>> rose: welcome to our program. tonight, a look at the supreme court's consideration of health care reform legislation. we're joined by four legal experts, walter dellinger, jeffrey toobin, stuart taylor and richard epstein. >> this is the biggest case involving the power of the federal government since the new deal. and, you know, if this law is struck down, the federal government is going to look very different the next day. and lots of plans and lots of existing programs are in jeopardy. so, i mean, as big as you think this case is, it's actually bigger. >> three provisions are clearly at stake, one of which is unpopular-- because it's misunderstood, the mandate-- two of which are extremely popular

and it's sort of an act of political malpractice that no one knows but that the unpopular provision is before the court and they don't know the popular provisions are being challenged. >> rose: we conclude with a conversation with lowell bergman, the producer of a "frontline" documentary on pbs about the murdoch investigation in london. >> what's at stake is not only a lot of the coverage, which is focused on the family and who's going to succeed rupert but it's also the basic notion of how he built his'm tire because when you think about it, these tabloids in the u.k. were the foundation, the money machine back 30 years ago that helped him grow in the united states, pushed him forward. they were a phenomenal success. >> rose: the supreme court considers health care and the murdoch investigation in london when we consider.

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from our studios in new york city, this is charlie rose. >> rose: today the supreme court of the united states began three days of oral arguments on president obama's signature domestic achievement. the health care reform law. congress passed the patient protection and affordable care act in 2010. the court's decision is expected in june. health care coverage for tens of millions of americans is at stake. the rule willing also have enormous legal and political implications. the central question before the justice is this: whether the law's individual mandate is constitutional. that issue will be argued tomorrow. today's arguments address whether the court should delay a decision on the merits until 2015 when the mandate takes effect. joining me now from washington, d.c. walter dellinger. he was the acting solicitor general during the clinton administration. jeffrey toobin of cnn and the "new yorker" magazine, stuart taylor of kaiser health news and joining me from chicago is

richard epstein a professor of law at new york university. i'm pleased to have them here. i first want to address this one question for each of you and i'll start from left to right with walter dellinger. how important is this supreme court case? walter? >> well, you know, the answer to that is twofold, charlie. because it would be of enormous consequence if the court were to told that this regulation that affects one seventh of the economy is outside the scope of congress's power to regulate commerce among the states. that would be, in my view, an extraordinary holding. if the court holds-- as a couple conservative judges did below, like judge silverman and judge sutton that of course it's a regulation of commerce or as others have argued it's a regulation of inevitable commerce of people that will engage in health care. it's a very limited ruling and i don't think it would be of great

consequence. it's only the thought that the court might strike this down that makes it seem like a big case. >> rose: jeffrey toobin? how big a deal is this? >> epic, awesome, enormous, huge. >> rose: (laughs) >> really, this is the biggest case involving the power of the federal government since the new deal and if this law is struck down the federal government is going to look very different the next day. and lots of plans and lots of existing programs are in jeopardy. so, i mean, as big as you think this case is, it's actually bigger. >> rose: stuart? >> i agree mostly with walter except upholding the law could also have large consequences. at least so claim the people challenging it. they claim the next thing the government would have the power to tell people they have to buy a ford car, for example, or a g.m. car. but probably the best way of measuring its importance is the number of hours the court allotted for arguments.

six hours for argument over three days. that's more than they've done in any case since 1966. >> rose: richard? how significant? how big a deal is this? >> well, it depends on how the ruling comes down. many of the people like myself who are opposed to the statute would say as follows: we do not have to strike down any of the existing laws that you have. you recognize this particular law is an extension on the individual mandate, strike that down and examine severability and you don't have to worry about whether the civil rights act is unconstitutional or the dodd-frank act is unconstitutional as well. if it's treated in that particular fashion than the importance is not so much for the precedence, because there will never be an individual mandate, it will be for the way in which one looks at federal power. the traditional view is regarded federal power because the ability to create national monopolies was the dangerous thing. the current progressive new deal who loves these natural monopolies and it's that which was sustained in an agricultural

cartel. >> rose: we'll come back to severability and the individual mandate a little bit later. but first day one. jeffrey, you were in the room today. tell me what it was like. >> it was so great. it was like the nerd super bowl. >> rose: (laughs) >> the only thing that was missing... you have to go in like a half hour early because there's so many people there and the only thing that was missing was that big head of walter dellinger hair which is usually circulating around. it's kind of like a little bit of a cocktail party between 9:30 and 10:00. but at 10:00 it was down to business. the justices appeared right on time as always and, frankly, today was very much an appetizer. it was just the issue of whether this lawsuit is premature. whether because the law doesn't go into effect until 2015 the decision should be put off and there seemed to be bipartisan agreement among the justices that the case is not premature. that the case should go to a

