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STATE OF THE UNION WITH JOHN KING

Sound of Sunday

Aired August 16, 2009 - 11:00   ET

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


KING: I'm John King, and this is "State of the Union."

(BEGIN VIDEO CLIP)

It's 11 a.m. Eastern. Time for "State of the Union's" sounds of Sunday.

Twenty-eight government officials, politicians and analysts have had their say. President Obama's health secretary and top White House spokesman, leaders of organizations representing doctors and retirees, and more than a dozen current and former members of Congress, including one helping organize the health care town hall protests.

We've watched the Sunday shows so you don't have to, and we'll break it all down with James Carville and Mary Matalin, an always feisty debate you can only see right here, and the best political team on television.

"State of the Union's" sound of Sunday for August 16th.

(END VIDEO CLIP)

KING: Bowing to political realities, this Sunday, the Obama administration says any final health care bill must have competition and choice, but not necessarily a public or government health care option.

(BEGIN VIDEO CLIP)

SEBELIUS: I'm convinced, at the end of the day, the plan will have both of those, but that is not the essential element.

(END VIDEO CLIP)

KING: To one key Democrat in the Senate, the Budget Committee chairman, it's a White House concession that's long overdue.

(BEGIN VIDEO CLIP)

CONRAD: The fact of the matter is, there are not the votes in the United States Senate for the public option. There never have been. So to continue to chase that rabbit, I think, is just a wasted effort.

(END VIDEO CLIP) KING: But while compromise on the public option might help the president in the Senate, a veteran House Democrat warns it could cause a revolt in that chamber.

(BEGIN VIDEO CLIP)

JOHNSON: It would be very, very difficult, because, without the public option, we'll have the same number of people uninsured. If the insurance companies wanted to insure these people now, they'd be insured. (END VIDEO CLIP)

KING: With two weeks left now in the August congressional recess, the administration says critics are using scare tactics and misleading information to sway the health care debate, but the health secretary also concedes that when the president says you can keep your current doctor and your current health plan, he can't really make that guarantee.

(BEGIN VIDEO CLIP)

SEBELIUS: Clearly he can't mandate that a doctor not retire or that an employer not switch a plan that might have a different network of doctors.

(END VIDEO CLIP)

KING: A shot of the capital there on a Sunday morning here in August. And as you can see, we have been watching all of the other Sunday shows so maybe you don't have to.

With me here in Washington, two of CNN's political contributors, only here on STATE OF THE UNION, Democratic strategist James Carville, and Republican strategist Mary Matalin.

Good morning to you both. Let's start with this debate. An apparent concession or sliding a bit on the question of a public option. James, most Democrats have said it's critical, absolutely critical. You have a public option to compete with private health care insurers. The White House is counting the votes in the Senate. They're not there. And you have the president and now the health secretary saying, well, we'd like to have it, but it's not essential. How does that influence the debate?

JAMES CARVILLE, DEMOCRATIC STRATEGIST: Well, a big influence. Senator Durbin I think said it a couple of weeks ago, said it was up -- and I said I think, I know, on this network, I think it was on Wolf's show, that, look, this thing is a pretty good indication that it's not going to happen if they are trying to get to 60 votes in the Senate, which is the apparent objective.

And I think Senator Conrad was just stating what the truth was. There are not 60 votes in the Senate for a public option. And that's pretty clear to everybody involved in this.

KING: And so if the Democrats can't have it, is that an incentive for new conversations with Republicans about compromise? Or is what we were seeing in the August recess and all of these town halls proof that any hope of bipartisanship is gone?

MARY MATALIN, REPUBLICAN STRATEGIST: I think the Republicans would be happy to sit down if there was real bipartisanship. There hasn't been since eight days into this administration with the signing of the stimulus bill with no Republicans whatsoever. This is really not and has never been health care that is about Republicans. It has always Dems v. Dems. Dems that won't vote for anything without a public option, Dems that won't vote for anything with a public option. That's what's going on out there.

And the longer this argument or this debate goes on, the fewer Democrats are supporting a public option, apparently even the administration at this point.

KING: A lot of commentary about how important this is politically to the president. Obviously there was some very significant policy questions, but politically the president has said must happen, must happen this year.

Among those who suggest, you know what, this drop in the polls will go away as long as he signs a bill, strike a compromise, sign a bill, it doesn't have to have everything you want, is the former president of the United States, James, a good friend of yours, former President Bill Clinton.

He says if the president signs a compromise health care bill, back up he goes.

(BEGIN VIDEO CLIP)

BILL CLINTON, 42ND PRESIDENT OF THE UNITED STATES: I don't care how low they drive support for this with misinformation, the minute the president signs a health care reform bill, approval will go up, within a year. Within a year when all of those bad things they say are going to happen don't happen, and the good things do begin to happen, approval will explode.

(END VIDEO CLIP)

KING: Your friend, Paul Begala, also -- you and Paul helped get Bill Clinton elected the first time, he says, you know what? Make the necessary compromises to get a bill and get one passed.

CARVILLE: Yes. My favorite president, one of my best friends, probably my best friend in the whole world say that. If the Republicans say -- if this doesn't pass, this is Waterloo, this is the end of things. Every commentator says that that's the fact. And what do we know?

When everybody says that something is going to -- if something in and of itself, they have to be wrong, it can't be right. If everybody says, buy a stock, you sell a stock. If everybody says, buy a house, you sell your house.

