JOHN HARWOOD, host: Mr. Chairman, thanks for joining us.

Representative HENRY WAXMAN (Democrat, California): Sure.

HARWOOD: First of all, let me ask how you're feeling. We saw that after you

passed the energy bill that you'd fainted, you went to the hospital. Was that

serious, and are you OK?

Rep. WAXMAN: I'm feeling fine. They did a lot of tests, and they didn't

find anything wrong, so I'm doing OK.

HARWOOD: Good. Let me ask you about how you feel about one other thing.

You're from Los Angeles.

Rep. WAXMAN: Yes.

HARWOOD: You're breaking your back trying to get health care legislation,

energy legislation through the Congress, it's an historic time, and the big

story of the summer is Michael Jackson's funeral. Is there anything wrong

with that?

Rep. WAXMAN: I think there's a lot of interest in Michael Jackson. It was a

shock to everyone that he had died so suddenly at such a young age, and it

brought out a great deal of mourning from people, with a tremendous funeral

and show. I understand that.

HARWOOD: Does it say anything about our society, though, that the--an

entertainer's life--and some of your colleagues have been critical of

this--gets so much more attention that this huge, historic public policy

debate and the deaths of soldiers in Iraq?

Rep. WAXMAN: I wouldn't want to extrapolate to make any comment about

American society and why they're not paying more attention to the intricacies

of the cap and trade mechanism to hold down carbon emissions or how a

connector to choose health care plans might or might not be the best for

individuals in the country. I think that people look at the broad issues,

they get a sense of whether they like what's going on or not. And

this--Michael Jackson was one of the leading entertainers of our time, very

popular, and people were very touched by his--by his passing.

HARWOOD: You talk in your book about the fact that you believe deeply that

Congress does good things to benefit the American people...

Rep. WAXMAN: Yes.

HARWOOD: ...and yet is very unpopular with the public. Republicans, in fact,

are now using that to criticize the president, saying he's delegating

important decisions to the Congress, rather than making--subcontracting his

stimulus package, his health care, his energy legislation to Congress. Is

that a problem? And does the president need to get more personally involved

in the details of these big endeavors?

Rep. WAXMAN: I think, quite frankly, that President Obama would be

criticized by the Republicans in whatever he did. They're suddenly in the

minority, they're not happy about it. And I can understand; we were in the

minority as well for twelve years. And so I wouldn't take that...

HARWOOD: But beyond the partisan nature, what about the substance...

Rep. WAXMAN: ...beyond that.

HARWOOD: ...of the point?

Rep. WAXMAN: The substance of it is the president is dealing with the

Congress that's an independent branch of government. He could send us a bill

and say, `Pass it,' and the people would say, `How could he send us a bill and

tell us to pass it? Why aren't we getting our input into it?' On the other

hand, he's given clear principles and has met with the congressional leaders

and members over and over again, saying what he wanted. He campaigned on the

idea of health care for all Americans, affordable, quality--good quality

health care. And he wants to hold down the health care cost to hold down the

deficit spending we're incurring because of Medicare and Medicaid. And he

even went so far as to say how he wanted to do it. He didn't want anything

radical. He wanted a system where, if you have insurance and you like it, you

can keep it; and if you want Medicare, you stay in Medicare, and then you

would be able to get other insurance coverage through a choice of plans.

HARWOOD: But given the fact that he wants bills through both chambers of

Congress by the August recess--very, very difficult goal in any

circumstance--does he need to move to assert himself more in the final deals

that are going to get cut in each chamber and get this process moving?

Rep. WAXMAN: Well, there should be no doubt the president and his

administration will be involved, especially in the final package, because he's

got the requirement to sign it, and he's going to want to be sure that it's

done meeting his specifications.

HARWOOD: The question is given the president's stated urgency about getting

this done by the August recess, through the House and the Senate, does he need

to be more personally involved and hands-on in the contours of your bill in

the House, the Senate bill, to try to create the conditions where this can

really move in the fall and achieve his goal?

Rep. WAXMAN: The president has given us pretty clear direction based on his

campaign. His idea of health care reform is not something radical, but to

assure people that if they have health insurance they like, they can keep it;

if they want to stay in Medicare, that will be there for them. But if you're

uninsured, for whatever reason, you can go into a system where you can choose

between various private plans and one public plan. He's given us the

outlines, his administration people have been in touch with the committees.

