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AWOL Soldier Planning Terror Plot?; House Vote on Republican Debt Plan Delayed

Aired July 28, 2011 - 18:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


WOLF BLITZER, CNN ANCHOR: And, to our viewers, you are in THE SITUATION ROOM.

Happening now, breaking news. With America just four days away from default, a vote has been delayed in the House of Representatives on a bitterly contested Republican plan to raise the nation's debt ceiling, even as the Democratic controlled Senate is poised to immediately reject it if it were to pass.

And if divided lawmakers can't reach agreement on the debt ceiling, the president may have some very unorthodox options to try to bypass Congress. Would you believe minting a couple of trillion dollar coins?

And with Social Security and Medicare still on the debt crisis chopping block, senior citizens are scared and they are speaking out.

We want to welcome our viewers in the United States and around the world. Breaking news, political headlines and Jeanne Moos all straight ahead. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

It's been a huge struggle from the start. The House speaker, John Boehner, trying to gather enough support within his own party for his plan to raise the nation's debt ceiling. Now House Republicans have delayed a vote on that plan.

Let's go straight to our correspondent Kate Bolduan. She's on Capitol Hill.

What a surprise this is, Kate. Few were expecting such a delay, which can only mean that the speaker is not guaranteed of his votes.

KATE BOLDUAN, CNN CORRESPONDENT: I will tell you, Wolf, we knew the margin of error could be thin if the speaker was not going to get any Democratic votes already.

And just to show how close this is really coming and how down to the wire it is coming, we now know that the House has delayed, postponed the vote on House Speaker John Boehner's bill. For how long, we don't know yet. We are trying to work that out as we speak. But what we know what has happened and how this has kind of unfolded before us this afternoon, the debate of the bill was happening and after that debate, it would have in regular order moved to vote on this bill. But before that happened, they stopped debate on this bill, on House Speaker John Boehner's bill and moved on to a completely unrelated debate on a completely unrelated bill. This is an indication really that they don't -- it appears -- I will have to be careful with my language, but it appears that they are still working to try to secure these votes at this late hour.

We have been seeing members going in and out of House Speaker John Boehner's office. I just spoke with one member and he said that he is still actually a no vote that he was not convinced to switch over to being a yes vote and that House speaker had asked him for his vote.

So you can see that they are very close right now. They are working very hard to try to secure these votes. And it appears at the moment, Wolf, that they are having a problem doing that. And we will have to see and we are continuing to check when -- if this evening when that vote will actually come up -- Wolf.

BLITZER: Yes. It's already an embarrassment to a certain degree. We will see what happens in the coming hours. Thanks very much, Kate. We will check with you.

The president has seemingly stepped out of the spotlight at least for now while the debt crisis drama plays out on Capitol Hill. I got an exclusive look at what is happening inside the White House today when I spoke with the White House chief of staff, Bill Daley.

I asked him about the president's contacts with congressional leaders.

(BEGIN VIDEO CLIP)

BLITZER: When you say the president is speaking to people on the Hill, is he speaking to the speaker of the House?

WILLIAM DALEY, WHITE HOUSE CHIEF OF STAFF: He hasn't spoken to the speaker in a few days. The truth is it looks as though the speaker is rather engaged in -- in putting together his bill and getting the votes for his bill.

So when that's put aside this evening, after it's, I assume, passed in the House, and then defeated in the Senate, then I think there will be a whole new stage of the Senate and House having to come together to avoid August 2 as being a day that has never happened in the U.S., and that is a day where we wouldn't back up the full faith and credit of the United States.

(END VIDEO CLIP)

BLITZER: All right, let's go to the White House right now.

Our chief White House correspondent, Jessica Yellin, is standing by.

He is confident, the White House chief of staff, that in the end there will be a deal. But how do you get to Tuesday, when the deadline occurs? What are they thinking at the White House how they manage to avoid potentially a default?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Wolf, the best scenario for the White House is to get past the vote in the House, let this Boehner bill happen and then move on to some sort of compromise agreement between Senators Reid and McConnell in the Senate.

This is the ideal scenario for them, where they agree to some sort of in theory negotiation where they have a second vote on the debt ceiling that's some sort of vote of disapproval, where you don't have to have this kind of deadlocked confrontation again over the debt ceiling in a few months, that and then send this back to the House of Representatives over the weekend and hopefully get it voted on before Tuesday.

