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NEAL CONAN, host:

This is TALK OF THE NATION. I'm Neal Conan in Washington. Sanford's slapped on the wrist in South Carolina, Mr. Franken comes to Washington, and Governor Palin's plans to bow out. It's Wednesday, you betcha, and time for another edition of the Political Junkie.

Former President RONALD REAGAN: There you go again.

Former Vice President WALTER MONDALE: When I hear your new ideas, I'm reminded of that ad. Where's the beef?

Former Senator BARRY GOLDWATER: Extremism in the defense of liberty is no vice.

President RICHARD NIXON: You don't have Nixon to kick around anymore.

Governor SARAH PALIN (Republican, Alaska): Lipstick.

President GEORGE W. BUSH: But I'm the decider.

(Soundbite of scream)

CONAN: NPR political editor Ken Rudin is in Aspen, Colorado, this week and posted his trivia question on the Political Junkie blog at npr.org. So Matt Bai, who covers politics for the New York Times Magazine and a pin-striper like Ken and me, joins us to pinch-hit.

Vice President Joe Biden takes a quick trip to Iraq and returns in time to swear in Minnesota's junior senator. Illinois's Lisa Madigan will not run for the state house or the Senate. And we'll talk with former White House chief of staff John Podesta as Congress prepares to walk into the political minefield of health care.

What's most important to you in the health care debate? Liberals, are you willing to tax health benefits if that's what it takes to get a bill? Conservatives, are you willing to create a public plan? Give us a call, 800-989-8255. Email us, talk@npr.org. There's also a conversation at our Web site. That's at npr.org. Click on TALK OF THE NATION. Matt, nice to have you with us today here in Studio 3A.

MATT BAI: Always good to be here, Neal. Good to see a fellow Yankee fan, as always.

CONAN: And we have to begin with Sarah Palin, who dropped her bombshell on July 3rd, and has since spoken about why quitting her job as governor two-and-a-half years into her term isn't quitting. Yesterday, she explained her decision to ABC News.

Governor SARAH PALIN (Republican, Alaska): You know, I'm going to just muster through a lame-duck session, sure, we won't get anything done but kind of milk it. This is what most politicians do, I guarantee you. I don't need a title to be the one to usher in what it is that needs to be done in our states and in our country.

CONAN: Soon to be former governor of Alaska, Sarah Palin, speaking with ABC News in Alaska yesterday. And Matt, Machiavellian genius or what?

BAI: I don't know. You know, the truth here is, Neal, I don't think anyone knows. I don't think she talks to national consultants. I don't think she has a big coterie of advisers in Alaska. I think she kind of flies solo on this stuff and goes with her gut. And I thought, you know, this quote you just heard, this to me is the most amazing thing, both the initial announcement and the subsequent interviews, this thing that says, well, if you stay in office until the end of your term, you're just milking it, you know, from the public, as she puts it.

This is the conservative argument taken to its extreme, right? This is even to serve in government a minute longer than you're absolutely needed is a betrayal. Somehow to stay in office is a betrayal of the public trust. This is sort of the bizarro world of the conservative argument, to me.

CONAN: And you hear a lot of people saying, look, she's realized political reality in the twenty-teens, and that is you can't be in office and run, sort of overlooking the fact that the last four people on the national ticket were three serving senators and a serving governor.

BAI: Yeah, I mean, it could be that you gain a benefit. Here's the thing I have not heard people talking about but that I think is relevant. I don't know. Again, I don't - it's not like I talk to Governor Palin, but Alaska's different.

Alaska's not Illinois, Texas, anything on the mainland. My guess is that if you sit down and figure it out, if you want to run for president, for the governor of Alaska, you can't slip out of the state unnoticed for a day. You can't slip out of the state without spending an awful lot of money. It's really geographically isolated, and for that reason, she may actually have more logistical issues with running for president as governor of Alaska than other governors or senators do. And they may well have determined that - no one's ever tried to do it from Alaska. They may well have determined - except maybe Mike Gravel - that running for president from Alaska, you know, quietly and in a way, in the methodical way you need to do it now, early in the cycle, is next to impossible to do.

