Senators Grassley and Dodd on "Fox News Sunday"

Senators Grassley and Dodd on "Fox News Sunday"

By Fox News Sunday - June 14, 2009

WALLACE:And hello again from Fox News in Washington. The debate over health care really got going this week. It involves almost 20 percent of the economy, and it will affect every one of us.

We've brought in two men at the center of the debate, Senator Chris Dodd who, along with Ted Kennedy, has drafted the leading Democratic plan, and Senator Charles Grassley, the top Republican on the committee which will propose taxes to pay for health care reform.

Gentlemen, President Obama called for $300 billion in new spending cuts for Medicare and Medicaid yesterday. He now says he's identified ways to pay for a $950 billion health care reform plan, with two-thirds of it coming from savings.

First question to you, Senator Grassley. Do you think the president's spending cuts are realistic as well as his estimate of the overall cost?

GRASSLEY: I have not studied them to know if they're realistic. There's a lot of things coming out of the White House that can't be scored by Congressional Budget Office, and that's what really counts.

There is a lot of waste in government-run programs generally, and a lot of waste and fraud and misuse of money in Medicare and Medicaid that can be saved. But right now, I could not put a figure on that amount of money.

But there is some savings there that can be made and ought to be made, whether or not we are doing things for health care reform or not.

Only one caveat I would give you -- in rural America, from Indiana over to the Northwest and from Kansas to Canada, if everybody practiced medicine in the rest of the country like we do there, we'd save about one-third of Medicare.

So I'm going to be looking at the president's suggestions to make sure that it doesn't make things worse in rural America, where -- in Iowa, reimbursements are so low we have a hard time making sure that we can recruit doctors to come to our state.

WALLACE: Senator Dodd, an awful lot of health care experts say that the total cost of health care reform is more likely to be about $1.5 trillion, 50 percent greater than the president's estimate.

And they also say that these hundreds of billions of dollars in spending cuts he's identified are so flimsy that, as Senator Grassley said, Congress' own budget office can't put on a number to them.

DODD: Well, first of all, Chris, this is going to be a patient- centered program we're talking about. The health care system is in crisis in our country. It's too profit-driven. It's too bureaucratic. It's too inaccessible. It's too complicated.

And clearly, this is a major issue both in terms of patient care as well as economic issues. The president's identified some $300 billion. I agree with what Chuck has said. We need to look at that, obviously. That's a major responsibility of the Finance Committee. We put $654 billion in the budget specifically to deal with health care costs over the next 10 years.

The Institute of Medicine, Chris, identified in a very valid study that there are about a third of the tests or assessments that are being conducted that, frankly, we could do away with, which would save about a third of health care costs. That's some $700 billion.

And then prevention -- if we're able to really, as Chuck and I and Mike Enzi and Senator Kennedy really believe -- Tom Harken -- that prevention could save a tremendous amount (inaudible) Steve Burd, who's the CEO of Safeway, the other day testified before our Health Committee.

He said something dramatic the other day, Chris. He said for every pound that a person would lose who's obese, there's a $50 savings per year in premium cost.

So if we deal with smoking issues, we deal with obesity, we deal with the cardiovascular issues as well as diabetes, the four chronic illnesses that cost 75 percent of health care -- really have a wellness program -- there are tremendous savings through prevention programs.

So between what's there in Medicare, what we can do with wasted tests and surveys being done -- or assessments, rather, as well as in the prevention area, I think we can reach that target that will come somewhere in the area of a trillion dollars to a trillion, 200 billion over the next 10 years.

WALLACE: Gentlemen, let's address some of the big controversies in this debate. And let's start, first of all, with mandates.

Senator Grassley, what's wrong with requiring individuals and companies to pay for health insurance so that all the rest of us don't have to pick up the tab for the uninsured?

GRASSLEY: And you're probably picking up 1,000 -- some estimates -- $1,800 on your premiums for people that don't have health insurance because of the expensive use of emergency rooms, as an example.

There isn't anything wrong with it, except some people look at it as an infringement upon individual freedom. But when it comes to states requiring it for automobile insurance, the principle then ought to lie the same way for health insurance, because everybody has some health insurance costs, and if you aren't insured, there's no free lunch. Somebody else is paying for it.

So I think individual mandates are more apt to be accepted by a vast majority of people in Congress than an employer mandate would be, as an example.

And with that goes the portability of the insurance from one employer to another so you don't -- you don't have to be tied to your job.

But there is a very important issue here, and that is that we consider that there are some people who can afford their own health insurance but decide not to buy it because they want to pay it out of pocket. Should you require those people to do it?

I believe that there is a bipartisan consensus to have individual mandates.

WALLACE: Senator Dodd, let me ask you about one aspect of the so-called Kennedy-Dodd plan. And let's put up the language on the screen.

This is going to get a little complicated, folks, but bear with me here.

