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LARRY KING, HOST: Tonight, do our die for health care reform -- could a crisis become a catastrophe?

Are the president's plans for change in danger of going down the drain?

And then, are blacks abandoning Obama?

An article out today says yes. We'll talk about it.

Plus, Tiger Woods named Athlete of the Decade by the A.P., in spite of a public scandal that rocks his personal life.

We'll debate it next on LARRY KING LIVE.

Good evening.

The health care fight in Congress has stalled in the short run.

Is it going anywhere in the long run?

Joining us to debate the issue are two top members of the United States Congress, Barney Frank, Democrat from Massachusetts. He chairs the House Financial Services Committee.

And Ron Paul, Republican of Texas, a member of the House Financial Services Committee, as well. Ron is also a medical doctor.

OK, Congressman Frank, we'll start with you.

Is this -- is this dead on arrival in the Senate or do we have a shot here?

REP. BARNEY FRANK, D-MASS.: Larry, you know, one of the things that's most troublesome to me, having come from a state legislature, is the lack of interaction between the House and the Senate. You know, there's just an institutional barrier there. And I tell you this, I'm not really sure what's going on.

And I also have to say, I've been pretty preoccupied up through last Friday with the financial reform regulations, so I haven't looked at it.

But I -- I don't think it is dead. There is a great need to do something. We do have some people who are always going to say if it can't be perfect, I'm against it. Those are not the kind of people who ought to be in elected office, because that's not the way a democracy works.

KING: All right...

FRANK: So I believe you are still going to see a pretty good bill.

KING: And what do you believe, Ron Paul?

REP. RON PAUL (R), TEXAS: Well, I'm afraid he's right. That's something that will come down. Since I take the approach that we don't need more government in medicine and blame so many of our problems that we've had too much government in medicine already, so I'm not anxious for anything to come.

But, really, the question is, how do you pay for it?

And I think more and more Americans, at least now, are getting worried about how you pay for it. And -- and even though I have an idealistic approach to medicine in everything that I do -- that we should do it with less government -- I do think everybody should be concerned about paying for it.

And that is the reason why -- you can't talk about anything economic without talking about foreign policy. And that's why I've emphasized that the waste overseas is so bad and it gets us in trouble. And we're fighting these wars that are never declared and they're endless.

So I'd save hundreds of billions of dollars by bringing our troops home...

KING: You...

PAUL: ...and I would be willing to put a lot of that into medical care, but I still...


PAUL: ...wouldn't endorse the idea that we need more government...

KING: Do you...

PAUL: or care.

KING: Do you both...

FRANK: Larry...

KING: Do you both fill philosophically believe that no American should go without health care?

FRANK: Well, I don't think we can guarantee that by the government.

But, Larry, I have on to say something first that I am afford is going to be disappointing to many of your visitors -- your viewers. I agree 100 percent with what Ron Paul just said. The hundreds of billions -- the trillions we are on -- on the verge of wasting in wars that do us more harm than good, that's really very important. And I -- I -- Ron Paul has spoken very accurately and I agree with him on that.

I do believe that we ought to have a system that makes it -- that extends medical care, but you can't guarantee it. I think we can do a lot better in providing it.

I would also say that, you know, an example of my differences with Ron is I think Medicare is a good thing. I think for older people, they are better off on Medicare than what replaced it and that's government medicine.

I would also say the most popular form of medicine as it's practiced in America, in my experience, is the wholly government medicine that is dispensed by the Department of Veterans Affairs. The veterans I talk to would get very angry if someone said we're going to abolish the medical services at the Department of Veterans Affairs, which is, after all, wholly government.

KING: Congressman Paul, would you agree that public at large does not want to you fail again to come up -- you as a body -- to come up with something that improves what we have?

PAUL: Well, I -- everybody does. But I might believe very sincerely that you can improve it with less government. Others would believe that you have to have more government.

For instance, in the imperfect world that we have, I don't think that we should be cutting out funds from Medicare. You know, it's in big trouble already. But they were talking about taking $400 billion out of Medicare to so-called pay for these others. That doesn't mean -- that doesn't make a lot of sense.

No, I agree with the idea that everybody should have good health care. But I just don't believe that government delivers on their promises...

FRANK: Except...

PAUL: ...when you think about houses. We were going to give everybody a house and, look, the poor people lost their houses. It was good intentioned, but the programs didn't work. So that's why I'm afraid that when you promise people health care, that some of them will come up short.