But will that happen? Who knows. That's sort of a best case scenario and we can't count on it. I will make one other point, Wolf, quickly if I could, which is that if the Boehner bill fails tonight, that creates a new challenge for the White House, which is it weakens Speaker Boehner. And they don't necessarily want Speaker Boehner weakened. They want him in a position where he can his deliver his conference to vote for whatever debt ceiling bill ultimately gets to the House before Tuesday.

BLITZER: Yes, because if the speaker doesn't have the clout to get his own legislation -- you make a good point, Jessica. If the speaker doesn't have the clout to ensure that the Republicans are on board with his plan, something that is not going to be as nice to them that could emerge from a conference let's say with the Democratic majority in the Senate, that will even be more difficult for the speaker to bring his own team on board.

Stand by. I want you to stay with us, Jessica.

Gloria Borger is here. Joe Johns is here.

What a mess, Gloria. This was not expected that there would be this postponement, this delay, because the speaker is not ensured that he has the 216 votes needed for passage.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, I just spoke with a leadership aide to a Democrat in the House who said, look, I think the speaker is just trying to lasso the last couple of votes.

I think they still expect that the vote will take place. And the Democrats -- it's interesting because the Democrats are saying they expect it to pass. And so what happens? Say it does pass tonight, goes to the Senate, Harry Reid tables it.

And then I was told that the Democrats wouldn't necessarily bring up Harry Reid's version, that they would set an ultimatum and say to Republicans, OK, we will give you X amount of time, a narrow window. Let's see if we could work something out. If we can't, we will pass our version of the bill. And then we are nowhere. JOE JOHNS, CNN SENIOR CORRESPONDENT: And just sort of adding to that, I just spoke to a leadership aide to a Republican, a high, high- ranking Republican on Capitol Hill, told exactly the same thing. Looking at it tonight, right now we expect to go forward, they said, with the vote tonight. So they are trying to wrangle...

(CROSSTALK)

BLITZER: Did he or she suggest it as going to be an hour from now, five hours from now?

JOHNS: Would not give me a specific time on how long it would take to get through.

But remember two days ago, we were expecting a vote on this. And we were just backstage talking about the Medicare reform vote. There have been a lot of votes over the recent history of the Congress where they have stretched it out hours and hours and hours.

(CROSSTALK)

BORGER: They don't have a lot of time to stretch these things out now. They have got a deadline of August 2 staring them in the face.

(CROSSTALK)

JOHNS: I was talking about the prescription drug...

(CROSSTALK)

JOHNS: ... the reform.

So, yes, they don't have a lot of time.

BLITZER: It's getting crazy right now.

I want everybody to stand by.

Mary Matalin is joining us. Donna Brazile is joining us as well.

Mary, first to you. This is already an embarrassment to the speaker that he had to postpone the vote because he is not 100 percent sure he has his Republican members on board.

MARY MATALIN, CNN POLITICAL CONTRIBUTOR: I don't think so, Wolf. The House under his leadership passed a budget. It's the only real budget. The president doesn't have a budget and the Senate hasn't passed a budget. The House under Boehner's leadership passed Cut, Cap and Balance. There is nothing comparable in the Senate.

The Senate has said everything that Boehner is sending over there is dead on arrival. The president to this day to this moment has yet to indicate one single specific cut that he would make. This is a big debate. And even when we have this vote on the debt ceiling, it doesn't begin to solve the problem facing the country with spending and debt reform going forward. It's one vote. I am actually really personally proud of Boehner for getting it as far as he has gotten, given the intransigence of the other two branches of government.

BLITZER: Well, let me bring Donna in.

Donna, you are our Democratic strategist. Is this an embarrassment to the speaker that they now have to postpone this vote?

DONNA BRAZILE, CNN POLITICAL ANALYST: It's an embarrassment to the United States of America that we cannot get people that we hired to do the nation's business to sit down and collaborate and compromise and come up with a solution.

The Republicans have won this debate, this round of this debate. Let me tell you why, because both sides are talking about spending cuts, spending cuts that will dramatically alter our landscape forever, senior citizens, elderly, the disabled, yes, our veterans and others.

It's time to come up with a deal that the American people will have to swallow hard and go ahead and pass this, this weekend so that our dollar is not weakened, our interest rates will not go up. Wolf, those are us who have a little bit of money in the stock market, we saw some of that money slip away yesterday.

But if we let this default happen, I don't care if you are Tea Party, Democratic, independent, Republican, it is stupid to put this country in this position. So, yes, I applaud Mr. Boehner for getting us this far, but take us across the aisle right now, get this bill to Pelosi, to Mr. Hoyer. Cut the deal. Go over to Mr. Reid and Mr. McConnell. Send it to the president. It's time to stop these games.