The eligible individual involved is not required to pay -- now we're going to get to the subordinate clause -- in the case of an individual with a modified adjusted gross income that does not exceed 500 percent of the poverty line for a family of the size involved. The individual is not required to pay an amount that exceeds 10 percent of such individual's income.

Now, that's pretty complicated, Senator Dodd, but as I understand it, under your plan, a family of four making as much as $110,000 a year would be eligible for a taxpayer subsidy.

DODD: Well, what we're talking about here -- and let me, first of all, thank Chuck for his recent comments there. And by the way, the first thing we always say about health care that -- and I think all of us say this. We should say it. If you like the plan you have, you ought to be able to keep that plan. If you like your doctor, you like your insurance company, you like your hospital -- the last thing you want to be doing is telling people they have to change what they like having.

Secondly is choice. People ought to have the right to make their own choices about the doctor they want, the hospital they want to be in. This is about fixing the problems that are wrong and sustaining and building upon the things that are working well.

Now, clearly, as Chuck just pointed out, when you start talking about individuals here in a mandate -- and I think he's right about this, that you have to include that if you're going to make this work at all, then making it possible for people actually to meet those targets -- now, the 500 percent of poverty is a number that we've put out there.

But clearly, there's some negotiation about that as well. But you need to have people to be able to support that.

WALLACE: Do you think that a family of four that's making $110,000 a year should have part of their health insurance tab picked up by the taxpayers?

DODD: Well, that number may be high.


DODD: But nonetheless, that's part of the negotiation.

Yeah, Chuck, and you can jump in on this, if you want, as well.

We're working on these numbers. In fact, we spent all weekend this weekend, Chris, my staff and -- that is, the Kennedy staff, I should say, Ted's staff and Mike Enzi's staff and others -- working on some of these issues as we approach next week as well.

WALLACE: Let me bring in another big sticking point.

GRASSLEY: Chris, that's...

WALLACE: Senator Grassley, I'll let you answer, but let me bring up another point as well, and this may be perhaps the biggest sticking point, and that's the president's insistence -- and it's also in the Dodd-Kennedy plan -- on a government insurance plan to compete with private insurers.

Senator Grassley, why is -- first of all, why is that such a concern? And do you think that the Senate can pass a government public insurance plan?

GRASSLEY: Let's go back to what Chris was talking about, what you had on the board there -- 500 percent. For most of us, even a lot of Democrats, that's got to be a non-starter for the simple reason that we went through that debate even at 400 percent on the Children's Health Insurance Program. We can't afford that. It's not good policy. And we're not going to go in that direction.

In regard to your question is -- you know, it's funny how this business of having a public option -- in other words, the 350 insurance companies need some sort of competition. You know, I wish I would hear that from the Democrats that Medicare and Medicaid ought to have some competition, because that's a government-run program.

And you know what you do? You've got the government interfering in the practice of medicine, and we're reimbursing doctors 83 percent of costs and hospitals about 79 percent of costs.

And a little bit of competition like we have in Part D prescription drugs, where we thought originally the program by now would cost about $74 billion a year -- it ends up only costing $44 billion a year.

WALLACE: Well, let -- let -- I don't want to get -- I don't want to get too far...

GRASSLEY: That's competition. But in regard to yours...

WALLACE: I don't want to get too far...

GRASSLEY: Go ahead, I'm sorry.

WALLACE: ... into the weeds here.

Let me, if I may, Senator Dodd, ask you -- because the president keeps talking about wanting compromise, and there are two possible deals out there.

One is the idea that the public plan could be a fallback, that it only kicks in if private health insurance doesn't work, doesn't clean up and doesn't become more competitive and lower costs, and the other is the idea, instead of a public health insurance plan, of cooperatives that would be organized and operated by the members themselves.

Are those possible compromises you could support instead of a public health insurance option?

DODD: Well, we'll see. And there are other ideas as well. Jack Reed of Rhode Island is proposing an idea. There are other thoughts out there. You've mentioned a couple of them here. This is -- we're talking about even a nonprofit idea as well.

The last thing we want -- we're not talking about a subsidized government plan. Chris, the reality is this. Premium costs have gone up 86 percent the last 10 years -- in my state of Connecticut, up 42 percent in the last six years.

If we don't deal with cost issues here -- this is a major factor. We talk about the uninsured in the country. We have -- we have millions of people who are insured but can't afford the escalating costs of their premiums.

We're looking potentially at 50 percent of people's gross income paying premiums, health care premiums, by the year 2040. We need to get our arms around this and reduce these costs.

And so having some competition out there is not a bad idea, in my view, in this area. And whether or not it's a government process or a nonprofit or a cooperative, this is exactly what Chuck and Max Baucus , Mike Enzi, other members of the committee are talking about.

But clearly, it's too profit-driven in many ways that are causing this health care issue to see costs escalate at the rate they are. Senator Kennedy has dedicated four decades of his life. I'm merely a designated hitter for him at this point while he's struggling with his own cancer. But he has worked for four decades on this.