decision on the merits so i think this issue is pretty much cleared away and the merits is what we're going to hear tomorrow. >> rose: stuart, you were there as well? >> yeah, and to pick up jeff's analogy, i'd say the super bowl is tomorrow. the nerd show was today. (laughter) most of the argument would have been incomprehensible to the average american lawyer let alone the average american. i'm not disparaging it. that's just... tax law is very complicated by my favorite moment was when justice alito said to the solicitor general "you're here today arguing that this individual mandate penalty is not a tax. you're going to be back tomorrow arguing that it is a tax. and have we ever said that?" he had a good answer but it captured the complexity of what's going on at least in today's arguments. >> one aspect of what was done today that's important, you

know, the arguments that the tax injunction act bars this suit before somebody actually pays their $95 tax penalty for not having health insurance in 2015, there's a perfectly plausible argument so if the court wanted to postpone a decision they could easily say for now this is barred by the tax injunction act but both the challengers and the united states are willing to go to the mat on the merits and both of them argue no, it's not barred. now, the one point that did come up that's important is whether this is... whether there's a mandate that exists independently of the alternative requirement that you pay a penalty that starts at $95 and never exceeds 2.5% and the solicitor general was very emphatic that no one is forced as their only choice to have health insurance coverage. the solicitor general was emphatic in discussing this in questions asked by justice kagan and justice alito that if you

don't want to have insurance, don't want to buy it from a private party all you have to do is pay the penalty which never exceeds 2.5% of adjusted gross income and you're fully in compliance. justice kagan said "suppose someone didn't abide by the mandate but they did pay the extra percentage point or two with their income taxes and they're asked later when they apply for a job have you ever violated a federal law? what would their answer be?" and the solicitor general"the as no. this law just gives you an incentive to either have coverage or pay a relatively modest penalty and therefore it doesn't..." he didn't go on to say this but it doesn't raise the great issues of liber they people who are challenging say that it does. >> rose: okay... >> well... >> rose: go ahead. >> look. the liberty issue i think... it's always nice when you do these things so soft pedal the implication bus in terms of the

tax injunction act, 2015 is a long time away and right now people are drafting furiously all sorts of regulations to deal with what is an essential medical benefit and so forth. the thought that somehow or other all of this regulatory process is going to be in limbo when the exchanges have to be set up by 2013, it's such an incredible level of inconvenience. this is not a statute like a traditional tax where you either pay the money or don't pay the money. this is the statute because of the severability issues that if you, in fact, strike down the mandate and something else goes with it, the entire system goes into turmoil. so i'm convinced for all sorts of equitable reasons they will emphatically decide they're going to hear this case right now. >> rose: okay. i'm going to go to the mandate in just a moment which will be argued tomorrow. but this question, stuart, tell us how these cases came to the supreme court. how many cases were there and how have they decided to lop them together? >> there were a bunch of cases all over the country which led to three federal appeals court decisions by the 11th circuit in

atlanta, by the 6th circuit in cincinnati and by the district of columbia circuit. a fourth, actually, that went off on the anti-injunction act by the 4th circuit. but the one they're focusing on for purposes of their review is the one from florida in which 26 states plus a business organization, national federation of independent business, plus a handful of individuals sued to challenge the individual mandate and the states also challenged a provision expanding medicaid. the states... the 26 states say that this would impose a huge burden on them in terms of expanding the state's obligations under medicaid. other states, by the way, with more liberal governments have come in as friends of the court saying oh, no, we like the medicaid provision. >> rose: and how did they choose clemente to make the argument for? >> paul clem men stay probably the leading... one of the leading supreme court advocates

on the conservative side in the country and the state started with other lawyers, david rivkin and lee casey they figured clement is probably the king of conservative supreme court lawyers and so they went to them. no disrespect to the ones they had before. >> rose: okay. so, jeff, set up the argument for tomorrow. >> well, it's really pretty straightforward. the question is does the federal government have the power to impose an individual mandate? and the federal government... the solicitor general has argued in basically that there are alternative grounds for upholding the law. the first is the commerce clause which is the underlying premise, the underlying justification for most economic regulation in the united states. the article i says congress may regulate commerce among the

several states and that has been designed since the new deal to mean just about any intrastate or interstate transactions. they have also justified the law as under the federal taxing power. and these 26 states and all the others have argued that this law the overall structure, is such an intrusion into individual's private decision making, forcing individuals to buy a commercial product like insurance is outside the commerce power. it is outside congress's power to do that and thus should be declared unconstitutional. >> rose: and richard you think what? >> well, my view about this is i'm very uneasy about the new deal settlement and let me see if i can explain why. the situation early on in the american situation was that congress could regulate cross-border transactions. the moment they wanted to form cartels in the agricultural

