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LOU DOBBS TONIGHT

Obama's Offensive; Are People Scared?; Who's Behind it?; Health Care in Spain; Recovery Ahead

Aired August 12, 2009 - 19:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


LOU DOBBS, CNN ANCHOR: Wolf, thank you. Good evening everybody.

The White House tonight is struggling to sell the president's health care proposals. His poll numbers continue to plunge. Extremist fringe groups are now trying to dominate the health care debate. We will tell you who is behind those groups, both on the left and the right.

Also, rising concern tonight that the Obama administration is trying to push through a big government agenda funded by American taxpayers, an agenda that some say could change this country forever -- that is the subject of our "Face Off" debate here tonight.

And new evidence that the worst recession since World War II has ended. Even the Federal Reserve acknowledging our economy has stabilized, something that I have been predicting, I might point out, for months.

We begin with the president's approval ratings -- they are now at the lowest level since his inauguration. President Obama has been on a full-out campaign to sell his health care plan. But all of the polling shows the president losing ground on every major national issue. The Congressional Budget Office has contradicted the president's assertion on the cost, the efficiency and the impact of his health care plan. Today, White House press secretary Robert Gibbs was on the defensive.

We have complete coverage tonight. Candy Crowley reporting from Iowa, Jessica Yellin reporting from Washington, D.C., but first, Dan Lothian reporting from the White House.

(BEGIN VIDEOTAPE)

(CROSSTALK)

UNIDENTIFIED FEMALE: You don't know.

UNIDENTIFIED MALE: Nobody 74 is going to be written off because they have cancer.

UNIDENTIFIED MALE: Why don't they take the health care being forced down our throat?

UNIDENTIFIED FEMALE: You don't trust me?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT (voice-over): There's a lot of noise in the health care debate, some of which the White House is calling misinformation that could muddle the message.

(on camera): Is there any concern at all that if this misinformation machine continues and the record can't be corrected as the White House would like it to be, that it could potentially make it more difficult to get health care reform across?

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: Well look, if the debate is dominated by something that's not true, of course.

LOTHIAN (voice-over): But White House spokesman Robert Gibbs hopes public support for health care reform will hinge on the facts.

GIBBS: I don't think the president believes, though, that when all is said and done, that most people will make their decisions on something that is false and something that has been said as false.

LOTHIAN: But even as the president was trying to set the record straight at a town hall in Portsmouth (ph), New Hampshire, Tuesday, his own facts were fuzzy. This is what he said about the AARP.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: AARP would not be endorsing a bill if it was undermining Medicare. OK, so I just want seniors to be clear about this.

LOTHIAN: While the AARP agrees it would never support a bill that undermines Medicare, in a statement, its chief operating officer called any suggestion of an endorsement, quote, "inaccurate". Gibbs cleaned it up this way.

GIBBS: I don't think the president meant to imply anything untoward.

UNIDENTIFIED MALE: He just misspoke?

GIBBS: Right.

LOTHIAN (on camera): The White House says that these town halls the president has held have been valuable, a way to inform and to knock down what they see as false information about health care reform. So the president hits the road again this weekend with town halls in Bowsman (ph), Montana, and Grand Junction, Colorado.

Dan Lothian, CNN, the White House.

(END VIDEOTAPE)

DOBBS: Well White House press secretary Robert Gibbs was on the defensive today as I said on the issue of whether the president misrepresented the AARP's position on health care. We're going to play for you the entirety of that section of the press briefing from the question onward. Let's listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Yesterday the president said AARP endorsed the plan. As you're aware, yesterday AARP said it hasn't endorsed the plan. Where on the information or disinformation scale would the president's remark fall?

GIBBS: Well, the president said -- well AARP has said they are certainly supportive and have been for years on comprehensive health reform. I don't think the president meant to imply anything untoward. I think he discussed the notion that AARP is supportive of legislation -- I'm sorry -- an agreement that would fund filling the doughnut hole for seniors as part of Medicare Part D as well as additional savings for comprehensive health care (INAUDIBLE).

UNIDENTIFIED MALE: The president is (INAUDIBLE) where AARP hasn't even endorsed the House pending (INAUDIBLE) legislation...

GIBBS: Which is what I just said.

UNIDENTIFIED MALE: Right.

UNIDENTIFIED MALE: He's aware of that.

UNIDENTIFIED MALE: He wasn't trying to mislead anyone.

GIBBS: No.

UNIDENTIFIED MALE: He just misspoke?

GIBBS: Right.

UNIDENTIFIED MALE: Is that something that can happen in this debate?

GIBBS: That people can misspeak?

UNIDENTIFIED MALE: Right. Without intentionally meaning to mislead?

GIBBS: Sure. I don't know if it's happened on certain subjects, but yes.

MAJOR GARRETT, FOX NEWS: OK, so within the range of this whole discussion, something can be wrong, but not necessarily intentional misinformation is what I'm getting at?

GIBBS: Yes. I think most of -- I think most of what the president has addressed though has been in many ways intentional misinformation.

UNIDENTIFIED MALE: That he's been trying to correct?

