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STATE OF THE UNION WITH JOHN KING

Interview with 4 Key U.S. Senators

Aired June 21, 2009 - 09:00   ET

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


JOHN KING, HOST: I'm John King. This is our STATE OF THE UNION report for Sunday, June 21st.

At least 19 have died as the government of Iran uses batons, water hoses, and gun fire to disperse thousands of citizens protesting the re-election of Mahmoud Ahmadinejad. CNN has just confirmed there are large protests happening again. And throughout today's program, we'll bring you the breaking news on this fast-developing story.

Health care reforms off to a rocky start in the Congress with predictions of sky-high costs and limited results. Can we afford to insure all Americans? Four senators, leading players from both parties, are with us throughout the hour to tell us comes next in the Iran and health care debates, and to answer your questions and concerns.

And we'll visit a medical center that could be an example to Washington. We'll show you the innovative way the Cleveland Clinic offers high quality care but keeps costs down. That's all ahead on STATE OF THE UNION.

We're going to have an extended conversation this Sunday with four senators with unique insights and critical roles in the pressing debates over Iran, North Korea, health care, and the nation's struggling economy.

Senator Chuck Grassley is the top Republican on the Finance Committee, where the Democrats leading health care reform proposals stalled this past week. He joins us from Cedar Falls, Iowa.

Coming to us from Scranton, Pennsylvania, Democratic Senator Bob Casey, who serves on the Foreign Relations Committee, and one of the key panels in the health care debate.

With me here in Washington, California Senator Dianne Feinstein, she leads the Intelligence Committee, and her state has perhaps the biggest stake in the health care financing fight.

And Senator Richard Lugar of Indiana, who is a ranking Republican on the Foreign Relations Committee, and a leading voice in international policy for a quarter century.

We begin with the election fallout in Iran, and I begin at the magic wall because I want to take us through some of these dramatic images we have seen. First a reminder, as we watch the fallout in Iran, it is, of course, in one of the most unpredictable and volatile neighborhoods of the world. Iraq here, Afghanistan and Pakistan here.

And the images we have seen, and we've said, we've just confirmed more protests today, here are some images throughout the weekend. Rock- throwing on the streets here. Those who support the candidate who lost the election, Mr. Mousavi. Flames and fire in the street.

And I want to begin with you, Senator Lugar, you're one of the leading voices in this town on foreign policy. When you these pictures and more protests today even after the supreme leader said, stay out of the streets, are we seeing frustration at the election or are we seeing the seeds of another Iranian revolution?

LUGAR: I think we're seeing a challenge of the regime. The leader, Khamenei, perhaps made a grievous error by making that the issue. In other words, he could have called for another election or for reforms or various other things. But in his speech on Friday, comprehensibly, he said now out in the streets you're indicating opposition to the state, to the regime itself. It's not a question of Mousavi or Ahmadinejad, it's me and the supreme council.

So the protests have continued. The challenge continues, which is -- is going to come to a conclusion one way or another in which either the protesters bring about change or they're suppressed. And it's a potentially very brutal outcome at the end of the day.

KING: And, Senator Feinstein, you are the chairwoman of the Intelligence Committee. As we watch this very volatile situation unfold, do you believe, based on what you're being told by U.S. intelligence, is this regime's survival at stake? Is that at issue in the streets of Tehran?

FEINSTEIN: Well, I think Senator Lugar said it correctly. I think what became as -- what began as a challenge to the election has become a challenge to the leadership now. And I think the way the leadership has behaved is really terrible for leadership that derives its authority from religion.

And a president newly elected who calls hundreds of thousands of people who protest an election just "dust," I mean, these were -- they threw the gauntlet to the people, essentially.

When there was a way out for the supreme leader, simply to say, so many people object to this election, we will do it over and we will show that we can do an election correctly, and with the people's confidence in our country.

Instead what you have is a total putdown by the leadership of what began as a legitimate protest, which has now turned into much more than that because of the brutality that the regime has shown to its people.

KING: And one of the questions, of course, any time you have a dramatic world event like this is, what is the role of the United States? And what is the role of the U.S. president?

Senator Grassley, I want to go to you, because some Republicans and conservatives have said that President Obama has not been bold enough. That he should stand at the White House and tell those people in the streets risking their lives that he stands with them and that the people of the United States stand with them.

I want you to listen to Senator John McCain and Congressman Mike Pence, two Republicans who say the president has this wrong.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, R-ARIZ.: On this issue, I do not believe that the president is taking the leadership that is incumbent upon an American president.