industry they extended it much further so that you could essentially rig prices and prevent people from escapeing the tar tell restrictions or the cartel by consuming their own grains. i think the older vision of the american constitution is, in fact, the superior one. there's no way you can undo the previous stuff but it's quite clear this effort to impose the individual mandate is something which we've never seen before and the basic argument in the briefs that i wrote before the supreme court is if you understand the economic calamities associated with wicked and fill burn and its threadbare constitutional conversations you don't want to budge this thing one step further. in fact the individual mandate is part of a complicated statute and the rest of it is so rigid that if it does go into effect it's a very good chance it will falter and die. >> rose: walter? >> it seems this case doesn't push any great limits. even if you assume congress

cannot regulate people not presently in commerce this regulation can be defended because it regulates people who will inevitably and involuntarily be in the commercial market for health care. and because they are inevitably going to be consumers of health care, congress can regulate the way in which they finance that health care to avoid them from passing the cost of health care on to other people which often happens today with the uninsured governor romney in massachusetts i think defended this very well as a conservative approach of saying that, look, we're going to tell insurance companies that they have to stop turning people down because of their present or pre-existing health conditions or charging people a higher premium because of their health condition, but if we do that everybody will wait until they're already hit by a car in order to get health insurance so governor romney said we have to

have an incentive for people to go ahead and sign up. that's what this is. you can... i think if the court uphold this is-- and i believe they will-- they're not going to write an opinion that says congress can simply force anybody into any commercial transaction congress wishes. they're going to write a limited opinion that says that because everybody is going to be consuming health care no one can avoid it, everybody's going to have to finance it, congress can obviously regular the financing of this and that does not open the road to requiring people to buy broccoli or general motors cars. >> rose: which is an analogy they used. stuart, where do you come down on this individual mandate question? >> i lean to think that the court will uphold it and probably should uphold it but i'm not nearly as confident as walter is. i do think, as richard says, we've never... congress has never before said to a large group of american people "you must buy a commercial product of a certain kind." and that could cross the line. i'm not sure the congress would

take it much farther. i'm not sure the politics would tolerate it. but it's a legitimate concern. by the way, one irony of the case is if congress had passed a single-payer system, everyone gets medicare, we'll pay for it with a tax, there would be no doubt about its constitutionality, which raises the question, well, if you could do it that way, why not do it this way? to which there are two answers: one is the critics would say, yeah, and if you called it a tax it wouldn't have passed. and so... >> rose: i'd like that ask... yes? >> it's more than that. one of the things to understand is that you do not need to have the mandate in order to keep the control problem. you could have required once people buy insurance they keep it for a year and it's not correct to say the mandate is designed to prevent people from free riding. it has another more controversial purpose which is to force people who are healthy to subsidize those who are not healthy. so you get the government talking out of both sides of its mouth, it doesn't want

freeloaders but on the other hand it wants to mandate people to pay far more for their insurance than it costs for themselves and i think this sort of utter selectivity with respect to the ends of this program-- denying the obvious one and stressing the other one-- may create certain constitutional embarrassments for the government. >> to that extent it's novel in that it doesn't follow the new deal approach, it does use the private market. but like social security... >> no it doesn't! >> social security transfers people... it transfers wealth, obviously, from younger people to people who are over 65. everybody will eventually be over 65. everybody will eventually be in the need for health care. but part of the essence of this particular bill was not to create a national agency but give people an incentive to use the private existing market to purchase their health insurance. >> well, there's no private market left in the traditional sense once the bill is in effect. the mandates will cure that. and on social security i think

the key point to understand is the first generation came out like gang busters but the idea that once everybody's old they will even out, every generation gets the less return and the current generation gets a deeply negative return. it's a wealth-transfer system which won't be able to regenerate itself and the reason we like federalism is to prevent these systems which have huge negative affects on the overall operation of the economy. >> well, speak for yourself, richard! you don't like social security? i think a lot of people do like social security. >> well, they receive it, of course they like it. but the issue is whether or not it's a... you look at the rate of returns, they consistently go down and for everybody under 40 today it's deeply negative. >> richard thinks that the post-new deal cases are wrong. fair enough. that's a perfectly legitimate positions but the new deal cases exist! they are the laos of the land. they've been the laws of the land for decades. the idea that the supreme court would decide that the system of constitutional law which we have

all lived under for 60, 70 years is wrong is just incomprehensible to me. and, you know there are certainly good arguments-- some of which richard is making-- that this was not the law congress should have passed. that this is a bad idea, it won't work. fine. tell congress to go fix the law. but to tell the courts that congress is incapable of passing this law is a completely different order of business and i just think... >> we agree. >> ...a completely reordering of how the constitutional system is supposed to work. >> no, all one wants to do is prevent the extension. as i said before, we're not trying to overrule previous cases but walter gave this sunny view of how all these programs work for high social ends. all of that is flat out false if you study the figures. if you're going down the a losing road we're asking not to go down further. we're not asking to unravel things done before. so it is isn't a constitutional revolution. what it is is an effort to

