Transcript: President Barack Obama

REICH: You know, Mitch -- Mitch McConnell continues to say to the Republicans, "Don't go along at all." Olympia Snowe is very, very important to give cover to some of the more conservative Democrats, both in the House and the Senate.


STEPHANOPOULOS: ... get Democrats.

REICH: Because -- because it's -- you know, her being there basically allows them to say, well, there are some Republicans there.

George, can I just respond to the deficit point? Because there -- the third most powerful person in this town besides the president and Ben Bernanke is Doug Elmendorf, who chairs or who runs the Congressional Budget Office. And he has found the Baucus bill actually, after 10 years, has a surplus. I mean -- and he also has found that -- and he doesn't count the public insurance option at all in being...


STEPHANOPOULOS: But, Bob, I can see the question of George before (ph). If you -- if you -- and it might be the right thing to do, but if -- if these provisions that Jay Rockefeller and others are calling for to add money back into the bill come through, then Doug Elmendorf is going to have to make another judgment. And will he still find that the bill is deficit neutral?

REICH: No, I don't think so. I think he will -- there will have to be further cuts somewhere along the line. I wish -- and this is why I bring it up -- because the CBO in scoring, this town is filled with the arcane notions of scoring and projections and also what's on the Byrd bill and what's not. Doug Elmendorf and his crew is going to decide whether and to what extent a public insurance option or anything by -- that looks like it can be scored in terms of savings, in terms of competition...

WILL: On -- on the basis...

REICH: ... and they will find nothing, because there's no analogy.

WILL: On the basis of what experience -- and you've had a lot of Washington experience -- do you believe Congress is going to cut Medicare? REICH: I think Congress is going to not cut Medicare...

WILL: Thank you.

REICH: ... but -- wait a minute -- but it's going to put some damper on the increases in Medicare spending over time. It's going to cut...


REICH: ... it's going to get that cost curve under control. It has to. It has to.

GILLESPIE: You know, there's a lot of focus on the Medicare aspect of this, George, but there's a big Medicaid aspect of it, too, that I think is lying in the weeds on this. And -- and the governors themselves, who are in cash crunches all across the country, this shift of a huge chunk of the federal Medicaid burden to the states, I think, is going to be one of the hidden things here that -- where people stand up and say, "Wait, we can't do that," and it's going to lead to a lot of problems in terms of that deficit number.

REICH: But get out of the -- get out of the twigs. Get out of the branches. I mean, look at the trees and the forests. I mean, Medicare costs are going from, what was it, 8 percent in 1980 to 16 percent of the GDP right now. Whatever you're talking about -- government expenditures, state expenditures, individual expenditures -- we can't go on...


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