REP. MIKE PENCE, R-IND.: When Ronald Reagan went before the Brandenburg Gate, he did not say, Mr. Gorbachev, that wall is none of our business.

(END VIDEO CLIP)

KING: Senator Grassley, the president says to be more direct than he has been. And he has said, the world is watching, and he has said he sees things that he believes are unjust by the Iranian regime. He says to go further would be to give a foil to Ahmadinejad and the supreme leader. How do you rate the president's performance on this one?

GRASSLEY: Well, I believe that we could be more forceful than we have, and I believe that the United States being a democracy for 200 years, we've bragged about what we want to do, extending democracy around the world.

We've been involved in the Philippines, in Bosnia, several other countries over the last several years and actually being very forceful in promoting democracy. If America stands for democracy and all of these demonstrations are going on in Tehran and other cities over there, and people don't think that we really care, then obviously they're going to question, do we really believe in our principles?

So wherever there's opportunity to promote democracy, it seems to me we ought to be in the forefront of that promotion, particularly when it comes from the grassroots demonstration that the people really want the ballot box to work and people to be elected honestly as opposed to what looks like a charade that went on last weekend in Iran.

KING: Senator Casey, you're on the Foreign Relations Committee, has your friend, the president, been too timid here, as Senator Grassley suggests?

CASEY: No, John. I think he has gotten it just right. The president, I think, has struck the right balance between making sure that we affirm and speak out in favor of the universal values of the freedom to assembly, the freedom of speech, all of those important values that our history has taught us.

But at this moment in the history of Iran, we should not politicize this issue here in the United States. The key thing here is striking the right balance, telling those who are protesting that we share their values, but also making sure that we keep our eye on the ball here.

The biggest threat down the road in terms of our security and the security of the region is Iran's nuclear program. And the best way to approach that is to leave every option on the table, including the strong and tough diplomacy, but also, and the Congress plays a role in this especially, and I've been a leader on introducing legislation on sanctioning Iran, or at least giving the president the authority to provide -- or to impose, I should say, sanctions on the Iranian regime if they continue to pursue a nuclear weapon strategy.

So I think he has gotten the balance just right.

KING: On that point, I want to get up and walk over to the wall, because I want to remind our viewers about the government structure in Iran. Senator Casey, you just say you believe diplomacy should stay an option. I want to show this float chart just so the American people understand.

President Ahmadinejad is down here in this structure. And President Obama has said he would like high-level diplomacy, even leaving the door open to a meeting with President Ahmadinejad early on in the administration.

It is the supreme leader, of course, who calls the shots, the armed forces report to him, the state media reports to him. Senator Lugar, I want to come back to you on Senator Casey's point. The president said diplomacy should be on the table. He has been waiting for the Iranians to come back to him.

If President Ahmadinejad or the supreme leader, Mr. Khamenei, came back now and said, we want to sit down with the United States at a high level, Secretary Clinton perhaps to the foreign minister, or president to president, should the United States say yes or would you be rewarding the unjust, to use the president's word, behavior he sees on the streets of Iran right now?

LUGAR: We would sit down because our objective is to eliminate the nuclear program that is in Iran. This is...

(CROSSTALK)

KING: Even though -- even though they are shooting people in the streets and beating people in the streets and arresting political opponents, if they called tomorrow, you would sit down with them?

LUGAR: Yes, it's totally improbable. And the reason is that this regime now is under fire. This is not a stable regime in which two people suddenly sit down with the United States. They may not be able to impose their will. This is what -- this is all about in the streets. But in direct answer to your question, of course, we really have to get into the nuclear weapons. We have to get in the terrorism of Iran in other areas in the Middle East. Now we have a new opportunity in which we might very well say we want communication with Iran.

We want openness of the press. We don't want to have use Tweeter (ph). We want to have to press on the ground. But in order to have any kind of relationship, we need to be able to talk to people, hear from people, argue with people.

This is not imposing our will, but it's fundamental to our democracy and to the development of democracy and or better governments in Iran at this point.

KING: Much more to talk about with our four senators. We'll come back in just a moment, as you look on the screen there. You're watching pictures from the streets in Iran. We'll talk more Iran. We'll talk North Korea. We'll move on to health care.

But when we come back first, perspective from CNN's chief international correspondent, Christiane Amanpour, just back from Iran. Stay with us.

(COMMERCIAL BREAK)

KING: There are more protests on the streets of Tehran today, this after CNN already confirming 19 deaths in Tehran yesterday, as demonstrators clash with (inaudible).

Reporter Christiane Amanpour reported from Tehran just last week. She joins us now from our London bureau.