stabilize the system and, in fact, if you look at the individual mandate it's part of a health care bill which is in many ways far worse. but that's not the issue. stop it and let them redesign this as stewart said which uses standard taxation and they'll discover they will not be able to pass it. >> rose: let me go to day three, severability. stuart, what's the issue on severability? set it up for me. >> the issue is if the court strikes down the individual mandate-- which is a big if, most people... most experts are predicting they won't, but they want to hear argument for 90 minutes on what happens if they do to the rest of this 2,700 page law with hundreds of provisions in it. does it all get struck down? does the mandate go down all by itself? and the court will hear three different positions on that. the whole thing gets struck down, that's what the challengers want, nothing gets struck down except the individual mandate, that's what a special friend of the court is going to argue and what one of

the lower courts held and then the government is saying only two other provisions would get struck down. most of the law would stand. the medicaid expansion would stand. the provisions that would be struck down are those that take medical history into account and denying people insurance and in pricing insurance the law is designed to prevent insurers from discriminating on grounds of your medical history. the government says this that would be a disaster unless you have the individual mandate because if people know they can buy insurance once they get sick they won't buy it sooner. >> rose: walter... go ahead. >> well, you know i think it's not clear to me and i don't have an opinion on how much else gets struck down other than the provisions about preexisting condition and community premium rates but what is striking to me about those two is that i think those have to fall if the

mandate falls because the government of the united states has already said in every one of its filings that if you strike down the mandates for people to have coverage to go ahead and buy their coverage then you cannot get away with requiring insurance companies to sell insurance to people whenever they show up. and what's striking about that is that the three provisions that are clearly at stake-- one of which is unpopular, because it's misunderstood, the mandate-- two of which are extremely popular. and it's sort of an act of political malpractice that no one knows but that the unpopular provision is before the court and they don't know that the popular provision is being challenged. 26 state attorney generals have brought a suit and if they win the effect will be that you can lose your health insurance and be unable to get new health insurance if you have a child born with a birth defect. where if you have asthma in the past you may find it impossible to get health insurance. if women have given birth by

cesarean they may not be able to get health insurance. all of those things could happen if the challengers to the mandate prevail and yet almost nobody seems to be aware of that. >> many of the thins that walter is talking about are covered by other laws not being challenged now. so this particular protection may go but some of the other protections will remain. in my own view it's not only that the guaranteed issue will have to go, i do not see how you can make thain anything associated with the private exchange market if it turns out that what you're going to do is to strike down the back stuff. the entire system of pricing, i think, will be necessarily impacted for the worse and there's an open and indeed i've argued in a brief i wrote that title ii probably should go as well because the size of the burdens that are going to be imposed upon the state us there its medicaid mandates are going to be heavily dependent upon the number of uninsured and all of the financing assumptions were there. the correct test is would they have passed the one part without the other? it's quite clear both title i and title ii is that this whole

thing was put up as an all-or-nothing proposition and it these stand to fall with that. so i think all these titles go and the rest of the statute remains. >> rose: jeff, is this likely to be a 5-4 decision with kennedy being the swing justice? >> well i think there are five votes that are very certain. the four democrats on the court-- breyer, ginsburg, sonia sotomayor and kagan-- are virtually certain votes to uphold law. clarence thomas has expressed a view of the commerce clause that is really contrary to... that would really require them to strike down the law. so i think those five votes are set in stone. the other four votes i think are up for grabs. i think anthony kennedy has expressed a view of the commerce clause that would subject he uphold this is law. so has chief justice roberts in certain cases. i think... a 5-4 bet is usually the safe bet in this case but i think 6-3 or 7-2 upholding the

law is also possible. >> rose: stuart, do you think that's right? >> i do think that's right. both chief justice roberts and justice scalia, believe it or not, have written opinions that endorsed a very broad vision of federal power in other cases. the cases are different enough from this one so that they can go the other way in this one but i think it's not an accident that the obama administration quoted one of scalia's broader statements five times in one of its briefs. they're hoping maybe they can get scalia's vote. they're hoping maybe they can get roberts' vote. they're thinking well maybe roberts will be thinking about his legacy and does he want to go down in history as someone who was part of a head-to-head clash with the president of the opposing party? so i wouldn't bet a lot on the outcome, but i would bet that if they uphold it, it's probably going to be 6-3, 7-2. >> rose: walter? >> i agree with that.