We're sitting down and talking with each other. This needs to be a bipartisan plan. Chuck Grassley has dedicated a strong part of his life to that bipartisanship. I agree with him about that. Max Baucus does. The Democrats do. We're working very hard to come to some agreement on this.

WALLACE: Let me -- let me move on, if I can, gentlemen, because there's one other big issue...

DODD: Yeah.

WALLACE: ... and that is the issue of taxes.

Senator Grassley, will your Senate Finance Committee propose a tax on health care benefits? And would that hit people making less than $250,000 a year?

GRASSLEY: The answer is we could, but it's going to take the president of the United States, who made a big deal out of McCain so- called increasing taxes -- and the McCain plan was a very good plan, but the president drove it into the ground, won the election.

It looks like he's looking at doing similar to what McCain wanted to do, and I think for the benefit of making this bipartisan, presidential leadership in this area would be very good based upon the tune of the last campaign.

There is another reason, though, for dealing with this, and that is at what level should we be subsidizing through tax credits the health insurance.

And we -- it seems to me that we ought to take an average of the nation and decide that we're going to subsidize through the tax code health insurance for everybody at that level and not subsidize above another certain level.

That does two things. It takes some inflation out of health care, and it also raises some money.

WALLACE: So what you're basically saying -- and I want to move on, because we're beginning to run out of time. What you're basically saying, Senator Grassley, is -- and some people have said the number should be $13,000 -- if your insurance plan is worth $13,000, it's tax-free. Anything above that would get taxed.

Senator Dodd, would you vote for a tax on health benefits? You're shaking your head already. No?

DODD: No, this is -- this is unnecessary, in my view, and I feel very strongly about this, as many do as well.

I mean, the idea that you're going to have people out there that are struggling to make ends meet today, they're falling further and further behind with wages, people losing jobs, losing homes -- to turn around and say, "You basically have no change in your health care plan, and by the way, we're going to tax you now for those benefits" -- we can actually pay for this in the ways that I've suggested -- the $654 billion that's allocated already, the $300 billion in savings we get out of Medicare.

The third of the savings are going to occur by doing away with unnecessary tests and exams, getting a prevention program that really works so that we'd reduce those -- that 75 percent of cost. The idea of talking about taxing benefits at a time people are overwhelmed I think is a very bad idea.

WALLACE: All right. Gentlemen, I've got about two minutes left, and I want to ask you each about a question -- because you've both been involved in controversies recently.

Senator Grassley, you have apparently discovered Twitter, and I want to put up a recent tweet by you, if I may. "Pres Obama while u sightseeing in Paris u said ‘time to deliver in health care.' When you are a ‘hammer' u think everything is NAIL. I'm no NAIL."

Senator Grassley, is that senatorial?

GRASSLEY: Yeah, very senatorial, because -- you know why? We've had dialogue with this president since January the 20th on a program to get a bill to the floor on July -- for July, and we're still on that timetable.

And the president, to say that we ought to deliver it, made it look like Congress wasn't working the very weekend that we were working Saturday and Sunday in Washington to keep on schedule while he was sightseeing. He didn't need to say that. It didn't contribute to it. It was a cheap shot.

WALLACE: Senator Dodd, you released an ethics disclosure form on Friday that indicates that your wife -- and we should say that she was involved in this before she married you -- but she sits on the board...

DODD: Thank you.

WALLACE: ... of four health care companies and that last year she received hundreds of thousands of dollars in salary and stock options.

Is that a conflict of interest for a senator like you, who is one of the point men in health care reform?

DODD: Well, I'm glad you pointed out she was a highly professional woman when I married her 10 years ago and deeply involved.

It's somewhat offensive, by the way. We don't hear these questions being raised about the -- about the male spouses of female senators, in a sense. It's offensive to my wife that you'd be even talking about it.

These companies are research companies. They're not involved at all. She never lobbies in Congress, never been up petitioning on their behalf at all -- a highly professional woman, highly skilled, and she deserves to have a career, particularly when we hired, in fact, an ethics lawyer to make sure that these boards she serves on would in no way pose any kind of conflict whatsoever with my job in the Senate.

WALLACE: So she will not step down from those boards.

DODD: No, there's no reason to. They're not companies that are affected. We've been through that. She's -- this is a -- this is a professional person.

WALLACE: Senator Dodd, Senator Grassley, I want to thank you both for talking with us and, obviously, explaining some of these key issues at stake in this debate.

Up next, is the free market system under attack in the age of Obama? The voice of business thinks so, and he'll lay out his plan to fight it after the break.


WALLACE: This week the U.S. Chamber of Commerce launched the Campaign for Free Enterprise, a $100 million effort to fight what it calls an avalanche of new rules, restrictions, mandates and taxes under President Obama.

We're joined now by the chamber's president, Thomas Donahue.

And, Mr. Donahue, welcome to "FOX News Sunday." First question: why this campaign? Do you really think that the free enterprise system is jeopardized by the Obama administration?