GIBBS: Right.

(END VIDEO CLIP)

DOBBS: All of that from a press secretary speaking for a White House promising complete transparency and openness. And the summation, the president misspoke. And it may be that he was not the only member of the administration to misspeak recently. Secretary of state Hillary Clinton in Nigeria saying that democracy in America is still evolving. She also made a surprising comment about the 2000 presidential election in this country while on foreign soil.

(BEGIN VIDEO CLIP)

HILLARY CLINTON, U.S. SECRETARY OF STATE: Our democracy is still evolving. You know we had all kinds of problems in some of our past elections, as you might remember. In 2000, our presidential election came down to one state where the brother of the man running for president was the governor of the state, so we have our problems, too.

(END VIDEO CLIP)

DOBBS: A State Department spokesman tonight told us, quote, "the secretary's remarks stand on their own".

As we reported to you earlier, the president's poll numbers continue to fall. A new Gallup poll shows the president's job approval has fallen to 53 percent. The latest Rasmussen poll puts the president's approval rating even lower, 48 percent.

One reason for those declining poll numbers is rising concern about the president's agenda, which is meeting strong resistance. A leading Republican senator, Senator Charles Grassley today declared people are scared by the president's health care plan and other policies. Senator Grassley making that comment at a town hall meeting in his home state of Iowa -- Candy Crowley reports from Iowa.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Well if it's OK with you, I'll get started.

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over): Winterset (ph), Iowa, Senator Chuck Grassley holds his 72nd town hall meeting this year and what a year.

SEN. CHARLES GRASSLEY (R), IOWA: We're here at a time when I sense that people are scared for our country.

CROWLEY: The stimulus plan, bailouts, government spending and now health care. Grassley has been getting two, sometimes three times the crowds he's had in previous years. Many people, so many hands in the air.

UNIDENTIFIED MALE: Where do my children go to get their insurance if they don't want government health care?

UNIDENTIFIED MALE: How are you going to change the insurance so that the small businesses can compete?

CROWLEY: So many cross currency.

UNIDENTIFIED FEMALE: I need to know what are you doing to these insurance companies that are putting everything in their pocket and just laughing at everybody else.

UNIDENTIFIED FEMALE: Simple math even for this southern Iowa red-neck shows that we can do -- we can cover the people who want coverage with a private policy cheaper, like one-third for what the government is proposing.

CROWLEY: It is a tricky journey home for the senator. He is ranking Republican on the Finance Committee and part of a smaller group, Republicans and Democrats, trying to come to some sort of moderation, piecing together a compromised health care bill.

Some of his constituents urge him to press on. But the core of his base is concerned Grassley will bend too much on his way to a compromise. So bouncing from town hall meeting number 72 to 73, 74 and 75, Grassley, up for re-election next year starts with what he won't agree to.

GRASSLEY: I'm not goings to do anything that's going to nationalize health insurance -- or I mean nationalize health care in America. I don't intend to do anything that will allow government bureaucrats to get between you and your doctor.

CROWLEY: The senator pushes back against people he says want him to sit at his desk with his feet up. He's at the center of the Senate negotiations, he says, to keep the Senate from giving away the store.

GRASSLEY: And you know the old saying, if you aren't at the table, you're the menu.

(END VIDEOTAPE)

CROWLEY: But at the moment Senator Grassley seems to think things are not going so well at that table. He has hinted to all the audiences today that it is possible when the Senate comes back and the Senate Finance Committee gets back down to work face to face, the Democrats may just take off on their own without any sort of Republican input. Senator Grassley said I won't walk away from the table, but I may be pushed away by things he just won't agree to. Lou?

DOBBS: Given the poll numbers that we're looking at, that becomes something of a daunting task for the Democrats, does it not?

CROWLEY: Well, what is very interesting here, when you come to Senator Grassley's town hall meetings, and there's been four of them, so we got a pretty good gist of...

(CROSSTALK)

DOBBS: What did you say; he wrapped up 75 of them?

CROWLEY: This year.

DOBBS: That's amazing.

CROWLEY: He's done more than 2,800 in his Senate career...

DOBBS: Good for him. God bless.

CROWLEY: Certainly he wins for stamina. That's for sure. And I tell you he stays for an hour at all of them. These aren't hit and runs -- I mean he does stay and talk. And what he's really getting buffeted on two sides and it was -- here in Adele (ph), Lou, what was really interesting is we had one woman stand up and say, listen, that you're even trying to compromise, there is no compromise with this liberal package.

We won't take any of it. And right after her, someone got up and said, you know, I'm a Christian woman and I'm a liberal, why are you not correcting all these lies that are out there about death beds and Nazi signs with Barack Obama? So he just -- you know both ways he goes he really gets slammed.

DOBBS: Yes.

CROWLEY: And I think what we're seeing is what we're seeing in those polls is those huge deep divisions.

DOBBS: Yes and that's one of the things we're examining here tonight, Candy, is the left and the right and really the fringes of the left and the right in this country dominating much of this debate. Thank you very much, Candy -- Candy Crowley reporting.