What about this? Suppose that they pass a House bill that can get 56 Senate Democrats? And you say, you know what we're going to do is we are not going to go by reconciliation, we're going to have a vote and make them filibuster it.

If it's the old kind of way -- if they filibuster it and make them go three weeks, and all night, and we'll be there the whole time, then you run -- you say, they're the people that stopped it. We had a majority of Democrats. We had a good bill. They stopped it.

Now people make the analogy between the Clinton health care plan in 1994 and this. One big difference. We quote -- used the euphemism of the moment, "pulled the plug" in August of '94. OK?

This is August of -- the year before the election. So, my suggestion is, is that you just know if everybody says something, it has to be wrong.

So, get a bill out of the House that can get 55, 56 Senate Democrats, and say, we're going to go the compromise way. We are going to let the Republicans vote on this. We are not going to -- we are not going to do it by reconciliation, and make them filibuster it. And then run against a do-nothing Congress.

KING: And if the result of that is no bill, you would rather take that than a bill that has too many compromises?

CARVILLE: I'm saying politically. Policy-wise, I'm not a health care buff. I'm not saying politically, if it doesn't amount to anything, people will see through it and they will just lie about it. They will say that you got people going in and assassinating children or something. And so what difference does it make?

But they can't lie about something that doesn't exist and then run against them on that.

KING: Sometimes I don't even want to ask you anything because I like the body language. But you have been there -- let me -- quick, let me ask. You've been there with the president. You have been there in the Oval Office where you say, Mr. President, politically, policy -- you're a Republican, of course, and a conservative, but how important is it to this president that it has to happen this year?

MATALIN: I said on this show, it's not what is wrong about conventional wisdom, it's that the failure of this, which is going to happen, is going to take down the president. What is right about conventional wisdom is, he'll be fine, but the Democrats in Congress won't.

And you are already hearing Democrats in Congress saying, this is deja vu. This is what happened with Bill Clinton. He makes us walk the plank, then we lose, as they did. They lost 52 seats in '94. We only have to pick up 40 seats this time. We walk the plank, he pulls back, we take the tough vote. We lose. Obama loses his majority, and then his -- as was the case with President Clinton, his approval was regained.

So, James's conventional wisdom -- or the Carville wisdom might be -- sound good for Obama, but it's terrible for the Democrats in both chambers. So, that's not going to happen. But Clinton is right about this, in a year, approval will explode. It has already exploded for Republicans.

The generic ballot for the second consecutive month is tending to Republicans. Eight out of 10 issues, people are favoring Republicans now, our recruiting, our fund-raising, our governor seats in New Jersey, in Virginia, the new blue and the old blue are tending Republican.

So yes, approval for this plan is exploding towards Republicans.

CARVILLE: No, I think it helps congressional Democrats. Put a bill out there, make them filibuster it, make them be what they are, the party of no. Look, we spend -- the truth of the matter is, we spend about $8,000 per person in the United States on health care.

The second -- the country that seconds the second most is Switzerland, they spend $4,000. That means you have got $4,000 per person more that we spend on health care, that is $1.2 trillion, 4,000 times 300 million. And you know what? Run on it.

A lot of people -- and we're not producing any kind of results that double that money provides. Let them kill it. Let them kill it with the interest group money, then run against them. That's what we ought to do.

MATALIN: How come their interest groups -- they're stakeholders when they're with you, and they're interest groups when they're against you. You know, you are swimming out against the tide here. The beautiful thing that has happened out of this is the American people's confidence in our health care system has gone up since this debate has gone on.

Do we need reforms? Yes. Do we need insurance reforms? Yes. There is nothing in this bill, nothing in this that cuts costs. That's according to the CBO, which says not only will it extend the deficit in the short-term, over the long term it will greatly expand the federal role -- the fiscal role in health care.

We cannot sustain this. We can't even sustain the current Medicare program. How are we going to sustain a whole new one of this magnitude.

KING: All right. Let's -- we both -- we have all been involved, all three of us have been involved in debates that are about this big thing that tends to get sidetracked into other issues sometimes.

And there are important issues here. How much should it cost? The government role? Where is the money going to come from? One of the things that has been hotly debated in recent days has been so- called "death panels."

The president out there saying it is simply dishonest because Sarah Palin and others have said there would be this mandatory meeting you would have to have to plan the end of your life, if you take this.

The president has been arguing this, including citing his own experience with his grandmother. Here's the president speaking at a town hall earlier this week.

(BEGIN VIDEO CLIP) OBAMA: The rumor that has been circulating a lot lately is this idea that somehow the House of Representatives voted for death panels that will basically pull the plug on grandma because we have decided that we don't -- it's too expensive to let her live anymore.

(END VIDEO CLIP)

KING: Now, we've looked at the bill. The president is right. There's nothing in the bill that says that will happen. But that the president of the United States, James, need to spend his precious time debating these points, that's a sign of weakness, is it not?

CARVILLE: That might be the best thing Senator Isakson, Republican of Georgia, said, it was nice -- look, conservatives like to believe nutty things. When I grew up, it was fluorination of water. There are probably more self-described conservatives that believe in creationism than believe in gravity.

There is nothing you can do about that. Thee was a big article in The Post today about all of the nutty things that they believe. You can't -- but I don't think the president -- actually the press has -- we have done it, everybody says that this -- it doesn't stop Sarah Palin from saying nutty things.