DONOHUE: Well, first of all, this is a positive campaign. It's the cornerstone of what we believed for 100 years. And we believe it's time to go out and remind our own members, many of whom are lining up for stimulus money, and remind the Congress and remind people across this country that what creates the wealth, what creates the jobs in this country, is a free enterprise system with free capital markets, with free trade, and with the ability to fail or succeed beyond your wildest imagination.

And we think it's time to go and do this.

WALLACE: But you obviously think there is some threat from the administration. To go back to your quote, "avalanche of new rules, restrictions, mandates and taxes under President Obama."

DONOHUE: Well, I'm not sure that I said under President Obama. I think that's your add. What we believe -- our biggest worry -- our biggest worry is the issue of what the Congress and then the follow-on regulations are doing.

Follow this. We supported the efforts on stimulus. We supported the TARP funds. We supported issues to clear up the issues on General Motors, because this is a most extraordinary time.

But now it is a moment to say, "OK, we've gone there. Now let's stop." You can't try and run these companies from the Congress or from the administration. You've got to tell people where's the back door. We did our extraordinary issue, and now it's time to get people back to work. That's how you create jobs.

WALLACE: But, Mr. Donahue, people will say -- and you're quite right; you admitted it -- "You supported billions in bailouts to financial companies, you supported billions for the car companies, you supported billions for economic stimulus, and now you're saying shut the door?" Some even say it's too late.

DONOHUE: No, I think -- I think that would be a -- not a very good conclusion. Everybody had to come to church on those issues when we are on the edge of going into a depression.

WALLACE: There are an awful lot of conservatives who didn't come to church on those issues, sir.

DONOHUE: Well, everybody that understood what was at stake, let me say. And we did what we thought was right. And now what we're saying -- having done that, it's time for all of us -- the chamber, our members, our government, our Congress -- to take a breath and bring us back to the system that creates the wealth, that creates the jobs, and is going to enable us to put this economy back to work.

You know, we're very, very lucky that we live in a land that has an enterprise system that protects us as we go to put this -- put us back in business of creating jobs -- 25 million small companies. Critical. We've got to get them some money.

WALLACE: All right. Well, let's talk about some of the big issues that are out there. We just spent time talking about the president's health care reform plan.

Are there parts of that plan -- these huge cuts in spending, mandates on business, a government -- public health insurance plan -- are you going to support that?

DONOHUE: No. We believe there ought to be a plan to improve the health care system in this country. It's a $2.3 trillion business. It's most of the new jobs and innovation in this country. And we believe we ought to do things to improve it.

The president has found extraordinary amount of money he wants to take out of Medicare and Medicaid, and yet Senator Kennedy's bill is talking about putting everybody over 55 into Medicaid.

Now, Kennedy is a giant in this country and in the Senate, and we want to listen to what he has to say, and Max Baucus is the guy who -- he's got two parts. He helps with the bill, but he has to find the money, and he's a pro at this.

But what we're saying -- there should be a bill that does wellness. There should be a bill that helps us perhaps have a mandate on individuals. There should not be a mandate on companies. We now cover 170 million Americans.

We -- and by the way, if you're going to do a federal plan, I think you've got a real problem, because you're going to have more opposition to what we're trying to do here than you can imagine, because you're going to put everybody else in a very difficult position and a non-competitive position.

WALLACE: The administration appointed a pay czar this week. When the government, with your support, saves companies from going under, don't taxpayers deserve some protection from these companies paying executives huge salaries and huge bonuses?

DONOHUE: You know, Chris, they appointed a czar. The Securities and Exchange Commission is talking about a major program to control compensation. The Federal Reserve is talking about this.

I think it's time to stop and remember something. Those companies that are in some distress -- if they don't have good people to run them, if they can't attract extraordinary people, many of whom are going elsewhere to work, they're in trouble.

And the government ought to stay out of the business of trying to set compensation in the private sector. It's wrong. It won't work. And thinking about all these people that are trying it -- we're going to be on the other side of this.

WALLACE: So are you saying if AIG wants to give million-dollar bonuses, so be it?

DONOHUE: I'm saying if -- AIG is in a lot of trouble, but I'm saying if it took the right people to fix AIG, you're going to have to pay them. Same thing right here in this network. You know, if you lost your -- you couldn't pay your very best people, I'm not sure they'd stay. They'd probably go to another network.

WALLACE: We're also not taking a huge bailout from the federal government.

DONOHUE: But I'm not particularly worried about those few companies that took the bailout. That will work out. I'm worried that when you put all these people in the compensation business, they'll get bored in a hurry and start going after every other company they think they should influence.

WALLACE: What about the auto industry? I mean, again, with your support, the -- General Motors has been put into Chapter 11 and the U.S. government now has a 60 percent ownership stake. You own 60 percent of the company.

You're going to have -- you're going to have members of Congress saying, "Don't close the dealership in my state."

