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OBAMA: Right.

BAIER: You either spend it on expenditures or you make Medicare more solvent. So which is it?

OBAMA: Here's what it does. On the one hand what you're doing is you're eliminating insurance subsidies within Medicare that aren't making anybody healthier but are fattening the profits of insurance companies. Everybody agrees that that is not a wise way to spend money. Now, most of those savings go right back into helping seniors, for example, closing the donut hole.

When the previous Congress passed the prescription drug bill, what they did was they left a situation which after seniors had spent a certain amount of money, suddenly they got no help and they were stuck with the bill. Now that's a pretty expensive proposition fixing that. It wasn't paid for at the time that that bill was passed. So that money goes back into Medicare, both to fix the donut hole, lower premiums.

All those things are important, but what's also happening is each year we're spending less on Medicare overall and as consequence, that lengthens the trust fund and it's availability for seniors.

BAIER: Your chief actuary for Medicare said this, that cuts in Medicare: "cannot be simultaneously used to finance other federal outlays and extend the trust fund." That's your guy.

OBAMA: No — and what is absolutely true is that this will not solve our whole Medicare problem. We're still going to have to fix Medicare over the long term.

BAIER: But it's $38 trillion in the hole.

OBAMA: Absolutely, and that's the reason that we're going to have to — that's the reason I put forward a fiscal commission based on Republicans and Democratic proposals, to make sure that we have a long-term fix for the system. The key is that this proposal doesn't weaken Medicare, it makes it stronger for seniors currently who are receiving it. It doesn’t solve that big structural problem, Bret. Nobody's claiming that this piece of legislation is going to solve every problem that's been there for decades. What it does do is make sure that the trust fund is not going to be going bankrupt in seven years, according to their accounting rules —

BAIER: So you don't buy —

OBAMA: — and in the meantime —

BAIER: — the CBO or the actuary that you can't have it both ways?

OBAMA: No —

BAIER: That you can't spend the money twice?

OBAMA: — no, what is absolutely true and what I do agree with is that you can't say that you are saving on Medicare and then spend the money twice. What you can say is that we are going to take these savings, put them back to make sure that seniors are getting help on the prescription drug bill instead of that money going to, for example, insurance reform, and —

BAIER: And you call this deficit neutral, but you also set aside the doctor fix, more than $200 billion. People look at this and say, how can it be deficit neutral?

OBAMA: But the — as you well know, the doctors problem, as you mentioned, the "doctors fix," is one that has been there four years now. That wasn't of our making, and that has nothing to do with my health care bill. If I was not proposing a health care bill, right — let's assume that I had never proposed health care.

BAIER: But you wanted to change Washington, Mr. President. And now you're doing it the same way.

OBAMA: Bret, let me finish my — my answers here. Now, if suddenly, you've got, over the last decade, a problem that's been built up. And the suggestion is somehow that, because that's not fixed within this bill, that that's a reason to vote against the bill, that doesn't make any sense. That's a problem that I inherited. That was a problem that should have been solved a long time ago. It's a problem that needs to be solved, but it's not created by my bill. And I don't think you would dispute that.

BAIER: We're getting the wrap-up sign here.

OBAMA: Yes.

BAIER: Can you be a transformative president if health care does not pass?

OBAMA: Well, I think that — look, I came in at a time when we probably had the toughest economic challenges since the Great Depression. A year later, we can say that, although we're still a long way from where we need to be, that we have made the economy stronger. It's now growing again. We have created a financial situation that is vastly better than it was before.

And so we're now in a situation in which the economy is growing, moving. We're reforming areas like education. We're taking steps on energy. We're doing a whole bunch of things out there that are going to create the foundation for long-term economic growth.

BAIER: So if it doesn't pass, does that diminish your presence?

OBAMA: Well, if it doesn't pass, I'm more concerned about what it does to families out there who right now are getting crushed by rising health care costs and small businesses who were having to make a decision, "Do I hire or do I fix health care?" That's the reason I make these decisions.

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