prayers of every american who has hoped deeply for something to be done about a health care system that works for insurance companies, but not for ordinary people. >> this morning, washington, wall street, corporate america, and main street america react as "squawk box" begins right now. good morning and welcome to "squawk" here on cnbc i'm carl quintanilla on capitol hill along with joe kernen and becky quick at headquarters. there is one story dominating newspapers across the country today. i know you've seen some of these. the historic volt on health care. just a few of the front pages from around the country, "the washington post" divided house passes health bill. the boston globe, historic okay on health. new york daily news, barack obama's greatest victory. revolutionizes health care. the journal says historic volt on health, "d" on abortion wins

over holdout democrats, the biggest change in deck ids. and the dims in new york, congress sends white house landmark health overhaul. we're going to get to a lot of that for the next three hours. first a grueling day, a fiery debate on capitol hill leading up to a series of late-night votes. want to check in with hampton pearson who's been covering the story late into last night and early this morning. hampton, good morning. >> good morning, carl. as you mentioned, tumultuous debate. really went on all weekend. this whole orchestrated strategy, particularly on the part of president obama and the white house, focused primarily at trying to get wavering democrats to come home. >> the republicans wanted what i call the fox's guard the henhouse approach, in which we further deregulate the insurance companies, and let them run wild, the notion being somehow that that was going to lower costs for the american people. i don't know a serious health

care economist who buys that idea, but that was their concept. and we rejected that. because what we said was, we want to create a system in which health care is working not for insurance companies, but it's working for the american people. >> and to the bitter end, the republicans and their allies, both inside and outside the capitol, stuck to, again, some core arguments on their side, as well. number one, about what this meant in terms of the size and continuing overreach, if you will, on the part of government, and of course, health care reform at what cost. >> what does this bill do? it imposes a new tax increase of 569.2 trillion dollars. over half a trillion dollars in new taxes on labor, on capital, on families, on small businesses, on work, on jobs. and look at what we're looking at. before even passing this bill, mr. speaker, we are going in to

a tidal wave of red ink of debt. >> so the votes are in, and health care reform is now law awaiting the president's signature. but, the debate will continue out into the public, especially now as we begin to get in to the implementation of this bill, which some things will happen right away, but the lion's share of it doesn't really go into effect until four years from now. carl? >> tim, we're going to start hat debate this morning. thanks for that. a big show planned today from washington. and from back at headquarters. our guests this morning include senator judd gregg. he's going to join us in just a few minutes. at 6:30, congressman scott garrett and greg meeks will duke it out. at the top of the next hour, guest host senator evan bayh of indiana, plus earl blumenauer, and kathleen sebelius will join us. among our other guests, former senate majority leader and medical dr. bill frist. congressman charles boustany, congresswoman debbie wasserman

schultz, and senator bob corker. guys the markup begins today, 473 revisions. one sign that that is going to be rancorous as well. >> it does not sound like we're going to be looking to get too bipartisan too quickly after we move past this. carl we were talking this morning about every implication this happens. i think probably at this point, real confusion from the american people. what does this mean for them on the bottom line? that's what i'm hoping to get answers from some of these politicians today. i'm not sure that we'll get that. but we'll also be talking to some people in the industry, including the choeths of cigna to find out what it's going to mean for his business, as well. >> real question, carl, do we view this as the end of the beginning, beginning of the end part of the process? it's hard to know. you've got a lot of states looking at how this applies to them, and ways to maybe challenge the mandatory insurance provision. and then i guess you're going to see republicans try to use this

as a launching point for november. >> yeah. >> as well. i don't know if you saw -- one thing i think we need to do right off the bat, carl, is that the making of a bill that we learned about in grade school. >> talking about, ♪ i'm just a bill >> we really need to include a couple of other things that go in to passing a bill like this. >> not demon pass. you don't mean that. >> no, no. just -- did you see kimberly straussle's piece? there's a couple of extra things in here that went in to interesting, it didn't go in to getting any republicans to sign on. it just went in to getting wavering democrats in line. i mean, even with the executive order did stupak, did he bring seven guys, carl? >> yes. >> and he still only hit 219 with the seven guys that folded their cards. i mean, they -- they folded like a cheap deck. i don't know if that's going to help him on either side of the

aisle. >> so what is that song going to sound like now? i'm just a bill headed for reconciliation. >> i don't know. it's just good to know that everything's changed in washington now. you know, hope and change with, you know, no back room dealing or anything had to be done. pure process. >> you saw -- >> pure, bipartisan process. >> you saw the drudge headline, a date which will niv in infirmary. >> in infirmary. >> and your point, by the way, about the debate, sort of being over, maybe not, jim demint is going to introduce legislation this week to repeal it and the virginia attorney general is now going to sue the federal government for unconstitutional overreach. >> i think there are 38 states that are considering whether or not they want to go ahead and fight this on a federal level. >> there will be a bump, no doubt, for the president, and for democrats in general. i finally figured it out, carl, i was thinking about it yesterday, that the scott brown thing, that more or less began

this comeback. even though it looked like the death knell at the time, because it became clear that a lot of democrats were already so -- it was already so bad that there was nothing to lose from passing this. >> exactly. and i think it was kent conrad who told politico that the brown election strangely brought an end to this because it saw -- it showed democrats the only way that this was ever going to happen anyway, and that was through the path they took. >> right. so it's going to be, you know, i don't think this is -- it's the beginning, i don't know whether it's the end of the beginning or the beginning of the end. i was looking at all the people we just showed in light of hoyer, poor hoyer lost because of maryland, they got beat. sebelius, she was hoping for kansas. story. it's weird that all the march madness is sort of, i don't know -- >> playing into this? but i do have a lot of questions. i want to know now, because i feel like there's been a lot of rhetoric on both sides, i don't

really have an understanding of what this is going to mean for my bottom line. i think people around the country are asking the same very same question. >> you how the harwood piece. >> it brings up a very concerning point. and something i've been worried about for weeks as we've been discussing about this, is does it mean it's the end of the employer-based health care system? does this mean that employers are then going to be able to eventually dump their employees and say you pick it up yourself? because what is it, i think if the house version passes it's only $3,000 that an employer is penalized for not providing health care insurance. and i'm sure a lot of the companies that provide health care insurance are spending way more than $3,000 a person. >> how are you feeling overall, joe? what's your take this morning? are you ready to move to france? what? i mean -- >> he's fairly -- >> no, i mean, we knew this was -- they would not have gone forward. we knew this was going to happen. i'm still saying, carl, that it was basically an argument that the democrats were having with themselves. which just shows how hard.

i mean there was never any question that in either the house or senate there would be a single republican vote. >> somebody said it was bipartisan. there were democrats and republicans who voted against it. >> yeah, that was the bipartisan. so watching them try to wrangle 219 when they have 240 or 250 themselves, that just, you know, it shows how divided things are. i want to see how they -- the polls we were conducting here, they weren't scientific, they were 75-25. >> i saw a rasmussen poll that showed a negative 16 when you took the positive feelings versus the negative feelings. >> on the president or on the -- >> on the plan. or the president was negative 16, because of the plan itself. >> this is definitely going to help. this will help. but i wonder -- >> getting it passed. >> when we go a couple of weeks or months from now, i wonder whether any of the -- i wonder whether the wage increases or decreases between now and november. >> oh, i don't know. >> yeah. >> a lot depends on what jobs do, and a whole lot of other

things, right? >> right. >> it's not operating in a vacuum. >> it's a slam dunk the senate will go for this. because i was reading some things that if they didn't go for it, that you could end up not going -- or sending something back to the house for another vote. >> they only need 50, right? 51 to get it passed. carl, you were on television last night talking about this when i went to bed. what was the most surprising thing that you saw out of all of the speeches last night on the floor, maybe the vote itself. what caught your attention? >> you guys heard boehner, right, speaking at the podium? i mean the jeering. the hyper -- we thought things were hyperpartisan before. i asked last night if we're in for some sort of new ideological civil war which is what a lot of people have raised as a possibility, he thought that was ridiculous. we will see. you read some of the commentary this morning from critics of the bill and supporters of the bill. it's hard to imagine how we're going to -- how we're going to agree on other things.

we'll see what happens with the dodd markup today. but -- >> and carl, the parliamenta parliamentary -- the gentleman that's in the middle of this is supposedly nonpartisan. he's got to look at what, you know, what qualifies for the bird bath and what doesn't and what can go in to reconciliation. the republicans are going to be there every step of the way trying to throw a wraench into the works here, too. >> that's going to be a great topic for judd gregg. >> why don't we talk about some of our other headlines that are clearly going to be a focus. >> court date scheduled for 9:30 thursday. thank you, thank you for that. thank you. couldn't be friday. >> thursday night when you're not going to be able to watch. another story we're watching today, google is expected to announce its plans for china. exiting china as early as today. let's head to beijing where check lei joins us with the latest. what can you tell us this morning. >> hi, becky. we may get an answer on that story as soon as monday, 4:00

p.m. u.s. time. this is according to china's cbn newspaper telling me that's when google will be announcing the compensation packages for its china advertising sales agents. of course, we've got a lot of reporters, foreign and local, staking out the google headquarters in beijing, hoping for interviews with some of the employees. but, security is tight. and pr has prepared the staff well in advance not to speak to the media. we've had some local reports saying that google will get out of china as soon as april 10th. partly that is because the chinese internet firms business licenses come up for annual renewal at the end of march. so that's why that time point. we've also had some unconfirmed reports that certain members of the chinese media have been invited to google's u.s. headquarters to have the exit matter explained to them. meanwhile, the rhetoric from the state media has been very harsh. beijing is sticking firmly to its internet regulations. the rhetoric goes something like this, calling the google story a

schizophrenic farce, saying it's ridiculous that one company can try to change china's internet regulations and also legal system. but, of course, analysts say it doesn't mean this is going to lead to a wave of departures from china. it possibly is just a one-off. back to you, joe. >> very good. thank you. appreciate that. coming up, we do have u.s. senator and frequent "squawk" visitor judd gregg will join us. then a special monday morning strategy session. now that the vote is done, what should you be doing with health care stocks? industry analyst barbara ryan has a few hints. first as we head to break, a look at last week's winners and losers. >> what carried us up the long, rugged path towards prosperity and freedom. >> because people have got to know whether or not their president's a crook. well i'm not a crook.

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all right. welcome back. back to today's top story. the house passing the senate health care bill last night by a vote of 219-212. this is a historic piece of legislation that has drawn very

bitter party lines from the beltway to main street. joining us now on the "squawk" news line is senator judd gregg. senator, thanks for being with us this morning. >> well, thank you. it's great to have a chance to talk to you. thank you. >> well, does this mean that this is a done deal at this point? everything else is just a formality to get this bill signed? >> pretty much. i mean, as a practical matter the big bill was the senate bill, which was passed. there's still this reconciliation bill which they used to purchase votes on the house side but i'm sure the president will be happy just with the senate bill because that's where all the spending is, that's where all the activity is. that's where really the major part of the program that he proposed, and that the democrats supported is. >> you know, this morning i think i know i'm feeling this way, and i get the feeling a lot of americans probably feel this way. they want to know what this means for them. what does this mean? >> well i think it means a lot of different things. obviously it's going to affect the way health care is delivered in this country. we'll have to wait and see whether that's good or bad. i personally think it's going to

be very bad. i think it's going to reduce innovation. it's going to reduce your ability to get to see a doctor, depending on the type of health care system you're involved in. especially if you happen to be in medicare. secondly, it's going to radically, radically expand the size of the federal government. you're talking about growing the government by $2.5 trillion, and the biggest problem, as i see it, is that in the out years here, we're not going to be able to afford it. and we're going to end up with a huge expansion of the size much government. government spending as a percent of gdp will probably close in on 30%. historically it's been at 20%. and that creates the structural deficit which is going to make it very hard for us to get out of the situation we're headed towards, which is a fiscal meltdown relative to our ability to sell our debt. people should be worried about that in my opinion. you're creating two massive entitlement programs or one massive one and expanding another one dramatically. and we're not going to be able

to afford it. >> senator, part of the way they got to the numbers they needed with the cbo was to cut $427 billion from medicare payments to health providers. that means payments to hospitals and doctors? >> absolutely. and it also means basically an end to medicare advantage. which is a insurance program that a lot of seniors in various parts of this country enjoy. it's a bigger number than that though, becky. when it's fully implemented it's a trillion dollars over the first ten years of full implementation and $3 trillion over the first 20 years. and the problem is that those reductions in medicare are then taken and used to finance this expansion and creation of a new inentitlement. and that's the serious part here because basically, medicare's already insolvent. and we know we aren't going to be able to meet the obligations of medicare. and now you're taking the savings that should be used to make medicare more solvent, and stronger, and spending them on new programs, and so, you're basically doubling down on the

fiscal problems we're going to confront as a country as we head out into this coming decade, and especially the second decade. >> senator, this is joe, and i'm going to quote a great man, and that's jock ewing from dallas, i know you remember, who said no one can give you power, bobby, you've got to take it. and that's kind of what happened here. my question is, the way that it was done, and there's kimberly straussle piece, and you know, the way that the sausage was made here, and a lot of the bad taste that's left in your mouth, that all kind of fades away just from the sheer power of getting it done, and from the media coverage. do you think that that happens between now and november, that you're just impressed with the power, and the ability to get it done? or will -- will people remember how it was done? >> well, that's a good question, joe. i don't think anybody knows the answer to that question. november is a long way away.