Christiane, as we watch the demonstrations unfold today, one thing we have seen that is new, Iran's foreign minister went on state television. What have we learned from that?

AMANPOUR: Well, several things. We're hearing both from the president, Ahmadinejad, for the first time in several days, accusing both Britain and the United States of interfering in the post-election scenario and saying that those governments should reconsider their comments if they want to stay, quote, "within the circle of friends."

Mottaki -- Manouchehr Mottaki, Iran's foreign minister, did address diplomats in Iran, and that was recorded on state television, in which he specifically blamed Britain for interference in the post- election violence, saying that Britain had been waiting for such a moment.

British foreign secretary David Miliband, again, for the second time in several days, rejected strongly those allegations and said the Iranian elections were for the Iranian people to decide, but also warning against violence.

Now, the president of Iran, the former president, Mohammad Khatami, the reformist, who is a key supporter of Mir Hossein Mousavi, has gone on warning that the vote of the people should be respected, that the guardian council, which is meant to be investigating itself, the very subject of the criticism and the allegations of fraud and warning about an increased militarization of Iranian society. By that, perhaps he means that, over the last four years, many, many members of the Iranian Revolutionary Guard have been placed in very key places, such as the oil industry transport, commerce, finance, and all such other places. John?

KING: And, Christiane, help everyone watching here in the United States and around the world understand the context -- they might not understand it if they're in a free Western nation -- of people going into the streets of Tehran after being told by the supreme leader: stop protesting.

AMANPOUR: Well, it's a very serious development. And again, the key things to watch for are how big will those protests be; how big will the defiance be? And how ready or willing will the government be to crack down? With what amount of might?

So far, despite the reported deaths and the injuries, it has not unleashed the full might of the state.

Now, that also is potentially troublesome. Because, in the 1979 revolution against the shah, the shah cracked down somewhat but was not prepared to crush the people, and therefore enabled the revolution to be successful.

And people are wondering whether or not ordinary police, ordinary rank-and-file soldiers who are not on the streets, but nonetheless the security services will do that.

But what's important again is to keep watching the streets to see whether these crowds get bigger, whether they keep coming out. As far as we know, it's been much quieter today, as of this hour, than yesterday. And we're still waiting to see how this day plays out.

KING: We'll continue to watch this with our chief international correspondent, Christiane Amanpour. She'll be back with us a bit later in the program as well.

And up next, we'll cover more on Iran, North Korea, the economy, and health care with our four senators. "State of the Union" will be right back.

(COMMERCIAL BREAK)

KING: We're back with four key U.S. senators.

KING: With me here in Washington, Republican Richard Lugar and Democrat Dianne Feinstein. In Iowa, Republican Chuck Grassley and from Pennsylvania, Democrat Bob Casey. Let's get straight back to our conversation about Iran and first, a bit of history. It was Persia until 1935, then in 1953, a coup engineered in part by the United States and Britain knocked out the prime minister of Iran and the shah returned to power. Then in 1979, the Islamic revolution, the shah and his family were forced into exile, the Islamic Republic of Iran is proclaimed, and Ayatollah Khomeini returns from exile. And we all know tragically 52 Americans were taken hostage inside the U.S. Embassy. Today, we see violence in the streets over Ahmadinejad's disputed reelected victory. Human rights organizations say prominent activism politicians are being arrested. Senator Feinstein, I want to come to you out of the context, especially, given the role in the past. The United States and the British government did interfere in Iranian politics. It may have been 50 something years ago. You're the chairwoman of the Intelligence Committee again. You are briefed when the United States does things covertly. You saw the Iranian foreign minister saying Britain, Germany, France, the United States are meddling in their affairs. Can you look the American people in the eye this morning and say absolutely not, no U.S. taxpayer dollars are being spent to undermine the regime?

FEINSTEIN: I can say this, to the best of my knowledge, there has been no interference with the election, there has been no manipulation of people following the election. These questions have been asked as late as this past week of people in the clandestine operations who would know this and in a formal setting, and that's the answers we were given.

So I think, you know, by blaming the United States and Great Britain, the regime is trying to take the responsibility from its own shoulders and clearly I think most people see that the responsibility belongs on those shoulders, not ours.

KING: Do you trust -- I'm going to stay with you for one second because of your role. Do you trust the intelligence? The legacy of Iraq was we put too much reliance on dissidents who may have an axe to grind or electronic eavesdropping and not enough intelligence on the ground, eyes and ears that we know and trust. Do you trust the intelligence you get from Iran?