FRANK: Ron, I think there's a difference there. What -- the mistake that was made by, frankly, the Bush administration more than anybody else -- but some others joined in -- which was to give everybody a house to own. I -- I continually argued that for some people in certain economic categories and in some social categories, rental housing is the appropriate form.

KING: But didn't you... FRANK: I have...

KING: Barney, didn't you support Fannie Mae and the like?

Didn't you (INAUDIBLE)?

FRANK: For rental housing, yes. I was very critical -- in 19 -- in 2004, George Bush ordered Fannie Mae and Freddie Mac to start buying low income mortgages for low income people. I opposed it. I -- I made a big distinction. I think pushing people into owning houses when they couldn't afford it and weren't well organized enough to do it was a mistake. I was pushing them to do more rental housing and that's a big distinction.

KING: All right, Ron...

FRANK: We also wanted...

PAUL: See, I -- I don't think that we should make those decisions. He -- he may be right about what you should have rental (INAUDIBLE). I like -- I like people to make their own choices.

But I -- I do think that we push some of the programs with Community Reinvestment Acts and easy credit. There were a lot of things that encouraged this, where I am -- I am -- I'm convinced that we are -- if we had a little sounder monetary system and we didn't have this so ease credit, people wouldn't be making so many mistakes.

FRANK: But I have...

KING: All right...

FRANK: Say, Larry, I have to respond to that, because Ron there has got it backwards. The Community Reinvestment Act is not the problem. The Community Reinvestment Act only covers banks -- things that are technically called banks that take insured deposits. They made a small percentage of the bad loans. The bad loans were made overwhelmingly by banks not covered by the Community Reinvestment Act. And the problem was too little government, not too much. You had private citizens lending money to other private citizens without regulation.

KING: All right...

FRANK: Many of us tried to get rules adopted to prevent that because we saw the negative consequences.

PAUL: Well -- well, Barney...

FRANK: The Community Reinvestment Act was not involved.

PAUL: Barney, I wanted to bring it up because I didn't want them to think that we agreed on -- on everything.


PAUL: So, but...

KING: Now, gentlemen...

PAUL: But that -- but, no. OK. Go ahead, Larry.

KING: All right. The key thing -- all right, the Republicans today had a freeze today for a few hours on the debate, insisting that the 767-page amendment be read aloud. There's obviously some story.

Are we -- a key question -- Barney and then Ron.

Barney, are going get a bill?

FRANK: I believe we will. You know, that's just an anachronistic rule. They used to read things aloud in the parliament in England in 1600 because they didn't have any typewriters, much less computers. And that's the kind of anachronistic rule that ought to be...

KING: All right, Ron...

FRANK: ...(INAUDIBLE) done. But I think you are going to get a bill.

KING: Ron, are we going get a bill?

PAUL: No. I -- I'm saying that we will not. We will get something, but not a real bill. I think there will be some incremental increase in government involvement in medicine, but it won't solve our problems.

So I guess, in a sense, there will be a bill. But it's going to be very, very minimal and it will be just something where they can say oh, we did something.

But we've been doing this for 35 years, incrementalism. But we have corporatism -- the corporations run the show, the drug companies, the insurance companies, the management companies, the management companies, they and...

KING: All right, let me...

PAUL: ...they run it so the corporations are still being protected...

KING: All right...

PAUL: ...even with this administration.

KING: Barney Frank and Ron Paul will remain with us.

Ben Bernanke is "Time's" Person of the Year.

Some other panelists join us.

Should he be? That's next.


KING: Barney Frank and Ron Paul remain.

Joining us now in Los Angeles, Tanya Acker, the political analyst with the Hoshing -- Huffington Post.

And Ben Stein, the economist and former presidential speechwriter, a columnist for "Fortune" magazine.

Before we get back to the total economy, what are your thoughts, Ben and Tanya, about the role Joe Lieberman is playing in this health care question?

Tanya, you first.

TANYA ACKER, CONTRIBUTOR, HUFFINGTON POST: I have to say, I am so shocked and appalled.

Actually, I shouldn't say shocked, but I do find his behavior fairly appalling, I mean particularly his new stance about a Medicare buy-in. You know, he said in an interview last night that Dana Bash that he had to take a principled stance against this bill. But it seems that he's really taking a principled stance against himself, because he used to support these provisions but apparently he doesn't like them now because people he doesn't like are supporting them.

I think that's really -- he's really a big disappointment.

KING: Ben, what's your read...


KING: ...on Lieberman?