i said 7-2 but it could be 6-3, it could be 8-1. i don't think it will be 5-4 and i think social security cases are instructive. if richard epstein had been around in 1937 to argue whether the social security act was unconstitutional we might have a very different world. >> i take as a compliment, walter. >> it is intended to be a compliment. you and i have been colleagues. in 1937 when the supreme court decided the constitutionality of the social security act it did not yet have its first new deal appointee. these were justices appointed mainly by conservative republican presidents, harding, coolidge, and hoover, and they overwhelmingly stepped back from the brink and did not invalidate the social security act and i think that's probably an instructive model for this litigation as well. >> my own view about it is that these conservative republicans are actually on the progressive side on the republican party on many of these issues.

but my view about it is unless these guys are prepared to fundamentally reexamine the foundations-- and listening to jeff toobin, i know he is not-- i think it's likely to be a firm probably by 7-2. but i would urge them strongly to consider the implications and the one ace in the hole is the persistent unpopularity of the statute as a hole. that means the political price that the five would pay if they struck this thing down would be relatively small except in certain elite universities which have have very liberal fact you will tease. >> rose: you've just raised a political consideration of this. starting with you, jeffrey, what's the political impact of this, a, if the court rules that either the individual mandate or the entire health reform act is unconstitutional? >> well, i think if they uphold it, it is a mild positive result for president obama. the status quo remains. if it's struck down i think it's a catastrophe. it's a total catastrophe for

barack obama if it's struck down. it destroys his signature achievement. it makes him look like he's outside the mainstream of american law and politics and, you know, it undermines his claim to be an important president of the united states. i mean, losing is a disaster. winning is a mild good thing. >> rose: stuart? >> there's a lot of lodgic to that. i'll just state a contrary proposition. if... us specially if it's 5-4 to strike it down, 5-4 against president obama the left will be enormously energized. the word coming from the left-- and we've already heard it starting-- will be the right wing nuts on the supreme court are trying to wreck president obama's presidency and wreck the country. and that could bring out a lot of votes and it would certainly be polarizing, i'm afraid and, frankly, to avoid too much polarization i'd kind of prefer a 7-2 decision either way than a

5-4. but i don't think we're going to see a 5-4 either way. >> rose: richard, what are the political implications of this? >> well, i think in effect there's the following thing that will be to obama's advantage. as stuart said, he could run furiously against reactionaries and also he doesn't have to worry about the enormous difficulties associated with this implementation. knowing enough about this statute as an economist and a lawyer who's worked on the inside as well as the constitutional issues, implementation for this thing would be nightmarish. and it's much better, i think, in many cases for him to run and c.s.a. see this wonderful thing i put up there? the shining light on the hill. rather than have this thing see constant complaints and uncertainties about the delays and inconsistencies in its administration. so my guess is it would be a boost to the president rather than a handicap but it would certainly make for a novel political system. >> rose: walter? >> you know, one unfortunate aspect of the case is that the way the court is presently

constitutes, if it were struck down by a... it would be by a vote of 5-4 with five appointees of republican presidents voting to strike it down and five... four appointees of democratic presidents voting to uphold it. that's not an argument for any one of those nine justices to change a contentious view, it's just a fact about the world that makes it unfortunate. though it could, i think, lead the chief justice to try to see if he could bring people together on a narrow opinion, not for example i would think perhaps upholding it as attacks and saying, look, the president said it wasn't a tax increase but that doesn't mean it can't be justified under the tax... maybe it would be a more limited holding. i think if the court does uphold it, the chief justice will have an opinion to himself and it will place significant limits on the power of congress and it will rule out-of-bounds the broccoli and car-buying

examples. >> rose: one thing that chief justice roberts said today that could play into what walter just said, he said that he didn't see any way to separate the individual mandate from the penalty provision, that because the penalty is the only consequence and you wouldn't be a law breaker if you pay the penalty, well, that makes it sound more and more like it's not really requiring you tow do anything, it's just taxing you. >> and that was, i think, the most encouraging thing that happened today for supporters of the law was the chief justice saying that he didn't think there was a separate requirement to buy insurance, it was just a requirement to either buy insurance or pay this money with your internal... to the internal revenue service with your income tax. once he said it's a choice to pay the tax penalty, that gets close to allowing them to hold that it's justified as an exercise of the taxing power. >> rose: before we leave this evening i want to just for a

moment talk about a case that's getting a lot of attention, the tragic death of trayvon martin in florida. jeff toobin has to leave us because of other responsibilities at cnn but this is getting a lot of attention and i would like before we go to hear what you all think of this unfolding story. >> this, i think, is as clearly a bipartisan non-partisan issue as you can possibly imagine. the regulation of force is something which all of us libertarians take seriously. now, when you start to delegate police power to random individuals with criminal records this is nothing short of social irresponsibility of the highest order and the tragedy is the staff chuts may well him against criminal prosecution that he so richly deserves. >> rose: walter. >> i think it's deeply sad. it would be sad as one political figure said if it were a child of any race or any color or any ethnicity, but that being said i know every african american