there will be other events in this nation which captures the attention of the american people. hopefully some positive ones. but could also be negative ones. who knows what will happen in the middle east. so, it's very possible that people will not be as focused on this by next november. but, in my opinion the institution of the congress has been fundamentally harmed. because this was not done in regular order. it was not written by committees. it was written basically harry reid's back room and nobody got to see how it was written and who was involved in making the decisions. it was not passed under what is a traditional debate, amend, and open discussion. it was passed on christmas eve in the senate, without any amendments being allowed on the major bill. and now went through the house with no amendments. >> and then to get, you know, with 240 or 250 democrats, to get 219, they were almost individual deals done, or at least if you believe what you read, there was, you know, anything that you went in with, you could probably get it if you

could agree to either switch or vote yes. >> i think you're probably right. but that's -- >> that's normal though. >> that's, you know, making sausage. but the issue -- >> but that was supposed to change, too. that was part of the hope and change. >> well there was no c-span in the room when this was written and nobody knows what the deals were. we'll find out about them, i'm sure, over the next few months. really it's the bill itself and the implications to our government, and to the way we govern, the fact that you're basically taking 1/16 of the economy and moving it dramatically towards government control. we're on the road to a european-style government here. and you can't deny it. >> how does that change the factor of the senate? how does sweeping social legislation situation the character of the congress? we have passed bills that are this ambitious before. >> i'm not talking about the character of the congress and the senate specifically, was changed by the way it's been done. by the fact that you basically eliminated the committee process.

this was written by a small group of senators sitting in a room somewhere, we don't know where, and then was brought to the floor, and there was no amendments allowed. >> so you don't believe that the finance committee process was sincere? was honest? >> it wasn't the final bill. the bill was actually written almost entirely in harry reid's office. the finance committee had a real decent markup, as did the health committee. but those bills were dropped along the way when they couldn't get the votes for them. and they went in to -- in camera and wrote it. and then the more serious issue is the way it was handled on the floor. you know the senate's supposed to be the saucer into which the hot coffee is poured. and there's supposed to be debate and amendment. there wasn't. you know, that's an institutional -- that's what happens on the institution. the bigger factor is going to be on you and i, and every other american, because this is going to radically increase the size of the government at a time when we can hardly afford the

government we have. when we can't afford the government we have. >> you made the point that the pain is going to come in the out years. the benefits are going to be a little more immediate. is this going to appear more popular than it deserves to be, at least in the early going? >> i think that it will appear more confused. i'm not sure that people are going to really sense its full impact for, well, a lot of it is scheduled to occur after the president leaves office. some of the most onerous things. it's going to be awhile in lead-in time. however, the tax burden in here is going to hit fairly quickly. and the cuts to medicare are going to hit fairly quickly in some areas. so there will definitely be impact. but it's going to be confusing to people as to what it really does and how it impacts them and that won't shake out for probably four or five years. but you've locked in place a process here which is going to be -- which you can't get out from underneath. i mean you can't repeal this. we can try. but it takes 67 votes because you'd have to override the

president's veto. so we are on this path to basically a european approach to our economy, where the government has massive influence over various sectors. i mean, you know, in this reconciliation bill, you remember, was the nationalization of the school loan program. as well as the partial nationalization or the path to nationalization of the health care program. so they took on two pretty big sectors of the economy and just basically shifted from a market oriented approach to a government oriented approach along the lines of france. >> senator, we hope you can come back in here again soon, and talk more about this with us. really appreciate your time today in getting up early with us. >> always a pleasure, becky. >> thank you, senator gregg. >> investors are now trying to assess what the health care reform bill will mean for the markets. joining us now is barbara ryan, managing director and pharmaceuticals analyst for deutsche bank security. you would think some of big business might have a problem, barbara, then i read in the "journal," we can't mark this day without noting it couldn't

have happened without the complicity of america's biggest health care lobby. big pharma, the ama, the american hospital association, business roundtable companies like walmart. so they all -- there's something in it for all of them. is it really going to hurt innovation, or did they take care of it with some deals beforehand, big pharma? >> well, i think to pharma's credit, i think you could either lean up as part of the problem or part of the solution. and i think the industry, you know, took the better approach to be part of the solution. and while there clearly are give-ups in terms of discounting, et cetera, i think the industry was successful in avoiding language that would have been most onerous, specifically as it relates to innovation. you know, price controls, you know, mandatory kinds of pricing and discounts. this really maintains the integrity of the existing mar t market, but obviously in return for that the industry is giving

bigger discounts, obviously it's going to be increasingly taxed. and hopefully will make up some of that with induced demand, as more americans have coverage. >> michael moore called it the biggest giveaway for the -- actually that might be satisfying if we saw the hmos just really rally a lot and go up about 50% based on all the new members that they get. that would be in a perverse way sort of fitting with all the bashing of the insurance industry that we've had. if they actually end up flour being, that would just be perfect. are you changing any ratings today, barbara? >> no, we're not. i mean, one thing i would say is, our health care group at deutsche bank did a survey of the buy side, and basically found that 80% of investors expect that health care reform would pass in this form. and therefore theoretically are probably positioned for it

anyway. i think this is pretty well baked in the cake in terms of stock prices. ironically some of the hardesest sectors like managed care may benefit just because, you know, the news is now out, and we no longer have this cloud of uncertainty hanging over the company. >> so what's your favorite stock now? >> so i think, you know, speaking for the health care group, i would say that, you know, the hospitals clearly are beneficiaries here. because they have a big, bad debt problem. and that goes away with this funding. the two that our hospitals analysts likes are tenet and community health. tenet is a turnaround story. community health is a consolidator in, you know, market that's right for further m & a. and managed care, two favorites would be wellpoint and aetna. covered by scott bidele. they're less exposed to the reforms or lower pricing that is

going to be implemented in medicare advantage. and will benefit this year specifically from higher pricing in commercial markets. of course, teva being the largest generic company, as many of these units in the pharma piece, anyway, are going to be dispensed via generic drugs, teva sells more pills than merck and pfizer combined so they clearly should be a beneficiary. on the device side we like medtronic and in pharma it's probably all beaten out at this point, for growth investors our favorite stock with be bristol. and financial stories based on value would be pfizer and merck. i think the biggest influence for pfizer and merck, quite frankly, is the direction of the economy. if we do get a fierce recovery, then, you know, pfizer and merck are not going to keep pace. if the market moves to being more defensive, then those stocks would certainly be favored. >> any conflicts of things that youown, or get your

disclosures? >> so deutsche bank, i would assume, you know, in our asset management group, owns all of these stocks. i would think that our investment bankers are always looking for business from all of these stocks. and i've no material nonpublic information on any of them, either. >> thanks, barbara. >> thank you, joe. have a great day. >> okay, you, too. >> a divided house the morning after the historic vote. we'll be joined by two congressmen with very different opinions on health care reform. republican scott garrett, democrat greg meeks straight ahead. and later fed matters, st. louis federal reserve bank president jim bullard will stop by the "squawk" set. a rare and extended interview. thing as taking a chance? as having to decide to go for it? at the hartford, we help businesses of all kinds... feel confident doing what they do best.

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welcome back. the house passing the senate's landmark $940 billion health care bill last night. 9 1/2 hours of contentious floor debate. both sides now wondering what's next. joining us this morning congressman scott garrett of new jersey, congressman greg meeks of new york joining me along set along with joe and becky back at headquarters. good morning to both of you. been chatting during the commercial break about the tone last night and i wonder how ill the aftereffects are going to be in terms of working to the. >> well, you know, last night was a, you have to think about it, but a braisingly arrogant move by the majority party. you know, even when fdr moved in with social security that was a bipartisan ef for. last night the only thing that was bipartisan was the opposition to it. republicans and democrats stood on the floor and repeatedly said the bill was a bad deal.

democrats said that repeatedly and republicans. but there was no republican willing to vote yes for this. and the democrats were not willing to work with republicans, in either the senate or in the house, to try to make it bipartisan. >> so, how -- how pronounced is the grudge? >> well, it's not a grudge. it's just this feeling that as leader boehner said last night all along republicans were listening to the american public. the majority of americans in this country said they did not want this. now we're going to try to do everything humanly possible to try to scale this back going forward. >> are you guys prepared for challenges on this? >> oh, absolutely, yeah. this is probably the most historic bill that we've had since the mid '60s. and this bill is the change that the american people were asking for. this is what happened when barack obama was elected president. this is why they wanted democrats in the majority. and this is why we will remain in the majority in november. we're making that change so that 32 million more americans will have access to health care, that did not have access to health

care. we're making sure that we're bringing down the deficit over the long-term, $1.3 trillion as the cbo clearly scored it. so this was a great night last night for all americans. and we're moving forward. >> i see you shake your head at the cbo numbers. we know about the dispute over the cost of this thing. when do you think the argument's going to be clear about what's actually true? if you doubt the numbers, when is the first big piece of evidence going to come that doesn't add up? >> the evidence already came. i was trying to remember on the way over here who was it that came up with that famous definition of insanity. i think it was albert einstein who said if you do the same thing over and over again -- >> trying to get a different response. >> that's the definition of insanity. we've had this experiment done in the state of massachusetts. and the officials told us what happens there. that the state is going bankrupt on this. they predict the united states government will go bankrupt in a four to five-year period. and as far as the care, the medical care, what has happened in massachusetts? the doctors have fled the state. i know that. >> a hugely popular program in the state.

>> a popular program until the fact that they can't afford it anymore and they can't get the doctor care they need. i have doctors in my state, i used to be in massachusetts, i fled when they put in that system. so we will begin to see this immediately when doctors say i'm not going to get paid. when you talk about the expansion of medicaid. medicaid and medicare are already going broke, and there are companies out there who are already not taking these payments in the system. where will all these people go? there's not enough money in the system. >> you'll acknowledge that -- go ahead. >> clearly number one, the senator who claims in massachusetts recently, he says the massachusetts health care plan is a very good plan. but the american people are rejecting the politics of fear. it seems as though that what is going on now, you're trying to make the americans afraid. and that is what was rejected last night. previously americans have been told that all of this negative is going to happen, and you know, then you saw some ugly politics that took place as a result of that fear last night.

and you make americans afraid, you're saying that individuals who were outside demonstrating and saying some awful things, and some awful things that were said on the floor when you hear the kind of outburst that you heard on the floor last night, that's not america. that's not the kind of politics that we should be talking about. that's the politics of fear. that is rejected by america. we're going to bring people together. that's what this bill does. we heard the same kind of things when social security was passed. we heard the same kinds of things when medicare was passed. and now, no matter who they are, democrats, republicans, when i got a phone call, they said save our medicare. as if the government had nothing to do with medicare. so that kind of politics is being rejected. and the politics of inclusion and bringing people in, so that they can have better health care, is being accepted. and we would love to run on that. >> with this now out of the way, does it make it easier to move on to other parts of the agenda, financial reform? or is the ill will going to block anything else from happening? >> oh, definitely be moving on to that. if you're in the financial

services world, my only recommendation to them is be afraid, be very much afraid. rahm emanuel already said we're going to move on in those areas and they can move on just as brazen with matters as well. >> incrementalism is dead? >> they will be doing an even more liberal agenda. i'm just quoting from rahm emanuel, a more liberal agenda. that's why they pushed dodd to dismiss their works with republicans in the senate and try to push even further in the financial sector. if you're in the financial sector i would say watch out what happens over there, because if you thought you had a tepid response from barney frank so far. watch out, all bells are off now, they're going to go for it. >> we are going to pass a financial reform bill. we have to. >> there you go. >> we have to. we can't leave the system the way it is because it failed. i know scott may want to leave us where we are vulnerable and we can have taxpayers having to bail out people again. that's not going to happen on the democratic watch. >> that's exactly where it happened. the democrat watch -- your friends -- >> it was george bush, george bush -- eight years and his

eight years of policy caused this -- >> the republican administration that had the first bill out. it was the republican administration that we decided -- >> and the democrats -- >> democrats put -- >> just let me finish -- >> you're cutting me off. democrats put the country over politics. we could do what republicans do. you know, when you see republicans come and zero person voting for something, you know it's politics. you don't generally -- when you see no member voted for anything on either house you know that politics is at play. it's a political strategy. it's not what best for the country. >> any effort you were going to make to reach out to them is now gone. they might as well not be in the house. >> that's not true. we reached out to them. >> wait, wait, wait, what's extraordinary -- >> he had a national television -- >> -- >> do you deny that? >> trying to do this -- >> how many -- >> 200 republicans -- >> how many -- answer one question -- >> how long have we been at this, scott?

