in the last six years. So it's a trick. If you actually look at real charges, you start in 2014 when the benefits kick in and you go out ten years, then the cost is not slightly under $1 trillion. It is $1.8 trillion or $2.5 trillion, which means it will blow an enormous hole in the deficit.

And everybody knows this. We heard Michael Steele say earlier, he's the head of the RNC, that these numbers are cooked because the head of the CBO was brought into the White House — I wish he hadn't said that, because that's not the reason. You don't have to corrupt the CBO. It's not. It's very honest.

You cook the books by presenting the assumption that the CBO is required to assume it will happen but what everybody understands is not going to happen. That's why the ostensible CBO number looks good. The real number is devastatingly in deficit.

BAIER: Steve, we heard in an interview late this afternoon that the president gave to American Urban Radio, he said, first of all, that he watched the vote at 1:00 a.m., and second of all, he said there isn't much difference between the House and Senate bill except the public option, and he essentially thinks that the House is just going to roll over and take the Senate bill as is.

STEVE HAYES, SENIOR WRITER, "THE WEEKLY STANDARD": I agree with half of what he says. I think there are some real differences but I do think that the House is going to roll over and basically give him what he wants.

The tricky part will be finding the people who support the Stupak amendment on abortions to support a Senate version or something like that, to reconcile those two kinds of — those two different versions of this.

I think you will get there. We have seen this with the Senate, we have seen this with the House on other provisions. You eventually get the Democratic Party leadership and the president putting on enough pressure and/or giving them goodies that people are going to roll.

Let me follow up on one thing that Charles said — it is not just that the real cost of this bill from 2014 to 2023 is $2.5 trillion. He is exactly right about that. It is the ultimate in the budget gimmicks.

But the taxes from that same amount of time are $1 trillion. People need to understand that by the time this actually kicks in, by the time the reform is real reform and we're paying real costs, the taxes are $1 trillion over that same real ten-year period from when this thing starts.

And the president said just a couple of weeks ago, "I have actually said that it is important for us to make sure this is deficit neutral without tricks. I said I wouldn't sign a bill that didn't meet that criteria." He knows that this is full of tricks. It is totally disingenuous for him to say what he said today.

LIASSON: The practice of starting the goodies later and the paying first to make something fit in the ten-year CBO window was not invented this year by the Democrats. I mean, it's not unlike the way the Bush tax cuts were paid for, because they stopped. They magically stopped.

HAYES: That's a fair point.

LIASSON: The fact is this is actually business as usual. This has been done for time immemorial because you have a ten-year window, and that's convenient, because you can put things outside of the window.

KRAUTHAMMER: It is business as usual except that it's a takeover of a sixth of the U.S. economy. It's not taxes that you can raise and lower. This is changing the structure of American medicine in a way that will be irreversible. And it's all done on tricks.

And that's why it is different and that's why it's important that it not happen, although I suspect it is now going to happen, and I can't see any way it's going to be stopped.

HAYES: And it is not just American medicine. It is changing the way the structure of the entire U.S. economy, U.S. businesses as well. And the thing that makes it especially different is that the president ran for more than a year on not doing things as business as usual. This was his primary appeal was to change the way things in Washington were going to work.

Now, some of us didn't believe he was actually going to do this, but when you run on it and win on it, you should be held to a different standard, indeed the standard he set for himself.

BAIER: They're talking about a big win and we are going to talk about the politics of all of this health care reform. We're back in just three minutes.



REID: There's 100 senators here, and I don't know if there is a senator that doesn't have something in this bill that was important to them. If they don't have something in it important to them, then it doesn't speak well of them. That's what this legislation is all about. It is the art of compromise.

CORNYN: This as a is the result of backroom deals with specific senators causing them to vote for cloture, what has caused some people on the blogs and on the Internet "cash for cloture."

SEN. TOM COBURN, (R) OKLAHOMA: This process is not legislation. This process is corruption, and it's a shame that that's the only way we can come to a consensus in this country is to buy votes.


BAIER: Well, it wasn't just Democratic Senator Ben Nelson of Nebraska who got a sweetheart deal that included $100 million, at least, of permanent exemptions from Medicaid expansion in his state and also an exemption from new insurance company taxes for Nebraska's non-profit insurance companies, but also other senators got some sweetheart deals in this whole effort to get 60 votes by the Senate majority leader.

What about the politics of this and possibly what happens afterwards? We're back with the panel. Steve?