CROWLEY: Sure.

DOBBS: A leading Democrat, Senator Arlen Specter blasting opponents of the president's health care plan. Senator Specter declared that critics may not be, in fact, representative of the American people. He insisted they should be heard, however.

(BEGIN VIDEO CLIP)

SEN. ARLEN SPECTER (D), PENNSYLVANIA: The groups are not necessarily representative of America. They're significant. We have to take into account what they had to say. And they're very angry about what's going on in Washington and angry about partisanship and about the bickering and the failure to deal with issues as a matter of principle.

(END VIDEO CLIP)

DOBBS: Senator Specter today again faced a barrage of tough questions on the health care plan. It is the third town hall meeting for Senator Specter over the past two days.

Powerful advocacy groups from the left and the right are battling over the health care agenda. They include the Democratic National Committee, the U.S. Chamber of Commerce. They're paying for competing television commercials. But a number of extreme fringe groups on both the left and the right are also committed deeply to this fight.

Jessica Yellin reports from Washington. Jessica, just exactly who is involved and how deeply in this fight over health care -- what's their respective agendas?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Well Lou, you say many of these folks are allied with extremist groups and guess what -- the DNC would agree. Remember when these shout fests started -- the DNC communications director called the protesters right wing extremists. Now in truth many of the people, Lou, at these events are from both political extremes.

They've been encouraged to come to the town halls by advocacy groups on the right and on the left. On the left you've got groups like ACORN, MoveOn, some of the major labor unions, they've all been notifying supporters asking them to attend town halls and those organizations, as you know, are fierce defenders of progressive or liberal policies.

Now on the right organizing help is coming in part from Conservatives for Patient Rights, the "tea party" organizations, another group called Freedom Works. Those last two organizations they're opponents of the president's overall agenda, not just health care reform. So it should be no surprise that what you end up with at these town halls is a good number of ideological folks who already have their minds made up, they're not there to learn about health care reform, but rather to defend their position. So these town halls might seem polarized, but Lou that does not mean they're an accurate reflection of the mood of the country as a whole.

DOBBS: Yes and the mood of the country as best we can discern it and obviously that's primarily from polling, is great wariness here. In part, some of that, I wonder if it really rests with health care itself or the fact that this government, this federal government, both Republican and Democratic administrations, has been so horrifically dysfunctional and seemingly incapable of managing both the country and resolving issues that are now longstanding including national health care.

YELLIN: Well it does seem the health care reform issue is sort of a proxy for a lot of people's deep frustrations about what you point out, the debt, dissatisfaction with government, even a general sense of a loss of control in their own lives, people not making as much money as they thought they would make, not being able to get the better health care they thought they would have and they're venting it in some ways through their frustrations over health care reform, so I do think that's right.

DOBBS: Jessica, thank you so much -- Jessica Yellin reporting from Washington.

Up next here we'll be examining concerns that the president is pushing for the biggest expansion ever in government. Also many economists saying the recession has ended. The White House however not acknowledging that turnaround in our economy.

We'll have a special report tonight on Spain's health care system. You won't see that report anywhere else on television. We'll have it next right here.

(COMMERCIAL BREAK)

DOBBS: As Congress and President Obama try to radically change this nation's health care system, we on this broadcast are asking and answering many of the questions that Washington isn't thinking about or at least not acknowledging. One of those questions is how satisfied are we with our health care system and what is, if any, the link between satisfaction and life expectancy and patient care.

Eighty-three percent of Americans, as we've reported, are satisfied with the quality of the American health care system. Life expectancy in this country is 78.1 years, below the average of 79 years in other developed countries. In Denmark, 90 percent satisfied with their publicly funded system, life expectancy there just about the same as in the United States, 78.4 years.

In Germany, more than half of all Germans aren't satisfied with their health care system. Their life expectancy is 79.8 years, considerably better than that of the United States. Fifty-seven percent of the people in the U.K. say their system needs an overhaul, life expectancy, 78.9 years. In Canada, 70 percent like their system, life expectancy, almost 81 years.

Eighty-four percent of the French satisfied with their health care, life expectancy there, 81 years. And 46 percent of the folks in the Netherlands say their system needs a change, life expectancy 80 years. Switzerland's health care system ranked seventh in a survey of the 32 developed nations, life expectancy almost 82 years.

Well we've been reporting here on health care systems all around the world, and tonight we're going to examine the health care system in Spain. Spain's health care system placed 17th in a consumer satisfaction survey of those 32 nations, life expectancy in Spain is above average, 81 years, almost three years longer than in America. Their system is publicly funded and doctors work directly for the government. Kitty Pilgrim has our report.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Spain provides health care for its entire population, approaching the standards of any other European country. Spain has come a long way. Richard Saltman (ph) has written extensively on various health care systems in Europe.

UNIDENTIFIED MALE: We need to remember that 20 years ago Spain was a relatively impoverished country, so there's been a big change.

