GEORGE STEPHANOPOULOS: Good morning. He was the youngest Kennedy brother who lived the longest. The only one who could prepare for his death.

And the by the time Teddy Kennedy was buried next to Bobby and John late yesterday, you just knew it was the farewell he wanted. From the Senate he served. The sons he loved.

(BEGIN VIDEO CLIP)

EDWARD KENNEDY, JR., SON: I said, I can't do this. He said, I know you can do it. There is nothing that you can't do. We're going to climb that hill together even if it takes us all day.

REP. PATRICK J. KENNEDY, D-R.I.: When he first got elected and my cousin Joe was a member of Congress and I came to Congress, dad finally celebrated saying, finally after all these years, when someone says, who does that damn Kennedy think he is? There's only a one in three chance they're talking about me.

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STEPHANOPOULOS: And the president.

(BEGIN VIDEO CLIP)

OBAMA: The greatest expectations were placed upon Ted Kennedy's shoulders because of who he was, but he surpassed them all because of who he became.

(END VIDEO CLIP)

STEPHANOPOULOS: And with that, let me bring in senators John Kerry and Orrin Hatch. Welcome to you both.

And you both spoke movingly Friday night as a celebration for Senator Kennedy. And I want to begin with you, Senator Kerry, because you called this last year of Senator Kennedy's life the sweetest of seasons. And I wonder if you could share a little bit of what you learned and saw of your friend in his last year.

KERRY: Well, he -- he was so graceful, George. And courageous. And I think the most important thing is that he was able to see and feel the love and affection and the accomplishment of his lifetime.

So that in the end when he went, he was truly ready and at peace. And I think there is a beauty in that.

STEPHANOPOULOS: And that was one of the themes really of this whole week. And, Senator Hatch, you cracked everybody up Friday night when you talked about your friend, Senator Kennedy, and especially when you talked about those old days sometimes when he was feeling no pain, in your words, on the Senate Floor.

But you spun it out into a story of redemption.

HATCH: Yes. Actually, Teddy was a very religious person. And, you know, when Vicki came into his life, it changed a lot of things.

Of course, we had some experiences before that as well that were very redemptive and helpful. And all I can say is that the latter part of Teddy's life was really, really tremendous. And I enjoyed being with him, you know?

We were like fighting brothers. I mean, we would go at each other and he would walk up to me and throw his arms around me and say, how did I do?

(LAUGHTER)

HATCH: And I used to just laugh. And I used to really rib him and give him a rough time too.

STEPHANOPOULOS: You said fighting brothers, and I couldn't help but notice you and Senator Kerry already talking about health care right before we went...

KERRY: Yes, listen, we're going to get Orrin. Orrin is going to be our man. He is going to be the go-to Republican. He is going to do what Ted Kennedy would have done. Right, Orrin?

HATCH: All they have -- all they have to do is just start thinking straight, and I'll be right there with them, I'll tell you.

STEPHANOPOULOS: But that's the big question. You say, do what Ted Kennedy would have done. And you know, this has been a big part of the debate this week. In fact, Secretary Sebelius engaged it just a couple of days ago.

(BEGIN VIDEO CLIP)

SEBELIUS: The best possible legacy is to pass health reform this year and have a bill that President Obama could sign. And hopefully at every step along the way, they'll ask themselves what would Teddy do? And move it forward.

(END VIDEO CLIP)

STEPHANOPOULOS: But, Senator Kerry, there already is a big debate over what would Teddy do. I mean, I think a lot of liberals and progressives saying he would fight for this public health insurance option and, you know, if that -- if you didn't have that, it wasn't worth doing.

Others look at it, and I think you may be one of them who say, no, the lesson of Senator is that he got what he could get, the perfect couldn't be the enemy of the good.

KERRY: Well, Ted would put facts on the table and he would put the reality of life for a lot of Americans on the table. And the reality of life is that we have over 87 million Americans every year during some portion of the year who don't have insurance. And almost 50 million who all of the time don't have insurance.

It costs them and costs America an enormous amount of money. We are not managing an efficient health care system. And so we are delivering worse health care for more money than many other nations in the world.

Now Orrin knows that. We know we can do a better job of providing health care to Americans. And what Teddy would do is he would fight for that public option, because he believes -- believed that the public option, as I do, is an effective -- the best way possible to be able to reduce the...

STEPHANOPOULOS: But he could count votes as well...

KERRY: Now let me just finish...

STEPHANOPOULOS: ... and the votes don't seem to be there.

KERRY: Let me just finish. Let me finish. He would fight for it, and he would do everything in his power to get it, just like he did for the minimum wage or like he did for children's health care, et cetera. But if he didn't see the ability to be able to get it done, he would not throw the baby out with the bathwater. He would not say no to anything because we have to reduce the cost. We have to make these changes. And he would find the best way forward.