You are never going to stop that from happening. You're never going to stop right-wingers from believing nutty things. You just have to move the debate on.

MATALIN: Here's a rule from your viewers going forward for Sunday, the greater the Carville level of vitriol, the more they are losing. All right?

(LAUGHTER)

MATALIN: This is just insane. There is in the bill a section 1233, "Advanced Care Planning Consulting," whereby the government pays doctors to consult with people, voluntarily, but at -- only in the case -- it's for five years, or when their health status changes, meaning they've taken a bad turn.

MATALIN: Doctors are incentivized. They're paid talking to people in that traumatic situation. This is in a cost-cutting bill. The only possible thing that could be cost-cutting about consulting with people in a terminal situation is to cut the cost of -- of the -- extending the end of their life.

That is -- now, and people -- there's also -- there's benefit research. There's all sorts of rationings endemic and inherent in this plan. By definition, when you're putting more people into a smaller plan or any allocation of resources necessarily scarce, because the government is allocating them, and they don't make anything, it results in rationing. And who would you ration out, young people or old people? That's just common sense. It's not right-wing nuttery. CARVILLE: Well, of course it's right-wing nuttery (inaudible) it's not -- that's -- that's Johnny Isakson's term, R, Georgia. And of course -- of course they believe in nutty things. They believe that it's all, like I said, a conspiracy to fluoridate the water...

MATALIN: This is something they do.

CARVILLE: It is.

MATALIN: You know, one really bad mistake I thought the Obama people understood, a tactical mistake they made was demonizing these protesters and -- and to -- to the extent that some people use incendiary language, then you're going to tar -- you're going to -- it's a straw man thing.

Obama does it all the time. He does it to great effect. They can see that this is a backlash. It's 10 percent more people that trust private sector than they do the government, when it comes to health care. So you're just perpetuating -- you're doubling down...

(CROSSTALK)

CARVILLE: I'll use...

(CROSSTALK)

MATALIN: ... you're doubling down on what's caused him to be in this position today.

(CROSSTALK)

CARVILLE: ... nuts, OK?

KING: Quick timeout here. Quick timeout here. We'll try to work some of this out during the break. We've got to make a little bit of money. We're putting some of the conservative critics to the trust test. When we come back, we change it, Mary. We'll put the president to the truth test.

(COMMERCIAL BREAK)

KING: Welcome back to "State of the Union." We're continuing our conversation with James Carville and Mary Matalin.

Let's move on to something the president has said quite often, that he's gone back to saying quite emphatically in recent days. At town halls he says it, and he writes it in an essay today in the New York Times. If you like your doctor, you keep your doctor. If you like your health care plan, you can keep your health care plan.

No wiggle room in those two statements. But when I asked the secretary of health and human services this morning, well, he can't guarantee that, because if you change the marketplace, some employers will shift their coverage. She conceded the point.

(BEGIN VIDEO CLIP) SEBELIUS: Clearly he can't prevent employers from dropping coverage, and it happens all the time, although health reform will stabilize that marketplace.

(END VIDEO CLIP)

KING: If you can't guarantee it, why does he say it?

CARVILLE: Well, again, right before that, he said -- she can't guarantee that your doctor will retire, all right? And right now, under the system that you have, you can lose your doctor. Companies switch health care -- health care policies all the time.

I think clearly what the president was saying is that your relationship with your doctor is going to be unchanged as a result of this legislation. And that's pretty clear.

But people -- but companies change. They -- they change all the time. Doctors retire all the time. Even doctors die sometimes. And so there's no guarantee that anybody -- and that's what the secretary was saying -- completely sane thing for someone to say.

KING: But he's using pretty emphatic language. He could say your relationship won't change or we won't get in between you...

(CROSSTALK)

KING: ... but let's just say -- let's just say Time Warner...

CARVILLE: ... as a result of this legislation. I will -- I will tell you, he could have said, "As a result of this legislation, the relationship with your doctor is going to be unchanged." That would be the precise, accurate thing, but -- but clearly that was the intent of what the president says. On the sort of misrepresentation of things, that's like -- on a scale of 1 to 10, that's a 0.002.

MATALIN: This is one of those classic Democratic dodges. The CBO says 6 million people will -- right off the bat, their coverage will change. Other independents have said over 100 million would change.

The difference between the doctor dying or your employer changing plans is that you can go find a comparable plan or a comparable doctor. If your -- this -- the private-sector insurance will be mitigated and eventually eliminated, and you cannot find comparable care in a public option. You cannot.

I will say again: When the government is allocating resources, they're by definition scarce, right, because they can't make anything. So the -- their allocation of resources in the health care sector into which more people will be coming will necessarily result in less care, lower quality care, and -- and less service. It's just Econ 101.

(CROSSTALK)

CARVILLE: ... right, Econ 101, $8,000 per person, next country $4,000, $4,000 times 300 million, $1.2 trillion. Of course they're going lie about this. Of course they're going to fight this. A lot of people are getting awfully rich off of this scheme.

By the way, it makes no sense. I wouldn't invest in a company that would insure people with a pre-existing condition. It makes no sense. The only way that you're going to get people -- the only way you're going to get sick people covered, which is the kind of objective here, OK, is that you have to have a public option. There's no other way to do it. No one has a thing...

(CROSSTALK)

KING: I want to listen to something...

MATALIN: Hold on. Let me give you another rule, John. The more he calls us liars, the more he knows we're telling the truth, and that's what they keep doing. There are many other ways to cut costs without raising taxes, all of which centrist Democrats and Republicans know.