STEIN: Well, the last time I looked, he represents the State of Connecticut, which still has a very, very heavy presence of insurance companies. I'm sure he's obliged to them. I'm sure he wants to please them. And anyway -- and anyway, buy-ins for people 55 to 64 into Medicare would be very, very expensive to a government and to a people that are already basically broke on government overspending.

But I mean he represents the state where the insurance companies are. It's not much more complicated than that.

KING: But the -- but the people are very liberal.

STEIN: The people are very liberal, but the people who have lots and lots of money and who can give it in a concentrated way are with the insurance companies.

KING: Now, let's get to business.

We start with Barney Frank. What do you make of the Federal Reserve chairman being named "Times'" Man of the Year?

They said: "He just doesn't reshape U.S. monetary policy, he's led an effort to save the world economy."

There you see the cover.

What do you think, Barney?

FRANK: Well, first of all, I don't subscribe to the concept of the man of the year or a woman of the year. I think it's kind of anachronistic. It's like when reporters say to me, you know, what's the one thing you would do?

And I say well, fortunately, I have more than one thing to do, so I never make the pick.


FRANK: I do believe that it is accurate to say that he's been a major force. After all, he is the major piece of continuity. He starts under the Bush administration. Ben Bernanke was a high-ranking George Bush appointee, first on the Council of Economic Advisers then as chairman of the Federal Reserve.

He's the one that initiated the whole intervention. It was his decision, not Congress and not, technically, the executive, although the Bush administration supported him, to give the money to AIG. The whole question of this intervention and what's been called bailouts...

KING: So...

FRANK: ...began in September.

So, in fact, as a description of his impact, yes.

Now, I think he made a mistake in the way in which he did the AIG thing. On the whole, though, I think what he has done has been constructive.

KING: What...

FRANK: I guess I would say this -- he gets partial blame for the fact that the crisis arose, although I think more of it went to Alan Greenspan. I think he gets a lot of credit for the way in which he's coped with it.

KING: Ron, what do you make of the selection?

PAUL: Well, I think it's pretty -- pretty neat. He's the most important guy in the world. And anybody that can create trillion of dollars secretly behind-the-scenes and spend it with no oversight, I mean that's pretty important. And he is a counterfeiter. So he is the chief counterfeiter of all history. And I would say that's very good. And I like it because it draws attention to the Fed, because the source of so many of our problems comes from the Fed, the business cycles comes from the Fed.

So this, to me, is a -- is a real delight. So I don't have to have agree for the reasons that they, you know, gave him Man of the Year...


KING: He's a negative Man of the Year. All right...

PAUL: Well, yes, but it's very important...

KING: Tanya, were you...

PAUL:'s very important that we understand why he's so important and powerful.

KING: Tanya, were you surprised at the selection?

ACKER: I was a little surprised. But I have to say, with all due respect to Senator Paul, I think he -- there is -- I think that this was -- here's a man who had to come on board and run -- manage things when were really on the precipice of disaster. And you can call it counterfeiting or, you know -- and I understand, you know, the congressman has a very different view of -- of government, the role of government than -- than -- than I certainly I do.

But I would say that, you know, he deserves some kudos for at least staving off a much bigger disaster. There's still a lot more work to be done. But I think it was a good choice. Bravo.

KING: And, Ben, what do you think?

STEIN: Well, he made terrible mistakes letting the monetary crisis get out of hand in the first place -- way, way, way too little regulation; way, way, way too much easy money going into people making mortgage loans; way too little regulation of Wall Street. And Wall Street was playing games with all of our monies, walking off with billions in their own pockets and leaving us with trillions in liabilities.

But once he had helped to create the problem, he did help create the solution, which was to flood the economy with money. And can caught it counterfeit money if you want, Representative, but it is money. It is, under the law, money.

And he did save the economy, but he -- he had a huge part in harming it. But to me, the Man of the Year is the American fighting man and woman fighting in Iraq and Afghanistan. Maybe they should be there, maybe they're not, but they are the real stars in this world.

KING: Let me get a -- let me get a break.

We'll come back.

Palin and Schwartz are going at it. We'll talk about that later.

And be back in 60 seconds.


KING: Let's take a call on all of this.

Villa Rica, Georgia, hello.

Are you there?

Are you there, Villa Rica?

Last chance.



What's the question?

UNIDENTIFIED MALE: I want to ask a question.

When do these individuals here -- I know Bernanke, he was awarded the -- the prize and that's all great and wonderful. When do we anticipate seeing these community banks be able to turn loose some money to get the lower middle class and the middle class back to being able to borrow money?

