(BEGIN VIDEO CLIP)

RICHARD TRUMKA, AFL-CIO PRESIDENT: The Senate bill from our point of view is inadequate. It does not deserve the support of working men and women.

JOE COURTNEY, D-CONN., HOUSE EDUCATION AND LABOR COMMITTEE: What the Senate bill is doing is, in my opinion, putting at risk the political underpinnings for support for healthcare reform.

CHRISTINE ROMER, WHITE HOUSE ECONOMIC ADVISER: The important thing the president has said that he thinks that this excise tax on Cadillac plans is important.

He has been convinced by experts across the ideological spectrum that say this is one of the things that genuinely slows the growth rate of cost and anybody worried about the budget deficit knows we have to do that.

(END VIDEO CLIP)

BAIER: Here is the issue. The nation's biggest labor unions go into White House for a bit of a showdown with President Obama over this Cadillac tax. This is a 40 percent tax on health benefit valued at 8,000 for individuals and $23,000 for families.

Unions say this affects a lot of folks that don't make a lot of money. And there is a battle over this. It's in the Senate plan. They are negotiating the two bills now.

We're back with the panel. Mara, what about this? How big of a problem is this?

LIASSON: I think it's a problem but I think it can be solved. Today at the White House they suggested that the president was open to adjusting it, not dropping it, but adjusting it - maybe the amount at which it would kick in. Instead of $23,000 it might be $27,000.

Maybe they exempt more unions, like firefighters, police officers, people in "dangerous jobs." Maybe they'd also lengthen the exemption for people who have existing contracts.

BAIER: But if you do that, you don't get the same amount of money to pay for the plan.

LIASSON: No doubt. Then you have to plug the hole somewhere else, and maybe then you borrow from the House plan and instead of having this millionaires' tax that the Senate doesn't like, maybe you have some kind of a mini-millionaire's tax.

The point is they have to do two things. If they change it, they have to find revenue somewhere else. But also, this has to stay in for a number of reasons. I think more important than paying for expansion of coverage is this is the only thing that is left in the bill that truly has a chance to reign in healthcare costs.

Now, all the other stuff are demonstration projects that might pan out over many years. This is the only thing that healthcare economists across the board say will actually bend the curve on healthcare costs.

BAIER: Juan?

WILLIAMS: I think the fear that the union leaders that met with President Obama today have is in fact that people won't pay this tax because employers and unions and state and city governments will drop the plan instead.

LIASSON: Then that is the same result.

WILLIAMS: So then they think, well, that means less coverage, so then it's going to be terrible.

But the fact is that all the alternatives that Mara just described are coming from the labor side. The White House knows they can't tinker with this deal or they will rip holding that 60-vote majority in the Senate. There is no getting away - that's the bottom line. There's no way.

You can talk about various strategies and possible deals with the House. The House is willing to do it. I don't think the Senate is.

BAIER: The cost here is the big thing, Steve. And you now have Senator Ben Nelson from Nebraska saying that his deal for $100 million of payoff for Medicaid in Nebraska he wants for all 50 states. That would add some $25 billion to the bill. You start talking a lot of numbers.

HAYES: You do, you do. And the question is how closely are people in the country paying attention to the numbers?

I think we have gotten the point where the debate is happening largely in Washington. The people who are against it are likely to stay against it. The people who are for it, the shrinking - what has been a shrinking group, are likely to be for it, and you have this debate among people.

But it's a narrow debate. You know, everybody assumes that this is going to pass. I still think it will pass. It's overwhelmingly likely to pass. But there are very, very difficult negotiations in the days ahead.

Nancy Pelosi, if you look at the numbers that she is dealing with, a vote margin of maybe three votes given the differences in abortion language between the two houses, and then you look at what she has to try to get her chamber to do on the question of the Cadillac tax, that's - she has a tough job.

And she and Rahm Emanuel are staring at each other right now trying to figure out who is going to blink.

BAIER: Senator Chris Dodd, who is retiring, Mara, said today in interview that healthcare reform legislation is hanging by a thread.

LIASSON: Well, this is one of the most important things. You also have abortion. Every single step of the way has been excruciatingly difficult, and now they're close to finish line, and they still have these make or break decisions.

BAIER: It passes, though?

WILLIAMS: I think it passes, and, it's interesting, the Democrats are the ones at this point who can stop it, and this kind of discussion doesn't help.

And the question is do the unions get so mad at President Obama and say you didn't live up to the promises you made to us on the campaign trail. You said this would help the working man, and in fact, this may in a very obvious way penalize working people in the country.

BAIER: OK, and before we head to break, we want to welcome our newest FOX News contributor. Former Governor Sarah Palin is joining the FOX News team as of today. The announcement came out from New York. Welcome aboard, and we'll see some of that commentary soon.