I'm sure when we get down to the conference and working out the final bill,

the administration will be very much a part of that discussion and reaching

that agreement.

HARWOOD: One of the elements of the discussion has been whether or not this

is going to be a bipartisan process or whether Democrats can do it alone.

Clearly, in the House, you can do it without Republican support, the rules

permit that. In the Senate, the Democrats have 60 votes, but you also have

the reconciliation procedure for important parts of the health bill. Do you

think the fact that the bipartisan negotiations in the Senate have been slow

and halting, does that provide enough evidence to you that reconciliation, in

fact, is the way to go and that Democrats are going to have to do this by


Rep. WAXMAN: I think that the Democratic leadership in the

Senate is going to have to make the decision how to proceed to get a bill

passed. I certainly would prefer a bipartisan bill in both the House and the

Senate. But in the House, the Republican leadership has, I think, decided

that they don't want to give President Obama victories, so they voted against

the stimulus bill even though very conservative economists were saying that we

need a stimulus because public--private spending was drying up, we needed

public spending. They voted against the budget. They voted against the

energy bill. And I believe most Republicans in the House are going to vote

against the health care bill.

Now, I'm still reaching out to Republicans, and I hope we'll get some

Republicans to join us. We did on the energy bill, very few, but we got some.

The Senate, because it needs 60 votes, has to try to get those votes. And

even though Democrats have 60 votes, there are regional differences in the

approach to health care, as there are in the energy issue, and they'll have to

figure out how to get to their 60 votes. If they can't get 60 votes, then

there is the process of reconciliation. But I think it's the position of the

Democratic leadership, and has been from the very beginning, that they would

like to do this outside of reconciliation and get the bill passed and get the

60 votes, if not more, for the legislation.

HARWOOD: But are you concerned, based on what you've seen so far, that that

effort is going to bog down and slow down the process to an extent that it's

going to make it difficult to get it done?

Rep. WAXMAN: I'm concerned about it because we can't go to conference--we

can't pass a bill in the House and then go to conference if the Senate can't

pass a bill. But don't--they're going to get a bill passed. And I'm

confident. This often happens in the legislative process. It'll look like

it's very close, and then it falls apart, then it goes back together, then it

falls apart, and it has its own rhythm. They'll figure out how to do it in

the Senate, I'm pretty sure because failure's really not an option

on health care. This is a make or break issue for President Obama

and the Democrats in the Congress. I can't imagine some of the Democrats in

difficult districts going home and running for re-election in 2010 and saying,

`Well, I don't have a health care bill.' The president's top priority, it's

favored by 70 percent of the American people. So the people--American people

want it done, and some of these details are tough, but eventually they have to

be worked out.

HARWOOD: Speaking of the tough details, the public plan is one that's a big

sticking point.

Rep. WAXMAN: Right.

HARWOOD: And whether the Senate acts with bipartisan support or principally

or only Democratic support, there's still resistance to a new public entity, a

new public plan. If you look ahead to potential compromises with the Senate,

which is preferable from your point of view? A public plan that might be

triggered by some judgment of market forces, as in the Medicare prescription

drug plan that was passed? Or the kind of co-op approach, which is a

quasi-chartered, governmental enterprise, but not actually part of the


Rep. WAXMAN: In the prescription drug bill, there was a trigger that would

bring out a public plan, but that was based on the assumption that we weren't

sure that private insurance would be available to cover pharmaceuticals. And

if they weren't, then we would have a public plan step in. Well, we've had

private insurance plans, so we know that we'll get private insurance plans.

But many people want a public insurance plan.

A lot of people want a public plan to be able to choose as an

option because they don't trust the private insurance companies. After all,

these private individual insurance companies have been trying to exclude people

from coverage who might offer them a greater requirement that they spend money

on behalf of those people. They have pre-existing conditions that they've

used to exclude people. We won't allow that any longer. But I remember the

days when some plans who had to take whoever came in and wanted to enroll

would require people to walk up three flights of stairs in order to sign up,

which of course excluded a lot of people who couldn't make the trip up those

stairs. So some people want a public plan. But the public plan

we're talking about is one that will compete, not replace private insurance.