DONOHUE: I went to the Detroit Economic Club long before that happened and said the only way out of this is a bankruptcy, tried to give them the cover to do it. I didn't know that they would take some of the steps they did.

I understand why they gave the union pension and welfare fund some ownership. They'll sell that in a hurry. But the government's got to get out of this business in a hurry.

I told some people at the White House the other day, "You own it now, and you better get some people that can run it, and you better attract the best, because this is a serious problem." I suggest it's all about people. If you don't have the people, you don't win.

And I'm not out having a big fight about compensation. I just think the government should do its part. Government should go out and get some more really good business people and bring them into the White House and into Treasury and other where. You look around -- there aren't any.

And I think it's very, very important to understand that if you don't have the horses, you don't have much of a circus.

WALLACE: Finally, what about the status of labor's top priority, union card check, which would take away the secret ballot in union organizing? Has that been pushed off ‘til next year?

DONOHUE: I believe it's been pushed off for some time because they don't have the votes.

And if you think about taking away the secret ballot, and then having a mandatory arbitration that says that somebody who knows nothing about your business are going to set the conditions of work and pay in your company, I think the people up on the Hill, particularly the people in the Senate, are beginning to think that's a pretty weak idea.

WALLACE: How would you respond -- we've got less than a minute left, Mr. Donahue -- to people who would say -- and I'm sure there are a lot of people out there who would say -- "Hey, wait a minute, this guy didn't sit there and fight when we put billions in the financial sector, into General Motors, into stimulus, and now he wants to sit there and say, ‘Well, you know, we took the -- we allowed the government to get involved in these industries, but now we don't want them to run them?'"

DONOHUE: I would say we did the responsible thing. I would say do we know enough about the economy. We knew about -- enough about the very serious position this country was in, that we went and we did the exception.

And now that we have done it and supported it, and we're proud we did it, we believe it's time for all of us, including the American business community, to go back to basics and say, "We've done our thing. Where is the back door?"

It's time to get government out of business and get business back to work creating jobs for workers and for companies.

WALLACE: Mr. Donahue, we want to thank you so much for coming in. Please come back, sir.

DONOHUE: Oh, thank you very much.

WALLACE: Up next, Iran's presidential election ends with both sides claiming victory and violence in the streets. What does it mean for relations between the U.S. and Iran? Our Sunday panel weighs in when we come right back.



ASHISH JOSHI: The signs were there and so was the warning -- public protests would not be tolerated. Around Tehran, pro-reform protesters have taken to the street in defiance. The demonstrations are small and sporadic, but they are making a point.


WALLACE: That was Ashish Joshi from our sister network Sky News describing the angry reaction in Tehran to the proclaimed re-election of Iranian president Ahmadinejad.

And it's time for our Sunday regulars -- Brit Hume, Fox News senior political analyst, and contributors Mara Liasson of National Public Radio, Bill Kristol of The Weekly Standard, and Juan Williams, also from National Public Radio.

So a fiercely fought campaign in Iran, results that show that Ahmadinejad won in a landslide, and now we have people in the streets, the supporters of the more moderate challenger, Mousavi, saying that the election was stolen.

Brit, where does this leave things inside Iran?

HUME: Well, it looks as if Ahmadinejad will cling to power. He's supported by the key elements of the theocracy that runs that country. Whether these protests will grow or spread is in doubt.

They seem to have subsided today after all the trouble they had yesterday. I think it leaves Iran about where it was, but showing the world an even clearer picture, as if any were needed, that this is basically a police state.

And it is difficult, therefore, to see how President Obama's dreams of a -- of a more constructive relationship with the powers that be there can go forward, given the fact that this election appears to have been defective, if not utterly fraudulent.

I mean, after all, Mousavi -- Ahmadinejad, according to the results, was supposed to have carried Mousavi's hometown by a large margin.

WALLACE: Inside Iran, do you -- do you have any feeling at all -- and obviously, we don't really know what's going on in the street there -- that this is any kind of a threat -- the protests, the anger about Mousavi's defeat -- that that is any kind of a threat to the ruling regime?

LIASSON: It doesn't sound like it at this point. I mean, there have been other kind of upwellings of reform spirit, and hopes have been risen only to be dashed in the past. We just don't know that yet.

I think the interesting thing is whether or not -- I think it is a setback and a disappointment for the Obama administration. But on the other hand, he did say he wanted to engage Iran as it was, with Ahmadinejad in power and the mullahs controlling things.

In other words, that was the Iran that he reached out his hand to, not -- he didn't reach out his hand to an Iran that was supposedly getting more democratic or was about to elect a reformer. So I think it does complicate it. It makes it more difficult, especially if there's a pall of illegitimacy over the election, but I think that policy is unchanged.

WALLACE: I do want to go back to Iran, though, before we get to U.S. diplomacy, because I think it's so instructive and so sad -- not surprising, but sad. Cell phone service cut off inside Iran. A lot of Web sites cut off. I mean, this is a totalitarian regime exercising its control.