parent thinks this is much more likely to happen to my child. this reinforces that every african american mother has to have "the talk" and every african american with their sons when they get to be 12 or 13 to say you've got to be very careful that you're not mistaken just because of your color for somebody who's a crook and that's a very sad thing about our society that we still have to work on. >> rose: stuart, any sense of what this... >> i think that richard and walter have put it eloquently. it's a terrible tragedy and a terrible law, the florida law. i think lesson people are going to have to learn is as terrible as it was doesn't necessarily mean that the guy who did the shooting should be prosecuted for a hate crime because the shooting was in part caused by this guy's overreaction depend

tong fact but it was in large part caused by the florida law. the florida law invites things like this to happen and a lesson needs to be more that that law needs to be changeed than that we need to lock up this particular person and throw away the key. >> rose: i thank all of you. back in a moment. stay with us. >> rose: lowell bergman is here, a correspondent for the documentary cbs "frontline," his reports for ten ron scandal, the roots of terrorism have won him many awards. he's also a professor at the berkeley graduate school of journalism. his latest project is a report for "frontline" on rupert murdoch and the scandal that's engulfed his media empire. here's a look at the film, the documentary "murdoch scandal." >> really ultimately this is a story about the power and the abuse of power, the cozy assumption that we can all look after each other because we're a all part of the same elite and

the rules don't apply to us and the law doesn't apply to us. that's where the trouble comes from. >> it's a most extraordinary story and it's still coming out. >> rose: tell me what your story is. >> well, really, it's a... >> rose: beyond what he said. >> it's a background for people. you know, if you've been reading about this... that's what happened to me. i've been reading about it since it started. >> rose: so have we. and have done several programs about it and the parliamentary investigation and it seems to be an ongoing story. >> well, to give it some context where did it start? how did it happen and where may be... maybe it's going. >> rose: and what's at stake? >> what's at stake is not only a lot of the coverage which is focused on the family and who's going to succeed rupert but i think it's the basic notion of how he built his empire because when you think about it these tabloids in the u.k. were the foundation, the money machine back 30 years ago that helped

him grow in the united states, pushed him forward. they were a phenomenal success. i mean, the "sun," for example, went on to become... i think next the times of india the largest circulation english language newspaper in the world. >> rose: what was the number, do you know? >> over five million. so you had these tabloids which she was very attached to and that combination of political influence that got him things people couldn't get and renege on his promises and so forth and the controversy with harold evens. that pattern set up back then seems to be at the base of what's happened now because it turns out if we are to believe the latest announcement from scotland yard in a very unusual proceeding where the assistant commissioner of scotland yard gets up where you're not supposed to talk about criminal cases and says that the sun has a culture of corruption.

>> rose: the "sun" the newspaper? >> the "sun" the newspaper has a culture of corruption. what kind of corruption? systematic bribery inside the metropolitan police. >> rose: meaning in order to undercover stories and get leads they were bribing the police? >> apparently that's how it started. we don't know what else has been going on. for example, rebecca brooks was just... who was rupert's favorite in england. his hand picked, if you will, person to run his newspapers there was just questioned recent about-- and she's been questioned before-- bribing military officials. we don't know how far this goes, where this is going. >> rose: and she also was a friend of david cameron, the prime minister. >> a social friend of david cameron and he in turn employed her former colleague andrew coleson who's now also at the center of this and one of the people that people say will probably wind up going to jail behind this. >> rose: so, in fact, what this

investigation is upturned, focused in london with the newspapers. only with the newspapers? >> well, there are a lot of other things going on that have been reported on over time. the british investigation right now is focused primarily on the newspapers. >> rose: is it a plit investigation or a parliamentary investigation? >> well, it's a police investigation that involves three separate task forces: metropolitan police. it's a parliamentary investigation and it's a special judicial inquiry which is a public inquiry that's going on which is producing lots of testimony and that's where the police testified and that's where rupert murdoch himself is headed back later in april. >> rose: for more testimony. >> more testimony, right. >> rose: and james murdoch? >> james murdoch has left london, is back in new york, is resigning the position he is had in europe and is back in the television and entertainment side of the business but it's clear he's unlikely to be the successor to his father. >> rose: who is likely to be the

successor to his father? >> you'd have to ask somebody else because they only have one other son and it's not clear any of his daughters will make it. i think the bigger question is the survival of the organization in the way it has been. that this may be the transition for it to turn into a, if you will, standard multinational corporation. not necessarily one dominated by a single family. >> rose: let's stay with what it might be. there was a rumor that somehow that might be an effort-- and this was a rumor-- to sell the newspapers to some russian businessman. that has been denied, i think, on all sides. but the idea that this has been so focused in the newspaper business, it's already shut down "news of the world," that just to get rid of the newspapers even though they had fueled the growth of the company at another stage in the live of newscorp. >> rose: well, if you recall the big shock in july around millie doweler and the fallout from that that took place...