PILGRIM: Total spending accounts for 8.5 percent of GDP in Spain, compared to 16 percent of GDP in the United States. And health care spending per capita is some $2,671 compared to 7,290 in the United States. Doctors are plentiful, but are salaried employees of the regional government, with a salary of around $100,000 a year. Because that is lower than doctors in other developed countries, it helps keep medical costs low.

RICHARD SALTMAN, EMORY UNIV. SCHOOL OF PUBLIC HEALTH: The disadvantage of that is that doctors work 40 hours. They look at their clock at 4:00 in the afternoon and go home.

PILGRIM: Still, there are more physicians per capita, one in 270 versus one in 416 for the United States. Life expectancy, 81.1 years compared to 78 years for the United States. Yet Richard Saltman (ph) describes the Spanish system as troubled.

SALTMAN: Inside the public sector there's a great deal of bitter squabbling between the national government and the 17 regional governments that are now responsible for running the system.

PILGRIM: The national government gives tax money to the regions who are responsible for providing health care. The funding is from income tax and a value-added tax, as high as 16 percent on almost everything that is purchased in the country. Richer, more politically powerful regions tend to have more resources and better service than the poorer areas.

(END VIDEOTAPE)

PILGRIM: Now, there are a few negatives. People must choose a doctor or a hospital in the region where they live. Now they're required to stay local in their choice of coverage. And if that region has fewer resources, there is no choice to switch to another more affluent region for health care, Lou.

DOBBS: And patient care ranks where for the Spanish?

PILGRIM: Patient care in terms of what...

DOBBS: Patient satisfaction.

PILGRIM: Oh satisfaction is very high because they were actually a very poor country and they've come a long way in terms of providing health care in the last, say, 10 years, so patient satisfaction is very, very high. But there are some very big negatives in the system if you look at it.

DOBBS: All right, thank you very much and it's very revealing to look at these varying levels of life expectancy in each of these countries. We should point out that there are other factors that go into determining that number statistically and we're going to get to some of the qualifications in this in the days ahead and also the impact of the economic conditions of each of these countries, their debt levels, their trade deficits and their total social and political environment.

We also looked at the amount of debt as a percentage of GDP for the eight countries that we've reported on and the United States. Based on last year's reports, Denmark's debt amounted to $80.5 billion. That's 22 percent of their GDP.

Spain's debt, $632 billion, 37.5 percent of its GDP; the Netherlands, 391 billion, that's 43 percent of their GDP; Switzerland's debt, almost 217 billion, 44 percent of GDP; and as these debt levels keep rising, the U.K.'s debt, $1.3 trillion, 40 percent of its GDP; the U.S. national debt, just about $9 trillion, that's just about 61 percent of GDP.

Canada's debt is almost $1 trillion, 62 percent of its GDP. Germany's debt amounts to 2.4 trillion. That amounts to just about 63 percent of its economy; France, a $2 trillion debt, a whopping 67 percent of its economy. We continue our comparisons of health care systems around the world. Tomorrow we examine the system in Japan where Japan has the highest life expectancy of any nation on the globe. More than 82.5 years, the longevity of the average Japanese citizen -- up next much more on the town hall meetings including a town hall meeting in Iowa.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: It is (INAUDIBLE) tyranny, enabling an all- powerful, all-seeing, all-reaching government a power of life and death that was once understood to be reserved for God alone.

(END VIDEO CLIP)

DOBBS: We'll tell you why many people are scared of the president's health care initiatives. And some good news on this economy and why many economists are finally agreeing with me. We'll be right back.

(COMMERCIAL BREAK)

DOBBS: We're committed here to bringing you the good news on the economy that much of the national media seems to be ignoring. When everyone else said our economy was collapsing, I would like to remind you I said there would be no depression -- that was just about a year ago -- that there would be economic recovery before the end of this year and I said that a year ago. Today, well some economists are catching up. Brooke Baldwin has our report.

(BEGIN VIDEOTAPE)

BROOKE BALDWIN, CNN CORRESPONDENT (voice-over): Could it be? Are we reading this right? One group of economists says the recession is over.

UNIDENTIFIED FEMALE: The recovery is underway...

BALDWIN: Diane Swonk (ph) of Chicago's Mesirow Financial (ph) was one of 27 economists who told "The Wall Street Journal" this week the recession has ended. Swonk (ph) points to several signs of progress -- first, the housing market. Swonk (ph) says the momentum has shifted from perpetual declines to some increases in activity, like a boost from first-time buyers.

Second, carmakers and dealers getting a much-needed boost from the federal "cash for clunkers" program, and third unemployment -- while the rate is rising, fewer jobs are being shed. Swonk (ph) predicts job gains could happen at the end of this year.

DIANE SWONK, MESIROW FINANCIAL: They won't be strong at first. But even any sign of job gains along with people's 401(ks) is looking a little better. That will make us feel a little better about the economy. But at the end of the day we're still talking about confidence in the U.S. economy that's come from the edge of the abyss to the recession lows we saw in 1981 and '82. BALDWIN: Echoing this optimism, the Federal Reserve. Wednesday the Central Bank reporting economic activity is leveling out. Conditions in financial markets have improved further in recent weeks, and household spending has continued to show signs of stabilizing, but remains constrained. But are Americans buying this bullish news?