So going to your original question, when this thing tanks -- and he will do it on the backs of his centrist -- you know, on his liberals, he's going to abandon -- he's going to abandon somebody. When it tanks, there's ways to cut costs, keep the quality. They've been on the till for a long time. And the do-nothing Democratic Congress that preceded this one is the reason they're not in place today.

KING: I want to -- I want you to listen to something else the president said this past week. And I'm not exactly sure what he meant, but sometimes you hear things, you just say, "That's interesting." Let's listen.

(BEGIN VIDEO CLIP)

OBAMA: I think private insurers should be able to compete. They do it all the time. I mean, if you think about -- if you think about it, you know, UPS and FedEx are doing just fine, right? The -- no, they are. I mean, it's the Post Office that's always having problems.

(END VIDEO CLIP)

KING: In the context of health care reform, I assume he means the Post Office would be the government plan. And this is a joke. This is a joke. I want to make clear this is a joke. But does that mean I can use my 44 cents and buy the forever plan?

MATALIN: Yes, there you go. There you go. He makes -- he's making the wrong point to buttress his argument, of course. The private sector is, by definition, more competitive, because it's the aggregation of millions of decisions. The government sector by definition is never competitive.

Insurance companies could cut costs and increase their competitiveness if they were allowed, which they're now disallowed by government regulation for interstate competition, and small businesses are not incentivized to -- or allowed, really, to pool to get an economy of scale. Again, there's ways to increase competition to lower costs. It's the government that's standing in the way right now.

KING: I want to close -- I want to close on something else, because, James Carville, I want to hear your thoughts on this. This is, again, Bill Clinton. You disagreed with him at the beginning of the segment. I want you to listen to Bill Clinton here talking about the -- the joy of being a former president, because you're allowed to, in his words, "screw up."

(BEGIN VIDEO CLIP)

B. CLINTON: Great thing about being a former president is you can say whatever you want and (inaudible) nobody cares what you say anymore, unless your wife becomes secretary of state. Then they really care when you screw up.

(END VIDEO CLIP)

KING: Looks like he's having a little fun there.

CARVILLE: You know what? He's having a blast. And he deserves it. He's doing good, and he's having a good time. I think he enjoys himself. I've been on a number of trips with him, the CGI out there. They're doing an enormous amount of good.

And I think you can see that in him. This is a man that is really enjoying his post-presidency. And I think he's very proud, and I think he very much enjoys his wife being the secretary of state. I really do. I think he's a happy guy. And I'm glad for him. He deserves it.

MATALIN: And he doesn't want her to be channeling him, let's just -- the record show that.

KING: We leave the channeling right here with James and Mary. Thank you both for coming in today, James Carville and Mary Matalin. Our pleasure, as always.

We're going to have more analysis of today's news from the best political team on television, but straight ahead, we visit Sioux City, Iowa, not just for a great breakfast. Why Iowa has an oversized role in the health care debate, just ahead.

(COMMERCIAL BREAK)

KING: Iowa, right here in the Midwest, is one of the more interesting states in the national debate over health care reform. It can always be counted on for a good meal. So we decided while we were out in South Dakota to drive six hours across the prairie, a magnificent lightning storm, to get to Sioux City.

Why so interesting? Let's take a look at Iowa. Number one, you have nearly 10 percent of residents in the state who don't have health care. The unemployment rate is about 6.2 percent. That's better than the national average.

But this is why it's so interesting. Barack Obama carried the state in the presidential election, but Republican Senator Chuck Grassley is now in the middle of the health care negotiations. He's a Republican, a conservative, and he's up for re-election next year.

So we spent most of the breakfast talking health care reform. But I began with a question that was on the front page of the Sioux City Journal that day: Is the recession over?

(BEGIN VIDEOTAPE)

WITTROCK: I think a lot of people in the private sector might have got their hours cut and things like that. But your public sector jobs, they seem to be all right.

HOBERG: I have felt that the recession is slowing.

KING: What is Washington's job to help? Is it to stay out of the way and just let the market run its course? Or is it to try to pump the economy with money or tax breaks?

HOBERG: I'm not in agreement with this total stimulus plan. As many economists have said, the general outlook seems to be improving with only 10 percent of the money spent. So leave it alone; it will fix itself.

WINGERT: I think big business should make it or fail, just like a small business should. I mean, if this place starts to fail, are they going to come and bail us out? I don't think so.

KING: Another big issue on which the government is trying to make some very tough choices is the health care debate. And your senator, Chuck Grassley, is one of the key people trying -- he's frustrated -- but trying to negotiate some kind of a bipartisan agreement that he hopes can bring some conservatives and Republicans on board. Do you want him in those negotiations, or do you think what they're trying to do is too much?

WITTROCK: I think negotiations are fine, because it is broken. It's a huge bureaucracy that's broken, but you don't fix it by expanding it.

KING: What's broken, in your view?

WINGERT: A lot of things. I'm worried about Medicare. At my age, of course, they say there's not going to be cuts. And according to my agent who writes my health care plans, the one that I'm on now is going to be gone next year on count of the cuts to Medicare.

HOBERG: I'm sure Senator Grassley is looking out for our best interests. He's one of the few, I believe, that truly are. At least he knows what's in the bill. And nothing irritates me more than -- and this even goes back to the original stimulus bill, why we've got elected officials that pass bills without knowing what's in them is totally ridiculous. KING: Have you watched the coverage at all of any of these town halls? Some of them have turned contentious or confrontational. Have you paid attention to that?