>> asking you that question. >> how long have we been trying to ask -- [ talking at once ] >> how many members -- >> how many republican amendments are in the bill? how many republicans amendments are in the bill? when you pass the health care -- >> ask the right question -- >> and this is where we are when it comes to bipartisanship. they will not allow one of our amendments to go through and not allow any of the amendments -- >> this bill was not done in a night. this bill was done over a long period of time. you've been reporting on this for awhile. >> they called it bipartisan last night because of the number of amendments. >> that's right. in the bill. over the long haul of the bill, this bill was not debated just over one night. this is -- >> bipartisanship that we have on the floor. because they have a majority. they talk over us continuously. they will not answer our questions just as we've seen for the last minute, they would not answer our questions -- >> -- party is there something you could have done that you didn't do? >> we are in the minority. and he is right on only one

point i've heard so far when he refers to the fact that elections have results. and the last three elections they put them in the majority, and we will see what they have brought and what they will do. >> the pharmaceutical bill that they passed in the middle of the night would stay open for a longer period of time than any bill in the history of this country. and he has to tell me that we are not partisan -- bipartisan. yes we are. that's why over 200 members -- >> november is coming. we'll see what happens. >> it sure will. >> appreciate the conversation. when we come back, corporate america reacts to the health care bill, as well. what is the deal on exactly mean for companies like stryker? we'll talk to the ceo after a break.

health care companies preparing for the impact of last night's vote on landmark industry overhaul, and steve macmillan is the ceo of stryker, one of the world's leading medical technology companies. and as it stands right now, what's the hit for you guys? does it still -- what did you think it was? >> it basically for the medical device industry it appears we're ending up with about a 2.3% excise tax which will be about $2 billion of additional taxes per year. and it does look like it's now starting in 2013. so they did push that out a little bit which will help, particularly given the economic environment right now. where the last thing any company needs is a higher tax rate in the short-term. when we're trying to create innovation and still create jobs and our industry, as many, as you guys know, is uniquely an american industry, headquartered in a lot of small towns in america, still reciting manufacturing jobs in this country. >> why do you feel like your industry got it worse than most industries?

everybody got it a little? >> i think where it all shook out is everybody kind of took their piece. i think what's different for us certainly is we really do think about ourselves as one of the crown jewels of american industry. if you started a industry and said let's develop a industry that creates manufacturing jobs, that's reveille r&d based and has a lot of jobs in this country, and happens to have a lot of small companies, there's over 8,000 medical device companies in this country, because so many of them are started in entrepreneurial environments. i've got a new idea for a new product and they start that way as opposed to being a industry dominated by huge players. and so, even an additional tax there, certainly hurts but people tried to help us along the way. >> did you have a chance, did they invite you a couple of years ago to be part of this? and did you not or something, did you not play ball? >> we as a industry got invited in early. i will tell you because of so many of the small companies in our industry we were probably

not as united as the pharmaceutical industries or the insurance companies that tend to have many stronger players. and as a industry, we were probably a little more divided because a lot of our small companies that just an additional taxes, a huge deal for, were dead set against any compromise at all. i think the bigger companies in the industry ultimately we coalesced but we coalesced a lot later than the other industries to basically say, you know what, at the end of the day we realize we're going to have to take a little bit of pain, as well. and ultimately our industry came together. but i think the -- because of the incredible bredth of the smaller companies in our industry bdu industry we didn't come the way others did. >> how do you feel today? do you feel like this is a huge burden or do you feel like this is something that you can live with and move on? >> two pieces, becky. ultimately as a company and as a industry, we think we'll figure it out in the shorter term. the real concern to me is much

longer term, in terms of the impact on federal deficit. still all the unintended consequences of, we think we may be signing up for a lot more spending than even what is in there originally. i mean if the medicare cuts don't come through immediately, this $940 billion gets a lot bigger. and i think just more than that are the overall shift from a country that's been driven by private sector job growth, entrepreneurialism, a country that's created microsofts, the googles, the strykers, you know, the other great companies, to one that is increasingly going to have a much larger public sector component, and it's going to crowd out private sector. >> you wonder about innovation. you're short in innovation in your industry right now a little bit, right? there will be a couple percentage points shaved off of how you measure that. what about profit growth over -- you have to think that's going to be hit not just from the taxes but also from maybe not being as innovative.

>> we're already seeing that in numerous ways. you know, first off as the hospitals have been under greater pressure. there's a market base, i do believe back to there's a market-based approach to reining in costs and there's been a lot of that within our industry. so, still think there's a lot of good market-based things. going forward, the innovation it's clearly we are continuing to invest. the question is will the marketplace still be able to continue to report it. ultimately, we still think there's going to be a place for innovation. but this country may not reward it quite as much as it always has. but we still think we'll find ways. >> all right. thank you, steve. >> we'll see you back here again. picked the wrong day to quit drinking. >> anyway, steve thank you very much. we'll see you back here again soon. coming up, is google going, going, goon from china? as an announcement is expected as early as today. we've got the inside line after. this

welcome back. google's looming departure if china seeing more and more certain. clayton moran covers the company and what does it mean for google to be exiting china, not only today but five years from now? >> well, it doesn't mean particularly a lot to google's financials today. china is about 1% their total

revenues. so it's not a meaningful contributor. but five years from now, it's about growth and the potential for growth. and china is obviously the largest internet market by users, so therefore, it was a big growth opportunity for google and they'll miss out on that. >> will you change your rating for the company as a result? or do you still stand by google? >> no, we won't change our rating. very small impact today. the growth was a prospect. it was potential. it wasn't certainly locked in. and as such, we don't think it really changes the near-term outlook for google. so we're not going to change our rating. we have google rated a buy. we think there's plenty of prospects in the rest of the world for google. >> what about baidu? does it change your opinion about where baidu will be five years from now? >> baidu has two-thirds of the market share today. that's the natural place for

users to go as a substitute. so their stock is up nicely as a result of this news. and that makes sense to me. >> clayton, thank you very much for joining us this morning. it's good talking to you. >> okay. thank you. up next, "squawk" is in session. a rare extended interview with st. louis fed president, james bullard, a busy monday morning is still ahead. national car rental? that's my choice.

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motion. the question is on the motion. making history with health care. >> all of those in favor say aye. those opposed say no. >> "squawk box" in session with one vote for the bill and one against. it may have passed, but the

debate rages on. >> no, you don't! >> we are guaranteeing -- >> no, you don't. >> house will be in order! >> from one overhaul to another. >> we've got work to do yet before, there's going to be complete bipartisan support for this bill. >> banking committee members, senator evan bayeh of indiana joins us on the "squawk" set. >> google's big announcement -- will the search engine pull out of china? "squawk box" begins right now. ♪ i'm just a bill ♪ yes, i'm only a bill ♪ and i'm sitting here on capitol hill ♪ >> good morning, everybody, and welcome back to "squawk box" here on cnbc, i'm becky quick, along with joe kernen and carl is in washington this morning. the democratic center from indiana, evan bayh will be our guest host. and then health and human

services, kathleen sebelius, she'll have the white house reaction to the vote. and also at 7:40 eastern, we have the ceo of significant cig. fir to carl in washington. obviously, the historic vote on overhauling the nation's kaelt her system, 219-212. we want to check in with our hampton pearson who covered the debate last night. >> you know, if you think about it last night, not that long ago, health care reform frankly was on life support after scott brown won ted kennedy's seat in massachusetts. and look how far the democrats in particular, president obama, came to get to the point last night. but again, it was all about getting wavering democrats to come home. how did the president do it? going back to one of his basic messages, that government can still do big things. >> so this isn't radical reform.

but it is major reform. this legislation will not fix everything that ails our health care system. but it moves us decisively in the right direction. this is what change looks like. >> but when as we saw in the house floor debate last night, the bitter debate at times, republicans in essence saying to their democratic colleagues -- yes, you did it, you go the those 216-plus votes. but you frankly did it by any means necessary. >> can you say it was done openly? with transparency and accountability? without back-room deals and struck behind closed doors? hidden from the people? hell no, you can't! this that's more than a battle cry. the rngs saying they have a plan and will try to put it in place it try to defeat the bill. meanwhile, outside what's going on here on capitol hill, word from the virginia attorney

general's office, remember, virginia just elected a new republican governor, it's attorney general ken kuccinelli saying as soon as the president signs the bill into law, he'll make a court challenge on behalf of the commonwealth of virginia. so it goes on, game on, carl. >> thank you for that hampton pearson at the capitol. last night's passing of the health care reform bill will bring health care to 30 million americans. but the true costs yet to be seen. here now, congressman blumenheuer and congress man isis. the "journal" has an op-ed, inside the pelosi sausage factory. for those who wake up today and are sorely disappointed this is law, do these challenges give them hope? or do you think it is fait accompli? >> the rules that used to apply

don't apply if you're doing something quote for the people. what i think people need to understand is, some aspects of this bill may be brought down by the courts. but for the most part, the taxes in this bill, the huge amount of new taxes, taking money out of the investment in private sector and putting it into this, will remain. one of the reasons this is deficit and not only neutral, but slightly reducing in the anticipation, you know, the forecast which never comes to pass, is because there's a huge new tax increase. >> why don't you think those will be, why are they not vulnerable to challenges, the taxes? >> because they're not. if you simply say you're going to tax investment, it's the congress at work. so the one thing i understand is, the taxes will stay, the benefits will cost more than they should, and our economic engine of prosperity has been hurt by a bad decision. the problem is real. some of the solutions in this bill were agreed to. ultimately the bill is not about

bipartisanship. unless you count the 34 democrats who joined with the republicans who said this is wrong. >> we've heard that point made this morning already. do democrats need a strategy to protect what's been passed? or is this the focus going to be on convincing the american people why it's going to work? >> well the most effective strategy will just simply let people see what's in the bill, understand it as it unfolds. i find it somewhat ironic that my friend dafrrell and the republicans, are somehow decrying procedural actions that they refined. reconciliation has been used repeatedly by the republicans to actually increase the size of the deficit. the heated rhetoric that somehow this is a massive takeover of health care -- is simply false. to take some of the most ardent anti-abortion members of congress, and call them baby-killers, was just frankly regrettable and i think shameful. >> it was more than regrettable, it was denounceable. >> the fact is that the

legislation here is going to start making a difference this year. in terms of eliminating the horrible practice of denying coverage when people get sick. being able to have children insured, despite preexisting conditions. to have tax credits available for small -- all of these things start happening. and they super-heated rhetoric and the embarrassing behavior will be put aside when people see that after a century, we finally are moving towards reforming medicare and extending health care to all americans. >> how do republicans counter that? because the benefits, whether they're paid for or not, are going to kick in. >> they are paid for. i mean, our neutral score-keeper, cbo, said that they are. and there are buried in this legislation, things that sadly the republicans decided not to work with us on. remember, boehner said they weren't going to legislate this