CONAN: There's a new USA Today-Gallop poll out today that says her announcement improved her standing with Republicans. So we shall have to see, although independents, by a margin of 55 to 34, would prefer that she leave national politics completely. Again, we're going to have to see where all of this goes.

In the meantime, we finally got resolution of the never-ending Senate race in Minnesota. And now Senator Al Franken arrived in town to be sworn in yesterday. November 4 seems like it was just yesterday.

BAI: It's kind of amazing, isn't it? I mean, sometimes - you know, we've had stretches like this before in American politics and even recently, and you go without someone in office for a while, usually, you know, you miss one or two things. I mean, when you think of what the state of Minnesota missed in the last six, seven months in terms of important, critical votes in the United States Senate, it's really quite remarkable.

CONAN: Mark Sanford, who would have believed that Sarah Palin is leaving her governorship, and Mark Sanford is still in his?

BAI: Yeah, I mean, you know, to the extent that Sanford was really ever in trouble here, it was in the old political adage of, if you're going to get out bad information, just get it out all at once. Don't do the dribs and drabs, okay, well, maybe I cheated more than once or maybe I did this or that. But at the end of the day, you know, I just don't think - sex isn't what it once was, and nor should it be, I think, the private lives of our public officials.

The fact that he left the state, disappeared, the fact that he's been sort of a family values crusader, all of that is relevant. There's always character issues. There's always hypocrisy issues, but I don't think that by itself is enough to get you bounced from office very easily these days.

CONAN: Another announcement today. Lisa Madigan, the attorney general of Illinois, announced that she plans to run for re-election to that job and not run for either the U.S. Senate seat, Barack Obama's old seat, or the governorship. She was touted for both, including by the White House.

BAI: Yeah, I mean, your gut tells you this is a smart move. I'm not going to pretend to be into the arcana of Illinois politics here, but given what's going on in Illinois, the mess that that state is in, and the Democratic Party in particular, you would think this is a pretty good moment to be an outsider in Illinois politics. You would not think this is the moment to be a power broker, whose father was a power broker, you know, running for a contested seat, no matter how good the polling is, no matter how much larger she loomed above the field. And I think it's probably a wise decision to step back, for whatever her reason was, simply given the climate toward insiders in Illinois right now.

CONAN: And just as a reminder how tough a climate it is for insiders, the last chief of staff to the previous governor of Illinois, Rob Blagojevich, his name is John Harris, agreed to plead guilty today to charges that they conspired to sell that U.S. Senate seat.

BAI: Yeah, nothing stunning there. At least he doesn't - at least he wasn't asking for a break so he could go on a reality TV show and swim with snakes or whatever it is Governor Blagojevich wanted to do, and ultimately his wife did. But it's a sorry chapter for a pretty proud state, and I suspect it's going to have reverberations for a long time, and if I were a Democrat, I'd be nervous, even in the current environment.

CONAN: The trial isn't scheduled to start until next June. So this is going to be around for a long time.

BAI: Perfect.

CONAN: Yes, indeed. Anyway, let's talk about the politics of health care. You wrote a really interesting piece about this in the New York Times Magazine just a little bit ago.

BAI: Thank you.

CONAN: And among the things you wrote was that the White House is determined on a very pragmatic basis to get a bill. Success is what they are focused on.

BAI: Yeah. They don't want to go down the same path that other administrations have gone down, particularly that the Clinton administration did. They don't want to set out hard-and-fast rules and parameters and then get into fights over it in the Congress. They don't want to dictate the terms of a bill. They don't want to get so stuck on a couple of principles that they can't find their way to a compromise.

They want success on health care that's acceptable to a broad range of people. And I think that's, you know, as Rahm Emanuel says to his staff, that is the non-negotiable principle here is success.

CONAN: Success, but success as defined by acceptable to a broad range of people. Does that mean, as the president continually says, and said most recently in Moscow, that that means there's got to be a public plan?