KING: Yes, when can we get -- last night, the other night, rather, Donald Trump said the banks have the money, but they're not loaning it.


FRANK: I'm frustrated by that. And I think here's the problem. There are certainly no governmental obstacles -- in policy. But you have this problem. The bank examiners -- they're the people who work for the Federal Deposit Insurance Commission -- Corporation or the controller of the currency. They go out and examine each bank.

I'm afraid their culture has been to be too tough. No bank examiner has ever been rebuked because of a loan that should have been made and wasn't made. They're more often rebuked for loans that were made that shouldn't have been made.

And I have tried very hard -- we have talked to the key chiefs of those agencies to urge them to get people to lend. Now, part of it, frankly, can be complicated and the accounting rules can be a problem there, because as the value of their assets deteriorates, then the amount they can lend deteriorates. We have tried to fix that...

KING: All right...

FRANK: We...


FRANK: But I -- I think it's fundamentally a -- probably a problem of the culture of the bank examiners...

KING: Do you...

FRANK: ...that we're trying to change.

KING: Do you agree, Ron?

PAUL: Yes, to a large degree. I think there are two things -- several things happened. After there's a bubble burst, then even borrowers get very skittish, even at the low -- if the interest rates are low, they're worried. Bankers get skittish because they lost a lot of money and they get frightened.

I think Barney makes a very good point that the regulators get overzealous. That, of course, is the reason I don't like regulators. But he -- he mentions -- and he has talked to the regulators. They're overzealous.

They overreact because, in a way, they're a third factor. You have the consumer not wanting to borrow, the bankers not wanting to lend, then the overzealous regulators come in and say you'd better be careful and they change the rules right in the middle of the game.



PAUL: ...I think that's what we're facing.

FRANK: Which indicates the small businesspeople are ready. They did have a problem. They are ready. And we have got the regulators to tell us they agree. It is just a -- a very uphill battle...

KING: And we'll...

FRANK: try and get it. But I can tell you this, though, Nydia Velazquez -- and this is where I think government can do more. Nydia Velazquez, who is the chair of the Small Business Committee, has proposed that we have the Small Business Administration, instead of guaranteeing loans made by the community banks, make the loans directly for a while. I think the community banks, once they see that...


FRANK: ...will decide they'd better get back into business.

KING: We've got to...

FRANK: But I think...

KING: We've got to get a...

FRANK: ...the direct loans would be the way to go.

KING: We've got to get a break. We'll pick up with more when we come back.


KING: OK, Tanya and Ben, you get in on this. Two big names in the Republican Party are in a public spat. Arnold Schwarzenegger questions Sarah Palin's interest in climate change, saying it has more to do with her career and winning the nomination.

Meanwhile, she shoots back, saying: "Why is Governor Schwarzenegger pushing for the same sort of policies in Copenhagen that drove his state into record deficits?"

What do you make of that spat, Tanya?

ACKER: I think that's absurd. I think that's another one of the absurdities that we've heard from former Governor Palin in recent weeks.

I mean, as a member -- as a citizen of the state, that is not -- trying to reduce emissions is not what's pushed California to the brink of disaster. That simply isn't it.

And the fact that she's one of these global warming deniers for whom the jury is still out, I think really speaks to how she values science or, rather, how she refuses to value science. And I -- I firmly stand behind my -- my Republican governor. That's my bipartisan moment for the week.

KING: All right.

Ben, why do you think?

I noticed you're putting your -- you're putting your face in your hands.

STEIN: Well, because -- well, I am somewhat of a fan of Sarah Palin's and I'm totally with her about climate change. I think the jury is still out. There are thousands and thousands of reputable scientists who say the jury is out. There's a lot of data that the Earth is cooler than 500 years ago or 1,000 years ago or 2,000 years ago.

So the jury -- and the jury is very much still out about the -- whether or not if there is global warming, it's caused by man.

But the -- the connection between that and California's budget problems is nil. There's simply no connection at all. I mean there's one big issue -- climate change may be a fraud. Anthropogenic climate change may be a fraud. California's budget problems are incredibly real and painful and they are not a fraud.

KING: Well, I know...

ACKER: (INAUDIBLE). KING: You don't like Person or Man of the Year, Barney, but allowing that -- having said that -- I love that -- who would you have selected?

FRANK: I -- I wouldn't have selected anybody, Larry. But I do -- I do want to get in on the -- on the Palin/Schwarzenegger.


FRANK: I think Governor Palin is critical of Governor Schwarzenegger because he didn't have the courage to quit his governorship.