year. they were going to communicate. are ways to strengthen the ability to change medicare practices. so it rewards value over volume. >> aren't you worried about the discipline it will take, the political stomach it will take to follow through on the changes to medicare, to raise taxes on union families? that's discipline you may not have to worry about. current member mace not have to worry about. >> this something we start on now. but in terms of the risk and the discipline. you saw it where people were facing a mob. and some frankly republicans playing to it. people put their political careers on the line. because they believed in giving health care to the americans. this is the best chance you're going to get. i mean, the republicans passed goofy stuff is that was going to artificially reduce the -- like the accounts to physicians. that they never intended to employ and have joined everybody to try to kick down the field this is a flamework that you can actually get some savings. >> this is where earl and i

perhaps disagree, regardless of the details of the bill. there's no that they're gaming the $500 billion cuts to seniors, they're not going to do it. ultimately, one of the problems is, medicare is leading inflation, it's part of the problem. speaker pelosi last night talked about the two great accomplishments before. social security and medicare. well, our seniors who paid in their whole life understand those are essentially ponzi schemes who are beginning to run out. they're beginning to cost us so much, that people know actuar l actuarially -- >> free money is always popular. now there's something that earl mentioned that i think is fair for us to talk about. the federal preemption, although maybe not constitutional, was widely agreed to. that we needed to deal with portability, preexisting conditions. these sort of things where you say to the insurance industry -- look, individually, you can't afford to do this but under an

overall mandate, you can spread the cost so that you don't deny coverage to somebody whose child happens to get sick. they lose their job and then they can't find another insurance company. there were things in this bill that will be popular, that could be done, oddly enough, the ones that take effect immediately are the ones that cost nothing. and for the most part, could have had broad bipartisan support. >> did you ever have a moment's doubt or worry that, that although this bill will begin the process, that future congresss would not follow through? >> well, look, it's always a struggle. i just mentioned the things the republican did and ran away from. this provides a framework to actually start reducing costs by changing the way that we practice medicine. and i truly think, and i happen to be one of the people who is concerned as darrell is, that medicare right now, is what's driving us over the edge fiscally. this provides a framework, i think we can actually work on together, to change the practice of medicine.

not like our friend paul ryan, who wants to eliminate medicare for people under 55. but reward accountable care organizations, move forward in terms of changing the, eliminating and discouraging unnecessary hospital readmissions. these are things i think after the bill is established, we will work on together and make stick. >> and earl has been a champion for preventive medicine and for good health and so on. and i think everybody in government appreciates that. the problem is, if you go to score it, you make the assumption that we're not going to take pork just out of washington, but out of our diets. and you can't count on that, the american people won't get healthy because we tell them to. >> but cbo didn't score that. but i'm quite confident that these are practices in the long run that are going to provide a healthier society. and changing the rewards under medicare to how physicians practices, so they don't just

have procedures and tests and procedures and tests without accountability, these are things that i think we'll be able to work on and make a difference. >> the longer of the long-term goals. >> they're the only way we can save medicare, that we're going to drive down, if i put ten pieces of metal in your neck, i get paid twice as much. we've got to make those changes. sadly, we didn't make them in this bill. it means we're going to be back to the drawing board to figure out ways to keep medicare from running up the cost of health care. >> it's going to be interesting to watch. congressmen, thank you very much. becky? if anyone at home has questions or comments about anything they've seen here at "squawk," he mail us at squawk@cnbc.com. next up, senator evan bayh. how things stand in washington and how washington is affecting the way wall street thinks.

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now the answer to today's aflac trivia question -- who won the ncaa tournament's most kwout standing player award in indiana's 1981 championship victory over north carolina? the answer -- isaiah thomas. attention on capitol hill, turns from health care to financial reform today as lawmakers mark up banking committee chris dodd's reform bill. joining us for the rest of the show, our guest host, evan bayh, member of the banking committee. good morning, senator. getting some things out of the way here. that's why the camera came back and i was right in mid-sentence, mid-conversation, i hate when that happens. but -- >> it never happens in congress. >> i think the way i, let's start the conversation like that i said you must be a little bit relieved that your days, you're my age, you're a young guy,

you've already been governor, you're not going back to doing that. >> i had a real job. >> and you would have been, you're very popular in indiana. but you're not going to run again. why? >> joe, i just felt that i could probably be more productive doing something in the private sector or helping to run a university, a philanthropy, creating jobs, businesses of some kind. >> i loved the one quote of yours. i don't know if your party liked it. but i said you think if you create one job in the private sector, it would be more than what congress did. >> it was an example hyperbole. but i like people who make investments and make the economy grow. i think at the heart of my decision, i'm just more of an executive at heart. there are some people who have legislative mentalities, i'm more of a what did we do today to get the ball down the field. it's been a feeling that's been growing in my mind for a while, i can't point to an epiphany.

i know my friend judd greg has been a host of yours before. i fwhoe we had a bipartisan bill to get the debt under control. that would have passed into the law. actually held out prospects for getting on top of the problem. seven members who actually co-sponsored it voted against it for political reasons. and it went down. that was an example of how dysfunctional congress can be. >> the way things work in congress, and we sit here and wonder, who would go into politics, from the start. it's gotten worse, i guess, ride? as time has gone by. >> well, it has gotten worse, joe. as you and becky probably both know, i had privilege of growing up around my father who was in the senate back in the day. and sure they had their disgreeths, things gagreements,y

had personal relationships to overcome that. today we've got politics has become much too tribal. republicans over there, and democrats over here. not enough common ground to actually get the progress that the country so desperately needs right now. >> it passed yesterday, as you know. will there be -- was it worth it? because it has, it's gotten worse. the rancor is now worse. and i'm not sure how the -- you know, you don't know whether the tea party rage is outliars or there's a real undercurrent. i don't know how many people we're talking about who might really be mad now. >> the bad news is that 85% of the american people think that washington is not doing enough to address the problems that meet the country. so the level of frustration and even anger in some cases is -- >> but they did something. >> but the good news is that almost the same percentage of americans think with the right kind of reform can make

progress. so my take on congress is there are a lot of good people. at the end of two hours if you had all of my colleagues here, you would say, that person had something to offer. and i think we need systemic reform to bring out the best in the members, rather than the worst. >> what kind of political reform? how can you change it? >> in the senate we have the filibuster, which back in the day, it predates my time, back in the '50s, you averaged one filibuster every two years. one per two years. last year alone we had 65. and things are filibustered that even passed unanimously. there's no substantive disagreement. when they're finally voted it, it's 98-0. the filibuster is used just to slow the process done so that nothing happens. the poor treasury department is trying to function these days. i know it's a matter of interest to your viewers, without many top employees because there's something called the hold.

senators have power because of your ability to stop things, including presidential appointees. the treasury department is having a great difficulty working because so many of the appointments have been stopped, not because of an objection to an individual. but basically to hold them hostage because of something else. and finally, something i mention that is likely to get worse -- fundraising is just constant. back in my father's time, there was a something that you did the country's business for four years and you campaigned for two. now you campaign all six years. never stops. and it's not uncommon to have a fundraiser for breakfast, a fundraiser for lunch, a fundraiser for dinner. if that kind of thing is on the members' minds all the time, it just makes it harder to put the politics aside and focus on the policy progress that needs to be made. so we need some political reforms, some fundraising reform so folks can be more statesman, less constant campaigning. >> we were at i think we were at

16% approval rating for congress or something. is it, 16 to 20. >> i was on the road during the last presidential election one night. came home and one of the debates had just about finished and i turned it on. and dennis kucinich, during the democratic primaries, he was still running and someone asked him if it was that he had seen a ufo and he said yes, he had seen an ufo, i think when he was at shirley maclane's house. and i said, oh, my god, is this what we're talking about with all the problems in the country. and then the commentators came on and someone was making derisive comments about the ufos, but i thought wait a minute, more people have said they've seen ufos.

>> does that mean the rating goes up, or does the way that it gets done keep it where it is or make it go down? >> probably some of both, joe. and there's been this big to-do about the process and that's not unimportant. and i think maybe in the short run that may increase people's cynicism about the institution. but in the long run for most people, most viewers out there, it's just how does this thing work. does it really help to decrease the rise in costs for individuals? does it really help grapple with the deficit? does it really inform the insurance market? the substance in the long run is what really matters. >> we'll talk financial reform. i was thinking, if you were going to see an ufo, that would be a good place -- >> shirley maclane's house? >> yes. >> if you were going to see a likely place -- he really did see one, too? >> there have been a few sightings on capitol hill. >> thank you, senator, we'll

talk to you more throughout the show. good to have you here. >> good to be with you, joe. >> carl? i just saw one a few minutes ago. coming up, we'll hear from the obama administration, health and human services, kathleen sebelius will be our special guest. "squawk box" is coming right back. when you're trading a stock, every penny counts. i hate when the trade is done and you find out you paid more than the quote price. i want it at the price i expect... or better. td ameritrade's unique trading platform uses multiple market centers to help you find the best possible price. i like those odds. i know they can't flat out promise a better price, but they're always looking for it. they know what matters to me. every online stock trade is always $9.99. not a penny more. and no maintenance fees. who else does that? are you ready to declare your independence? td ameritrade. independence is the spirit that drives

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all right. welcome back, everybody, right now let's take a look at this futures as we await to see what's happening. right now there is some downward pressure on wall street. the dow futures down about 51 points below fair value. fed chairman ben bernanke says regulators must be significantly tougher on large and complex financial firms. the goal is to limit wider risks. he was speaking at a conference over the weekend. chairman bernanke argued that big firms are still needed to try to keep the global economy humming. still, he called the two big to fail concept one of the barriers in the financial market. we'll go inside the fed with

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welcome back to "squawk box" at 7:40 eastern, the crowe of health care insurance giant, cigna will tell us who about how the overhaul will impact his industry. at 8:00 a.m., we've got fed matters, with st. louis fed president, james bullard. and at 8:45 a.m., senator bob corker talks about health care and the other overhaul in the works, financial reform. and becky, you have this morning's headlines, do you? yes, i do, joe, we've been watching the futures. rirt now the dow futures are down about 50 points below fair value. remember the dow broke its eight-day winning streak on friday with a down day that day. we'll see where things are headed later this morning when

we check in at the cme. and gasoline prices are jumping once again, the lundberg letter says the average price of gasoline came in at a gallon per unleaded regular standing at $2.81. up over 8.5 cents over last two weeks. analysts trilby lundberg says she doesn't expect gas prices to rise much further. meg whitman said she is prepared to spend $150 million in her campaign against ex-governor jerry brown. which would set a record. the current record is $148 million. that was set in the 2002 race for governor in new york state. which was won by george pataki. cnbc's jane wells has more on the story of google pulling out of china. >> don't let the door hit you on

the way out seems to be the reaction in china. and if google leaves, who benefits? baidu already has about two-thirds of search business in china and is expected to get all of 30% google has, giving the chinese search giant potentially 95% of the search market there and 85% of the revenues. this in a country without a long history of antitrust laws. baidu's stock is up tripled in the last year. steve weinstein thinks baidu's progress on its own warrants the stock price. said even without google in china, baidu has been growing at 50% a year. >> i think if google leaves, you probably get somewhat of a windfall to revenue for late 2010, 2011 numbers and you can justify a much higher stock

price from here. so i'm sticking with baidu. >> he thinks it will go to 600. others have it even higher. he and others say baidu knows that chinese internet user much better than google ever has and much of google's revenue in china last year will say bye to google and move to baidu. while most say it will hard to catch baidu, watch out. ten-cent, a chinese instant messaging company, is busy working on its own search engine and while google is expected to boost 16%, 29% next year. on the other hand, baidu's monopoly could invite more scrutiny from consumer activists and the government. it said in november of 2008, china's central television accused baidu of taking part in

illegal medical advertising and reportedly baidu lost 10% of its income as a result. the house passing the health overhaul bill without a single republican vote and the debate over the measure races on. here with eaction is bill frist, former senate majority leader, doctor. i like leader, i like, if you've been a leader, i like to go with leader. leader frist i'm going to harkin back -- welcome, good to see you, senator. >> great to be with you again. >> you were on and the left, moveon.org and the huffington post had big headlines and said, frist will vote not reform and you said you wouldn't vote for the bill. so we're confused. today, are you a happy man, a sad man, a concerned man? where are you after the historic move yesterday? >> it was an historic vote, 32

million people over ten years, it was about the same size a as medicare. and my real concern with it i'm probably to the left of where most republicans are. because i do think we ought to have every american have affordable access with insurance in this country. but this bill fails from the cost standpoint. from the spending standpoint. there's really nothing in the bill from a market-based standpoint. the only real way that we're going to be able to control costs over time. there's nothing in the bill to slow down costs and when cost escalates, spending escalates and health care eventually ends up dumping more people to the uninsured. so in ten years, i predict 15 to 18 to 20 million people will still been insured. >> should we be worried about how big government is going to get here, leader? or not. when one senator said it's not as gate as one side said, it's not as bad as the other. about you we're growing

government, no? >> there's no question. the thing that everybody agrees to, government has a much bigger role in health care. it moves decisions away from they're usually made, the doctor, the patient, the facility itself. from a monetary standpoint, today federal health care, government spending is right at about 55%. so we already have majority control. because however has the dollar ultimately has the control. it will go from 55% to 60%. in addition, in the bill there are things that concern me and i've written about it. the it's called independent payment advisory group, basically 15 people appointed by one president, either the republican or the democrat. it doesn't matter who. who ultimately have huge authority in setting prices. and ultimately prices determine the way that medicine is practiced between a doctor and a patient. an unelected body nominated by a person from a single party.