STEPHANOPOULOS: So he wouldn't agree with those like Howard Dean who say it's not worth doing if you don't have the public health insurance option?

KERRY: I think there is an enormous amount, George -- oh, here is what Teddy would do. He would say, I'm going to fight the fight, and if and when we get to the point that we can't get there, we'll see whether or not we can do enough to make good happen out of this.

And you can't make that measurement today. We have to go down that road.

STEPHANOPOULOS: You said, earlier this year, Senator Hatch, that Senator Kennedy was really missed in the negotiations, because of his ability to speak to progressives and reach out to Republicans.

What about going forward right now? Who can fill that void and is there a deal to be had here?

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HATCH: One thing that Kennedy had, he could bring together all of the base groups of the Democratic Party. They wouldn't take him on once he made up his mind. And as somebody who over the last 33 years passed almost every health care bill that works, many of them with Ted Kennedy, in fact, most of them with Ted Kennedy.

Everything from orphan drugs to the three AIDS bills to the CHIP bill, you can just name it, you know, even people with disabilities. I mean, we worked on all of those together.

In every case, he fought as hard as he could, like John has said here, but when he recognized that, you know, he couldn't get everything that he wanted, but he could get a good bill by working with the other side. And making through compromise, he would always come through.

STEPHANOPOULOS: Did you think he would move in that direction now?

HATCH: I have no doubt about it. I mean, if he was here...

STEPHANOPOULOS: Is it doable now?

HATCH: ... I don't think we'd be in the mess we're in right now. And look, Ted was the leading liberal in the Senate -- in the whole Congress, as far as I'm concerned. And others come very close to him, like John here.

I mean, very good people, but you know, let's be honest about it, the people out there are very concerned. They don't want a Washington-run government plan, it's just that simple. And I think that is showing up everywhere throughout America. When Medicare is $38 trillion in unfunded liability, and then they want to take $400 billion or $500 billion out of Medicare, I mean, come on, this doesn't make sense. And Teddy would have recognized that.

And look, I -- we used to get in tremendous fights, he and I, but we would always come together in the end. And it was always because both of us were willing to go to the center. And sometimes he would go to the center-right.

I mean, CHIP was a center-right bill.

STEPHANOPOULOS: So what's going to...

(CROSSTALK)

KERRY: Yes, but one of the things that Teddy would make clear, and I want to now, is that no one is talking about a government-run, Washington-based health care plan. That is not what people are talking about.

So if we can get a reality onto the table, which Orrin is usually pretty good at doing, we can have a good conversation here.

I'm convinced we're going to do this. I believe better judgment is going to prevail. I think we're going to come back, begin this discussion anew in a way that we ought to. And I think we're...

STEPHANOPOULOS: But let me draw out something...

KERRY: ... going to get it done.

STEPHANOPOULOS: Democrats and Republicans, if you look at -- across the broad (INAUDIBLE), have agreed on a couple of components of the bill.

KERRY: Right.

STEPHANOPOULOS: These insurance reforms, you can't be denied health care if you're sick. You can't get thrown out if you're sick. A lot of Democrats, Republicans say that maybe we should have this individual mandate, to require people to buy insurance, to couple that with reforms.

Bill Bradley points out today, I think it was in The New York Times, that, you know, maybe they should include some malpractice reform as well. Are they -- those three things the building blocks of a deal?

HATCH: Yes, they really are. You know, Democrats have been unwilling to take on the personal injury lawyers. And look, there are cases that really deserve huge rewards, huge judgments.

We've got to find some way of getting rid of the frivolous cases, and most of them are. Most of them are brought...

KERRY: And that's doable, most definitely.

HATCH: Yes, and that's doable. Most of them are brought to -- you know, to get the defense costs. They know that once they bring them, the insurance companies are going to have to pay their defense costs rather than take a chance at a runaway jury.

But it's not just that. It's the other elements you've been talking about too. Those are three very important...

STEPHANOPOULOS: And then if you add some subsidies to that to move towards covering more people...

KERRY: Yes, which I think we have some -- actually, I think we have some flexibility on as to sort of the rate and manner in which you do that. So I think that there are ways to do this, George.

As a member of the Finance Committee, I've been part of this discussion, though many of us would like to see it broadened in some ways. I'd like -- I mean, you know, my question to Orrin and to others is, you know, who is the Republican? Who are the Republicans, plural, who are prepared to step up and do as Ted Kennedy would have done here?

STEPHANOPOULOS: You were part of the negotiations earlier this year but then stepped away. Are you ready to come back?

ORRIN: Sure. I've always been ready to do that. But look, you talk about an individual mandate. The problem with an individual mandate is that the people who are really hurt the most are those on the lower end of the wage spectrum.