BAI: Well, they've certainly said they want a public plan. They are not married to it. It certainly sounds like they've backed away from it as any kind of requirement. There is now a popular - or an idea taking hold that's popular among centrists that might push it down the road a little bit. Right, you start out without it, and if turns out the private market can't do what you need it to do, you can implement a public plan.

This is obviously, you know, a big issue between the president and his left flank, right, the liberals who are his great supporters, who see this as an important gateway toward a larger government role in health care and who think it's critical, ultimately, to holding down the costs.

CONAN: And at the same time, we hear reports that Harry Reid, the Democrat from Nevada and the Senate majority leader, has instructed Max Baucus, who's the chairman of the relevant committee, to stop looking for Republican votes on this. We're losing more Democrats by proposing to tax health care benefits than we're picking up Republicans.

BAI: Yeah, that's an interesting argument. I mean, I have felt for a while that what they're doing in the Finance Committee is absolutely the most critical thing happening here in this whole process.

There are a couple of bills out there now. You know, there's another one in the Senate. There's a couple in the House, but I think - and they're going to reconcile all this, but you know, this is the only place in Washington right now where Republicans and Democrats, powerful office-holders, are sitting down and trying to find a compromise, something that can pass with both parties, meaning some number of Republicans and a bloc of centrist Democrats.

If they can't get a deal in the Finance Committee that's acceptable to a broad range of senators, I think they are going to have a perilous time, not an impossible time but a perilous time, trying to pass a bill.

CONAN: Well, in a few minutes, we're going to talk with the former White House chief of staff, John Podesta, about this. But basically the question we're asking today is: What would you give up in order to get a bill. That's the White House's goal. Liberals, would you tax those health care benefits? Conservatives, would you accept a public plan? 800-989-8255. Email us, talk@npr.org. And Mary(ph) is on the line, Mary calling from Augusta, Georgia.

MARY (Caller): Yes, sir.

CONAN: Go ahead, please.

MARY: I wanted to say that I'm very much in favor of a public option. I live and work in two states. They're 600 miles apart, but I have my health insurance in one of the states. If I happen to get sick in the other state, I'm not covered, excepting out of network.

If there were a public option, I could get ill, and even though - I'm willing to pay, you know, the premium, it's just that I think I should be able to go anywhere in the nation and if I get sick, be covered.

The other thing is my daughter taught in Greece for five years, and she got sick, and she got strep throat, and the resident who lived in the little village where she was teaching came to her apartment, treated her, gave her the antibiotics, and they didn't charge her, even though she wasn't a Greek. And if they can do that in such a poor country, surely we, the richest country in the nation, can provide basic and preventive health care for everyone who lives here.

CONAN: Mary, if the opposite side of that is okay, then those people who get health care benefits through their companies, if there's generous benefits, they have to pay taxes on them.

MARY: That's okay. I pay my taxes. I'm fine with that.

CONAN: All right, Mary, thanks�

MARY: I believe that everybody should have health care and that we're paying bonuses to companies who are denying people service. We're not going to end up paying any more in the long run. Some of us may end up in different jobs, but that's still okay. We're smart people. We can do this.

CONAN: Well, that's going to be the argument, Matt Bai, that's going to be on the floor of the Senate and indeed the House of Representatives and on all the talk shows for the next couple of weeks.

BAI: It is. I mean, this is a political - this is a fight over what the political reality. I think there's a broad consensus in the Democratic Party for a public option. The issue here is that Republicans aren't going to vote for it. They've basically said it's a non-starter. Republicans on the Senate Finance Committee have said it's a non-starter.

Now, you can go ahead and try to pass one anyway, but you've first got to get enough centrists Democrats not to desert who feel that there needs to be a bipartisan plan. And Senate Baucus is one of them. He has said this has to be done in a bipartisan way, otherwise it's not sustainable. And then assuming you can get those Democrats onboard - I don't know that you get enough of them to avoid sort of reconciliation, which is this process by which you sort of have to ram it down the Republicans' throats.

CONAN: In other words not needing 60 votes, needing 51 votes.