but yet has such huge power. that's what bothers me, even more than the cost standpoint. to have one body, uneelectriced, unauthorized in many ways, almost writing legislation that controls health care down to the doctor-patient letter. >> senator bayh is with us as well. senator bayh when you hear things like that are you concerned on the same level with what's happened here? are you concerned about the deficit down the road, 10, 20, 30 years down the road because of the new entitlements being created? >> i'm very concerned about the deficit, becky. and if you look at the estimates on this bill, for the first ten years, it's about a push on the deficit. the second ten years there are estimates that it can begin to what they call bend the cost curve and start to reduce the deficit. but that all depends on the political will of future congresss and presidents yet to be determined. and the history of congress as we know, tends to be taking the path of least resistance on hard fiscal decisions until the credit markets react and you can't just go there any more.

i think bill had it right. this is a good humanitarian thing to do. and i give me friend senator frist great credit for caring about the 35 million folks who will get coverage. there are also some insurance reform elements to this, but many of your viewers will do away with lifetime exclusions but he was right on the point he made about cost. for 93% of the american people, who have insurance, this won't really affect their cost very much. that means it's going to continue to go up at rates that are going to be hard to sustain. and that's really an issue yet to be addressed. >> which is why one of the questions, senator frist, that's arizing is are we nearing the end of a situation where employers will continue to pick up health care costs? or does this bill make it more likely that employers will dump their employees on to other issues? i mean if they're penalized $3,000, which is what the house bill lays out for not offering coverage -- >> i don't think so. i think if, if there had been a

large public plan, where you had the purchasing power and the monopolistic power driving prices down artificially, then i think we would have seen a lot of companies who are barely operating with with any margin the all dumping it on the table. once it's taken off the table, all the consumers will go two ways, either into the medicaid program, of the 32 million, about 16 million will go into the medicaid program. that's why the governors are so worried. thaus why they're going to revolt and the other 16 eem will go through these insurance exchange. and the insurance exchange, hopefully, this is where the market people like me need to get involved. can offer real competition, transparency, accountability. so 16 no a government program, 16 into new private plans. but only about 4% of the

employer-sponsored people today, in plans. will fall off and they most likely will flow not to medicaid, but to those insurance exchange, had the other 16 million people will go and those are basically private plans. so i'm not worried about the employers dropping people like i was three months ago when the democrats were bushing the plan. so i would expect it would be about a 4% dropoff in the period of ten years. >> is it going to be a windfall for the insurance companies if they get an additional 16 million people buying in? >> sure. the health sector is the big winner here. any time you're taking $2 trillion, dumping it through a system that already has $2.4, $2.5 trillion. twaking two additional trin dollars, people in the health services, the hospitals, even the insurance companies. because once you have a level playing field and you define what the regulations are, what the framework is. the companies will be able to adjust. if there is some sort of decrease in size of the really

big insurance companies, that gives lots of opportunities for the smaller insurance companies. so you'll have 16 million additional people coming in. people not the 170 million people from the employer-sponsored plans will not be dropped. so in the end insurance companies will do very well. pharmaceutical companies will do well. hospitals will do well under this bill. a group of people like home health will have increased pressure. but all in all, the health sector is a big winner here. >> do you think is the health care system of the future? for the u.s.? or are there progressives that are still going to try to use this as a stepping stone to single payer somehow down the road? >> it's a great question. this bill is not a reform bill and that's my problem with the bill. it's a coverage bill. it's distributed justice, it's fairness, and that's probably again to the left of most of my colleagues. but that's a good thing. i think insurance markets work bet aernd if you get people in,

you have better risk-writingth and over time, you get better competition, because you've got everybody in. i think that will bring the prices down. the problem with the bill, there's no reform into the bill. it pours money into all the buckets that are there without reforming this. spending will skyrocket. we'll go from 18% to 20% of our gdp. states will have to increase spending on legislation. increased taxation, which will slow down, i believe, our coming out of the recession over time. we haven't changed the system at all. and until we reform the system, progressives maybe move to single-payer, that's not going to work, i don't think and america doesn't support it i think people like conservatives such as myself, have true reform, aligning incentives, payment reform, pay people on value, not on volume, very little of that is actually in this bill. >> yeah, you should have been like czar or -- i don't know why, you're a doctor, you're a

leader. you know, majority leader. you know about running hospitals. why didn't they just let you come up with something and to fix it. and you could you know, do the brain operations on half the members of congress that they need, too. it seems like you could do everything. >> it's tough, it's a tough business. but this is a start, and we're going to all get in shape and i think we can shape it with market-based principles, but you're nice to say that. >> thank you senator, leader, doctor, dr. frist, good to see you this monk, thanks. >> great to be with you all, thank you. the health care reform bill passing 219-212 as you know, without a vote from republicans. want to get to the white house this morning. health and human services, secretary kathleen sebelius joins us. madam secretary, good morning to you. >> good morning. >> your thoughts on today and i imagine after what was a night last night of very little sleep as well. >> well i think it's a big new day for the american people. that's what this debate has been

about from outset. for small business owners who haven't had any leverage in the marketplace and often got pushed out or shoved out by insurance family. and for people who have insurance right now, who are a pink slip away or new premium away from losing their coverage. so the president has been talking about this on the campaign trail. in the year that he was president. and i think he finally has a bill that gives us a framework to build a new health care system. >> we've obviously been following the odyssey of health care for a year now. things looked tentative when scott brown was elected. it was written over the weekend that the tipping point may have been that big premium increase by anthem blue cross. do you think that was what turned it around, among other things? ? well i think one of the things that the premiums in anthem willpoint is not the only company. this is a happening across the country. but it's a real-life example of what happens if we do nothing.

and i think people took a new look at the bill, saying clearly we have a something that's unsustainable. we can't just walk away, saying this is too hard or too kple indicated, two comprehensive. we really need to roll up our sleeves and get this down. what we have is totally unsustainable for families, small business owners and government bumgts. so th budgets. >> so this is an opportunity to bring everybody into the system for the first time ever in the history of america. >> a lot of people waking up this morning and probably realizing they don't understand competely what's happened. but they obviously have a lot of questions. specifically about employer-based insurance. what are you going to tell the fist business owner you meet who says, i'm dumping my employees. i'm going to take the fee and send them on their way. >> well first of all what people have to understand is what passed last night phases in

gradually. so right away, this year, small business owners will begin to get a tax credit to help them stay in the market, buy insurance in the market. that's very good news. nothing changes in terms of the new marketplace for a couple of years. and people who have employer-based coverage today will have it tomorrow and the next day. if their employer chooses to keep it, which is the current situation. eventually we'll have a new marketplace giving small business owners and self-employed americans the opportunity to have some barg n bargaining power. this is a private-market system. it's choosing among private plans who will have to compete with some oversight on what they're charging folks and how much of their premium they're actually paying in medical benefits. >> i'm sure you understand those who are leery of the bill, look at it as one step towards single-payer. is there going to be an effort by the white house to walk that

sentiment back to issues some kind of pledge or guarantee that single payer is not the direction you eventually want to go? >> i think what needs to happen -- there's been so much intentional misinformation over the course of this conversation. i'm anxious to get to the point where we can tell people what the bill does and what it doesn't. and talk to seniors about how they will pay less for prescription drugs and the so-called doughnut hole. talk to small business owners. and i think once people understand what's in the billing, once they understand that they'll have choices and comet competition, that they'll have health security. they'll be a very enthusiastic response. it's why doctors and nurses and health care associations and the association for the aging have all been enthusiastically supporting this measure moving forward. they know the system is broken and we not walk away from people getting 40% rate increases and just say, it's okay. >> i understand, explaining

what's in the bill. but i'm talking about explaining what the white house's ambitions about future bills may be. is there way to say -- single-payer is not in the cards? >> single-payer was taken off the table immediately by the president. he didn't want to dismantle the employer health-based system, which serves about 180 million americans. most of them are very happy about what they have. they will will continue to have their doctor in their plan. >> are you wearing northern iowa sports gear now? >> i am absolutely not. i congratulate them, they played a great game, i'm very sorry about my jayhawks being out of the tournament. but they lose only one senior and, they've got a great team coming for next year. so we'll look at the rest of the tournament with a little bit of less interest. but another year coming. >> tears, but always next year.

>> but k state is in. i'm thrilled as the former kansas governor, married to a k stater, they're still in the tournament. so go cats. >> why appreciate your time. beck? you'll be sorry disappointed thursday night, too, madam secretary. when they go up against xavier. k state is -- >> who won again. >> yes, who won again. going up against xavier. >> beat pittsburgh? >> beat pittsburgh. i'm worried, you're right. >> my grandfather was the first basketball coach of xavier. so i've got loyalties on both sides. >> that was cold, i'm sorry that carl asked you that. that was cold, carl, wow. >> either team wins, i'm happy. >> very good. >> she can handle the tough questions. >> spoken like a former governor. all right. the passage of the health care reform bill, it will add tens of millions of new subscribers to the client pool for insurance companies. joining us now is the chief

executive officer of cigna, david cordani. we've spoken to number of people and they've said almost unanimously, they think the legislation will be a huge boon for the health care companies. do you think it will, that you're seeing 16 million to 30 million people who will be buying private health insurance. >> one of the goaltends of the reform was to expand access and it does expand access for both the medicaid rolls. but ideally for the private system as well. and we would expect to see some growth there. >> so it's a good thing overall that legislation came through? or do you have concerns? >> if you look at the goal of the legislation, it was to expand access. to address costs and to improve quality. it would look at the ledge sligs as expanding access, so that was positive. it did nothing to improve the cost equation, that's a concern because there's a sustainability issue. and it did little to improve quality overall. so that's also a negative from the legislation standpoint. >> overall, how are you feeling about this? >> i think from the country's

standpoint, it's good to get this stage of the legislation behind us. but fundamentally we're going to need to move forward with additional activity to improve the overall cost equation. it will not be sustainable to expand access to this level without addressing the underlying cost drivers today. >> some new ideas that have been brought forward that you'll be held responsible for, i believe is that the medical loss ratio has to be at 85%. what's your medical loss ratio right now? how much do you pay out in terms of medical losses for what you take in? >> for cigna, we're a broad service company. so the vast majority of our services are non-risk related business. the portion that's risked runs at about 85% today. so unto itself, the loss ratio is not problematic to us today. >> what about some other yts that have been put forth. like you can't deny people coverage for preexisting conditions? does that matter to you?

