<Date: January 3, 2011>

<Time: 20:00:00>

<Tran: 010301cb.228>

<Type: Show>

<Head: FREEDOM WATCH for January 3, 2011 - Part 1>

<Sect: News; International>

<Byline: Andrew Napolitano, Dennis Kneale, Michael Moynihan, Sascha Burns>

<Guest: Rep. Ron Paul, Dr. Betsy McCaughey, Matt Kibbe, Stuart Varney, Dan


<Spec: Budget; Congress; Economy; Government; Insurance; Medicare and

Medicaid; Politics>

(BEGIN VIDEO CLIP)JUDGE ANDREW NAPOLITANO, HOST (voice-over): A New Year but the same government intruding interrupts private lives. Now, the ultimate intrusion, how we die? Tonight, freedom fighting Congressman Ron Paul wants to repeal the president's health care bill and stop the government's intrusion into the twilight years of people's lives.

Health care freedom crusader Betsy Mccaughey on why we must take a stand now from to stop face those bureaucrats from influencing our end of life decisions.

DR. BETSY MCCAUGHEY, FORMER NEW YORK LT. GOVERNOR: This is not just dangerous to your health, it could be fatal to your freedom.

NAPOLITANO: And that's not enough from Matt Kibbe of FreedomWorks, he wants to kill the president's health care law altogether, but is repealing this law now even possible?

Then, the first big test for tea party Republicans taking hour this week, the fight to raise America's debt ceiling. Stuart Varney on the fiscal game of chicken that could signal. Will the message from Election Day be received or ignored?

Also our Freedom Fighters, Dennis Kneale, Sascha Burns and Michael Moynihan. How better the state's budget and why our Democratic governors now sounding like fiscal conservatives?

UNIDENTIFIED MALE: Either we do business differently or this state is going to have real trouble.

NAPOLITANO: All that and travelers stranded at airports for days this Christmas. Does flying at the feast (ph) so miserable? CATO's Dan Mitchell says no. It wasn't the snow, it was the government clogging the runways. Because in the year 2011, we will keep our firm resolution to these basic principles, that government is best which governs least. The people are entitled to a government that stays within the confines of the constitution. The constitution was written to keep the government off the people's backs.

Paul, McCaughey, Varney, Kibbe, Kneale, Burns, FREEDOM WATCH. The revolution continues now.


NAPOLITANO (on-camera): Tonight, Congressmen Ron Paul, but first, a few items from our Freedom File. While people all over the country rang in the New Year, more than 700 new laws went into effect in California. A state in desperate need of reform, but none of these new laws will address the fiscal and constitutional disaster that the golden state has become. More laws are not what this bankrupt bastion of big government needs. California like all of America needs fewer laws, less regulation, and much tighter fiscal policy. More laws can only mean more unintended consequences, and most certainly, less freedom for those who choose to live there.

It's reported that the shares department of Bexar County, Texas, which include the city of San Antonio will implement a no refusal DWY checkpoint policy. These checkpoints are growing trend nationally or a direct assault on our fourth amendment rights. They allow officers to stop motorists not for driving recklessly but for simply deciding to drive. The safety sell including motorists (ph) against truck driving claim this checkpoint saves lives, well, so would making people ride bicycles and getting all cars off the road.

Reason magazine argues that mandatory DWY checkpoints have no effect on vehicle mortality rates, but, what we do know is that these checkpoints are unconstitutional because they consist a police interference with your free choices without any probable cause of any criminal behavior on your part. And they are another sign that tyranny is growing in America.

Claire Hirschkind, a rape survivor who has pace marker set of the metal detector at Austin-Bergstrom Airport. The TSA goons gave her two choices. She could either be sexually assaulted by an agent under the guise of an enhanced pat down or missed her flight. Ms. Hirschkind, aware of her constitutional rights argued that she gave them no cause for that search and express that she did not want to miss her flight.

When she refused, the police officers pushed her to the ground and arrested her. America, this is what the government has done to our airports. If you don't want the government to touch your genitals, be prepared to be treated like an enemy.

Very disturbing thing happened during, otherwise, joyous holiday season. As part of the new health care law, the government plans to pay doctors extra money to consult with patients on end of life decisions. Congressman Ron Paul, one of the most effective defenders of freedom in Washington and himself a physician, is appalled with the idea that our government is going to interfere in these very private and delicate decisions.

Joining us now is Congressman Paul. Congressman, Happy New Year to you and welcome back to FREEDOM WATCH.