BAI: Exactly, only needing 51 votes, and that, by the way, opens it to a lot of procedural issues. It means you can challenge various points of it, too. So it's very complicated on the legislative level.

CONAN: We'll be talking much more about how much Republicans matter, should they matter, when we come back after a short break. Matt Bai is our guest Political Junkie today. And when we come back, we'll be talking with John Podesta, who served as chief of staff under President Clinton, the last time health care dominated the debate in Washington. Stay with us. I'm Neal Conan. It's the TALK OF THE NATION from NPR News.

(Soundbite of music)

CONAN: This is TALK OF THE NATION. I'm Neal Conan in Washington, and no, that's not Ken Rudin's voice you've been hearing. He's in Aspen this week, but the Political Junkie show must go on. Matt Bai is pinch-hitting as our guest junkie, as he does from time to time. He's political writer with the New York Times Magazine, and we're taking up the topic of health care today.

Vice President Joe Biden said today an overhaul is on track and added we must and we will enact reform by the end of August. Republicans and Democrats agree the current system is broken, that change is needed, but so far at least, they cannot agree on details.

So what's most important to you? Liberals, are you willing to tax health benefits if that's what it takes to get a bill? Conservatives, are you willing to create a public plan? 800-989-8255. Email us, talk@npr.org. You can also join the conversation on our Web site at npr.org. Click on TALK OF THE NATION.

And joining us now to talk more about politics and health care is John Podesta, White House chief of staff under President Clinton. He's now president and chief executive officer of the Center for American Progress, a left-of-center think-tank, and John Podesta joins us from the Omni Shoreham Hotel here in Washington. Nice to have you with us on the program today.

Mr. JOHN PODESTA (President and Chief Executive Officer, Center for American Progress): I'm glad to be with you.

CONAN: And the progress could be - I think Matt Bai described it in his piece in the New York Times Magazine - we're talking about labyrinthine.

(Soundbite of laughter)

Mr. PODESTA: The Center for American Progress is labyrinthine, or the progress on health care is labyrinthine?

CONAN: Well, perhaps both, but�

Mr. PODESTA: So we're going to - because Matt's written about our place - but look, the challenge of getting this health-care reform bill done so that everybody has affordable, quality health coverage and that we lower the overall cost of health care has been a project that's been going on since the Truman administration.

So it's a tough deal. I know that. I served in the Clinton administration. But I think President Obama has made tremendous progress in moving the ball forward and in getting everybody to the table.

This morning, the Hospital Association announced its agreement to cut costs by $155 billion - that Vice President Biden announced. Last week, we saw the pharmaceutical industry come to the table.

So look, these are tough compromises, but I think that you see progress moving forward in both the House and Senate. I'm optimistic that a bill can get done.

CONAN: By August?

Mr. PODESTA: I think that we'll see, certainly see action in the House of Representatives before the August recess, and I'm hopeful that we'll see action in the Senate and a bill produced in the Senate that will pass before the August recess.

CONAN: And would you think that any bill will have to include a public plan?

Mr. PODESTA: Well look, I think that the president has stated that he wants a public plan. In my view, a public plan is an important option for the American public. It'll help control costs, reduce costs. If you look at just the administrative costs, Medicare spends about three percent on administrative costs. The average private health-insurance plan spends about 20 percent.

So you're eliminating a lot of red tape with a public plan. But you know, there are a variety of ways to do it, and I think there are ideas on the table from doing it at a state-based to a national-based plan. So I think there's room for discussion and compromise, and I hope that a very strong, robust public plan is included in a bill that emerges from the Senate. As I said, I'm quite confident there will be one coming out of the bill that comes out of the House.

CONAN: A bipartisan bill? Are any Republicans going to vote for this?

Mr. PODESTA: You know, I think that - that's the $64,000 question in Washington today, which is will - can the Finance Committee - I know Matt was just discussing that - can the Finance Committee forge a bipartisan compromise that produces enough votes so that you legitimately could say this is a bipartisan bill. And I think the answer to that is, you know, we don't know the answer to that as we speak.