does that change your business model at all? >> changing the individual market, broadening the small employer market to take away the preexisting condition is a positive reform when it's coupled with individual responsibility or bringing everybody into the pool and the staging of when those concerns take place is concerning. broadly speaking, the changes are not. i the timing of the changes not being aligned. >> you mean a lot of this doesn't happen until 2014? >> correct. a lot of the individual responsibility doesn't ramp up until 2014 and beyond. but the market rern reforms. >> for cigna, it will be a small impact, we're a minor player in the marketplace. broadly speaking, i think you'll see access expand in the marketplace. you'll see some cost pressure continue to tran spire for employers, which will be problematic, until some aspects

of costs transform from the marketplace. >> we looked at some numbers from "reuters" thompson financial which showed that health care costs last year were up in 8%, in a year where you didn't see inflations on any other levels. why so things so far out of whack when it comes to health care? and what do you think needs to actually be done to rein in some of the gains we've seen over the last 20 or 30 years. >> two fundamental drivers, numbers of services utilize and cost of services. both are increasing. the number of c.a.t. scans and mris have doubled and services have quadrupled. so the number of services and the costs have increased dramatically. >> emergency rooms doubling over the last four or five years. obviously if people have health care insurance, they will go to their doctors offices. but why do you see the number of

c.a.t. scans and mris doubling? >> c.a.t. scans and mris more than doubling over the last five years. fundamentally we have a system that pays per service or per activity. we don't have a system that pays for yot comes. the opportunity as we go forward is to evolve the system to have people understand the costs and to be reimbursing hospitals and physicians based on the quality of incomes, no the just the servicings provided. >> that would have been a great idea to cover in this bill. that's a whole new point. that would have been smart, right? what a concept? >> there was a significant amount of energy that was put forth in the last year around that topic. and i think people broadly understand it but it's complicated. >> it's rather complex. >> but you can see it done at places, right? >> well it's being tested in states. >> there's systems in mayo, safeway, it's there. why didn't it make its bay into this. >> there's something in there,

joe, it's on a pilot basis, but it doesn't get up to scale to affect the bottom line in a material way. but it does allow some experimentation on the male model. >> and joe, broadly speaking, you mentioned safeway as well. we've had success with a lot of employers actively engaging in those models today. what i would expect to see over the next two to three years, is a lot more invasion around transparency and reform. >> did the ama's participation in the deal, did that make it so that the hard things that need to be done in fee for service and the doctors, are not going to be done? did the doctors dodge another bullet? >> i don't think so. i don't think any one party caused a bullet to be dodged. i think more broadly where you go, is each of these stakeholders need to be lined up. and the mayo system is

admirable, you look across the system, you can't look at one silo alone and try to solve it that way. >> we hope to see you back here again soon. i want to stay young forever, it's not working. it's working for you. >> you didn't hear about the ponce de leon provision in the bill? >> that would solve a lot of things. >> unfortunately the ravages of time all kick in. >> and this doesn't cover cosmetic stuff, either. >> have you been over utilizing that? >> does it look like it? >> you were worried about the bo tax? >> people are going to say you die your hair? >> not a chance. >> i don't either. but i get all this mail. at least the rug mail we call it. coming up, the other massive overhaul. financial regulatory reform. senator bob corker will tell us where that's headed next. and the st. louis federal

reserve president, james bullard.

here's to your health care. >> on this vote, the ayes are 219, the nays are 212. >> the historic overhaul bill passes without a single republican vote. >> shame on this body. shame on each and every one of you. democratic congressman, debby wasserman schultz and congressman thomas mustani bring the bill to "squawk." google's big announcement, the search engine deciding whether or not to pull out of china. what would leaving the world's biggest market mean for the boys from sig silicon valley?

fed matters, st. louis federal reserve president, jam a bullard making a rare appearance on the "squawk box" set. "squawk box" begins right now. welcome back to "squawk box" on cnbc, i'm becky quick, along with joe kernen in cnbc's world headquarters and carl is in washington after a long night leading up to the historic vote on heal care reform. our guest host, indiana senator, evan buyia a lot to talk about today, and a lot of discussion. about before we get to it let's check the morning's top stories. sfurts are under pressure, right now the futures are down by about 57 points below fair value. s&p is down as well. it's down by 7.5 points below fair value. google is expected to announce

its plans for china china as early as today. two months ago the search giant said it would not abide by china's search engine rules. and four rio tinto employees pleading guilty in shanghai to allegations that they accepted cash bribes while working for the company in china. the corruption case rocked the global steel industry last summer and strained diplomatic relations between china and australia. it's a story being followed lowsly today, as the continuing relations between china and united states face a series of pressures. let's get to carl standing by in washington. >> as we watch rio tinto and watching health care legislation on its way to the president's desk. we think he might sign in the next couple of days and sign the reconciliation bill in the next week or so the house passed the senate bill with a 219-212 vote late last night. 34 democrats and all republicans saying no to the pressure and the debate continues this morning at 8:30 eastern. republican congressman charles

bousany and democratic congressman debbie wasserman schultz battling it out. and senator bob corker of tennessee saying it will hit his state hard. and the market begins at 5:00. we had bernanke talking in favor of it on over the weekend. geithner speaks today at the american enterprise institute. and corker has about 67 revisions. shelby has got 110. just between those two gentlemen. so we'll see if that is spelling out a theme here about how rancorous that debate is going to be. >> yeah. it's it could rise to the same level, maybe with the popular anger. the bill affects every single person in the country. our steve liesman joins us with a special guest, st. louis

fed president james bullard. >> thank you for being here. your district includes two-thirds of the state of our guest host district. >> it's no coincidence. >> no coincidence. >> i'm going to be listening carefully, jim. >> let's start off with another area in play, which is fed policy. the federal reserve just affirmed the language exceptionally low for an extended period and you voiced your options about that. are you still opposed to the use of that language in the statement? >> well i haven't come out and opposed the language. i said i was sympathetic to president honig of kansas city, who dissented. i think the "extended period" language is putting us in a box. people are interpreting that as a date certain when we're going to raise rates. that isn't the truth. the truth is that it will depend on the data. so if we could swip to some language that would get the data dependence in there a little better, i'd be for that. >> do you feel like that language is going to serve the

fed well for the next several meetings? or is that something that you fed, you think needs to start backing off from right now? >> if we could do it in a way that would get the data dependence, get markets to focus on, how is the economy going to perform, how is the, how is inflation coming in, so on and so forth. and then have that be what's dictating when we're going to raise rates. instead of saying, it's some certain calendar date, we're going to raise rates, it makes no sense. >> on friday the second circuit court of appeals in new york ruled against the federal reserve and said it had to disclose borrowers from the federal discount windows. how do you feel about that? >> the chairman said on many occasions said it's no the a good idea to reveal pearl borrowing at the discount window, that could trigger a run, be contagious from bank to bank and perhaps you collapse the whole banking system. so this is a case where i'm all for revealing as much information as possible, but

this is case where it could be very dangerous. i think we oppose that. >> and today, the senate is going to start marking up the regulatory reform bill that excludes or would take away supervision of the federal reserve of the small banks. which banks that you routinely supervise. >> yeah. i've argued against that i think it's a bad idea. the way the bill is right now, you've got you know, the fed in charge of the very largest banks. and nothing to do with the community banks. that's going to create a biassed fed going forward that's only looking out for the very largest banks. >> don't talk to me, talk to him. >> well i'm sure -- >> i'm sure the senator knows this argument. >> i've spoken up on behalf of the fed retaining a robust regulatory presence, receive. i think it's important to getting the monetary policy right. and i think anybody else is going to have to work their way up the information curve. the fed made some mistakes, i think they learned from the

mistakes. jim, i'm all for you keeping your finger on the pulse of the american economy. what would you learn from the american banks that you can't get? >> the big banks are the big global enterprises, the middle of big deals, putting together huge companies and things like this. the small banks are really lending to small businesses. the job-creators in the economy. it seems to me you'd want to know a lot about that if you want to make good monetary policy. >> the feds can't get that information at this point? >> i think you lose touch. you definitely lose touch.z fino get the you lose touch with main street america. >> you say it's qualitatively different data you get from the small banks compared to the large ones? >> i think so. it means that you're in the bank, you understand what, what they, what kind of problems they're facing, what their loan demand really is. you know, you're understanding what, what they're really facing

on the ground. and i think it's a very different thing than to go into goldman sachs. >> a very wise man, he got his p ph.d. from indiana university. >> you got to love it. >> it works for me. >> president bullard, you talked about the oversight you've had in the past and senator biden pointed out that he's very much in favor of you keeping the power. but there were some mistakes that were made. where do people fall down in seeing things like repo 105 and seeing the problems in the big beverage that were taking place? >> mistakes were made, but not on the small bank regulation. that has worked fairly well. for the very large organizations, frankly, the fed didn't have any regulatory authority over lehman or bear

stearns or any of the investment banks, none of the big insurance companies, prudential, aig and none of the hybrid companies like ge capital. you've got to get the central bank to have the complete view of the whole financial landscape, they have to understand going on. bus what has happened over time, we used to have the banking system, but the shadow banking system has grown and grown and that's where most of the problematic institutions were. those weren't under fed guidance during this thing. so we did not have a team sitting in bear stearns telling us, okay, here's what bear stearns is really facing. here's what's real going on at bear stearns. >> that's an argument for even broader. >> yes. and that's where we should be going. and some of the provisions of the bill are going in that direction. >> can you remember when trichet

said we only have to worry about one role for the fed. can you tell me about all the varied roles for the fed now? are there five, six, seven? you said you're uncomfortable with that language. it almost seemed to indicate that you want to tackle bubbles before they get too inflated. is that part of your role here? >> you're saying what is the mandate? >> how many different roles do the fed have and is there any way that you can be a jack of all trades? >> i think the fed has three roles and there's no getting around it. you've got to keep inflation low and stable. you want to stabilize the economy to the best of your ability. and you want this financial sfablt. i think implicitly those three roles have always been there. always been there. >> that could be consumer protection, monitoring banks. you can do all of those things. you're very smart. you have a ph.d. as we just figured out. >> that doesn't mean anything. >> that's a lot of -- >> for a guy like ron post,

there wasn't even, part of the constitution you know, creating the fed. that's a lot of responsibility for one organization. >> it's a daunting task. but this is what you have to do. what are you going to do, let financial stability slip through the cracks? that doesn't work very well. this is where you have to go. >> you made the point that no matter what happens, because the fed basically controls the printing presses and has the emergency lending facility, that no matter what system you design, the country is going to look to the fed in a financial crisis? >> yeah. and it's just so true. if you look at the uk, they made a decision to separate off regulatory authority into the fsa. and then they got the bank of england sitting over here and the crisis came, and everybody went running to the bank of england. why? they've got the money. that's what happens in a crisis. so you've got this lender of a last resort role and there's no getting around that, no matter what you do in the legislation. everyone will run to the central banks. you've got to be ready to handle that. >> back to joe's point, the

consumer protection, having a dual mandate of protecting the nation's monetary policy and making sure that the financial system is in the right place, does it make sense to mix that with consumer protection? because when we've seen institutions that have dual mandates before, you think of fannie mae and freddie mac. >> i think the senator can comment on that. what i understand the bill is, it's an independent entity inside the fed. i have questions about that. but maybe the senator can caulk to that. >> it's an unusual hybrid we have here, which is what's the old saying? a camel is a horse that was designed by committee? this is a consumer protection bureau housed in the fed, but for all intents and purposes, they're just renting space there. they have their own budget, their own rule-making authority. but if one of their rules threatens the financial integrity of the system, that can be appealed by the prudential overseer to the systemic risk council that the fed is part of.