So if you want a public plan, you can sign up for it. If you want a private

insurance that's a health maintenance organization, you'll have that choice.

If you want a private preferred provider organization, that would be another

choice. If you want a fee for service, you can choose that. We want to give

people choices and in the result, competition will help lower the prices and

make the systems more responsive.

HARWOOD: But if a trigger or a co-op is necessary to get the votes in the

Senate to get this done, you'll go along with that?

Rep. WAXMAN: No, I didn't complete my thought. A trigger, while it

made some sense in the prescription drug area, would make no sense here.

It's got to be an alternative from the beginning. Otherwise, we don't know

what event will trigger it and then you suddenly have to get it started.


HARWOOD: So could you live with the co-op?

Rep. WAXMAN: Well, I don't know if we could live with the co-op because I

haven't really looked at the co-op. And that's not what we want as we're

working on

HARWOOD: But you're not ruling out the co-op?

Rep. WAXMAN: I never want to rule out absolutely anything, but I do believe

this. I can't see a health reform bill passing the House without a public

plan in it. And while the Senate is having difficulty agreeing on a public

plan or an alternative, we have to be mindful of their concerns, but they have

to be mindful of our political imperatives as well.

HARWOOD: Let me ask about pay or play, which Republicans are very

concerned about. Chuck Grassley in the Senate said no bill with a mandate on

employers can pass, can attract Republican support in the Senate. One of the

things that you can play with on the employer mandate is the size of the firms

that would be required to participate. What is the right level in terms of

employees for you? Is it anybody with 25 employers, or could you compromise

by going up to say 500 employees?

Rep. WAXMAN: We need to say if you have insurance at your job, you can keep

it, and we want to encourage employers to continue to offer health insurance.

But if employers are not offering health insurance for their employees, they

ought to pay in some money so that their employees can go into this exchange

and get a health insurance policy. Now, we're very mindful of the impact on

small businesses and we're going to exclude some of those small businesses,

then we're going to give tax credits for those who step up to the plate and

provide money to help their employees get covered. Exact numbers, we really

haven't decided. But we're mindful of the burdens.

HARWOOD: That's another area of potential compromise with the Senate?

Rep. WAXMAN: Well, everything will be open to compromise once we get our

bill and they have their bill. But no compromise is going to work unless it

can pass both Houses.

HARWOOD: Speaking about compromises, the issue of taxes is one that

Everybody is focused on. You have been brooding about issues like a

surtax on high-income individuals, soda taxes, other related taxes. In the

Senate, there's a lot of focus right now on taxing employer-provided benefits

at some level. And the administration has indicated the president is open to

that idea. Is your resistance to that a bargaining position? Is it something

that you think the House is simply ideologically strongly opposed to, or is

this an example of where the Democrats in the House are doing the bidding of

labor unions in resisting that step?

Rep. WAXMAN: The idea of taxing insurance benefits is quite controversial

because a lot of people will say, suddenly, I'm going to get to keep my

insurance policy but I have to pay more taxes to be able to stay where I am.

And that's troublesome to a lot of people. The labor unions are not happy

about it because they fought for benefits for their employees, and now their

employees are going to have to pay additional taxes in order to keep those

benefits. President Obama campaigned against that idea. It was part

of the proposal that Senator McCain had put forward. So it's not without

controversy. But I have to believe that everything's on the table. But for

discussion--but that's not going to be in the House bill. And the way it

looks right now, it may not be in the Senate bill either. A number of

senators wanted to put it in but a number of senators said that's a red line

for us. So if we keep on having people draw red lines, we can't have this

tax, we can't have that plan, we can't have these employers required to do any

responsibility for their employees, we can't require people to get insurance,

you could keep drawing enough red lines and then when you're through, there's

no ability to get a bill passed, and that's counterproductive and going to be

very self-defeating for everybody who really wants a bill.

HARWOOD: You made a series of compromises along the lines that you're

discussing to get the climate energy bill through the House. Some people are

now taking to criticizing those compromises, and there was a columnist who

came out with a piece today who said the Waxman-Markey bill should be

euthanized because it's been drained of revenue because of the allocation

being given away and it's created a political favor-trading system for certain

industries getting allocations. What do you make of that criticism?