UNIDENTIFIED FEMALE: I'm hopeful, but still we're not there yet.

UNIDENTIFIED MALE: I don't get the feeling that it's as bad as people thought it was going to be.

UNIDENTIFIED MALE: Technically, the economists may argue we're out of recession, but people in the street, you know the public aren't going to feel that. You know they've been hurt. Jobs have been lost. Houses are being lost.

BALDWIN: Lost, yes, but the economists are encouraged the losses are slowing.

(END VIDEOTAPE)

BALDWIN: If things are truly turning around, we won't know it officially until early next year. That is when the National Bureau of Economic Research, the group officially charged with declaring the end of a recession would make the pronouncement. But if all these economists polled by "The Journal" and you, Lou, are correct, and by that point in time we should be well into economic recovery.

DOBBS: And we'll have a sense of that before then. The orthodoxy in politics is usually wrong. The orthodoxy in economics is usually wrong. By the way, and mentioning the National Economic Research Bureau, of course we don't know when the NADR (ph) would make that decision, but you know if history is a guide it would be sometime certainly in that time range.

The good news -- you know obviously a lot of people feeling pain, a lot of people facing foreclosures, delinquencies, and the credit cards, their mortgages. Job losses, as you report, continue to mount, but slowing. And as the saying goes, we've been down so long that it looks up. This is hopefully the turnaround.

BALDWIN: A good thing.

DOBBS: All right, thanks a lot. Brooke Baldwin.

BALDWIN: Thank you.

DOBBS: Coming up here next, President Obama facing charges he's misrepresenting, as he put it, the facts in the health care debate. The president also being criticized for pursuing what some say is a big government agenda. We'll examine the fight over big government in our "Face Off" debate. Remember a previous Democratic president said the era of big government is over. We'll see and we'll have a special report on the mere $60 trillion in unfunded liabilities that face this nation and the risk of bankruptcy.

(COMMERCIAL BREAK)

DOBBS: The federal government has posted a record $180 billion federal deficit for the month of July, bringing the total deficit to $1.25 trillion over the past ten months. Unfunded liabilities, Medicare and social security at a staggering $56 trillion. And the Obama administration's health care proposal estimated to cost more than a trillion dollars. Critics ask how can we even consider such a costly plan at this time? Lisa Sylvester has our report.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Medicare's trust fund will run out of money in 2017, just eight years from now, that according to a recent report from the trustees of the social security and Medicare fund. The social security fund will be insolvent by 2037. J.D. Foster of the conservative Heritage Foundation says liberals, mod rates and conservatives all agree something has to be done.

J.D. FOSTER, HERITAGE FOUNDATION: We may disagree on the solutions, and we frequently do. But the problem has to be addressed. That is Medicare and social security are promising benefits we can't afford.

SYLVESTER: Medicare, the program that covers those 65 and older and the disabled and Medicaid that serves the poor have been gradually expanding benefits since their creation in 1965. The social security system has been strained with people living longer. Add to that the upcoming baby boomer retirement wave, and the system is nearing its breaking point. President Obama has said that health care reform is a necessary part of reigning in entitlement spending. Without it he says --

OBAMA: Your premiums will continue to skyrocket. They have gone up three times faster than your wages and will keep on going up. Our deficit will continue to grow because Medicare and Medicaid are on an unsustainable path.

SYLVESTER: But fiscal hawks like the Concord Coalition's Robert Bixby says what he sees being debated on Capitol Hill won't do much too actually brick down costs.

ROBERT BIXBY, CONCORD COALITION: So far the bills we're seeing coming out of Congress do a better job of expanding coverage than they do of controlling costs.

SYLVESTER: Bixby saying without real reform, Medicare and social security will only continue to add to the record federal deficit.

(END VIDEOTAPE)

SYLVESTER: And Robert Bixby worries on the path we're on right now, some tough decisions will have to be made. Higher taxes, more federal borrowing or cutting services -- Lou?

DOBBS: And all of those issues not yet in discussion in the national debate or the hearings before the U.S. Congress on so-called health care reform.

SYLVESTER: The big question, how do you pay for it, of course?

DOBBS: Absolutely. Thanks so much, Lisa Sylvester.

Many Americans at the town hall meetings across the country are raising concerns about big government. That brings us to the subject of our face-off debate tonight. Should we reduce rather than expand the size and reach of our federal government?

Joining me now former presidential candidate Steve Forbes, author of "Power, Ambition and Glory." Jeff Madrick, editor of "Challenge" magazine, author of the new book "A Case for Big Government." Good to see you. It's been a while. We appreciate you being here.

Let me begin, Steve, with you, is as some are charging, the Obama health care initiative a call for a socialized medicine, a more socialistic America?