WINGERT: I think you should be heard. I don't think you need to get violent and -- and -- and call names and all that stuff. But some people are more passionate than others or they're more outspoken, louder, you know, as long as they don't get violent or anything.

HOBERG: Some people, when they get really involved in something, their -- their voice tends to go up. And, of course, we hear things about -- about people coming now with baseball bats, et cetera, trying to break these up. Who knows? I'd like to see proof of that.

KING: Democracy or over the line?

WITTROCK: Democracy, definitely.

KING: This is a conservative corner of a state that President Obama won in the November election. At seven months in office, just close by giving me your impressions.

WITTROCK: I believe he ran as a centrist, maybe a little lean conservative, because when you listen to both McCain and Obama, there wasn't any difference. But once he's in now, there's a lot of radicalness to what he's trying to achieve, and that doesn't fly with middle America.

HOBERG: We absolutely cannot afford a quick fix on everything he wants to do. I would just assume him pick one major topic, get that taken care of, and at least figure out a way to get it paid for.

WINGERT: I think he's just moving too fast, trying to do everything all at once, where he should take his time.

(END VIDEOTAPE)

KING: Great conversation and a fabulous meal, the Fourth Street special, so long as you can carve out a little extra gym time.

A short break, and then more "Sound of Sunday," with three of the best political team on television.

(COMMERCIAL BREAK)

KING: I'm joined now by CNN senior correspondent Joe Johns, CNN congressional correspondent Brianna Keilar, and CNN White House correspondent Dan Lothian. Welcome all.

We don't know how it is going to be influenced, but we see these town halls playing out across the country and we know that when lawmakers come back, the health care debate will be a little different from when they left at the beginning of August.

And I put that question to the health secretary, Kathleen Sebelius, earlier today, essentially, what is going on out there. Here is her take.

(BEGIN VIDEO CLIP)

SEBELIUS: Clearly some of this anger is not directed to health reform, it's people who are, I think, uncertain, and afraid about the future, and unfortunately there has been a lot of misinformation, intentionally circulated, trying to scare people, trying to scare seniors and veterans.

(END VIDEO CLIP)

KING: So, Dan Lothian, it's the president's signature initiative. He didn't get the votes before the August recess, that's what he wanted. So you couldn't have this happening out there right now. What is their take? They're obviously talking about the critics, misinformation, but I assume the longer this goes on, the more they worry politically.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Oh, they certainly worry about it. I mean, I was talking to a senior administration official, and they said, that's the reason they got their Internet site up and running, because they really wanted to debunk some of these myths.

But what the administration has been doing over the last week is sort of pointing the finger at the media and saying, listen, you are focusing on all of these raucous town halls that are happening out there, but there are a lot of other town halls that aren't getting a lot of attention. And those are very productive.

KING: It's our fault, Joe. JOE JOHNS, CNN SENIOR CORRESPONDENT: Well, come on, I mean, yes, sure, we do -- we focus on the conflict. But here the conflict is the problem. If there wasn't conflict over health care, frankly, it would have been passed during the Clinton administration.

That said, we all know, we've been to many, many town halls around the country with a variety of different public officials, and you don't see the screaming, you don't see the yelling. There's a great deal of passion, but the polls bear out that there's a lot of polarity. There is a lot of disagreement over health care. And we're just pointing it out.

Also, it's August, which is a quiet news time.

KING: It's a quiet news time (INAUDIBLE).

Brianna, I want your take on this, especially because you covered the debate on Capitol Hill, and you went out there to see some of this up close and personal. And among those people who are in one of the most interesting positions, Mike Ross, he is a Democrat from Arkansas, a so-called Blue Dog Democrat, a guy who has to go home to a conservative state where they are skeptical about Washington, skeptical about spending. And in his town hall, he went out of his way to make the point, look, I may work in Washington, but I'm my own man. (BEGIN VIDEO CLIP)

REP. MIKE ROSS (D), ARKANSAS: I don't work for President Obama, and I don't work for Nancy Pelosi. That's why I stood up to them and that's why we're having this conversation today. Had I not done that, the vote would have already taken place.

(END VIDEO CLIP)

KING: Take us inside the room at these things.

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: That got so much applause there at that town hall meeting in Arkadelphia. It was this uproar when he said that, really distancing himself from Nancy Pelosi and from President Obama.

This is Arkansas's 4th Congressional District, voted 58 percent for John McCain. Now that said, they voted 86 percent for Mike Ross. So that is really what you see a lot of these conservative Blue Dog Democrats doing.

And when you talk with sources and Democratic leadership, you know, this kind of annoys them because what they say is -- you know, not Mike Ross, because he has been in Congress for some time, but some of these freshman Blue Dog Democrats who are trying to distance themselves, they say, what's up with that? Because it is President Obama who was up for election that really got them elected, bringing so many Democrats out.

So that just shows you there is a little sniping and infighting. KING: But if they were skeptical to begin with, before they went home for August, and they were fighting the administration on this, trying to change that, didn't quite want a public option, were worried about how much it cost, if that was their mood before they went home, is there any way they're going to come back more inclined to support the president or Speaker Pelosi?