HAYES: It has been interesting this afternoon after Harry Reid made those comments to listen to conservatives and Republicans criticize him for making those comments and saying basically that your senator should have done better to get some goodies, and if they didn't get goodies, then they weren't doing a good job as a senator.

That's an interesting thing, but what jumped out at me just now as we replayed the clip was the second thing he said, which I had not picked up earlier, which is A direct quote, "That's what this bill is all about."

I think that is what this bill is all about. It is only about health care secondarily. Really it's about compromise and politics.

And that's what makes it amazing sitting here now after a year of debate, after a year on the campaign trail, looking at this health care bill, nobody likes it. Nobody likes it. You can find people to defend it. You can find Democrats who will defend it, but you cannot find anybody who is genuinely enthusiastic about the bill.

And certainly, as reflected in the polls, this is not a popular thing for the Democrats to have done or for the president to have done. And I suspect that they will pay a price for this in the 2010 elections.

BAIER: Mara, people like Blanche Lincoln from Arkansas. Here is someone who had a tough vote because she faces really upside-down polls in Arkansas in her reelection bid in 2010, but she didn't hold out for any goodies.

LIASSON: I'm surprised about that. I think that the people who got a good deal, they are not going to face any blowback at home. They're going to face cheers at home. Ben Nelson, Mary Landrieu, they did pretty well for themselves. Even Bernie Sanders got something.

But I'm actually surprised that Michael Bennett and Blanche Lambert Lincoln didn't hold out for something. They are really in trouble at home. Bennett is a freshman who faces a really tough race.

BAIER: But you know people at home sitting there listening to you saying, hold out for something? What are we talking about here? That's how Washington works, we get it, but...

LIASSON: It's how politics works, and it's why people have constituent service. It's why they represent their state. They don't stand for election nationally. They're elected by the voters in their state.

But anyway, they didn't. They went along, and we'll see — if Republicans are now saying your senator didn't get enough for your state in this grand bizarre of the healthcare legislation, we'll see.

But there is another question Steve just raised, which is this going to hurt or help Democrats in 2010? And that is really an interesting question, and I'm not completely sure yet. Right now, yes, the bill is popular, although people didn't know exactly what was in it.

Now they're really going to know what was in it because we're going to hear a lot of talk about the bill, the president will sign it, and then he will immediately spend a lot of time talking about what is in it because he wants to prove to people that he and his party did something good for them.

And hopefully there will be things that happen right away so he can how their lives and their healthcare has gotten better. There are many things will have to wait several years to get.

So we will have a big debate over this bill well after it's passed.

BAIER: Charles, there are a lot of states who are on the list of goodies who are in financial trouble that perhaps those state officials will say this is going to be painful.

KRAUTHAMMER: That's what is so ironic about this. Remember the whole impetus of the bill was the moral imperative of insuring the uninsured, an act of compassion.

What Harry Reid is saying after he gets this monstrosity through the Senate is that if your senator was uncorrupt in achieving it, they are going to suffer and they were naive, probably acting like rookies.

I find it interesting how Lieberman was excoriated and Nelson was celebrated by the left, especially, and Democrats. Look, if you want to hold out on a matter of principle or policy, as Lieberman did on the matter of the public option, and saying it would be unaffordable, well, and you get it by holding up the process, that's called a deal. And that is a concession over a policy issue that applies to everybody in the country.

But what Nelson got this unbelievable deal in which all the other states get three years of the federal government assuming the cost of extra Medicaid enrollees, but after that, all the other states have to chip in except Nebraska. It is the Nebraska exception.

Now, that is simple corruption, and yet what he does is countenanced as OK. In fact, Reid hails it as real good legislating, and what Lieberman did is excoriated as a betrayal. It shows you how the values of all this, which started out as a high-minded crusade on behalf of the unfortunately has been twisted in a fairly radical way.

BAIER: So maybe the fallout could be another call for term limits across the board?

HAYES: It makes perfect sense, if Republicans are going to do a new updated contract for America, you can bet that this kind of corruption and term limits and other things will be headlining it.

BAIER: Mara, the politics of the House side, you've got a lot of House Democrats, moderates, who are facing some interesting races back home. And some who retired.

LIASSON: Well — we're waiting to see how many Democrats will retire. We had a group of four who just retired.

The big question for moderates is some moderates will like the Senate bill better than the House bill because it is more centrist, with the exception of the abortion language, which is another issue, but the liberals in the House I think are just going to swallow hard and accept this because they know the only way to pass it is a bill that gets 60 votes in the Senate, and this is it.

BAIER: That's it for the panel, but stay tuned for the latest wrap of what really happened in Copenhagen.

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