STEVE FORBES, AUTHOR, "POWER, AMBITION, GLORY": Certainly is. Health care, as you know, is about 18 percent of the economy. What they have proposed will be defactor nationalization, turning health insurance companies either as wards of the government or very closely regulated utilities, telling companies like our company why kind of health insurance we can give our people, what has to be in it and what can't be in it. If that's not semi nationalization, I don't know what is. We've seen what they've done with the insurance sector, auto companies. Wherever they can grab, they grab.

DOBBS: Should we argue the previous administration did a lot with those industries?

FORBES: They certainly did. Both administrations deserve to be taken over the rack on this.

DOBBS: Jeff, you said this kind of argument about socialism, it's ideological entrapment. What do you mean by that?

JEFF MADRICK, AUTHOR, "A CASE FOR BIG GOVERNMENT": I think it's a bad word, socialism. It's used in order to cast gate people. It labels people. It's sticks and stones will hurt me. Sticks and stones will hurt my bones, but so will names. It's inflammatory because we've always had serious government in America. Government is not some necessary evil that pops in and out of our lives. Government has controlled and regulated events and economic issues even back to the 1790s. Government built the canals. Government subsidized and paid for most of the railroad development. Government built the sanitation system.

DOBBS: Economic stimulus.

MADRICK: Well, investment in ourselves, not just stimulus, but investment in our future. Government built the primary schools. We have to be clear about this. This health care system is a mess, way before Obama became or anybody thought Obama could become president. It is a mess. Business will not be able to pay the insurance they want to pay in 10 or 12 years. Premiums are going way, way, up.

DOBBS: Steve?

FORBES: First of all, government has been involved in the economy from the get-go. The question is to what degree? Till a few decades ago the federal government spending was about 3 percent of the economy, and we have the mightiest economy in the world. Today in the 1980s and even in the 1990s we had the government at a fairly relatively stable or low level of the economy and the economy was the envy of the world. Now this is a great leap forward. Federal spending going up proportionally or 40 percent from 20 percent to 28 percent of the economy. The regulations they want to put in, cap and trade, substantially raising the costs of energy. Raising taxes. That's going to be a real burden on job creation and higher standard of living.

DOBBS: I'm sorry. Go ahead.

MADRICK: Steve, come on now. More government spending did not create the financial crisis. In fact, less government. Deregulation, looking the other way, the entrenchment in the ideology for the last 30 years that said government keep out of this because markets always work.

FORBES: Between the early 1980s --

MADRICK: Markets need supervision and nourishment. They need guidance.

FORBES: It's a matter of degree. From the early 1980s to the crisis in 2007, we in the world had the greatest advance in terms of people advancing economically in human history. What brought about the crisis, the core was the Federal Reserve printing too much money. They didn't print too much money, the housing bubble could never reach the size it did. Congress, creation, government agencies. Fannie and Freddie, no regulation on them, going on a binge.

MADRICK: Federal Reserve has been accused of printing too much money time and again. This economy did not unwind because of that. It unwound because of this ideology, because of the ideology that government was looking the other way, and -- we grew far more rapidly in the '50s and '60s than we did in this period you call the greatest expansion. So let's get our facts here.

DOBBS: Let me show everybody in the audience, this -- the president of the United States in 1996, the State of the Union address, William Jefferson Clinton.

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: The era of big government is over.

(END VIDEO CLIP)

DOBBS: Now, here we are in the odd position of a Democratic president having said that year, the year of big government is over. And in a peculiar position of a Republican president for eight years presiding over the greatest expansion in federal government since the great society programs. What are we to make of those two?

MADRICK: Well, I think they're both wrong in serious ways. It was not the end of the era of big government. Government remained a very big share of the GDP from my point of view. Thank goodness government is not always affected by any means, but it is necessary.

FORBES: Look, if government spending was the way to wealth, the Soviet Union would have won the cold war. Western Europe would be a font of innovation and high technology. The soviets lost the cold war. Western Europe is not a font of high technology.

DOBBS: I'm sorry, gentlemen.

MADRICK: Western Europe is doing fine by any standard.

FORBES: Not for innovation. There's no Silicon Valley in Western Europe.

DOBBS: Hopefully you'll both come back and we'll continue the discussion because the issue will be before us for some time. Thank you very much Jeff Madrick, we appreciate, the new book "A Case for Big Government." And "Power, Ambition and Glory," all things which Steve has aspired. Thanks for being with us.

Brooke Baldwin has the update on the other important stories we're following tonight -- Brooke?

BALDWIN: Lou, begin with the launch of a major marine offensive against a Taliban strong hold in southern Afghanistan. The marines backed by carrier jets exchanged heavy fire with insurgents in Hellmann province just before dawn. The marines are just trying now to push Taliban insiders from a village and provide security for next week's presidential election. At least seven insurgents were killed in that attack.

The bodies of those five Italian tourists killed in the mid air collision over the Hudson River were back on their way home to Italy. The tourists were on board a site seeing helicopter when it crashed with a small plane Saturday afternoon. The helicopter pilot and three people on board the plane were also killed in that crash.

President Obama held a reception for new associate justice Sonia Sotomayor in the White House. Sotomayor was formally sworn in as Supreme Court justice at a ceremony on Saturday. The Supreme Court's new term begins October 5th.