REP. RON PAUL, (R) TEXAS: Thank you, judge.

NAPOLITANO: Were you surprised when the so-called death panels, professional health care providers that the government will compensate to consult with patients on end of life decisions which were expressly removed from the health care legislation because even Democrats couldn't vote for it too suddenly reappeared on Christmas Eve to a decision of an unelected bureaucrat?

PAUL: You shouldn't be surprised ever. Remember the thing on the abortion issue with Bart Stupak? He said -- when they took that out and tried to apiece him, Obama's says I'll do it by executive order. Government is out of control. They just ran (INAUDIBLE), but it's really the Congress' fault because they allow it to happen. We should be able to rescind any of that. Any type of regulation, this is an example, once again, how we have allowed the executive branch to become so powerful.

NAPOLITANO: Without getting too much into the weeds (ph) and how it would actually happen, can the Congress rescind this decision by Secretary Sebelius to create these death panels?

PAUL: In a day. We could do that tomorrow or the day we get sworn in. You know, we could just pass the law. Of course, it would have to be passed by the Senate and the President and sign in. But, we could, you know, resist and say that we will not endorse any bill that money would be used for this reason. So, the house could, in many ways, blocked it by refusing to pay those particular fees for that type of consultation.

NAPOLITANO: Rather than a 2,500-page piece of legislation in which the federal government might pro-manages a good chunk of the economy which is almost all of the health care in the country, you proposed a very simple easy to read, easy to understand free market-based proposal to address health care? Tell us about that proposal.

PAUL: Well, this proposal means that we can legalize choices, legalize freedom, get out of the government's system. That means that you can get to into these expanded medical statement accounts and get your tax deductions and tax credits, and that you're not forced into it. It also give deductions for these insurance policies that we give you major medical deductions, you know, with larger deductions. So, there's a lot of ways and malpractice is a provision in there that takes care of the malpractice insurance as well to compensate for what's going on.

NAPOLITANO: You and I talked recently at a gathering in Washington D.C. about what the president might do now that he doesn't have a majority in the House and he doesn't have a filibuster-proof majority in the Senate and that is ruled by decree. To have a bureaucrat just issue some edict much as Mrs. Sebelius did on Christmas Eve. should we expect more and more of this? Do we have a presidency as a result of what Republicans and Democrats have given to the White House that's out of control and has no respect for the constitution?

PAUL: Yes, I think it's going on. I mean, we've already seen it twice happen with the medical bill. So, this is going to happen in all areas whether its the EPA that has done it there. So, that's what they expect, and it's up to Congress and the people to say enough is enough and to quit.

NAPOLITANO: We have $14 trillion or nearly $14 trillion in debt. This week, the Treasury Department is going to formally ask the Congress to raise the debt ceiling. Will the Republican leadership in the House, under any circumstances, go along with this or will they stick to their guns as they told us they would during the campaign and never let the government borrow more money?

PAUL: I'm worried that they might go along with it not so much just with the increase in the national debt as much as thinking they're going to get something for it. But this is where the line and the stand ought to be drawn because this is where you stop it. Don't raise the debt, and we would have to get our House in order.

We couldn't pay our bills until we collected some revenues or something like that. We would quit. It would prevent the fed from monetizing the debt because we wouldn't be spending the money. You cannot raise the national debt. It's the place where we ought to stop it.

NAPOLITANO: Congressman Paul, thanks for joining us, and again, Happy New Year to you.

PAUL: Thank you. Thank you.

NAPOLITANO: Our next guest says the government intruding into our end of life decisions is just the tip of the iceberg in this unconstitutional law. Here now is former lieutenant governor of the state of New York, Dr. Betsy Mccaughey. Betsy, welcome here.

MCCAUGHEY: Thank you.

NAPOLITANO: So, the government couldn't accomplish this by an actual vote. I mean, they mocked Sarah Palin, Governor Palin when she said there are death panels in this law. And then, eventually, the people wrote to members of Congress who are Democrats saying if it's in there, get it out and it was in there and they got it out and the bill became law without the death panels. Suddenly, they crop up over Christmas weekend. How did this happen?

MCCAUGHEY: Unfortunately, the Obama administration is attempting to achieve by regulation what the public refused to allow them to legislate. And these end of life counseling sessions appear to be less voluntary than the administration would say, and the government appears to be trying to script what is actually said in these counseling sessions rather than letting your doctor decide.

NAPOLITANO: All right. Now, as I only understand, correct me if I'm wrong, the law as it now stand will compensate these doctors, pay them money when they have these end of life conversations and the more conversations they have, the more they will be paid?