KEILAR: I think it's a big question mark. And I think that Mike Ross may have been surprised by how much pushback he got. People weren't rude to him, per se, but there was a whole lot of upset. And he kept repeating, I'm not even sure I'm going to vote for this. You know, I'm not sure I'm going to go this way. I'm not sure if I would go for certain things that were bothering the folks in the crowd. So I think we really need to watch them when they come back. I think it's a question mark.

JOHNS: Nervous. Democrats are extremely nervous. Because number one, you have this bill that seems to be certainly unpopular in a variety of different states where there are a lot of Republicans. And the other half of it, I think -- and perhaps the other thing that Democrats have to look at is that we know that in the first term of a president, a new president, when you get to the midterms, that president almost invariably is going to lose some seats -- the party in power loses seats.

So Democrats look at those two things and say, what is the end result? The president is going to be fine. He's not up for reelection in two years. However, all of the members of the House are up for reelection.

KING: Well, on that point -- on that key point, I want you to listen to Arlen Specter. Remember, he has been in the headlines quite a bit because he was a Republican, he turned Democrat. He's up next year as a Democrat in Pennsylvania, faces a Democratic primary. He is out there at one of the town halls and he says this of the people protesting.

(BEGIN VIDEO CLIP)

SEN. ARLEN SPECTER (D), PENNSYLVANIA: We have to bear in mind that although those people need to be heard and have a right to be heard, that they're not really representative of America, in -- in my opinion. We have to be careful here not to let those town meetings dominate the scene and influence what we do on health policy.

(END VIDEO CLIP)

KING: The president would probably agree, I guess, and say, not representative of America, but boy, that's a dangerous position to be in. If you're on the ballot, some of those people he says are not representative of America are going to decide who Pennsylvania's next senator is.

LOTHIAN: That's true, but I think they are trying to damp down all of those raucous town halls. And going back to the point that I made earlier is that they want to show that there are other productive town halls out there, and that people are getting the message. They're asking questions and they're getting the answers.

And it's not just about the screaming. But, John, I also wanted to point one other thing out, is that what makes it so difficult for these lawmakers when they go out there is that it would be much easier if they had a plan, if they had one finished product that they could walk out and say, this is what we have.

They don't have that. There are several plans and there is a lot of uncertainty, and it's difficult to say this is what's going to be in there.

KING: And one of the people who originally defended the protesters, saying, you know, a lot of Democrats saying it's an angry mob, it's organized, Claire McCaskill tweeted, hey, these are real Americans, they're just stating their mind. And then, guess what, she heard it from real Americans. Let's listen.

(BEGIN VIDEO CLIP)

SEN. CLAIRE MCCASKILL (D), MISSOURI: I don't understand this rudeness. What is this? I don't get it. I honestly don't get it. Do you all think that you are persuading people when you shout out like that?

(SHOUTING) MCCASKILL: Beg your pardon? You don't trust me?

(SHOUTING)

(END VIDEO CLIP)

(END VIDEO CLIP)

KING: So, Brianna, she is not on the ballot next year. And I bet she's happy for that. But is that the mood out there right now? It's hard to tell. You're in a room. These people show up. But is that the real mood or is that just the mood in those meetings?

KEILAR: Well, I think that maybe the yelling isn't. I mean, that is not -- when you're in one of these rooms, and you're looking at that people who are standing up and shouting, it's not the majority of the people.

KEILAR: It's a significant minority. The day before that town hall meeting, which was in Hillsborough, Missouri, she was in Poplar Bluff, Missouri, and it was very loud, but I would say it was one- fifth to one-sixth of the crowd that was standing up.

What I think -- and those folks, I think -- maybe Claire McCaskill isn't going to win them over, but what about the people who are sitting there I noticed who kind of wanted answers, and they do have serious concerns. I think a lot of people have these concerns. They may not be yelling them, and those are the people that someone like Senator McCaskill really needs to worry about.

JOHNS: Pew, right before all of this started, right around the 30th of July, put out a poll. And it said that if you poll Democrats and ask them which is more important, health insurance reform or deficit reduction, government spending, much more Democrats say health insurance reform. But if you ask the Republicans, they say deficit reduction is more important. And she talked about trust. There was also a question in the Pew poll about trust. A lot more Democrats say they trust the government with their health insurance than they do health insurance agencies, and Republicans say exactly the opposite. So these feelings were out there even before people took to the streets in August.

KEILAR: And as you talked to individuals who are going into these meetings, whether it was Claire McCaskill's or it was Mike Ross's -- you would speak with someone who -- I spoke with a retired cotton farmer, who has two grand kids, who are low-income, they don't have insurance, and he said something needs to be done, and he doesn't really see there being an answer other than with government. You know, I spoke with someone who buys their insurance on the individual market in Arkadelphia, Arkansas, and her husband has Medicare, but she said I need something that is cheaper and I'm hoping that they can do that for me. So there certainly are a lot of people looking to the government for something, but maybe they are not the ones standing up and getting really rowdy.

KING: Quick timeout here. Much more to discuss with Dan and Brianna and Joe when we come right back. Stay right with us.

(COMMERCIAL BREAK)

KING: I'm back with Joe Johns, Brianna Keilar and Dan Lothian, and we've been talking about the congressional town halls. Now let's talk a bit about how the president has been making his case. And I want to walk over to the wall just to go through the geography of it. The president earlier in the last week was up in Portsmouth, New Hampshire. We can show you a bit of his town hall here. You see the president there. And New Hampshire is interesting, because 44 percent of the voters up there are registered as independents, so that has been a group where support has been sliding. We have seen that more independents raising questions about the government option and about all the government spending.