KRISTOL: I'm not so sure they're going to -- it's going to work. I mean, these are the biggest street demonstrations in Tehran in 10 years. People are being a little too fatalistic and deterministic in saying, "Oh, ultimately the reformists always lose."

Ten years ago, the regime was in real trouble with the student demonstrations in Iran. We did nothing to support them or help them. The Europeans did nothing. They had a pseudo-reformist in power, Khatami, which sort of deflected the anger.

Here we have the opposite, and as opposed to -- I think Mousavi -- it looks like he's calling for a general strike and mass demonstrations on Tuesday. That will be the moment when we see who can really turn people on the streets. Are the Tehran police willing to fire on their fellow Iranian citizens and the like?

If this gets sustained, I think it's a big deal. We now have unambiguously a jihadist security service regime. It's not -- and the theocrats, as Brit called them, are somewhat split, actually. You know, some of them might have preferred Mousavi, a kinder face. They all want the nuclear program.

But now I think it's unambiguously -- you know, it's sort of like the move from a -- you know, a moderate, complicated -- not moderate, but a complicated, illiberal and nuclear-pursuing regime to an unambiguously illiberal regime in which the war party is dominant. That's the key.

I mean, does anyone seriously think that the Ahmadinejad Revolutionary Guard forces wouldn't do anything they could do once they had nuclear weapons? Does anyone think that we can sort of contain them and trust them? So it has huge implications, I think, for our policy and for Israel's policy over the next several months.

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WILLIAMS: Well, I think you -- as you can hear from Bill, I think what's happened now is that the hardliners in the United States, in Israel, in the -- throughout the Middle East are sort of emboldened by the result.

They're saying, "You know what? President Obama, you were wrong to ever reach out to the Iranians." Clearly, this is a totalitarian hardline state. I am actually...

WALLACE: When he said hardliners -- I thought you were talking about Ahmadinejad.


WALLACE: You're talking about Bill Kristol.

WILLIAMS: Well, no, I'm talking about the Iranians. But I think that, you know, when you look at what the possibility is here now, it seems to me options then become limited, because how can you negotiate with someone -- how can you offer them any incentives when, in fact, there's a question of their legitimacy?

Is this a real government or not? Is it simply some kind of, you know, religious-driven society, totalitarian -- however you want to describe it -- in which they are not...

WALLACE: So you think all of President Obama's efforts or hopes to reach out to Iran on some level -- that that's dead?

WILLIAMS: Well, it looks like it. I mean, the only thing is that there's the possibility that you get Ayatollah Khamenei and others in search of some kind of domestic appeasement, saying to people, "You know what? Oh, no, we're going to negotiate with the international community. We're going to take steps to try to amp down the tensions here." But that's the only hope.

I don't see that there's much hope now in terms of these negotiations going forward because President Obama would look weaker. It would look as if he was giving in to this man who's not even legitimately elected.

KRISTOL: Juan's giving up on reaching out by President Obama. At the moment you should be -- this is the moment for President Obama to step up. He does have some credibility, presumably, with people in Iran. He should support the democrats.

HUME: Right.

KRISTOL: He should support the demonstrators. He should say that stealing elections is unacceptable, killing demonstrators in the streets of Tehran is unacceptable. He could work with the Europeans to say, "Let's bring in international observers to review whether this was a fair election. If it wasn't, let's think about having another election."

WALLACE: But you're saying turn up the heat, not reach out to the ruling regime.

KRISTOL: Reach out to -- right, reach out to the Iranian people. I mean, this is the -- I really am shocked that Obama has said nothing so far, and we'll see what he says today.

But I mean, doesn't America -- when these things happen, there's -- when there are democratic protests and there's a chance for success, their success depends on outside forces helping them. That was true in Lebanon.

WILLIAMS: But, Bill, what...

KRISTOL: It was true in Ukraine. It was true in the old Central and Eastern Europe.

WILLIAMS: How is it -- how is it going to help? How are they going to help? Look, even when Mousavi wanted to have a press conference, security people canceled the press conference. You have reporters being beaten. So what do you say?

The U.S. gets involved. We can offer some kind of support. We can try to open communications channels. We can send money. But do you want to send troops in there?

KRISTOL: No, I do want to...

LIASSON: No, no.

KRISTOL: ... open communication channels.


KRISTOL: I do want to send money. And I want to tell the Iranians who are on the fence and who do want trade with Europe and do want warmer relations with the U.S., "Look, you've got now to back off or else you don't get anything you want."

The worst thing the U.S. can say is, "We don't care what you do in there. We desperately want to engage the regime no matter how thuggish it is."

LIASSON: It's worth a try. The worst thing that happens is you get a very clarifying moment if it fails. And that in and of itself might lead to some kind of a resolution of this.

HUME: But does anybody sense that the inclination of this administration is to do what Bill suggests? I think not. This president couldn't have been blind to what Ahmadinejad is and what he represents, and he was prepared to reach out to him, as has been pointed out here.