MCCAUGHEY: That is not the problem. The problem is two fold. First of all, in the Obama health law itself which --

NAPOLITANO: By the way, is that the law in front of you? Every time I see you've got this monumental (INAUDIBLE).

MCCAUGHEY: Well, in section 936 says that the government is going to create decision made. In another words, brochures and leaflets and other materials to hand out to Medicare patients on how and when to die. This is not the government's business. Uncle Sam shouldn't be providing this advice.

NAPOLITANO: If the government is paying for people's health care and they are at the end of their life, does the government have an interest in talking them and to dying so that the government will have less to pay for?

MCCAUGHEY: Yes. Uncle Sam is not an impartial adviser any more than AETNA or CIGNA would be because the less health care you get, the less the government has to pay out. And, of course, this Obama health law expands Medicaid by eviscerating Medicare. It, literally, reduces future funding for Medicare by some $500 billion over the next decade when 30 percent more seniors are going to be enrolled in Medicare. So, that's what makes this particularly problematic.

NAPOLITANO: Correct me if I'm wrong, the government will know what the doctor says to the patient and what the patient says to the doctor, because among the monstrosities underneath your left hand is the destruction of the patient-physician privilege when federal bureaucrats will know what the doctor says to the patient and the patient says to the doctor, right?

MCCAUGHEY: Yes, but here is the other problem. Medicare pays doctors a bonus based in part on how many of their patients they convince to make advance directive on living wills. And beginning (ph) in 2015, Medicare will actually penalize doctors based in part on how few of their patients - -

NAPOLITANO: Is the government going to pay doctors to talk people into dying?

MCCAUGHEY: Well, pay them for talking people into making these advanced directives which generally means accepting less care towards the end of life. And here's the problem, Medicare already pays doctors so little that some doctors are going to be tempted to put a lot of pressure on their patients. And when somebody in a white coat says sit down and listen, it's hard to say no. And that's why it's not strictly voluntary.

NAPOLITANO: You're the former Lt. Governor in the state of New York, you're also a scholar. You have a PhD in American constitutional history. Isn't the first job of the government to preserve our freedom and to preserve our lives? If that so, isn't this law doing the opposite?

MCCAUGHEY: It's doing the opposite, and the problem is also that this end of life counseling is supposed to be part of an annual well visit to the doctor. That's like a drum beat for early death. And frankly, those visits are so short that doctors are going to have to skip over talking about proper diet or exercise, things that could actually extend your life instead of cutting it short.

NAPOLITANO: Betsy McCaughey, thank you very much for joining us.

Forget the death panels, kill the entire health care law, but can the new Congress do it? That's next.


NAPOLITANO: They had to pass a bill so they could find out what was in it. Remember that? Well, now, the realities of the law are being exposed and growing numbers of American support total repeal of Obama care. But is repealing the sweeping health care bill really possible in the present political climate?

Joining me now to discuss this is the president and CEO of FreedomWorks, Matt Kibbe. Matt, Happy New Year and welcome back to FREEDOM WATCH.


NAPOLITANO: With the White House controlled by the Democrats, obviously, with the Senate controlled by the Democrats, with a very, very healthy Republican margin in the House of Representatives, is it feasible to suspect or to believe that the health care reform act would be invalidated?

KIBBE: I think there are two ways to approach this. And first of all, you're going to see the House fairly quickly pass a full repeal most likely with Democratic votes, and I think there's quite likely something close to 60 votes in the Senate, and you're going to see Senate Republicans force a vote there. We may not get a president to sign that full repeal until 2013. But in the meantime, there are number of pieces to Obamacare, and if you pull any one of those out, the whole thing falls like a house of cards.

NAPOLITANO: All right. Is the proposal there or is the idea is a strategy than, Matt, first to have this single vote on repeal which may make it to the president's desk or may not. If it gets there, obviously, they'll veto it. Then, to attack it piece by piece and to attach those attacks to piece of legislation that the president wants. So, he has a dilemma. In order to get something he wants or needs, he has to invalidate something that he really wants which is part of the health care law.

KIBBE: Well, we're all talking about deficit reduction and tackling the debt. We've identified over $1 trillion in Obamacare spending that can be repealed by going after the individual mandate, which is grossly unpopular with the American people --


KIBBE: By going after the Medicare subsidies and the other pieces of Obamacare. You kill anyone of those pieces and the whole thing falls apart.