Then it was way out here to Montana. John McCain carried this state. You'll see -- we like to do style notes here on "State of the Union" -- the president more casual out West. And out here, John McCain won, but just narrowly. And as you get further west, as we all know, there's always more skepticism about the role of government and of government spending.

And lastly, the president, before taking a bit of a break, was down in Colorado for a town hall. And look where he is. He carried this state, turned it from red to blue, but his message was delivered out in the Grand Junction area, which is conservative country out here. And 17 percent of the residents of Colorado are uninsured.

Dan Lothian, as we watched the president make his case, one of the things he said in Colorado was, don't get so fixated on this so- called public option. I would like one in there to compete with private insurers, but people are getting all hung up on that, and there are more important things, there are other things at least to talk about. We could say we hold these truths to be self-evident. It's been clear for some time he doesn't have the votes in the Senate. Is he sending a message?

LOTHIAN: Well, it does apparently sound that way. I mean, the president has held pretty fast to the notion of a public option. Time and time again, when you press the White House as to whether or not they're willing to back off of that, they'll always say, listen, what the president wants is he wants a health reform plan that will be deficit-neutral, that will allow people to get covered and to get medical attention even if they have pre-existing conditions.

But clearly there's a lot of opposition to this public option. And there's this concern at every one of these town hall meetings, and I heard it again -- I was in New Hampshire when the president was there -- and people think this is yet another attempt for the government to sort of take over their lives. And so they're very concerned about it. And that's probably the reason you're seeing the president sort of soften the language, because he knows the inevitable, is he probably won't get it.

KING: And so, Brianna, you work in one of the most fascinating buildings in town. You could go over to the Senate, and if the president says no public option or co-ops, maybe, a less robust term, they would use, public option, in the Senate everyone would say, yay, cheer. Walk across to the House, where you have a more liberal Democratic caucus, that one could boil over.

KEILAR: Yes, and we saw this right before the House left for recess. When the Blue Dog Democrats were able to secure some of the concessions that they wanted, cut down on the price tag and a lot of them are not loving the public option idea, liberal Democrats got very upset, and, of course, they want this public option.

So I think we're going to continue to see that infighting. But there are a lot of these conservative Democrats in the House as well, and as we saw from Mike Ross' events in Arkansas this week, you know, he certainly was distancing himself from the public option. I imagine that's going on as well at the other meetings of these Blue Dog Democrats. So I think yes, there is that liberal contingent in the House that wants it, but they are not a unified voice, of course.

KING: And Joe, we lived through this back in the Clinton days. You have a Democrat president who has said this is priority one. Bill Clinton at that point had a Democratic House, had a Democratic Senate. Will President Obama find the key, the magic element that President Clinton couldn't?

JOHNS: That's the million dollar question. You know, in college, in theater class, you hear about deus ex machina, god from the machine, something that swoops in and changes the entire equation at an instant, and the question, of course, is what will that be, or will they simply scale this thing back.

A lot of Democratic strategists I've talked to say, look forward to this thing just simply being scaled back.

The other thing, though, is that around the middle of July or so, the former majority leaders, Dole, Baker and Daschle, all came up with some ideas to try to take the gloss over this thing and give them an idea to pus through. One of those ideas, I thought, was fascinating, was sort of incentivizing results instead of procedures, which even like the Heritage Foundation sort of glommed on to there. So you wonder whether somebody else, perhaps from the outside, is going to kick in a couple of things that sweeten the pot a little bit, they scale it down, the president can still call it a win.

KING: A bit earlier in the program, we had Senator John Barrasso. He's from Wyoming. He also happens to be a doctor. There are several doctors in the House. He's a doctor in the Senate. Some nurses, so some medical professionals who are getting to cast these tough votes.

He's a Republican. He opposes the public option.

KING: He opposes some of the spending here, we should be clear about that. He says when he is home, he's also hearing concerns that as you squeeze Medicare and Medicaid for savings, he says, there's money to be saved there but that some people increasingly worried you'll hurt care. (BEGIN VIDEO CLIP)

BARRASSO: Physicians are very concerned because in the past, Medicare and government payers -- government is the biggest deadbeat. They don't pay enough, the fair price, they don't even pay the ambulances enough to get the patient to the hospital, so then there's this dramatic cost-shifting, John, that happens in America.

But at the town hall meeting, what I heard from people in Wyoming is they're afraid that with this new plan that the president is proposing is they are going to end up paying more and ending up with worse care.

(END VIDEO CLIP)

KING: Paying more, ending up with worse care. Have the Republicans, the conservative critics won, at least the first two weeks of August?

JOHNS: Wow.

(CROSSTALK)

KEILAR: I think even some Democrats will admit -- I've heard from many Democratic leadership aides in the Senate that at this point conservatives have the upper hand on this.

Why? Because -- well, first off, I should say seniors are very concerned about Medicare. This was a huge issue in Poplar Bluffs, Missouri. And most of the folks in the audience were seniors concerned about that.

But they were also concerned about this idea of the end of life care, so why do conservatives have the upper hand? It's because these issues about money in there for abortion, is that in there? And you have Democrats saying, absolutely not, it's not in there.

But they're talking about it. They're talking about end-of-life care. And they're not on-message because they have to debunk all of these things that they say are myths, and so, yes, they're completely distracted.