FEINSTEIN: Well, I don't think our intelligence candidly is that good. I think it's a very difficult country in which to collect intelligence right now. So I think our ability to get in there and change the course of human events is very low, to be very candid with you.

KING: So Senator Lugar, what should we do? Senator Casey said before the first break that he has sponsored some legislation that would essentially -- like South Africa, disinvestment. If you're a pension fund doing business with an oil company or petrol chemical company doing business in Iran, no, we want to outlaw that. What next? Should the president go to the United Nations and say we need even tougher sanctions? Because economically we know unemployment is quite high in Iran, they don't have a great economy right now. If we could put more diplomatic sanctions pressure on them, would that be a way of affecting change?

LUGAR: Initially it's more complex because we don't know what the outcome of the challenge of the regime is going to be. That is, who is going to be governing Iran? That's the question, how many people will come out? Will the police finally decide not to suppress them? And if so, what kind of hybrid situation exists?

Secondly, the fact that they've condemned Great Britain and France and Germany is a plus factor because these countries have sometimes been reticent to impose sanctions that would be very, very tough on Iran. If those four countries as well as others decided simply that the nuclear policy has to change and we really went after it, then that's going to be, I think, very decisive. And the Iranian leadership, at least -- and this is a mistake again on their part, by blaming all of these countries has added allies to the United States in our diplomatic effort.

KING: Senator Grassley, you are known every time you go home to Iowa, you're a guy who travels, your state has a number of town halls. This is a connection to the American people question. Does this matter at home? Do people come up to you and raise this issue what are we doing in Iran? What do you know about what's happening in Iran? Or is this more of a Washington debate?

GRASSLEY: Well, it's more of a Washington debate right now as far as the demonstrations are going on. But over a period of time, usually Iran in my town meetings will get thrown in with North Korea and the questions raised about the prospects of nuclear, what are we going to do? And the questions come from the standpoint of my people wanting answers. And my usual answer is that, you know, we have encouraged the Iranians to ignore us for the most part.

I'm talking about their government because the last seven or eight years, you know, we have relied a great deal, particularly while we were bogged down in Iraq on Germany and Great Britain leading this. And they would feel we made some progress. And then in the final analysis, you know, we didn't follow through when Iran didn't keep their word to us.

So we encouraged this sort of abuse and disregard for the negotiations that the West was carrying on with them. And so now when we have a chance to stand tall and let the people know we're behind them, I think there's all the more reason to let them know that they have a friend in the West.

KING: And Senator Casey, if diplomacy is the carrot and sanctions is the stick, you said -- you said you mentioned your legislation earlier, what should the president do now? It seems everyone wants -- at least Senator Lugar and Feinstein and Senator Casey want him to hold the carrot of diplomacy out there, does he need to have a tougher stick?

CASEY: Well, John, I think he's gotten it right, at the right balance. I was just looking at the statement he issued yesterday. He said and I quote "We call on the Iranian government to stop all violent and unjust action against its own people." He says, "The world is watching and they must respect the dignity of their own people."

So I think he's given a very tough and consistent line to the regime in supporting the values that we spoke of earlier of those who are protesting in the streets. But the president doesn't have the luxury of just thinking about the next couple of days. He's got to be able to think about the short-term, the long-term, tactical moves as well as long-term strategy. I think he's gotten it right. But the Congress should reaffirm, I think, what I believe is a bipartisan consensus to give him the authority to use sanctions if necessary. But part of this is not just the sanctioning those companies around the world that do business with Iran in terms of the refined gasoline products, for example, the divestment legislation of mine that I spoke of earlier, but also, to make sure that we're working in concert with others on the U.N. Security Council to continue to provide that pressure.

I think there's a consensus about this. But I think there's been a lot of early and unfortunate criticism of the president's policy. I think he's gotten it right. But this thing is unfolding and it's never going to be the same in Iran. Something is stirring in the hearts of Iranians that we've never seen before. And we shouldn't just measure it by the number of people on the streets. There's a lot of people in their homes that are feeling this. This is a movement of the likes of which we've never seen. I think it's going to continue. We have to monitor it closely.

KING: Senator Feinstein, you were nodding when Senator Casey said something is stirring.

FEINSTEIN: Well, that's right. And I think Senator Casey has it correct and I think the president has it correct. And I think, you know, there is an urge for the United States from some to get out there and really say, you know, we're going to be behind you, we're going to do this, we're going to do that. And we've done that before and then haven't delivered. And that too can be a problem.