NAPOLITANO: Now, are Republicans going to stick to their word? Because almost to a person, they ran as if they were members of FreedomWorks. They ran as if they were all members of the tea party. Or is this vote to invalidate the health care reform just a symbolic brushback pitch thrown at the White House?

KIBBE: Well, we don't know that for sure. I suspect and you might suspect as well that some politicians aren't always sincere in what they say in the campaign trail, which is why grassroots pressure and why freedom fighters need to keep the pressure on these folks, but the House budget resolution, the extension of the debt, all of these things are perfect places to test their resolve by going after these pieces of Obamacare which produce huge budget saving.

NAPOLITANO: Last question. Were you surprised, not that this happened on Christmas Ever, but were you surprised that the administration decided to establish that death panels after the Republicans and the Democrats expressly removed them from the legislation before it was passed by the House and the Senate?

KIBBE: I'm not that surprised. There are a number of faceless bureaucrats in the health and human services agency that are going to be making more and more of these decisions. And it's clearly unconstitutional and clearly violates what the Congress expressed its intent to be, but that's what happens when government takes over health care. They start making these decisions for you.

NAPOLITANO: Unfortunately, that's true. Matt Kibbe, thanks for joining us.

KIBBE: Thank you, judge.

NAPOLITANO: Tea party Republicans about to slash government's spending and limit how much debt the government can ring up, but now, the White House is warning that doing so will create an economic catastrophe. Stuart Varney and the truth about the debt ceiling, next.



AUSTAN GOOLSBEE, WHITE HOUSE ECONOMIC ADVISER: If we hit the debt ceiling, that's essentially defaulting on our obligations, which is totally unprecedented in American history. The impact on the economy would be catastrophic.


NAPOLITANO: Catastrophic, really? Or would the real catastrophe be allowing the government to ring up even more debt on check? To my friend and colleague, the host of Varney Co., Stuart Varney. How did we get 14 trillion or nearly 14 trillion in debt? This isn't happened overnight.

STUART VARNEY, HOST OF VARNEY CO: No, it's not happened overnight, but it's gone up by $4 billion at day for at least the last year, and most of the two years of the Obama administration. We've just run up by spending and spending and spending and spending and borrowing and borrowing and borrowing.

NAPOLITANO: All right. So, the 14 trillion is money that we owe, individuals or institutions or Foreign Service enterprises.

VARNEY: Right.

NAPOLITANO: Banks owned by foreign governments will literally loan money to us over the past hundred years.

VARNEY: That is correct.

NAPOLITANO: OK. And now the government wants to raise the debt ceiling meaning authorized the treasury to borrow more money.

VARNEY: We are again running out of money. In about the first week of April, we'll bump up against the limit which we're allowed to borrow, which is $14.3 trillion. We'll get there in the first, we could have a full very probably. If we want to borrow any more money and spend some more, we got to raise the ceiling allowing us to borrow more.

NAPOLITANO: And what will happen if the government doesn't raise the ceiling? If either the House or the Senate does not give the president this legislation that he wants?

VARNEY: You would have an immediate and very serious economic consequence. You would let the government, the federal government, no longer be able to pay its vendors, companies that are giving items to the government can't be paid for, can't pay workers, can't pay the military. There'll be rapid slowdown, and whatever (ph), judge, I know you don't want to hear this because there would be a rapid slowdown in the economy.

The dollar would tumble. The price of gold would go through the roof. You would be facing very near depression like circumstances very quickly.

NAPOLITANO: All right. The reason this would happen is because the government has budgeted its expenses in anticipation of its ability to borrow. It never intended to spend only what it took in from taxes.

VARNEY: That is correct.

NAPOLITANO: All right.


NAPOLITANO: So, if we did default and all these awful things that you described happened, to some people off, you own gold, you'd become very wealthy overnight, wouldn't that basically say to the lending markets don't lend to this federal government any more? And wouldn't the consequence of that with a lot of pain, nevertheless be, you have to live within your means just like everybody else?

VARNEY: A default means that you can no longer repay the debt that you have outstanding. We will be saying to China, we will be saying to our own citizens who have lent us this money, we would be saying we cannot pay you back. We are defaulting on this. Now, that destroys confidence in your ability to repay in the future.

NAPOLITANO: All right. Last year, shortly before Christmas, the Secretary of State Hillary Clinton and the Chairman of the Joint Chief of Staff Adm. Michael Mullen separately said the same thing, quote, What is the worst danger to our national security? They both answered the debt. So, is the government trying to tell us that we shouldn't be making it worse -- shouldn't make it worse or that we should just be able to borrow and spend and borrow and spend with no hope of paying back?