(CROSSTALK)

JOHNS: Go ahead.

LOTHIAN: No, I think if you want to look at who won, just look at what the president has been doing. In Portsmouth, New Hampshire, what we saw the president do is come out and say, listen, I don't want this to be just sort of friendly questions. I want some tough questions.

He did that at the beginning of the town hall. And then at the end he went out of his way to make sure the...

KING: Almost begging for a fight. LOTHIAN: Begging for a fight. And so clearly that shows that this administration knows that they have some ground to make up. And they want the tough questions because they want to set the record straight. And the only way to win is to get their message out there. And right now the town halls and all of the things that are circulating on the Internet right now are winning.

JOHNS: The message is the thing, you're absolutely right. Democratic strategists I've talked to say the Democrats look like they're back on their heels, they're explaining issues when they should be asserting their positions. And they say it all stems from a lack of a unified message at the outset.

There were a bunch of different bills floating out there. They couldn't just sort of zero in and talk about enough specifics to try to persuade people. Also, there's just a lot of opposition.

KEILAR: And that's what Democrats want, is to focus the message. How do they focus the message? The way they see it, President Obama. Get him out there. People seem to be yelling at him less and he -- and they see that really as their godsend and that is what they want. They want health care.

LOTHIAN: And he's going to be going out there a lot more. Robert Gibbs, spokesman at the White House, saying that he will be going out a lot during September. So we'll see more town halls from the president.

KING: During September. Does he have a town hall at Martha's Vineyard on vacation?

(LAUGHTER)

(CROSSTALK)

KING: All right. A quick break here. When we come back, our "Lightning Round." Two issues, we'll give our correspondents two sentences on each. Stay with us.

(COMMERCIAL BREAK)

KING: All right. We're back with Joe Johns, Brianna Keilar, and Dan Lothian for the "Lightning Round."

Now the president says those who say there are death panels in the bill, meaning they could decide, never mind, you don't get care at the end of your life, are simply dishonest. But senators have decided, at least in the Finance Committee, they won't even put that in the legislation because of all of the political storm.

The Health Secretary, Kathleen Sebelius, says, wait a minute, there should be something in the legislation to encourage people late in life to have conversations about living wills, and about whether they want to be on life support.

(BEGIN VIDEO CLIP) SEBELIUS: I hope this element is part of it because it's something that people talk with me about all of the time, and as I say, I've been through it personally with a mother who was very ill at the end of her life.

And just having that kind of conversation and consultation, which we finally did, but it was weeks into her hospitalization that the conversation took place. It was very helpful but it would have been a lot more helpful if it had taken place weeks earlier.

(END VIDEO CLIP)

KING: Too hot to handle politically, does Sarah Palin win this debate?

JOHNS: Well, it's the one-sentence story, which is easier to explain? Advance care planning or they want euthanasia? And as much as the Democrats try to explain this one, it gets down into the weeds. It's very difficult for them, probably they just want to move on.

KEILAR: Yes. I think the Democrats have lost the debate on this issue, even though when they explain it, it makes sense, and I think Chuck Grassley saying it's not going to be in there means it's not going to be in there.

LOTHIAN: And people don't understand that that's the reason they're so confused about it and scared about it, they keep hearing, pull the plug on grandma, and the president mentions this time and time again. It's not about that, but it's still controversial and...

(CROSSTALK)

KING: And will we pull -- sorry, will we pull the plug on bipartisanship as a decision that we've made one month from now, they say we'll try to get a bipartisan deal after September 15th, then we'll see what happens.

Kent Conrad, the Budget Committee chairman, a Democrat who wants bipartisanship, says this about a deadline.

(BEGIN VIDEO CLIP)

SEN. KENT CONRAD (D-ND), CHAIRMAN, BUDGET COMMITTEE: What we have agreed to is that we are going to be ready when we're ready. And we are working, we hope to be able to reach conclusion by the middle of September, but we have agreed that if we still don't have all of the answers back from CBO, that we will not be bound by any deadline.

(END VIDEO CLIP)

KING: He wants them to move, doesn't he?

JOHNS: He really does, you know, and there is a lot of question as to whether, if the president can't get health care reform, what will this mean for his overall presidency? He's really pushing through this. I can't answer that question, but I can tell you this, this administration has made health care reform its top priority.

If they don't get it, it's not a good thing.

KING: All right. I need to call a time out right there. I'm sorry, Dan Lothian, Brianna Keilar, Joe Johns, save it for the green room. Thank you very much.

And we'd like to welcome back our international viewers. I'm John King, and this is STATE OF THE UNION.

(BEGIN VIDEOTAPE)

KING (voice-over): As the health care debate turns testy, the president mounts a cross-country fight to regain his footing.

OBAMA: Spread the facts, fight against the fear. This is not about politics, this is about helping the American people.

KING: His most important domestic policy initiative in danger of failing. We go inside the administration's summer strategy with Health Secretary Kathleen Sebelius.

We'll also break down your health care flashpoints line-by-line, from the role of government to talk of so-called "death panels" with two doctors and a nurse who now serve in the Congress.

Congressman Mike Ross, one of the conservative Blue Dog Democrats, with a big say in the health care fight, gets "The Last Word."

KING: Then, our "American Dispatch," from South Dakota Cheyenne River Reservation, a land so rich in history and fertile soil, yet home to stunning poverty and despair.

This is the "State of the Union" report for Sunday, August 16th.

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