I think that Chairman Baucus has made heroic efforts to try to talk to Republicans, to bring them to the center. But you know, frankly if the compromise is going to be pass the plan that John McCain put forward in the campaign, we had an election. Elections ought to count for something.

So I think that there is sort of a give and take about what is going to be acceptable to produce a result that I think the president would feel comfortable signing, and right now they're in negotiations. I think that there are a number of Republican senators who could be convinced to support a strong bill that provides much more substantial coverage, the bulk of the uninsured Americans in this country, at a price that the country can afford and that's paid for. And so the details - I think the Finance Committee is the place where, if there's going to be a bipartisan compromise forged, it will be in the Senate Finance Committee, but there's another path forward, which is to try to move forward with just a few Republicans votes or perhaps even none at all.

CONAN: Let's see if we can get a caller on the line, 800-989-8255. Let's go to Nathan, Nathan with us from Shelbyville in Kentucky.

NATHAN (Caller): Gentlemen, let me give you a first-hand account of this public health care. I was in Russia and had a really terrible skateboard accident. I broke several teeth and couldn't move my arm, and my Russian friends took me to the free public hospital.

There was no lights in the building, water standing on the floors - waited in line. They X-rayed my arm, told me nothing was wrong, and they looked at my teeth and said they really couldn't do anything there.

So I had to go across town and pay for a private health-insurance or health provider for them to pull out some teeth. Came back to the States, and several months later, didn't do anything about my arm, finally just had to go to the hospital, and they found my wrist was actually broken.

While I was there, other people had�

CONAN: Well Nathan, don't you think that's an extreme example of a public health care plan, that we might be able to do it better than Russia?

NATHAN: I don't know. I don't know. I'm just giving one first-hand example, and that's the way it was there. And I've heard other stories that point to the same. I don't see other programs, such as Medicare, which is run by the state, doing much better. And I think what we're doing here is just creating this huge, uber-government that controls everything, and it scares me to death. I've seen it in China. I've seen it in Russia. I don't like the direction our country is going.

CONAN: Matt Bai - well go ahead, John Podesta. I'm sorry.

Mr. PODESTA: Yeah, I think that if you ask people over 65 whether - how they feel about Medicare, they're very happy. You know, they're very happy about it. They're very satisfied with it, and I think to compare Medicare to the Russian medical system is the kind of scare tactics that, you know, sometimes prevail in this country. But I think what the president is looking for is not a nationalized program but one in which a public plan is a choice that people have available to them.

If you like your private health insurance, you can keep it. If you need access to a public option, then you have it. So I think it's an overblown and overstated argument.

NATHAN: My question, then, is: If you have a public option, how can a private health care insurance, which has to have so much more overhead, how can that even compete? It can't compete. What you're doing by establishing a public option is eliminate the private option.

CONAN: And that's, Matt Bai, the argument you're going to hear from Republicans. Creating this public option, the thin edge of the wedge, inevitably you're going to end up with a government-run, single-payer health-care program like, well, we'll avoid Russia for a moment - Canada.

BAI: Well, you really shouldn't skateboard on ice, by the way. It's a bad idea.

(Soundbite of laughter)

BAI: It's always icy in Russia, and you shouldn't bring your skateboard. I'm sorry to hear that story. Yes, that is not just the conservative argument, but I think John would admit there's a lot of liberals who feel the same way, and that's why they're excited about the public plan because they think it is a gateway to getting the single-payer system that they very badly want, and I hear from many of these people, you know, as you write about this.

But look, this isn't only - this public-option deal, and I think John would agree with this - this isn't only about getting Republican support writ large. In other words, I don't think you're ever going to get a whole legion of Republicans to vote for this thing. Let's be honest. There's a couple of Republicans in play, and beyond that, they're not going to give you that.

CONAN: You're having with Ben Nelson. You're having trouble with some Democrats.

BAI: Exactly. The question is: In the centrist bloc of Democrats, and they are very influential in the Senate, how many of them will not vote for something if there are no Republican votes? Or how many of them, if they can get two or three Republican votes on something, will they be swayed to go along as part of a, you know, a centrist coalition. That's the question here.