so it's a pretty complicated system. >> it's like the sunglass hut at the mall. it sets up and leasings space in the lobby. >> can i just bring up one concern about that? i do not like the importing fed credibility on some -- bureau that we don't have any say over. >> they'll have all the responsibility but none of the authority. >> that's problematic, senator, do you think that's something that -- >> well clearly, the consumer needed greater protection. some of that came to light following this crisis. but at the same time people had concerns about establishing a separate entity that might take on a whole new level of mission-creep so to speak. so this was the compromise. how do you protect the consumer. on the one hand without creating an entity that might get outside of its lane on the other. it's one of those things that practices has to be debated further as the legislation goes

on. >> we heard chairman greenspan say, that since he can only control the short end, he wasn't responsible for what happened in the long end. a continuing defense of the low-interest-rate policy. and other guys says you've got to watch the credit spreads. and when they get to zero, you need to know it's not safe keeping things that low. has the fed learned? is that what you're talking about? >> didn't chairman greenspan famously say that history has not treated low risk spreads very well? i think that was turned out to be a very prescient saying. >> but it happened again, didn't it? >> it did. >> and it almost took it down all the way. >> i thought he said it in the 2004-2005 period. so we were looking at the low spreads. but maybe not emphasis on that. >> you've got some really important decisions to make with regard to the quantitative easing and how we begin to get back to a more normal situation. what will you look at, jim? what are the data you will look

at to determine whether this recovery has become self-sustaining and we've achieved the escape velocity that will give you the confidence to begin getting back to a more normal situation? >> i think we're on track. i think we're recovering. we'll continue to have positive gdp vote in the first half and throughout the year. >> do you look at job creation and confidence? >> it's been frustratingly slow, i know. but list be here, i think we'll get some good months of jobs reports coming up very, very soon. we're looking for march to be strong. and hoping that will carry on in a couple of months following that. i do think we're about to turn the corner on jobs, we'll be watching it very carefully. >> noncensus-related jobs? >> yes, when you see the jobs report, you'll want to separate out how much is census and how much is not. the census jobs are real. >> jobs other than government hire. >> back to the senator's question, what is your preferred way for the fed to get out?

should the fed raise rates and keep that $2 trillion balance sheet the same? or should it be selling assets first and then raising rates? >> i've been advocating sort of a lifo policy, last in, first out. so you brought your rates down to zero. then substituted quantitative easing for the fwakt that you couldn't bring rates any lower. now it seems the natural thing is to withdraw the quantitative easing and raise interest rates. >> this is what is so great about having senator bayh on. senator bayh if the fed starts selling mortgages and that raises interest rates, that's going to be a lot of political blow-back. >> particularly at the time we have a lot of adjustable rates resetting for the residential side and you've got some bills coming due on the commercial real estate side. not a great time to have rates potentially rising. >> this is a story about ordering. the question is, should you, should you raise, your

traditional short-term rate, which is supposed to have an effect on the whole term structure. or should you had sell some mortgage-backed securities in a slow and easy way. north to get the balance sheet back to normal in a reasonable amount of time. i would take the second policy versus the first policy. they're both tightening policies and you wouldn't embark on either until the data tell you that the recovery is strong enough to with stand a little bit higher interest rates. >> what about the timing of all that? you guys are doing a lot of stuff to get ready for a party that doesn't have date yet. when you say -- you know, i mean, we're dressing up, we're basing the discount window, dressing up with reversed repos. is that a this-year story? is that a next-year story? >> i know there's been a lot of talk about exit strategy for long time, but that's because these policies are extraordinary policies, off-the-chart policies, that zero rates,

tripled the balance sheets. so you have to be planning ahead about how you're going get out of here. these things do not happen in a quarter or two. they'll happen in a period of years. >> i talked to the president of the kansas fed, he said we should be at 1%, that's closer to where we're going than zero is. >> he makes a powerful argument, if you come up a little bit, it's still a really, really easy policy and i have some sympathy for that. but i think it's a little early to go there. >> would you embark earlier on a strategy of actually selling assets, there's not a lot of support for that on the board from what i can tell. >> i think there's more support than you think. and i think you could do it slowly. you could do a little bit at first and ramp up later. it's all data dependant. and the prerequisite for anything, to do anything, is to see the economy on a firm recovery. >> do you expect that?

>> i do expect that. it's not going to be a roaring recovery. it doesn't look like. but it is going to be a reasonable recovery during 2010 here. >> now, that was great. reasonable recovery compared to what we've been through. >> questions for your colleague from indiana. >> i'm glad it's the ph.d. from i.u., making these decisions. >> are you concerned that the senate is going to come up with a bill, stripping the fed of the whole system that was ultimately designed as the counterweight to washington and wall street? >> i have some concerns about that. but you've got 0 remember, the initial proposal was to strip them of everything. so this is one of several items that needs to be further debated as we go along. and as i understand it, bob corker is coming on and i'll be interested to hear from him. it could be that the political process is fairly truncated so some of it could play out on the floor of the senate. >> do you think we're going to

have the deck stacked with doves by the president? the deck stacked with doves? >> no, i don't really think so. i think janet yellen is on the committee now and she's moving from one side of the table to the other side of the table. she's been in the fed both as a governor and as a president. so she has great perspective on the -- i'm not sure who the other two nominees might be. >> i went, let the good times roll, let's go. how much longer are we going to live, senator, right? easy monetary policy now. and you guys can tighten when i'm 80. >> but other days you think it's the rate thing, joe. >> yes. >> you're a true keynsian, joe. >> can't we just do it? >> president bullard, thank you vex. and steve, thank you. again we'll be talking more about these issues in ten minutes' time with senator corker. right now, a quick break,

we've got a lot more coming up. we'll talk about the futures that have been under pressure and why they've been under pressure.

all right. welcome back, everybody. the u.s. equity futures are still under pressure at this hour. it's not necessarily because of the health care names that are under pressure. if you look at stocks like aetna and cigna that are higher. dow futures down by about 47 points below fair value. so keep an eye on what's been happening with the futures. over the last eight sessions before friday, the dow had been on a straight-up winning streak, on friday gave back some gains. nnchts the headlines, the uk is expected to launch a $3 billion green investment bank. details to be unveiled in wednesday's budget. the goal is to help britain's transformation to a low-carbon economy. it will help finance projects like railways, offshore windpower generation. the debate over health care reform far from over. we'll talk to republican congressman charles bo everyone

ustany and debbie wasserman shuts. and also senator bob corker will weigh in on health care, saying the bill will cost his state of tennessee, and future generations very hard. we'll talk financial reform as well, as the dodd bill gets marked up beginning at 5:00 tonight. in the north of england to my new job at the refinery in the south.

i'll never forget. it used one tank of petrol and i had to refill it twice with oil. a new car today has 95% lower emissions than in 1970. exxonmobil is working to improve cars, liners of tires, plastics which are lighter and advanced hydrogen technologies that could increase fuel efficiency by up to 80%.

welcome back to quack box here on cnbc, first in business worldwide. still ahead, google preparing to announce its plans for china. plus squawk is back in session. congressman and doctor charles boustany and congresswoman debbie wasserman schultz square off on health care and we'll

turn to financial regulatory reform. now that we're done with health care. we're going to go on to that. we've got going for us. >> and the rest of the economy to deal with. >> yes, exactly. with republican senator bob corker. you just heard our guest host, democratic center evan bayh, a long line of senators. >> someone called that a genetic defect, joe. but we're proud of it. >> when was your father first elected? >> 1962. he came in with -- >> from being, growing up in ohio, senator bayh being right in the neighboring state. >> the election was just after the cuban missile crisis, which had a big impact on that election. and he was elected by only one vote per precinct. >> and how many terms? >> three terms. >> 18 years. >> yes. >> and you were governor? >> i was governor for two terms and secretary of state for two terms before that. and was out two years and have been in the senate starting my 12th year. >> amazing, great to have you

here. becky's you know -- >> my hometown. my home state. >> she's part of the hoosier diaspora. we try to claim her. >> i was born in indiana and i graduated from high school there. and my parents grew up in indiana. >> you went to colorado. >> i never went to colorado. that was you. >> oklahoma i was eight years, texas i was five years, but my roots all go back to indiana. >> once a hoosier, always a hoosier. >> got roots in all 56 states. anyway, let's check the markets this morning, the futures are headed lower, down about 50 or so. now 41 points. what are traders watching this week, brian battle of performance trust capital? >> joe, good morning. i think the first immediate benefit is going to be, there's going to be, there's got to be a repricing in stocks. some of the staxs that were

agreed upon last night for high-income urners and for unearned income, a term i hate, dividends and interest, that's going to have to reprice stocks lower, because the dividends will be worth less to high net worth individuals. this week a lot of economic numbers, gdp. i'll talk the under in all the housing numbers. the housing market still has a problem. a lot of talk out of the fed and hoenig will give a talk and maybe some interesting disagreements between ben bernanke and the rest of the team. >> as far as health care goes, you're focusing on the overall effect maybe of the taxes on unearned income? >> sure, there's a larger political argument that we shouldn't be monkeying around, the government shouldn't be intruding in our freedoms. but i'll ignore it it for now and dividends will be priced less and you receive the dividends and you make over a certain amount of money, it will have less value to you. the price of the stock has to

decline. >> we're already looking at that's going to change at the end of next year with the bush tax cuts, too, right? >> right. you'll get a double whammy on that one. and on top of that you get the health care surcharge, so the high net worth people, the people that are actually paying taxes right now, are going to get a bigger knock with this kind of momentum, it looks like the bush tax cuts probably don't have much of a chance. i think there's going to be a lot of power to let those tax cuts expire. so there's going to be a big drag in the economy with increasing taxes and it just doesn't help business formation and it doesn't help valuations of existing businesses. it's going to put a lot of pressure on equities. the good news is all the bond market fixed-income people don't fear inflation. so the bond market looks like a safe place to hide, because higher rates seem like a way long way off. >> brian battle, thank you. >> all right, joe. let's talk about a few other headlines this morning, four rio

tinto employees pleading guilty in shanghai to allegation has they accepted bribes while working for the company in china. it rocked the global steel industry last summer and stra strained diplomatic relations between china and australia. and steven freiberg will take the post of president at e trade. and google is expect the to announce its plans for china as early as today. jim goldman is here with the latest on that. >> happy monday to you. will they or won't they? it seems google has backed itself into a diplomatic and financial corner with little choice except to leave the chinese market since there's little chance that the government there will back down and google continues to demand that search censorship is a deal-breaker. backing oust of china seems to carry huge consequences, google trying to tap the 300 million

chinese web surfers, but in the four years that google has been operating in china, the company has seen little to show for it, $300 million to $350 million in revenue. about 1.5% of google's total global revenue. the company is down about 5% on all the chinese controversial, while the chinese company baidu. possibly to apiece the chinese government. unlikely that yahoo stands to make any gains, either, having its own problems with china. and quickly running to google's defense early on. google's ceo eric schmidt knows the world is watching and waiting for his company's decision. >> there's a huge debate about how powerful these tools are against repressive regimes and free speech and those kinds of things, google is embroiled in this controversy with china. i will tell you that eventually

the tanks trump the internet. that it is still the case that you can roll the tanks, and you can stop it. but people have long memories. and that's i think the contest that we're going to see in the next few years. >> that was eric schmidt, march 10th in abu dhabi. >> google controversy in china, immaterial. diplomatically, it is another story, if google does make a decision, i'm told the company will likely announce the news on the corporate blog and you can imagine that's getting a lot of refresh hits this morning, becky, carl, guys, we're expecting some kind of decision today, at least today, possibly this week. >> jim, thank you very much. >> i'm here, too, jim. nice to see you. >> i didn't see you there, joe. >> he was supposed to toss back to me, but he looked at the

prompter and he tossed to carl. you got under his skin. >> i can't win with joe. the google news on any other day would be a lead for us. but the health care vote obviously the lead today, getting votes it needed to pass, not without plenty of debate and ra wrangling from the white house. joining us today, congressman debbie wasserman schultz, chief deputy whip. and congressman bostony. what's it like today? >> this has been a marathon, not a sprint and we've got a few steps to go to the finish line. so it's be a incredibly amazing feeling knowing that we've finally gotten the senate bill into law. the president will sign it cover 32 million americans, with deficit reduction. but with by $143 billion. slow the growth of medicare and

add nine years of solvency. the american people really won last night. >> is it time for a reset? are we capable of having a reset in congress? >> if we look at this, we know we have a long way to go. i believe there are going to be a lot of unintended consequences from this massive bill. of course, we all know about the major tax increases across the board in the face of a recession that are going to hit businesses pretty hard. but i'm very concerned about the long-term fiscal outlook as a result of this bill. the congressional budget office gave us preliminary figures. but in something so complex as this, it's really hard to get accurate projections. and that's why republicans felt that we should go, step by step, break it down into workable parts with an eye toward getting toward a comprehensive solution. >> the incrementalism debate, i wonder if you think that's been settled? >> step by step was shorthand for do nothing. the republicans, during the 12 years they were in congress and the entire government, didn't make health care reform a priority. we did.