It is very crucial as I see that we not have our fingerprints on this. That this really be a truly inspired by the Iranian people. We don't know where this goes. And I sure wouldn't want to be responsible for thousands of people being killed, which is a distinct possibility. So this is really within the hands of Mr. Mousavi, with his supporters, with the bulk of the Iranian people, and I think the important thing is that this may well reveal the enormous fallacy behind this Iranian religious inspired regime.

You know, people don't look to religion to go out and shoot a young woman in the heart. So I think, you know, my heart and thoughts are with the people. I think the people in Iran know instinctively that the United States of America is supportive of a true democracy, not a fixed ballot, but a true democracy.

KING: I want to ask one more foreign policy question before we go to health care and the economy. And I want to ask it of you, Senator Lugar, because it was two years ago this week, you gave a very important speech on the floor of the Unites States Senate in which you questioned severely, some say broke with the Bush administration on its policy in Iraq. And you gave a very detailed speech as to why you thought the policy had gone off the tracks. I want you to listen to one portion of what you said then and I want to ask you how it applies now. Let's listen.

(BEGIN VIDEO CLIP) LUGAR: American manpower cannot keep the lid on indefinitely. The anticipation that our training operations could produce an effective Iraqi army loyal to a cohesive central government is still just a hopeful plan for the future.

(END VIDEO CLIP)

KING: Fast forward two years to right now, a critical moment. As this president of the United States starts to draw down U.S. troops in Iraq, is it still a hopeful plan for the future? Or are the Iraqi security forces up to par in your view?

LUGAR: Well, they're not up to par and therefore it is hopeful for the future. Now the hopes are based upon the fact that more people are under training, more governance is occurring. We'll see pretty rapidly come June 30, and the withdrawal of the cities, the first part of our agreement, and the Iraqis are insisting on that.

LUGAR: So this is no longer an option on our part, and we have to hope...

KING: Are you nervous?

LUGAR: Of course, because there clearly are gaps in terms of the training, the security, the governance of various cities as well as other provinces.

KING: We'll be back shortly with our senators. Up next, we'll turn to the problems facing Congress back here up next, including how to pay for health care reform. Much more with our four senators when STATE OF THE UNION returns.

(COMMERCIAL BREAK)

KING: You're looking there at the Golden Gate Bridge in San Francisco. That's Senator Feinstein's hometown, 18.5 percent of California does not have health insurance, which brings us to our next topic as we welcome you back to STATE OF THE UNION.

I'm joined once again by four leading voices in the U.S. Senate, Republican Richard Lugar and Democrat Dianne Feinstein, Republican Chuck Grassley and Democrat Bob Casey.

As we move on to the health care debate, let's take a look at one of the reasons the debate in the Congress went off the tracks a bit this past week. The Congressional Budget Office took a look at the leading Democratic plan, said it would cost $1 trillion or more over 10 years and it was estimated to reduce the number of uninsured by just 16 million by 2015.

Why is that important? Let's go to the next number here. You will see without the $1 trillion plan, the Congressional Budget Office says there will be 51 million Americans without insurance in 2015. After spending $1 trillion, the Congressional Budget Office says that number would still be 35 million. That has led many to say too much money for too little gain. Senator Grassley, you are the ranking Republican on the Finance Committee, the key committee when it comes to paying for this. You spent much of the past week shuttling with a few other Republicans in and out of the Democratic chairman's office. Can you tell us today that progress toward a bipartisan plan has been reached? Or is health care reform this year in peril? GRASSLEY: Well, it has not been reached, obviously yet, or we'd have a bill for Tuesday for committee action. But we're still working. Our goal is affordability for people to have insurance and accessibility to do away with the discrimination that comes from people not getting insurance because of preexisting conditions. Our goal is to insure 45 million Americans that don't have health insurance, and to make it affordable. Our goal is to do that.

Our committee has a responsibility for finance, but also don't forget our committee has the responsibility for a lot of health care policies, as well, because we have jurisdiction over Medicare and Medicaid. And we feel that we will be able to put together a bipartisan plan that will do what everybody wants to do, accessibility and affordability. And we'll be able to pay for that, and we will not have the problems that you described of $1 trillion and only covering 16 million people.

Now, we have a separate piece of legislation than the one you were referring to because that was the other committee, the health committee, and, of course, that's a major problem. But we also had a score from Congressional Budget Office on ours that brought it in higher than we anticipated.

So we're in the position of dialing down some of our expectations to get the costs down so that it's affordable and most importantly, so that it's paid for because we can't go to the point where we are now of not paying for something when we have trillions of dollars of debt. And we anticipate paying for it through some savings and Medicare, and from some increases in revenue.