I think he will continue to -- that's what they said yesterday in the face of all of this. I mean, I think it's going to be -- you know, it's going to look terrible to do it now, given the questions about the legitimacy of this election. This will all play out in the next couple of days.

WILLIAMS: That's my point.

HUME: But I can remember so vividly not so very long ago, when the United States was friendly to dictators around the world who were helpful in the fight against Communism, and the American left just hated it. They thought it was outrageous, that we should be supporting the liberal opposition and so on. Where are they now on this?

LIASSON: President Obama isn't talking about making an alliance with Ahmadinejad. He was talking about direct negotiations with an enemy of ours, not an ally.

Now, if he -- he's going to have to do some really careful balancing here in how he reaches out to the democratic forces, such as he decides they are, while at the same time, I guess, not backing down from his comments to negotiate.

HUME: But at this particularly point, at this moment, President Obama's outreach to Mahmoud Ahmadinejad is worth a lot. It is a symbol and token of recognition as the legitimate ruler of that country -- or leader of that country, I should say -- and to withhold it would be meaningful as well, as Bill suggests.

But I see no sign yet that Mr. Obama's prepared to do that.

KRISTOL: Yeah. Reagan negotiated with Soviet leadership at the same time as he reached out to this -- to distance (ph).

Secretary Clinton can place a phone call to Mousavi to make sure that he's OK and is not under house arrest. There are a million things the U.S. could do symbolically to try to strengthen the forces of those in Tehran who want to prevent the Revolutionary Guard and Ahmadinejad from totally taking over the country.

WILLIAMS: I'm all for it. I just think there's limits to what you can do. And don't forget that you have the Israelis -- Benjamin Netanyahu is going to give a speech about settlements and freezing things today. And he wants to make the case that Iran is the problem in the Middle East, not what's going on with the Palestinians.

WALLACE: All right.

WILLIAMS: This strengthens his hand in those talks with President Obama.

WALLACE: All right, gentlemen, we have to take a break here -- gentlemen and ladies.

But when we come back, Washington braces itself for a rough debate over health care. What will we end up with? Some answers after the break.


WALLACE: On this day in 1777, the Continental Congress adopted a flag for the U.S. with red and white stripes and 13 stars. On this day 100 years later, the first Flag Day observance was held.

Stay tuned for more from our panel and our Power Player of the Week.



OBAMA: Real reform will mean reductions in our long-term budget, and I've made a firm commitment that health care reform will not add to the federal deficit over the next decade.


WALLACE: That was President Obama this weekend continuing his push for an overhaul of our health care system.

And we're back now with Brit, Mara, Bill and Juan.

So, Brit, as the debate over health care reform heats up, do you sense that the president and the Democrats are gaining momentum or losing momentum?

HUME: They're Losing momentum, but they were inevitably going to when we got down to the particulars of this. This is one of the reasons why they were so hesitant to say anything very specific about what exactly was going to be proposed.

And the reason is obvious. Every idea you have, every plank in this platform, if you will, has its supporters and its opponents. And the opposition is now forming and coalescing.

The other problem the administration has is it doesn't have any money, that we're already committed to so many other things, and the -- and the deficit, which is becoming a more and more potent political issue, is a big problem, too.

So hence, you had the statement that he made, which I think is pie in the sky, about how it's not going to add anything to the -- to the deficit. It's bound to, if it, indeed, passes in the kind of form that he's proposing. So I think it's in some serious trouble.

WALLACE: Serious trouble -- the entire...

HUME: In terms of anything on the scale that he is talking about, where you insure all the uninsured, you have a public option and all these -- all these ideas that have been at least tentatively embraced by the Obama administration.

WALLACE: Mara, do you buy that? LIASSON: I think there are always two really, really big obstacles. One was how you pay for it, and one was whether or not there would be a public plan.

Up until this week, I always thought the public plan was the bigger obstacle.

WALLACE: And let's just explain. We're talking -- a public plan means that there would be a...

LIASSON: Would be an alternative...

WALLACE: ... public option.

LIASSON: Yes, an alternative to private insurance.

WALLACE: Government insurance plan.

LIASSON: Government insurance, a Medicare-style plan, that would compete with private insurance plans.

I think there's been actually some movement on that. You heard today, you know, Senator Dodd and Chuck Grassley talking about this co-op idea which wouldn't be public. It wouldn't be run by the government. It would be a nonprofit cooperative, like ag -- agricultural cooperatives, that would still compete with public plans, but it wouldn't be government-run.

WALLACE: With private plans.

LIASSON: I mean, still compete with private plans, but it wouldn't be government-run. And Max Baucus really likes it. And that seemed to be, at least for the moment, until the details are delved into -- seemed to be providing some kind of consensus.

I think paying for it is turning out to be much, much harder. I mean, you heard Senator Dodd absolutely saying it's no go on taxing these gold-plated health care benefits that a lot of people get.