and look, with all due respect to my friend dr. boustany, just because he says it doesn't make it true. this legislation will provide the largest tax credit, the largest tax cut for small businesses in history. up to 50% of reductions in their premiums when they provide insurance coverage to their employees. $143 billion in deficit reduction. the cbo numbers were solid. they don't put them out and have them be on shaky ground. >> the point is it will be up to future congresss to make sure the numbers stick, yes? >> of course, it always is. but just in this calendar year, we have really significant reform that americans are going to feel. insurance company abusive practices will end. children will no longer have to be denied coverage or dropped because of a preexisting condition. the doughnut hole for senior citizens will begin to be closed and fully closed in the next ten years. and a lot of important reforms that the republicans, with all

due respect, had no interest in making. >> congressman demint will introduce some revisions. are there any people waking up thinking, this doesn't happen, will it become law sm. >> there will become law, i'll spend the rest of my congressional career, trying to undo some of the problems with the bill. >> do you think it's fixable in that republicans can find ways to operate within the context of the broader bill that's been passed? >> we're going to have to take on these unintended consequences and problems and deal with them as we go. i'm kwibsed, as a doctor, not taking the 30,000-foot level, but at the clinical level, i think we're going to see some serious consequences clinically. we already have shortages of doctors and nurses, this is not aid kwatly addressed. quality, as a whole, is not addressed in this bill and i see ser yus cost issues going forward. keep in mind, that the congressional budget office

certainly did not add in the doctor fix in this. we've got double counting with regard to the class act. which is a new long-term care entitlement that's been created. i think it's on faulty footing. so these are issues we'll have to address going forward. >> here's peggy noonan writing on friday before this, any of this happened. she wrote, i wonder at what point the administration will realize it wasn't worth it. worth the discord, worth the diminution in popularity and prestige. worth the deepening of the great divide. what has been lost is so vivid, what has been gained, so amorphous, blurry and likely illusory. are democrats going to have to pay a price, even that they're willing to pay? >> i think we should ask david frum, president bush's former speech writer, that question. who wrote an essay that was published yesterday. that said that the only waterloo that anyone is going to have to deal with are the republicans. because the significant reform that we've accomplished, the fact that we put patients and

their doctors back in the driver's seat and not insurance companies, the fact that we're really aggressively addressing the deficit. at the end of the day, consumers are going to realize that this was a really good thing to do. and to be honest with you, i dare the republicans to repeal this. because this is significant reform. that the american people are not going to want to give up over the in connection few months when we're able to talk to them about what we've done. >> is this, does that send chills up your spine? attorney generals who are filing suit, should they be bolstered about i that comment? that dare? >> carl, we could have done better. i tried from the very beginning to make a bipartisan effort in this, with my background in health care. i did reach across the aisle. we did try to get some common-sense activity going back and forth and it didn't happen. and what we have now is a partisan complex bill. there was bipartisan opposition to the bill. the unanimous republican opposition to the bill. but we had a number of democrats who were opposed as well.

i believe we're going to spend a lot of time, my entire congressional career, going forward, trying to deal with some of the unintended consequences of this. >> look, the american people watched president obama and the democratic leadership reach out over and over across the aisle to try to get republicans to come to the table and sit down and reach bipartisan compromise. that's exactly again, what david from said, is they had an opportunity, they blew the opportunity. so instead we move forward with the reform that we know is going to make sure that will put patients and doctors in control of health care. and make sure that we can reduce the deficit and add solvency to medicare. >> does it embolden the democrats to swing for the fences on other things, too, because you were able to get this done? >> no. what we were emboldened by the election in november of 2008, when the voters elected barack obama as president of the united states. urged us to move this country into a new direction and voted for change and that's where we're going to press forward for. >> it will be an interesting few

months into november. good to see both of you. thank you for your time. congresswoman debbie wasserman schultz and charles boustany. up next, senator bob corker of tennessee. "squawk box" continues in a moment.

health care reform taking center stage following last night's vote. but it's financial reform, the debate heating up as the mark up of senator dodd's bill begins today. joining us today, republican senator from tennessee, bob c k corker, and back home, our guest host, democratic senator from indiana, evan bayh. also on banking. senator, welcome, you want to just touch on health care, get it out of the way? >> i think everybody understands what happened last nirt and there will be some reconciliation action on the floor. i think enough's been said. >> it's been said to us this morning that if you're a banker, watch out. because with that now done, it's going to, it's going to give

democrats the momentum they need to approach this in as partisanly-pure way as they did health care -- true? what's going to happen tonight? >> i think we left here friday, i know we left here friday thinking we were going to have a real mark-up this week in the financial, on financial reform. and i think you know, look, i turned in about 98 amendments, i know senator shelby turned in a lot. i actually coordinated with some of my democratic colleagues, thinking this week we were going to talk through a bill and negotiate fine points and get it into a place that hopefully was middle of the road. over the weekend, without going into a lot of detail, but with multiple conversations, that changed. and so what will happen tonight is probably there will be no mark-up. there will be, you know, some opening statements and the bill will pass out. and so here you have a 1300-page bill that has is chock-full of substance that actually matters.

that really won't be vetted. and i think the process, if i could have expressed my thoughts this weekend, there might have been some bark coming off trees. obviously, i wouldn't do that. but the fact is that i think there's probably a better opportunity to get a middle-of-the-road bill done before it goes to the floor. probably for lots of reasons, not going to happen in committee. and for those in the audience that are business guys and sort of have those type a personalities, this is one like i hope i have, this is one of those cases where you have to sort of bite your lip and realize the goal is to have a good policy. to have a policy that will stand the test of time. and you have to put aside sort of interim shenanigans and focus on the longer haul. that's what i want to do. i want to see us get a good bill. >> you can't give us any clarity on what happened over the weekend that made this so? >> i probably shouldn't. i think that all i can say is, there really won't be a mark up.

and i think we have, i think it's probably true that we have a better opportunity with different cast of characters, the full senate, to do something that is sound policiwise. just to get this out of committee. i regret that. because i think there are numbers of members on the committee that i'm not trying to knock anybody. i know evan is not one of these. that candidly probably don't know a lot about what's in the bill in the first place. >> bob, can i jump in here and say i share your disappointment as well, i was looking forward to trying to get to yes on this bill and let me take this opportunity to commend senator corker to the viewers out there. he's really one of the people who is trying to get to some sensible common ground here and he stepped forward at a time there was an impasse, to try to get to achieve that. and i share your disappointment. i think it's important for the viewers to know that in this particular case, unlike health care, since the reconciliation process does not apply to financial regulatory reform,

there is no choice other than a bipartisan compromise solution. one side does not have the ability to impose its wishes on the other side. so i think there's some folks out there who are thinking they're going to have it all way way or nothing. and that's just not going to happen if we're going to get anything done, so i'm glatt i e can have what is essentially a mark-up, even after the mark-up's over with. looks like that's how it's going to have to happen. >> well, evan, i agree with you, and as all of us, we're sad to know that you're leaving this ball. you are one of those people that i think does try to reach middle ground. >> i'm finally back on my medication, bob. that's what happened. >> does this push it past easter? are you going to be working through that? >> well, no, because -- i mean, my guess is the bill will pass out on party-line vote tonight, and so, you'll have easter recess, and that's when, i guess, over the course of the next several weeks when the real negotiations will be taking place. and again, you know, for what

it's worth, we were, you know, our staff was with dodd's staff all weekend. so, even though, you know, the bill has taken a sharp turn to the left, and i think everybody would acknowledge that, we have continued to try to work through issues and we'll continue to do that, you know, up until the time the bill hits the floor. >> but we -- >> bob: i say one more thing? you referred to my decision to seek other employment. the thing that is frustrating to me is that things that are even obvious to being done, we came close to having a complete and final meltdown of the financial system. it's obvious we need to act here, and even in a case like this, we have trouble getting close to yes. i hope you don't get too discouraged and keep trying to find common ground and i intend to work with you across the aisle. let's keep at it and i think the american people are expecting us to act, so let's do our best. >> look, i know we've done some things on energy together and i think we can do that on this bill, too. you're right, this is not a partisan issue. i do think that -- i hope the white house, without being too

prejorative here, i hope they will sit tight and let folks in the senate prevail and let's end up with a bill that's down the middle of the road. a lot of times, evan, as you know, people think bipartisan means getting everybody on your team and one or two on the other's, and that's really not bipartisanship. a great bill coming out of committee would have been to lose three democrats, lose three republicans, get it out of committee, get it to the floor and get an 80-vote bill. and even though, obviously, i'm very disappointed about the process, the long-term goal is to get to that 80-vote bill and i'm going to continue to work towards that end. >> i share that goal, also. carl, if i could just interject one thing. viewers may notice that bob's a former mayor, a former businessman. you can really tell the members who have had to run something, and to be accountable for actually implementing things as opposed to just voting for them in theory. people who have been governors, mayors, businesspeople like bob, tend to bring a more practic

practicalable approach. >> and former governors. >> those who say, senator, they've seen this movie before, legislation struggles in committee, it goes to the floor, it's important to the white house and ends up like it did last night. you don't see that scenario repeating itself with financial reform? >> well, it could. you know, i do think -- and i said this a couple weeks ago in a press conference -- i do think that health care legislation has balled this up a little bit. i don't want to dwell on that. i mean, think about it, we have a bill in the senate banking committee exactly at the same time reconciliation is taking place. i'm sorry it did, and i know that senator dodd, who i've had a good partnership on this -- i was obviously disappointed things stopped. and again, i think there was white house pressure on that, in fairness. i think that there still is here a great chance. i know senator shelby truly

wants a bill. i know that senator dodd expressed strong feelings towards wanting a real bipartisan support bill, an 80-vote bill and i want the same. i think we'll get there. i really do. >> joe? >> they can't ram this one through, right? you'd need 60, right? >> well, you do need 60, but you've got -- you do need 60. it's possible, though, you pick up two or three folks in a tough race or whatever. but i don't think that's where senator dodd wants to be. >> joe, do you remember when senator corker came on, it must have been in november? >> yeah, 90% that health care would go. >> we asked him the odds of the health care bill. >> that was before scott brown and then -- >> yep. >> at the time, we're all naive and we thought that scott brown meant it wouldn't go through, when actually, it meant it couldn't get any worse, so they're going to vote for it. i mean, they had nothing to lose at that point, senator. >> are the odds as good for financial reform, as you said they were for health care? >> 90%, absolutely. >> really? >> senator, do you think the same thing?

do you think it's 90% odds that financial regulatory reform gets passed? >> i think the odds are still good. i think what may be going a little bit are the politics of the financial regulatory reform are kind of the opposite of health care reform, where it was unpopular for the democrats. here with the vast majority of americans, financial regulatory reform is very popular. so, bob what may be going on here is we may be trying to take a hard line, the democrats, in hopes of picking off one or two of your members. i think ultimately that won't work, and i think, becky, the odds are very good that we will end up with a meaningful compromised bill that does get enacted. because having been through what we've been through, i don't think people want to go to the polls this fall not having prevented a future crisis from taking place. that would be shameful. >> or at least doing something that may have felt like we did something -- i mean, you can't prevent a future crisis. >> well, at least you can prevent the last one from reoccurring. you can't predict the next one. >> yeah, exactly. >> if i could say one thing, that is the interesting thing. this bill still yet doesn't even

deal with the base issue of the crisis. i mean, it doesn't deal with the underwriting. those are some of the amendments that i had planned to offer this week to deal with the underwriting in the first place. i mean, if you deal, you know, by the leverage, the derivatives, spreading the issues all across the world, those are all important things, but until you get underwriting right, we're going to continue to have these kinds of issues, and someone just said we're going to have another financial crisis. of course we are. i mean, we have them ever so often. no bill is going to prevent that. but you know, there are things in this bill that need to be strengthened. there are additions that need to occur. and then we need to make sure it's not a christmas tree. i mean, things have been added to this bill that have nothing whatsoever to do with financial reform because people think it's going to move, it's going to become law. so, hopefully, working with evan, a sane, thoughtful person, and others, hopefully, we'll end up with a good, a good middle of the road bill that will stand the test of time. >> well, we won't be watching tonight, i guess. we'll watch something else.

>> going to be pretty boring tonight. you might watch for a little while. >> senator, thanks for your time. >> thank you. >> we'll be back in a second. final thoughts with senator bayh.

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