KING: Senator Lugar, before I get to the Democrats, Senator Grassley's under pressure from a lot of Republicans because he's negotiating with the Democrats saying don't go too far, don't give away the store. What is your message in this debate? Can we do all he just said, reform Medicare and Medicaid, insure those 45 to 50 million uninsured Americans in one full sweep? Or should there be some incremental steps first?

LUGAR: I think it should be incremental steps. As a matter of fact, I don't have the slightest idea what is in either of the two bills in the committees. None of us do because much of it hasn't been written, still being drafted. People are scoring something that doesn't exist. What I would suggest is we hang on now for a period of study so that we find literally what the alternatives are.

KING: So not this year like the president insists.

LUGAR: Not this year because the president is trying to solve the economic crisis in our country and the world. We already have $1.8 trillion deficit projected apart from all of this. And we're going to have to be thoughtful about the dollar. Will the Chinese continue to buy our bonds? Will the Japanese pay our deficits? We can't pay them right now with the resources of this country. This is alarming and therefore health care is very important. And reforms might occur incrementally even this year. But this is such an audacious move that it threatens more than just the health care problem, it threatens our basic structure of our economy.

KING: Senator Feinstein, I see you nodding. I want you to come into the conversation to see if you agree with Senator Lugar, that it should be incremental. But first, I went out to the Cleveland Clinic this week. The CEO is very impressive, Toby Cosgrove. It's a place where they give some of the best care in the world and they do it at a much lower cost than many places around the world. And he's a big champion of reform, the CEO is, but he also worries about the cost. I'm going to liken it to the ketchup or mustard pack you get at that ball game. If you squeeze it too hard, it sprays out somewhere and you get unexpected results. He said he is worried. The president has said, as you know, and your state would be hard-hit by this, that the immediate savings should come from Medicare and Medicaid. That's one of the ways to pay for it. Dr. Cosgrove says that might be fine, but if you do it too fast and you take too much out of the program, there will be huge negative results among them, he says could be this.

(BEGIN VIDEO CLIP)

DR. TOBY COSGROVE, PRESIDENT AND CEO, CLEVELAND CLINIC: The first thing you still see happening is a deferment of all of the reinvestment in the infrastructure. Classic example of that what's happened to the national health in England. They didn't invest in any of their infrastructure for 50 years, and now a lot of the hospitals in England are 100 years older and way behind. So, you know, if you begin to take money out, it will make a difference. And it will hurt the system in some way.

(END VIDEO CLIP)

KING: As a leading Democrat in the Congress, is your president trying to seize this political moment because he has the votes right now and the political capital in the first year in office? And might he as a result potentially do more harm than good if you try to do this all at once?

FEINSTEIN: Well to be candid with you, I don't know that he has the votes right now. I think there's a lot of concern in the Democratic caucus. Senator Lugar's point about the economy, the trillions of dollars that have gone into buttressing the economy, now we're going to be dealing with regulation of the financial sector. What all of the impact of this is not yet known.

FEINSTEIN: Ergo, you have enormous problems in my state. California's bigger than the populations of 21 states and the District of Columbia put together. We have an enormous health care industry, 350 hospitals. University of California alone has 34,000 health care workers, has health care worth $4 billion a year.

So it's complicated. Additionally, the state is in a state of financial catastrophe. I think that's clear. So, if you change the Medicaid rate, for example, it has an impact on California between $1 billion and $5 billion a year.

Now, how could I support that?

Because it would take down the state.

You also have enormous profit centers in the health care industry, in pharmaceuticals, in medical insurance. And I wonder about these profit centers. Because, unless you have some method to control these profits, premiums continue to rise in the private sector, as they have over the past eight years, substantially.

Therefore, controlling costs is a very major and difficult subject, as long as you have a large private-sector involvement. So this needs to be worked out.

The issue of coverage, I think, you raised -- over $1 trillion to cover 16 million people. We have 6.6 million people without coverage and below the poverty line. So just to cover them becomes a huge, huge problem.

KING: So, Senator Casey, come into the conversation with your views. And as you do so, Senator Feinstein, a Democrat, just raised some significant questions. She'd like to get this done but she has big questions.

Senator Mary Landrieu of Louisiana is another Democrat who lives in a more conservative state. She has raised some questions. The reward for her raising questions has been a liberal group, moveon.org, is now attacking her on the radio. Let's listen.

(BEGIN AUDIO CLIP)

ANNOUNCER: Why is Mary Landrieu opposing the president's plan to provide health care choices for all Americans, including the option to join a high-quality public health insurance plan? She did receive $1.6 million in campaign contributions from the health care industry, the same industry that's now spending millions to stop the president's plan. Call Mary Landrieu.