You can do this through reconciliation, which is again this arcane, this sort of maneuver you can use with 51 votes, and there are a lot of Democrats, I think, probably listening to this who say well, why don't you? As John says, you won the election. You got the votes. Just use it. Right, that's what the Republicans would do.

But Chairman Baucus raises some really, I think, interesting concerns about this: one that is has to then be re-authorized, it's not permanent; two that it's open to all kinds of procedural maneuvers when you're debating it that could strip it down, he calls it a possibility for a Swiss-cheese bill; and three, that it could politically really come back to bite you. So I think for all those reasons, that's not so easy to do.

CONAN: Let's get another caller on the line, and let's go to Carolyn(ph), Carolyn with us from Hamburg in New Jersey.

CAROLYN (Caller): Hi, yes. Thank you for taking my call. I'm a teacher, and one of the things that we have as one of our benefits is to have a really wonderful health-care program, but it costs the taxpayer a tremendous amount of money.

So if we had a public option, the taxpayer in fact would save if all the public employees had their benefits through the public option rather than the very, very expensive options that we have as - in the private sector.

CONAN: And again, thank you very much for that, Carolyn, but again, John Podesta, that's the argument. All of these people are going to run to the public policy plan, and you're going to end up with, well, the opposition will call it socialized medicine.

Mr. PODESTA: Well you know, it's interesting that people take one more choice and competition, and convert that, you know, into socialism. I think that if the private sector really can compete, deliver a better product at a cheaper price, then they ought to be able to compete against, you know, this - the government that's providing its option.

And I think, you know, for example, I think the caller raises an important point, though. There are different ways to construct the public plan. One of the things that a bipartisan group, lead by Senator Daschle, Dole and Baker produce, was do it at the state level and let people, essentially, buy their way into the state employees plan. So I think there's room to talk, there's room to compromise, there's room for Republican ideas.

I think - I agree with Matt, that it would be better, it'd be more stable if you could find some bipartisan support. But I think that, again, you can't decide to fold the tent if there's nobody on the other side to talk to. And I think that's what's really being explored at this moment, which is - will there be legitimate compromise, honorable compromise, that can produce a good bill that will lower cost for the average family, that will lower cost for the government over the long-term, and that will be paid for in the short-term, and that will produce better delivery of medicine.

You know, the dirty little secret in America is that we're - not only do we pay twice as much for health care, but we're like 28th to 29th in terms of public health outcomes compared to other industrialized countries. You know, you could - earlier caller took the example of Russia. But if you look at other countries in Northern Europe and in the other parts of the developed world, they're getting - they're not just getting lower prices, they're getting better outcomes for their public across the board.

CONAN: You still have an awful lot of Canadians coming across the border to get elective surgery that they would have to wait a very long time for in Canada.

Mr. PODESTA: Well, you know, I think there is some of that, and you have to adjust to that. And I think, again, we want an American system which permits people to have the choice of buying whatever elective surgery they want. But on the other hand, I think most people today feel like they're a job loss away, they're an illness away from getting knock off their insurance company. So their health insurance here is quite fragile. And I think that for many, many Americans, the system clearly isn't working. It costs too much and it's not producing the kind of results that are keeping them healthy.

I think refocusing the system on wellness, on disease prevention, disease management, the things that the current insurance system don't do a very good job of will produce, you know, healthier lifestyles and healthier American public and at a lower cost. So this - look, this has been a project that's going on for a long time. Seventy-five percent of the American people support the public plan. And clearly, that many support a comprehensive health reform. So the question is, does the political system, can it kind of overcome special interests, can it overcome inertia, and produce something, hopefully, in a bipartisan way?

CONAN: Former White House chief of staff, John Podesta. Also with us, guest Political Junkie Matt Bai.

You're listening to TALK OF THE NATION from NPR News.

And let's talk with Donna. Donna with us from White Lake in Michigan.

DONNA (Caller): Yes. Hi. How are you this afternoon?

CONAN: I'm well. Thank you.