FRANK: She defines courage as quitting.


FRANK: And she's -- she's shaming him for not having had the guts to quit the way she did.

KING: Who would you have named, Ron?

And I'll try to see if you'll answer the question.

PAUL: Well -- well, I haven't complained too much about Bernanke. He's a good target. And I get to make my points about the Fed. And, you know, they don't always pick people for that role...

KING: I know.

PAUL: ...for positive things. It could be for negative things...

FRANK: But let me just...


PAUL: I think the greatest -- the biggest counterfeiter in the world is a pretty good event that we should concentrate on, because it wipes out the middle class and hurts the poor and gives us unemployment.


STEIN: You call it counterfeiting...

FRANK: Ron Paul thinks all money is counterfeit. But I would...


KING: All right, Barney, you wouldn't have...


KING: wouldn't have selected it, so you're out.

Ben, who would you have picked?

FRANK: I would go with Ben's pick.

STEIN: I would have...


STEIN: ...without question, picked the American servicemen...

FRANK: I agree.

STEIN: ...fighting -- and servicewomen fighting in Iraq and Afghanistan, putting his or her life on the line...

FRANK: I agree.

STEIN: after day. Absolutely, without question.

KING: Tanya?

ACKER: I -- I'm going to second that. I'm going to second that.

KING: Really?

ACKER: I am.

KING: All right. Obama writes a personal letter to the North Korean leader, Kim Jong-Il. A United States envoy delivers it.

What happened to the axis -- axis of evil?

Obama wants denuclearization of the Korean Peninsula.

Did you see anything wrong with him -- Ron Paul, are you seeing anything wrong with the president?

PAUL: Oh, well, no. I -- I like that. I'd much rather him do that. I wished he would write some more letters. I wish he would write more letters to the Middle East, to the people in Afghanistan and Pakistan and Iran instead of putting on sanctions and stirring up trouble and sending in more troops. So we need more letters and more talk.

I mean we -- we left Vietnam in a terrible situation. It's unified. They trade with us, we talk to it. There was no Domino Theory. The domino was toward capitalism and the West.

But Korea, it's divided. We have troops there. We spend all this money. So it's about time we wrote some letters. I say more letters, more trade. Let the -- let the Koreans get together. Let them settle their problems. The best thing in the world we could do is just come home from Korea, save another hundred billion.

KING: Ben, what do you think? STEIN: Well, Kim Jong Il is probably as evil a person as there is on the planet. He's made his entire country into a penal colony and a gulag. He starves people to death by the millions while he lives the life of an incredible international playboy.

This guy, who has flouted every international authority, the idea that you can change him by writing him a letter is comical and the idea we should not be defending South -- helping to defend South Korea against him is comical. I -- I don't know what -- where this idea has come from, but it's just comical.

ACKER: But I think the issue...

KING: Tanya?

ACKER: I think the issue really is one of engagement. I mean, and I think, as Ben well knows, his former boss, President Nixon, engaged with a really bad guy, Mao Zedong, who was running China. And so I think that whole issue is whether or not we are going to engage.

Now, you know, is it -- whether it be writing a letter or picking up the phone, I'm not going to speak to what are the mechanics of how we engage with people with whom we don't like. But we came -- we've come off of a foreign policy that we -- where we treated our interests like a video game, where we said, you don't like us, we're not talking to you until you do exactly what we say when we say it.

KING: All right, we're running...

ACKER: That's never how American foreign policy (INAUDIBLE)...

STEIN: Chou En Lai -- Chou En Lai had already said he wanted to have a rapprochement with the United States and had already sent many messages through Kissinger to Nixon about that. If that happened with Kim Jong Il, I would be with you entirely. It hasn't.

KING: Ben, quickly, what do you think?

FRANK: Larry, let me -- I -- I'm very close to Ben Stein's view.

KING: All right.

FRANK: I would try sanctions. And I -- I thought my friend Ron was being too cavalier about this. This is a terrible man who has done terrible things. South Korea has become a democracy with our help and we should be very proud of that.

The frustrating thing is that The People's Republic of China, which wants to be a responsible nation, is failing on its responsibility and not helping us push -- put pressure on North Korea.

KING: All right...

FRANK: But North Korea with nuclear weapons is a very scary thought and it takes strong action...

KING: We thank...

FRANK: stop it.

KING: We thank Barney Frank, Ron Paul, Tanya Acker and, as always, Ben Stein.

African-Americans helped President Obama get elected -- how do they feel about him now?

That's next.


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