Rep. WAXMAN: I haven't read that column, but it's easier to write a column

criticizing legislation than to pass legislation. We had three goals in the

energy climate bill. One was to make this country more independent from

having to bring in foreign oil. It's a national security imperative. The

second objective was to create all the new jobs that we're going to have in

this country if we push in the direction of developing new technologies and

giving an incentive for investments in holding down the carbon emissions. And

of course, the third is the carbon emissions to be restricted so that we don't

have the terrible consequences of global warming, which some scientists are

telling us if we don't act soon enough, may be irreversible damage. So those

are three worthwhile goals. We achieve them in a way that provided for

transition in the economy, we didn't want to put any region of the country at

a disadvantage, yet we wanted to achieve the reductions of--from carbon and we

wanted to make sure that we can get new investment and jobs. We had support

from that--for that legislation from the business community, from the

utilities, from the auto industry, from a lot of industries in the past that

would never had signed on with the environmentalists. And the

environmentalists, such as NRDC and Sierra Club and Environmental Defense

Fund, supported the bill as well. So we needed a broad coalition of business

and environmentalists and labor unions and we got it, and it had the backing

because it was a compromise that recognized that we couldn't just do this one

way and not the other, we had to bring in a lot of different factors.

HARWOOD: Let me ask you about what you see as the end game there. My

conversations with administration officials and some in Congress lead me to

think that it is generally believed to be much more realistic, though still

tremendously difficult, to get a health care plan enacted into law than it is

to get the cap and trade idea enacted into law in this Congress. We saw at

the G-8 this week that poor nations resisted some of the targets that

developed countries--or developed countries rejected targets that developed

countries wanted them to hit. Senator Boxer has now said she's going to delay

her effort to mark up this legislation. Is it the case that the bill that

you've now passed in the House is, in fact, the achievement for the Obama

administration to take to Copenhagen, and we're not going to see legislation

through the Senate and signed into law on cap and trade in this Congress?

Rep. WAXMAN: Well, I want to see a law passed, both on energy and on health

care, by the end of this year. Those are two of three main domestic

priorities for the president of the United States, the third one being

education. So we need to work to accomplish those goals. And some people

have raised this issue about the developing countries saying they're not happy

about it. Well, we're not passing this law for them, we're passing this law

for our own national security reasons to be independent of Saudi Arabia and

the money flowing into Iran to be used for nuclear weapons and other countries

that we have to rely on who keep us addicted to that oil. We want to move away from that addiction and use alternatives. And then we're also

doing this because we need jobs in this country, and this legislation will

provide more jobs. The business people that supported the bill did so because

they want to know what the rules are so they can make their investments. And

that's why they supported it. And as soon as this bill passes, we'll see a

stimulus to our economy in the private sector that could be as helpful as

anything that's done from the public sector and maybe even more so.

HARWOOD: But what tells you that given the regional differences that exist,

within your party, on an issue that you don't have the option of

reconciliation? What is it that you know about the Senate that tells you that

they can actually pass a cap and trade program even along the lines of what

you passed in the House?

Rep. WAXMAN: On the energy bill, we framed it to overcome some of the

regional differences. We didn't want the people in the Midwest to be hit

harder than other places in the country because they burn coal. And we took

that into consideration and we said the utilities will get the free

allocations to use for the purpose of holding the rate payers for electricity

harmless from the increases. We did this to balance out concerns. We did

other things as well. The premise of the bill is to get renewable fuels as

part of the electricity portfolio, greater efficiency and market system to

drive the technology for greater reductions across the board.

HARWOOD: You're persuaded the Senate can pass it?

Rep. WAXMAN: Well, I'm persuaded that unless you push things forward and

try, you can't succeed. And people said we wouldn't be able to get this out

of our committee and we passed it out of committee. And people said certainly

we couldn't pass it out of the House, and we passed it out of the House. Now

they're saying, well, maybe they did it out of the House, but how can they

possibly do it in the Senate. Do you think senators care less about our

national security or global warming or trying to create jobs for our people?