DONNA: First thing, let me tell you right upfront that I am an insurance adjuster and have been with the industry for a very long time. So - but that said - also, by the way, when you listen like this, you get additional questions. But your gentleman from Russia�

CONAN: Yeah.

DONNA: �he can try going someplace where he can actually get the electricity to turn on, and Russia is not one of those places. I had a friend who had a very difficult injury in England and received the best topnotch care available anywhere in the world. So I think the Swiss and the English and the Canadians might disagree with them somewhat. My personal question, though, was, whose crazy idea was it to consider the possibility of taxing health care benefits?

CONAN: Whose crazy idea was that, Matt Bai?

BAI: I don't know whose crazy idea was, immediately. I mean, John McCain talked about it during the campaign, so it could be his�

DONNA: Oh, that figures.

BAI: There you go.

DONNA: Oh, okay.

BAI: It could be his idea. But - and the president was against it then. Although, I think John McCain - this gets confused. He was talking about something, I think, slightly different. He was talking about the employer benefit, which most people fear would immediately - if you were to take away that exemption - would immediately unravel the employer-based system because employers would say, well, I can't afford to offer coverage anymore, et cetera.

What we're talking about here is something a little different. It's about people who get what they call, sometimes, Cadillac plans - high value medical benefits. And if you got benefits over a certain value, which are effectively income from your employer, which�

CONAN: Which could be regarded as income. They're not now.

BAI: Well, they're not regarded - they're not taxed as income. But if it's an exemption, it is income. You would be taxed at some level. And the reason they're kicking around this crazy idea, Donna, is that we got to pay for this thing. And it could well run, depending on how many people you want to insure, to over a trillion dollars, and that's a real a lot of money. And we can't just print it like some, you know, Latin American countries might. So, because that's (unintelligible) enough.

DONNA: They're not talking, then, about the consideration of taxing the benefit. And when I talk about the benefit in terms of the insurance industry, I'm talking about something that the insurance carrier is paying to an insurer. And that when you talk about�

CONAN: No, this would be paid by the�

DONNA: �taxing the benefit�

CONAN: �by the individual who gets the so-called Cadillac plan.

BAI: This is effectively a tax hike�

DONNA: Okay. You're talking about an increased employment benefit.

CONAN: Yes.

BAI: This is effectively a tax hike for people who get very good medical benefits plans on which they currently pay no taxes. (Unintelligible)�

CONAN: For an administration which promised not to raise taxes on middle-class (unintelligible).

BAI: And it - well - but it might not be on middle-class. We don't know - I don't know the structure of it. John may know better. I mean, they can cut that off in an income level if they want. They can cut that off in a benefit level.

However it is, it's not going to be aimed to everybody. It's going to be under a certain level of (unintelligible).

CONAN: And, John Podesta, we just have a minute left. But paying for this, that's the other part where the devil is in the details. This has to be a relatively budget neutral, no?

Mr. PODESTA: I think it absolutely has to be budget neutral. I think we already have, you know, seen the president inherited a deep budget deficit as a result of the recession that's gotten worse. And he's - and we need to, you know, dig our way out of that.

So I think one of the things - one of the markers the president's been very clear about is that whatever we do, it has to be paid for. And so, you know, that's a challenge, but it's not one that is impossible to meet.

We've just - my center has put out a new analysis showing how the possibilities of doing that using savings from the traditional Medicare system, some increased taxes, and that could be done in a variety of different forms, including some sin taxes on tobacco and alcohol and other things, as well as the kind of options you've been talking about.

And then there should be tremendous savings from recovery, from delivery reform, which can be recouped and put back into the medical system so we get better health coverage at a lower cost.

CONAN: John Podesta, thanks very much for your time today. We appreciate it.

Mr. PODESTA: Thank you.

CONAN: John Podesta, former White House chief of staff and now the president and chief executive officer of the Center for American Progress. And we also want to thank guest Political Junkie Matt Bai, joining us here in Studio 3A.

We did get this email from Phillip. If you have mandatory coverage and no public option, then the government would drive you into the arms of the private insurers. We'll talk about that tomorrow.

This is NPR News.

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