The problem is that the savings that are scorable, that the CBO will actually count towards savings, are politically really difficult. And the things that are politically easy and are vague, like innovation, you know, making these health -- health delivery systems more productive, are impossible to score.

I think this is a tough nut to crack, and I do think what Senator Grassley said is important. The president is going to have to break this logjam, and it's going to involve climbing down from some campaign promises, which is not to tax people under $250,000.

KRISTOL: Well, if he wants to tax people under $250,000, good luck. Let him try to explain to the American public why, when we're -- when he's raising taxes anyway next year and the year after -- that's pretty clear -- and we're in a recession, and we have a huge budget deficit, that we should spend a trillion dollars and tax people in middle income brackets for speculative -- very speculative health care gains, which I think, in fact, would be -- would lead to rationing. It would be a diminution in the quality of health care.

I think Republicans can win this fight (inaudible) the Republicans. I mean, I think opponents of the health care plan could win this fight with Democrats deciding this whole package is a bad idea. The government plan is, I think, a ridiculous idea. The co-op is a fairly ridiculous idea. Hey, if a co-op's a good idea, set up a co-op. You know? If they all think it's...

HUME: There's nothing preventing them from doing that now.

KRISTOL: There's no law against setting up new insurance plans in the United States. If people want to do it, if people want to do it cooperatively, they can do it. Why does the government have to spend a trillion dollars? So I think that goes.

I think the taxes are a big problem. Spending is a big problem. I think for the -- actually for the first time, not just parts of the whole plan could be defeated, but people could decide, "You know what? This is not the moment for a radical overhaul of one-sixth of the U.S. economy. Let's get out of the recession. Let's do some other sensible things, maybe some small insurance reforms, and let's revisit this in a bipartisan way after 2010."

WILLIAMS: It will never happen. If you wait, it will never happen. As President Obama has said, now is the time. The moment is now.

KRISTOL: Why is that?

WILLIAMS: And the time is now because as you approach 2010, then the power of big money and big money coming from the insurance companies that are particularly threatened by this proposal would be all over the table.

And it will -- we'll be back to the paralysis that has prevented any kind of health care reform in this country for all time. That's the reason we have so many uninsured. It's the reason we had kids who were not getting care. It's the reason people are clogging the emergency rooms.

HUME: There's another reason.

LIASSON: Well, you know what, though?

HUME: There's another reason.

WILLIAMS: So here comes the moment to do something. And everybody says, "No. Well, we should just wait." Look. I think what you heard from Chris Dodd this morning is let's talk, let's negotiate.

But the idea that you would say no or that you would say, "Oh, well, people can form co-ops any time," if they -- if they were going to form the co-ops, they would have done it. Obviously, there's some disincentive and this is a moment for the government to act aggressively and affirmatively in terms of caring for the American people. LIASSON: You know what? The last...

WILLIAMS: That argument has not been made yet, and I think it's -- that argument has...

LIASSON: Of course it has been made.

WILLIAMS: ... to be aggressively made by...

WALLACE: What do you mean? You haven't heard the president?

LIASSON: The president makes it every day.

WILLIAMS: I think -- no, I think the president hasn't gotten out there and sold it. That's why this week -- and I believe he's...


WILLIAMS: ... giving a speech tomorrow. He's going to aggressively begin the salesmanship.

LIASSON: No, he's been aggressively selling this. The question is -- the last health reform fight that Bill was involved with, that's what happened. The whole thing collapsed of its own weight, and then they turned their attention to SCHIP, little incremental changes.

I think -- I think the winds are stronger behind health reform this year than they were then.

WILLIAMS: I agree.

LIASSON: And I do think there are other ways to make it slightly less expensive. Maybe you don't cover everybody all at once. Maybe it's incrementally rolled out. I mean, there are ways to make it more digestible.

I think they've come an awfully long way. You've got Congress really working on this in a bipartisan way...

WALLACE: I have to...

LIASSON: ... which you didn't 18, 15 years ago.

WALLACE: I have to say, Tom Donahue off camera said, "We really do want a health care plan." Now, they don't want a lot of the president's plan, but I think a lot of businesses would really...

HUME: Well, they might pass some pieces of this. I say let's hear it for co-ops. Co-ops are a wonderful idea.

LIASSON: Well, what about an individual mandate?

HUME: Let's do co-ops first, because they're -- you know why? Co-ops are essentially harmless. I mean, there's -- you know, there's -- you know, that's -- there's nothing wrong with that idea. It's a good idea. And it doesn't do any real damage. Individual mandates -- you know, for an old guy like me, I say great. That's more young people paying into the system to help pay for my health care.

WILLIAMS: You know, but he didn't -- but Tom Donohue -- when he says he...

LIASSON: We've got agreement on those things.

WILLIAMS: ... wants health care, doesn't that suggest to you it's important to the American economy?

KRISTOL: No, it suggests to me it's important to big business. The big auto companies were for the Clinton health care plan. It's small business and individuals who get (inaudible).


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