(END VIDEO CLIP)

KING: Senator Casey, is that helpful? That's an ally of your party, moveon.org. They have helped the Democrats in elections. They helped President Obama in the election. There's not a bill to vote on yet. There are people like Senator Feinstein, like Senator Lugar, like Senator Grassley. I bet Senator Casey has some questions about this legislation.

And before there's even a bill to vote on, she's being attacked on the radio. Should the president of the United States, the leaders of the Democratic Party tell moveon.org to save its money and get off the radio?

CASEY: Well, John, I'm not sure we can be in the business of telling groups how they spend their money. But, look, this is very early. I don't think either side on this should overreact, people in the Democratic party, groups that support us, nor people in the Republican party. There's still an awful long way to go here.

But the reality, for a lot of families, in Pennsylvania and across the country -- I'll just give you one example. In Pennsylvania, if you look at 2007 and 2008, at some period of time within those two years, more than a quarter of our population had no health insurance at all.

It's a huge number, and the same is true across the country. The worst thing we could do is to sit back and continue to wait and debate for too long.

The status quo, right now, is unacceptable. I think the status quo is the enemy of reform and change. So we have to be cognizant of the difficulty of the cost issues as well as coverage issues. But I really believe we can get this right.

For example, our committee, the Health, Education, Labor and Pensions Committee, this week, began voting on amendments. So the ship is moving here; long way to go.

Senator Grassley's worked hard with Senator Baucus on the Finance Committee. There's still a lot of work to do.

But the worst thing we could do, I believe, is to lose the opportunity to get something done here. The American people expect us to be prudent. They expect us to tell how we're going to pay for this.

But the last thing they want us to do is to wait and delay for 2010 or 2011, because this is the economic threat to our country. If we don't get this right and get it done, American families are going to pay far too much. There are estimates, in the next eight years, the cost of health care for families is going to go up by 83 percent, by one estimate.

We cannot allow that crushing economic burden to be imposed upon families who are still struggling to get through this recession. So I think the president was right to focus on reducing costs, enhancing quality, and making sure that people have choices.

And I believe one of those choices should be a public option, which, in the paper today, the New York Times survey shows 72 percent of the American people favoring it. I know that's not the universal opinion in Washington. But I believe we can get this right. It's going to be difficult, but our committee is actually moving and voting on amendments, and that's the way it should be.

KING: I will continue to cover this issue and all the other issues, as we go forward. I want to thank all of you senators for joining us for a long, extended conversation today. And yet, believe it, despite all this time, I have more I wish I had time to ask. But we'll invite you all back.

Senator Casey, Senator Grassley, Senator Lugar, Senator Feinstein, thank you so much.

And coming up, the next generation of health care. We'll take you inside the prestigious Cleveland Clinic, where doctors are revolutionizing the way patients get treated, all the while keeping costs under control. Stay with us.

(COMMERCIAL BREAK)

KING: If you were just with us, listening to the senators, covering the estimated 45 to 50 million Americans without health insurance is the lofty goal of major health care reform; paying for it, always the seemingly insurmountable challenge.

One puzzle in this price tag debate is the wild variations in health care costs. Let's take a peek at them.

If you look at McAllen, Texas, for example. it is one of the most expensive communities for health care in the country, Medicare spending $15,000 per patient in McAllen, Texas. That's twice the national average.

For contrast, let's go to Colorado. If you look here in Colorado, you see, in Grand Junction, Colorado, $5,800 per enrollee, again compared to $15,000 here.

So how do you keep costs down?

In our travels this week, we went to one of the places proving how to do it. I'm going to move these out of the way. We went up to the Cleveland Clinic. It's ranked number one in the nation for heart care, 14 years it's been that, 18 salaried physicians.

KING: That's the big difference there, 3.3 million total visits to this hospital, more than 50,000 admissions in 2008.

It's a different financial structure at the Cleveland Clinic that they say should be a model for the country as it decides how many to cover and how to pay for it.

(BEGIN VIDEOTAPE)

KING (voice-over): Cardiac intensive care unit at the Cleveland Clinic. World renowned for both its high quality care and its comparatively low costs. Those who work here, like Dr. Steven Nissen, an important example as Washington debates a radical restructuring of American health care.

DR. STEVEN NISSEN, CLEVELAND CLINIC: Everything that we do is done with the patient at the center of the picture, not the doctor at the center.