>> rose: explin who millie dougher will is. >> millie doweler was a 13-year-old girl who back in 2002 disappeared and there was a nationwide hunt for her and she turned up dead in the end. but it's now come out because of the ongoing investigation that both a reporter and private investigator separately for "news of the world" hacked into her cell phone while she was still missing and used that information to try and advance the story. it's unclear whether that resulted in further aggravation for the family because at one point some of the messages disappeared and her family thought she was alive. >> rose: no one from newscorp would be interviewed? >> no one from news corporation would be interviewed and we even got to the point of going beyond e-mails and phone calls but started sending letters and we sent over two dozen letters formally to senior executives of the company, to editors of the "wall street journal," to anyone who might... who has written or

said anything including the board of directors and independent directors. no one would say anything except mr. murdoch who wrote me a kind little note back saying he can't talk at this time. >> rose: because of the legal matters under way? >> he didn't specify what. >> rose: (laughs) you don't need a reason, i'm just not talking to you, bergman. i know who you are. >> well, you know, what's unusual about this situation-- and in my experience both at cbs for example, and the "new york times"-- is that when you have a news organization, one of the primary things is staying honest with your audience and when you get caught out because you made a mistake or your employees made a mistake or executives made a mistake and that could shake the confidence of the public and the reason you exist, the public interest side of why you exist, not to say anything is pretty unusual. >> my imsuppression that joel klein is conducting an internal investigation.

is that true or not true. >> we are told and there have been some reports that after the doweller situation this summer mr. kline's strategy which was tow do an internal investigation of their own and hand the investigation over to the authorities or wherever is what took precedence and that happened in britain. in other words, an independent group of people called the management and standards committee was moved outside of the regular habitat of news international, the news corporation offices in britain and they conducted an internal investigation totally cooperating with the police. the result of that, for instance was the arrest of ten editors and reporters of the "sun" for bribery. but it's not clear the company as a whole is conducting a complete examination of what the problems are. >> rose: how is the difference between the examination that they are conducting-- whatever it is-- and the examinations that the "new york times" did after the jason case? >> well, i was at the "new york times" at the time and i felt to

some extent that they may have gone overboard with it but the mode of principle behind it w we have to tell our audience, our readers, what actually has gone on here. we have to bare our souls, if you will. and that's what they did in the pages of the newspaper and showed everything that they could find there without... >> rose: a kind of transparency. >> right. we've had almost none of that in this this case. the allegations aren't just making up stories, the allegations are thousands of people's privacy being violated, the allegations are destruction of evidence and obstruction of justice. the ol negotiations that are out there flow computer hacking. all kinds of different activities. surveillances mounted on members of parliament who happen to be investigating them. now that's a pretty unusual thing for a news organization in a democracy to be doing. >> rose: what's the best thing you can say for the murdoch side? >> the best thing you can say at this point is that they've survived so far.

a lot of societies organizations that do what they have been accused of doing usually have severe retribution. >> rose: has nobody defended them in any way in terms of how this might have inspired and this was not a systemic thing but an example of something that was happening in several of the >> there are loyalists like kelvin mckenzie who we interviewed who wanted to say at one point in our conversation that this was just a couple of rogue people doing it. and he himself, i think, would say today that he felt in some ways used by that position that he took and the reassurances that he got. i don't think anybody is actually confident on their side of what the true story is. >> that's an of this. no one is confident of what the

true story is. no one is prepared to say it went here and no further. because they don't know. >> well, but we know for instance... >> rose: is that right or not? >> i think on that side... on the news corporation side? you're an employee or executive i think that's true. what we do know that's been coming out in this extraordinary inquiry is that, for example, mr. edmunds, i believe it, is jeff ed mubdz, who's the head of the crime writers association in britain, testified. and what did he say? he came forward and he said look i'm a police reporter. he teaches at a police academy as well as writing. i went to work at "news of the world" right after rupert murdoch took it over in the early 1980s. 1980 he started. he said "when i got there they told me you have to bribe the police." he said "well, i don't do that. i don't want to sully my hands with that." they said "well, we have a slush fund for you to use to bribe the

