Transcript: Carville on "State of the Union"

Courtesy of CNN:

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.