I disagree. It's going to be a heavy burden to do things but what President

Obama said in his campaign and as president, he wants to bring about big

changes, not just work around the edges but do something that's going to make

a huge difference for this country. And that's what I'm trying to do as a

member of Congress to work with him to help accomplish.

HARWOOD: Last question. Let me just ask you about the economy.

Unemployment's 9.5 percent, rising. The president says it'll go over 10

percent. The administration believes that the stimulus plan will work and the

economy will recover, but there's a lot of concern among the American people

about spending, about unemployment, about deficits. Do you think that it is

appropriate to have a second stimulus package for the economy and is it

politically achievable?

Rep. WAXMAN: It may well be necessary for us to get a second stimulus bill.

I don't know the answer to that. I want to hear what economists have to say.

But it drives home the point that we should be running up deficits only for

emergencies like a recession/depression, only if there's a war, not to give

tax breaks to rich people, which is what President Bush did. He took a

balanced budget and put it into deficit to pay for tax cuts for the people who

needed it the least. And now that we have that deficit, we're forced to add

additional deficits for things that are needed.

HARWOOD: Do you think a second stimulus could get the votes to pass?

Rep. WAXMAN: If economists tell us it's needed, as economists across the

board--even Martin Feldstein said we needed a stimulus bill the first time

around, that President Obama pushed for it and got it, I think the votes will

be there. You know, President Bush had to force for votes for the TARP, the

bailout for the banks. People didn't like it but what choice did we have if

the economy was going to go over a cliff? So those are the things that have

to weigh on our minds.

HARWOOD: Final question, briefly, do you favor--and will it be part of the

House health bill, a tax, a surtax on the highest income Americans to pay for

health care reform?

Rep. WAXMAN: I want to see what the Ways and Means Committee proposes.

We're going to try to hold down costs in the health care system as much as

possible to help pay for the costs that we're going to incur. We're saving

some money, we're spending some money. But by bringing in a lot of new people

to make health care affordable, we're going to have to help them get health

insurance and pay for it. But if we bring everybody into the system, we'll be

able to hold down costs. Otherwise, all we do is shift costs from the public

side pushed over to the private side.

HARWOOD: But is the surtax at least an option?

Rep. WAXMAN: Well, they will be. I'm not--I'm going to reserve judgment

until I see the Ways and Means proposal. It certainly is consistent with

President Obama's pledge not to raise taxes on middle and lower income people.

I want to work something else in this.

HARWOOD: Sure, go ahead.

Rep. WAXMAN: A lot of people look at government and Congress and said, `Oh,

government does no good and Congress does nothing worthwhile.' I just wrote a

book called "The Waxman Report: How Congress Really Works." And the two

points of that book, and we use a lot of anecdotes to illustrate it, is that

government can be a powerful force for good for millions of Americans, and we

hear about the scandals in Congress but we don't hear enough about the times

that we do work together on a bipartisan basis and pass laws that turn out to

even be more successful than ever expected. And I think that after we pass

this energy bill and after we pass this health bill, somewhere down the road,

maybe five or 10 years from now, people will say, `How did it take them so

long to do that?' We get the value of greater independence for the our

country, we get more jobs, we reduce greenhouse gases. That's a worthwhile

thing and why did it take them so long to get there? And for national health

coverage, holding down health care costs and making it available to everybody,

people will say, `Did you know at one time in the United States of America, we

spent more money for health care than any other country in the world and we

had 46 million people uninsured and people who were insured couldn't get their

care? Could you imagine such a thing? Well, thank God that we don't have

that anymore because of President Obama and the Congress,' hopefully on a

bipartisan basis.

HARWOOD: Mr. Chairman, thanks so much for joining us.

Rep. WAXMAN: Thank you.

About CNBC:
CNBC is the recognized world leader in business news, providing real-time financial market coverage and business information to more than 340 million homes worldwide, including more than 95 million households in the United States and Canada. The network's Business Day programming (weekdays from 5:00 a.m.-7:00 p.m. ET) is produced at CNBC's headquarters in Englewood Cliffs, N.J., and also includes reports from CNBC news bureaus worldwide. Additionally, CNBC viewers can manage their individual investment portfolios and gain additional in-depth information from on-air reports by accessing

Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at