They either lose their jobs, a cutback in pay, or the company goes overseas. Once you start doing that -- because the theory behind that is that you've penalized the company if they don't provide insurance for their people by having them have it surcharged.

And look, let's just be honest about it, it's a very difficult thing to do. There are some ways we could do this, none -- both sides...

KERRY: Actually, Orrin...

HATCH: Both sides are arguing for insurance reform. That's not the issue. The issue is, how do we put all of these elements together...

STEPHANOPOULOS: Let me switch to...

(CROSSTALK)

KERRY: The truth is we're doing that very effectively in Massachusetts. Ted Kennedy was part of making that happen -- a key part of making that happen. We went from 10 percent of our folks who had no insurance down to 2.6 percent, the lowest percentage of uninsured in the nation. And it has worked. And companies have not left. Companies, in fact, are delighted with the better distribution of costs in the state.

So what we need to do is have people who want to sit down and not be bound by ideology, not be the prisoners of a political strategy, but who want to get health care done based on the best way to get it...

STEPHANOPOULOS: Let me move to...

KERRY: ... done. If we did that, we'd get it done.

HATCH: Can I make a point on that?

STEPHANOPOULOS: Very quickly.

HATCH: You know, that's one of my points that I've been making, is that Utah is not Massachusetts, neither is any other state. Massachusetts is having a very, very difficult time because of the costs involved in their program. But it is their right to do that.

Utah has one of the best health care systems in the country, most people agree with that, as does Minnesota. Because -- and I think the demographics in each state are different. I think if we give some flexibility, we might be able to have a better -- a very good...

STEPHANOPOULOS: We have to move on to another...

HATCH: ... health care system.

STEPHANOPOULOS: Another issue that...

(CROSSTALK)

STEPHANOPOULOS: OK. Let me move to another issue that came up earlier this week. The attorney general decided to investigate possible CIA abuses in the prisoner interrogation cases.

And Vice President Cheney this morning has blasted that decision by the attorney general.

(BEGIN VIDEO CLIP)

DICK CHENEY, FORMER VICE PRESIDENT: The approach of the Obama administration should be to come to those people who were involved in that policy and say, how did you do it? What were the keys to keeping the country safe over that period of time?

Instead, they're out there now threatening to disbar the lawyers who gave us the legal opinions, threatening, contrary to what the president originally said, they were going to go out and investigate the CIA personnel who carried out those investigations.

(END VIDEO CLIP)

STEPHANOPOULOS: He called it an outrageous and possibly dangerous act.

KERRY: Well, Dick Cheney has shown through the years, frankly, a disrespect for the Constitution, for sharing of information with Congress, respect for the law, and I'm not surprised that he is upset about this.

The Obama administration has no intention -- I think the president himself has been unbelievably bending in the direction of trying to be careful about what happens to national security, protecting our national security interests, being very sensitive about the CIA's prerogatives and needs and so forth.

And in fact, I think there is a little bit of a tension between the White House itself and the lawyers in the Justice Department as they see the law and as what their obligation is.

And in a sense, that's good. That's appropriate, because it shows that we have an attorney general who is not pursuing a political agenda, but who is doing what he believes the law requires him to do.

And we have an administration, on the other hand, that is balancing some of those other interests.

STEPHANOPOULOS: The vice president also said that he believes that CIA officials who went outside the bounds of the guidelines they were given were justified. Do you agree with that?

HATCH: There is a real question whether they went outside of the bounds that they were given at the time. Look, I -- as the longest- serving person in the Senate Intelligence Committee, I've got to tell you, we don't want to cripple our ability to be able, in very crucial times, to get the information we've got to have to save our country and to protect our people.

I think what Dick Cheney is arguing for -- and look, how can anybody argue that Cheney has been a great asset to the country in so many ways? He is a tough guy, there is no question. He differs from the so-called progressives in the Congress.

And I really question, after all of the investigations were done, some prosecutions that were waged, and most of this material was decided not to go forward, to now go forward with this, I really question whether the attorney general is doing what is right.

And look, the attorneys, maybe you can question the opinions, but they were sincere opinions. I know the attorneys involved. They were wonderful, wonderful...

(CROSSTALK)

HATCH: ... lawyers who...

STEPHANOPOULOS: ... they're not going to be investigating that part.

HATCH: Well, they shouldn't investigate that part. And nor should they be prosecuting people who acted under good faith following advice of the lawyers in the department.

So, you know, and what they're doing is crippling the CIA where they're going to be unwilling to really take the risks that have to be taken during really crucial times.

STEPHANOPOULOS: Afraid that's all we have time for today. Gentlemen, thank you both very much for coming in this morning.

KERRY: Thanks, good to be with you, George.

HATCH: It's nice to be with you, George.

KERRY: Thank you.