KING: At many hospitals, cardiologists and cardiac surgeons work in different departments, here all under one roof, with a business model that translates into more collaboration and less competition for patients and for health care dollars. NISSEN: The Cleveland Clinic is not a fee-for-service model. I get paid a salary. We all get the same check. It doesn't matter whether we do an operation or do an angioplasty. And so we have taken that issue of income out of the equation. Now, unfortunately, it's not the case across the country, though. And that does leads to excess costs. Everybody wants to do their procedure.

KING: CEO Dr. Toby Cosgrove is an outspoken advocate of reform but also sounds several cautionary notes as Washington debates just what to do and how to pay for it.

DR. TOBY COSGROVE: You know, I think if you begin to take money out of the system, my concern is that you begin to drive quality down.

KING: Most hospitals get about half their income from Medicare and Medicaid. And it is those programs the president says must be squeezed for major cost savings.

COSGROVE: Fifty percent of the hospitals in the United States are running in the red. So if you begin to look at reducing the amount of money that's coming to hospitals to look after patients, I think you are beginning to look at failure of a group of hospitals. UNIDENTIFIED MALE: The platelet count has fallen from 200 to 230.

KING: The American Medical Association is wary.

UNIDENTIFIED MALE: Heart rate 77, common normal sinus rhythm.

KING: But many doctors at the Cleveland Clinic are open to a government-run insurance plan as part of a major reform package.

NISSEN: Having 46 million people who have no health insurance is an embarrassment. It's the wrong thing to do. And a public plan that gives everybody access to some kind of a health care, subsidized if necessary, I think it is an extraordinary step in the right direction.

KING: But again, CEO Cosgrove sounds a cautionary note. Hospitals worry private insurers will see lower payments in the government program and look to trim their reimbursements as well.

COSGROVE: If you begin to drive down the payment from the private patients with insurance to a level close to Medicare and Medicaid, then it's going to be very difficult for physicians and providers to remain solvent.

If you begin to take money out, it will make a difference and it will hurt the system in some way.

KING: Cleveland Clinic holds itself out as an example of how to lower costs, yet also improve results. The emphasis on preventive care is designed to reduce the need for surgeries and procedures. And leaders here say a major reform goal must be to reverse the system's financial model.

COSGROVE: Begin to reimburse for wellness. Right now, if I do a heart operation, I get paid for doing a heart operation. If I prevent somebody from needing a heart operation by helping them understand their diet and their exercise, I don't get paid anything.

KING: Wellness is a Cleveland Clinic obsession. It won't hire smokers. Healthier foods dominate cafeteria options. A farmers market on campus. Yoga classes for employees and patients.

COSGROVE: We've lost over 75,000 pounds in six months as an organization. Seventy percent of the cost in health care is from chronic diseases. And chronic diseases come from really three big things, from obesity, from lack of exercise, and from smoking. So we have got to go after the prevention in the wellness aspect.

And that brings down the level of disease across the entire country. We live longer. We live healthier. And we live cheaper.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

KING: I'm John King. And this is our STATE OF THE UNION report for this Sunday, June 21st.

After a bloody day Saturday, Iranian protesters are in the streets again today. We'll bring you updates as they happen.

And straight ahead in our "RELIABLE SOURCES" hour, Howie Kurtz will ask his guests if amateur reporters on the Internet are maybe doing a better job on the Iran story than conventional news organizations.

Also, ABC News will run a prime time special on health care this week direct from the White House. Is this just an infomercial to the president's agenda? Howie will put that question directly to ABC's Diane Sawyer who will be anchoring from the West Wing.

And, finally, the chaotic situation in Iran, and a possible setback for health care reform dominated the news this week. We'll break down what is happening and what it all means with the best political team on television. That's all ahead on today's STATE OF THE UNION.

Time now, as we always do at this moment, to turn things over to Howard Kurtz and "RELIABLE SOURCES."

And, Howie, as I do so, we always look at the front pages, Iran obviously dominating, but right here a fascinating story in The New York Times. Times reporter escapes the Taliban after seven months. I know it's a topic you'll be covering in the hour ahead.

KURTZ: It's a very dramatic story, John. Pulitzer Prize-winning correspondent David Rohde was kidnapped in Afghanistan seven months ago. And equally interesting, he managed to escape by climbing over a wall. We just learned about this yesterday.

The New York Times and everybody else in the media world sat on that story at the request of The Times in an effort to not further jeopardize Rohde's safety. And that's an interesting dilemma for those of us in this business. We'll talk about that with Bill Keller, The Times executive editor, a little later in the program.

KING: I look forward to it.

KURTZ: Talk to you later, as well, John.

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