VARNEY: I see where you're going and you're right in both cases. A default, the inability to repay our loans, is indeed catastrophic.


VARNEY: The setting up of even more debt in the future is indeed catastrophic.

NAPOLITANO: So, which is worse, that we can't pay back our debts or that we'd get more debt that we can't payback?

VARNEY: No. It's on a question of which is worst. It is when does the catastrophe strike?


VARNEY: If you default, the catastrophe strikes now. If you keep on borrowing, you probably pushed off the catastrophe into sometime in the future.

NAPOLITANO: And that's what the politicians do, spend now and let our future generation, your children and grandchildren, God bless them, worry about it.

VARNEY: That is correct.

NAPOLITANO: Would you agree with me that if this continues, it's destroys the ability of our children and grandchildren to enjoy prosperity because their taxes will be so high because of the debt service?

VARNEY: I look to politicians to come up with a long-term plan to, hey, grow the economy and that will grow us out of this deficit situation and be get a long-term grip on our spending.

NAPOLITANO: It's the only television show that does not start at the top or the bottom of the hour. 09:20 in the morning, eastern time, Varney Co. The handoff for my --

VARNEY: With you as a frequent guest and that's most important.

NAPOLITANO: It is my pleasure. Thank you for joining us.

All right. White House economic adviser, Austan Goolsbee, claims that if the nation hit the debt ceiling and the government defaults, that will cause an economic collapse far greater than what we saw in 2008, and Stuart Varney agrees. What Mr. Goolsbee really means is that big government cannot govern without borrowing money, without spending more than it takes in.

America, the government's current fiscal policy of spending for the sake of spending and borrowing more money to cover the cost of borrowing has been described as one of the greatest theft in American history. Politicians today are borrowing money for personal pet projects that will be paid for by your children long after those who have spent the money have retired or died. The truth is that if we cap the debt ceiling, the government will be forced into fiscal responsibility.

We will either default in our debts in which case no one will lend the government anymore money or we will cut the budget. Either way, spending will go down. This country needs to live within its means. Raining (ph) in spending is the only way to bring back credibility to the government and to our currency. If we cap our debt, in the long run, our economy will grow and our society will be prosperous.

The sad reality is that when it comes to money, our legislators in Washington act as recklessly as a drug addict looking for just one more fix. It's time to end their access to limitless cash. Well, that's easier said than done. Our Freedom Fighters on what's really at stake in this debt battle. The future of the Republican Party could be on the line, next.


NAPOLITANO: Republicans are calling for a showdown over raising the debt ceiling, the amount of money the government is legally allowed to borrow. They want spending cuts that justify raising the ceiling. This could be the first real money fight for the new Tea Party-fueled Congress.

To our Freedom Fighters, on if the GOP will follow the mandate of the election to get our fiscal house in order. FOX Business Network's Dennis Kneale; democratic strategist, Sascha Burns; and senior editor for Reason magazine, Michael Moynihan.

Dennis, to you first. What will happen if the government does not authorize -- if the Congress does not authorize the Treasury Department to borrow more money?

DENNIS KNEALE, FOX BUISNESS NETWORK: I always thought this was a big bluff because if you're a supplier, you know the government will pay their bills. No big deal. I talked to David Walker, the former head of the GAO, this morning. He says, Dennis, anyone who thinks there is no big consequence here wither doesn't know what they are talking about or haven't looked at it had enough. He said the first thing that happens is you cannot send out Social Security checks because already Social Security is paying out more money every week than they take in. And they wouldn't be able to borrow. The second thing that happens is you cannot pay interest on government bonds outstanding, which means you have technical default and that means we have a meltdown even worse than in 2008.

NAPOLITANO: Michael, what would happen if the government defaulted? Wouldn't there be a silver lining to that cloud? Wouldn't that mean that people would stop lending money in the future, and eventually would have to live within its means like the rest of us do?

MICHAEL MOYNIHAN, SENIOR EDITOR, REASON MAGAZINE: I wish that were the case. And I hope it is, but it will not be. Unfortunately, John Boehner said two months ago that they is no way the Republicans will not take the risk on this and not allow the debt ceiling to be raised. So politically, there's a lot of lip service. Look, I am happy for a lot of this lip service, people like Michelle Bachmann saying, if you want to do this, you have to cut spending -- as long as they're underlining that point of cutting spending. But practically, it is not going to happen. The Republicans don't have the stomach for it. And we are back exactly where we were when we started.