Those are some of the stories we're following tonight -- Lou?

DOBBS: Brooke, thank you very much.

Coming up next, Americans speaking out against the president's health care plan. Are they un-American?

UNIDENTIFIED FEMALE: Your government has lost the faith and trust of the American people.

DOBBS: Why do they call representatives, representatives? Who in Washington is listening to the people?

And President Obama trying to clear up what he says are misrepresentations about his health care plan. Did he do a little misrepresenting of his own?

(COMMERCIAL BREAK)

DOBBS: President Obama says his opponents are wildly misrepresenting, as he put it, his positions on health care. His critics, however, say the president has done misrepresenting of his own. Yesterday President Obama incorrectly declared that the AARP supports a Democratic party's health care legislation. Ines Ferre with our report.

(BEGIN VIDEOTAPE)

INES FERRE, CNN CORRESPONDENT (voice-over): President Obama wanted to dispel what he called wild misrepresentations in Tuesday's down hall meeting. In doing so, he made his own misrepresentation.

OBAMA: AARP would not be endorsing a bill if it was undermining Medicare.

FERRE: AARP which wants health care reform hasn't endorsed any bill. In a statement the organization said, quote, indications that we have endorsed any of the major health care reform bills currently under consideration in Congress are inaccurate. White house spokesman Robert Gibbs saying Obama misspoke.

GIBBS: AARP has said they are certainly supportive and have been for years on comprehensive health reform. I don't think the president meant to imply anything untoward.

FERRE: AARP represents more than 40 million seniors. It's also one of the biggest endorsers of health insurers under his for-profit subsidiary, AARP services. In 2007, AARP services brought in nearly $498 million in royalties from endorsed providers for different products and services. 60 percent of those revenues came from health- related products. This expert from a nonpartisan health care think tank says the organization is trying to play both sides.

PETER J. PITTS, CENTER FOR MEDICINE IN THE PUBLIC INTEREST: They walk a very tight line between an insurance company wanting to make money, a membership organization wanting to serve the needs of its membership and a highly politicized organization that is trying to say the right things and not take sides. Sometimes when you straddle a fence, you sit on a pike.

FERRE: A recent CNN Opinion Research poll shows the majority American under 50 support Obama's plan. While a majority of those over the age of 50 oppose it. Some AARP members in a town hall meeting in Texas were vocal at their opposition.

UNIDENTIFIED MALE: AARP is not ours.

UNIDENTIFIED MALE: Stand up and take the government back.

FERRE: AARP says it has held many other town hall meetings that did not have such disruptions.

(END VIDEOTAPE)

FERRE: AARP says its approaching health care reform strictly from the standpoint of how it can approve the quality of life for older Americans, saying it's working with both political parties and the White House on health care reform -- Lou?

DOBBS: Ines, thank you very much; Ines Ferre.

Joining me from Washington, D.C., political editor of the Washington Examiner, Chris Stirewalt, good to have you with us Chris. And here in New York, former assistant to both President George W. Bush and former Vice President Dick Cheney, Ron Christie and Democratic strategist, CNN contributor Hank Sheinkopf.

Ron, let me turn to you first. Let's take a look at a woman at the meeting of Senator Carden of Maryland and what she had to say to the senator.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Your government has lost the faith and trust of the American people. This government is out of control. We are in debt up to our eyeballs, and you all are doing nothing but putting more debt on us and our children. And it's got to stop. What are you going to do about it?

(END VIDEO CLIP)

DOBBS: There are some who would argue that woman put forward, straightforwardly, the question that has not been asked throughout this entire debate by our elected officials?

RON CHRISTIE, FORMER ADVISER FOR BUSH ADMIN.: I think she's absolutely right, Lou. I think it goes back to what the government did at the end of the Bush administration with the bailout of Fannie Mae and Freddy Mack, going forward spending $787 billion for a stimulus package that people are saying, did that work? The president's budget, I think people around the country are angry. They're saying we have to watch our wallet's. We have to watch our pocketbooks. Why is Washington spending so much money and now seeking to impose a new health care regime that will impact 1/6 of the American economy so quickly.

DOBBS: Hank Sheinkopf, Democratic strategist, you are one of the best. This administration is acting as if those questions that woman asked don't pertain to the national health care initiative of this president. Is that good political strategy? Is it effective strategy?

HANK SHEINKOPF, DEMOCRATIC STRATEGIST: It seems not to be effective at the moment. Frankly, this thing has gotten way out of hand, Lou. That woman asked the appropriate questions. The administration doesn't answer them. It's too much being shoved at people too soon, too quickly with a Congress that can't seem to answer the questions directly. What we need is clear answers to questions that will make people like that woman who pay the taxes and who will be beneficiaries of the health care reform plan, we have to explain things better. That's part of what's going on here.

DOBBS: Do you agree, Chris?