police." he says "i'm not doing that." and he says that led to his departure from the newspaper. >> rose: how much of this was done-- if at all-- by other publications in competition with the newscorp publications? >> it's said it was done by a number of tabloids and they did it more frequently in competition with murdoch's newspapers in england became more prevalent. we haven't seen a lot of it proven or charged or arrested made at this point. but the key thing to remember here-- and i think thing that first struck me when i looked at it having read along the way and go back and look at it and talk with people, meet with people the mill di doweler instance is in 2002-- and by the way it's not an isolated incident. there were a lot of other ones. but in 2003 there was an extraordinary thing that happened in parliament. a member of parliament had rebecca brooks and the editor of the "sun" and andy coleson the

editor of the "news of the world" in front of the committee. >> rose: 2003? >> 2003. and he says to rebecca brooks "do you pay the police?" he did this on a flufrj a constituent. "do you pay the police?" her answer? "of course." in front of a committee of parliament. coleson immediately jumps in and says "but only when it's legal." and then there's hub bush and the chairman of the committee for reasons we don't know ends the hearing immediately. cuts it off. very little follow up anywhere else. news corporation acknowledged they never conducted an investigation after that when this was said in parliament. bryant, the member of parliament who asked the question says that at some time afterwards he was trying to... in a sense it was a labour party member and not a friend of their sell the story

and no one would run the story. he runs into rebecca brooks at a party, she comes up and rags on him because he's known to be gay. afterwards he's what they call monstered in the newspaper. >> rose: monstered means lots of bad things written about you? >> and pictures of you in compromising positions and so on and so on. so there were consequences for standing up to this empire. when the whole thing happened in july-- and i you're aware of this-- people in britain were saying "this is like our arab spring. it broke the ice." >> rose: they also argued this changed the relationship between newscorp and the parliament and other institutions like this that there had been a factor of either intimidation or fear and that that had changed by this

investigation >> i found a funny thing. there is no perjury before parliament. the consequence apparently is that you can... the speaker of the house you can be summoned to the well of the house of commons and they'll wag their finger at you. they don't have subpoena power in the way our congress has subpoena power and that, in fact according to the member of parliament, tom watson, they had to send a sergeant at arms to bring murdoch in. >> rose: two questions. one, what have we learned from this "frontline" documentary that we didn't know before? >> we know this is an ongoing spir they's been going on for over a decade. >> rose: conspiracy to do what? >> to cover up, it looks like. documents are now coming out that show that people in the company knew exactly what was going on when they said there was one rogue reporter. >> rose: and how high high up does that go? >> it went from rebekah brooks we know that for sure back in 'twixt and than an e-mail was

read that shows she was briefed by the police and that the police knew at the time that this... there was a lot more there. so that has gone on until relatively recently when they abandoned that point of view. now we can't tell who knew what when. we do know from public statements people say we don't know or i wasn't told and so on. >> rose: newscorp paid a price, i assume, for in that it wanted to buy an additional part of the ownership of b sky b that it didn't own and that's now been put either... no longer happening or put on hold, correct? >> rose: that's the economic price for the company. new hampshire is an your consideration is it's not the economic price it's a reputation in the end that will be most damaging to the company? >> and/or where this goes when it crosses the atlantic back to this country. >> rose: how would it cross the atlantic? >> in two different ways. one is it is an american company

run by an american citizen and there is something called the foreign corrupt practices act and that makes it illegal ever since the post-watergate years this law was passed, makes it illegal for an american company or businessman to bribe someone else in another country, a public official in the country for business reasons. clearly the bribery of the police... >> and i assume once you're found guilty of that what's the fine? >> it all depends. it can be in the millions. they've been as high as 800 million. there are sometimes jail sentences involved but we don't know... usually what happens in that kind of situation is that the multinational company then does a complete internal scrub of everything it's done in this area and therefore lots more can come out. it's ask a scrub they agree to hand over to the justice department. >> my instinct would be that what's at risk for a multimedia company is the license it gets from the government. those are the things that put it

at risk. >> that question is currently before the regulatory agency in britain where it's very similar in terms of how r they fit and proper to hold the license? b sky b being one of the licensees in britain. there's no indication that the f.c.c. here has looked but we don't know how this extends to the united states. >> rose: so what's the next thing to happen? the next shoe to drop? next thing to happen. >> well, it will be rupert murdoch's public testimony at the end of april. it seems to be scheduled before the levin son inquiry and it will be who and when gets charged in the british situation. we have over 40 people arrested but in britain... >> rose: arrested but not charged. >> it's not like in the u.s. get you get arrested and arraigned the next day with charges. the estimates are the charges will take place in june then we'll know who's going to trial.

we'll know more as time goes on about what else went on and who else will come forward and talk about it. >> rose: those arrested but not charge included andy coleson, former executive at "news of the world" and later the press secretary for prime minister cameron and rebekah brooks said to be a rupert murdoch favorite who was in charge of all the newspapers that's right. >> rose: great to have you here. >> nice to be here. >> rose: lowell bergman, the film is "frontline" on tuesday night on 10:00 on pbs. captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org