CHRIS STIREWALT, POLITICAL EDITOR, WASHINGTON EXAMINER: 100 percent. I think that's exactly what's going on. The administration outsmarted itself in an effort not to repeat the Clinton administration with health care. They decided to leave it as an open question. That's why they were so eager to have this very short time frame for passing the legislation. It has backfired spectacularly. Right now the president is out trying to sell a nonexistent plan. And in that open space, all the concerns and fears about people, about all the subjects including the national deficit and the national debt come flooding into that open space.

DOBBS: Hank, the president and his press secretary had to acknowledge a misspeak I guess is the way to put it. At the time he's talking about misrepresentation in that very speech is this simply going to put further weight on sinking poll numbers for this president?

SHEINKOPF: It's going to be hard to get change done. Any successful president has broken with the past administration, created his own way and taken on Congress when necessary. The scholars are clear about that. The problem is his agenda is too ambitious for the amount of time he's been in office. People are nervous about it.

DOBBS: We'll find out about nervous folks here in just a moment. We'll continue with our panel in the one moment. We'll be right back.

(COMMERCIAL BREAK)

DOBBS: We're back now with our panel. I want to take a little turn here. We've seen some signs. Nancy Pelosi talking about swastikas and Congressman Cook with a swastika on a sign for his office, his district office. We've seen at some town hall meetings signs that depict President Obama as Hitler. Let's show some of this, if we may, to our audience and the panel. It's reminiscent to many of images and rhetoric that associate -- Ron, I suspect you remember this President Bush with the 2003 demonstrations against the war in Iraq. How is it that we've gotten to this level over the course of, really, the last four to perhaps five years, in this country, where this is the kind of nonsense that is going on for both the left and the right, attacking both a Republican president and a Democratic president.

CHRISTIE: I think there's a lot of money involved in politics right now. And I think a lot of the people around the country are saying the system is out of control. You have people raising millions of dollars. You have people who are being organized and coming to these events with these very inflammatory signs. But I also think it's a sign that people are fed up with what's going on in Washington. The sense that people in Washington around listening to them. I don't agree with the signs. But I do agree if I write letters to my Congressman, if I call they're not responsive, I have to do something to get my voice heard. I think that's what it's reflective of.

DOBBS: Chris?

STIREWALT: I think he's right. Because the frustration that you're seeing on the periphery is a more virulent expression of what's going on in the middle because what's going on in the middle is people feel like it's not even worth it to participate and those who do participate sometimes go to the extreme so the problem is that people don't feel like they're being heard a bit.

DOBBS: Let me turn to another story. The Associated Press publishing a story today about a report on anti-government militia groups brought to you by the southern poverty law center. The link to the story, if I may, and this is interesting, I won't read the whole thing. "Militia groups with gripes across the country are regrouping across the country and could grow rapidly, according to an organization that tracks such trends. The stress of a poor economy and a liberal administration led by a black president are among the causes for the recent rise." This is from the Associated Press. "The report from the Southern Poverty Law Center says, conspiracy theories about a secret Mexican plan --" blah, blah, blah. I ask each of you to take a look at the story for independent judgment. What is your opinion, first of the reporting of the Associated Press and the Southern Poverty Law Center?

SHEINKOPF: We need to be careful what we read to. The second paragraph taken as gospel, with no facts, frankly, is very dangerous. Now, this may in fact be a trend but there's nothing in there to skate any factual data. That's just wait it is. It's simple.

DOBBS: Ron?

CHRISTIE: I agree with Hank. I think obviously there are a lot of people around the country that with the first African-American president and I think people are reacting to that. We need to make sure it's based in fact and not rhetoric. I think it's a very irresponsible report.

DOBBS: Chris?

STIREWALT: Well, look Southern Poverty Law Center has its own agenda to push. That's what they're supposed to do. They're supposed to pursue heir own interests. Part of that is scaring people and talking about these things. My beef is with the Associated Press. That's my concern here is that the main channel for what is supposed to be unbiased news in the United States is putting stuff out there. That's what gives me pause. Not the Southern Poverty Law Center.

DOBBS: Yes. And I think in the interest of free speech, exactly, the Southern Poverty Law Center has the right which we all support to do exactly as it feels it must. We may not agree with it. Empathically not in many cases. But the Associated Press, my god, an independent news organization, a storied news organization, not its brightest moment.

Gentlemen, thank you very much. Appreciate you all being with us. Thank you very much, Ron, thank you very much, Hank.

DOBBS: Coming up at the top of the hour, Campbell Brown -- Campbell?

CAMPBELL BROWN, CNN ANCHOR: Hey, there, Lou. We are tonight going to keep fact-checking a lot of the claims being made during the health care debate.

Also, the growing outrage after passengers are trapped on a grounded airplane for nearly seven hours. We're going to look at what, if anything, can be done to stop this. Why we'll still waiting for a passengers' Bill of Rights.

Plus, an incredible story, this TV anchor accused of killing drug dealers to boost his ratings.

We've got the top stories plus our "Mash-Up" of the other top stories of the day, Lou.

DOBBS: Thank you very much, Campbell. We appreciate it.

We'll right back. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Please join me on the radio Monday through Fridays for the Lou Dobbs show.

That's it for us tonight. Up next, Campbell Brown.

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