BLITZER: Jessica Yellin is over at the White House.

Jessica, there is no doubt that I think the only silver lining right now at least in my mind about this postponement, that it has occurred after the stock markets close on Wall Street. Because if this had been going on at 1:00 or 2:00 in the afternoon, you have got to believe the markets would get really, really nervous that maybe they won't reach a deal by Tuesday and there could be default.

When I spoke with the White House chief of staff, Bill Daley, earlier today over at the White House, he was still optimistic that there would be a deal by Tuesday. He couldn't guarantee though that the credit ratings would not reduce America's AAA credit rating even if there's a deal. They are nervous over there at the White House, aren't they?

YELLIN: Absolutely. Senior Democrats and policy makers in this building are keeping their eye on the stock market and on the nation's credit rating.

The president has said openly that he is talking to Treasury Secretary Geithner about the next contingency plans. And the Treasury Department is making -- taking steps, Wolf, to decide which bills will be paid and which won't be paid. We have two major bills that go out, Social Security checks worth $30 billion that have to be sent out I think on Tuesday or Wednesday of next week and then a major payment to bondholders.

Those are real things that have to be decided if this debt ceiling is not raised, what will we pay, what won't we pay. Plus an auction that happens in the middle of next week. And if investors decide not to buy America, there's a major ripple effect that could happen throughout this country's economy that everyone in this town and in this nation has to be concerned about.

BLITZER: And, Gloria, pick up the thought that Jessica made earlier, that even though there are political differences between John Boehner and the president of the United States, the Democrats and the White House, they need a strong speaker right now to ensure passage of something in the House of Representatives.

BORGER: They do. They need a strong speaker. I think Jessica is absolutely right about that.

But there's something also you have to consider if you take this a couple steps down the road, which is say there is some compromise that is reached. The House speaker knows that he will lose a lot of those Republicans he is now fighting to get today for this vote tonight. He is going to have to get some Democrats on board as well, because you can presume that a lot of those freshman Democrats -- I mean, Republicans -- whose arm he twisted will say, no, I will not vote for this compromise.

So Boehner and Pelosi have to work together because she has got to convince some Democrats to vote for a final compromise and he has got to keep at least half of his caucus.

BLITZER: And, Joe, that might be easier to achieve than getting some of these supporters of the Tea Party movement in the Republican Party, to bring in a whole bunch of Democrats, and you really have a bipartisan piece of legislation.

(CROSSTALK)

JOHNS: Absolutely. And the one thing you are also hearing on Capitol Hill is people are talking about triggers again. This is something that Democrats want.

There is so much angst over this bill that the speaker has put forward and the way he actually has a two-step process. Democrats are talking about a trigger. That's something they could vote for and maybe that's coming back into the conversation so that you can get some more Democratic votes.

BLITZER: Mary, is it fair to say as some have suggested that the Republicans have created I guess some sort of unpredictable element by supporting this Tea Party movement and getting all these Tea Party- backed freshmen elected, that they really can't be controlled under normal circumstances in the House of Representatives?

MATALIN: Well, I don't know if it's fair or unfair, Wolf, but it's kind of irrelevant.

It's not just the House of Representatives, which was an historic election. Governors and state representatives across the country in every state and in previous Senate races and in future federal Senate races, the 2012 races, people have been sending this message for two years. Stop spending. Cut programs. Stop spending our money on programs that are not working. It's much bigger than this.

I know we are hyper-focused on this debt ceiling, but it's not that the Republicans need -- no one out there is worried about John Boehner's clout or the control of a chamber. They are sending messages to chambers across the country. And if there is not a significant and real, and not smoke and mirrors, spending cuts and spending reform attached to raising the debt ceiling, there will be equal chaos with the markets and equal chaos in the next election. That's what people have been saying for three cycles now.

BLITZER: Well, Donna, it's fair to say that at least for now, none of these proposals, the Boehner proposal, the Harry Reid proposal, include any increased taxes, no increased revenue from taxes, no tax reform. The Democrats basically have given up on higher taxes for wealthier Americans or for big business.

BRAZILE: We are going to live to fight that battle another day and I hope the president will help lead that charge.

But, Wolf, the federal government will take in about $170 billion next month. We owe about $300 billion. We owe. This is about paying our bills. This is why many of us are worried. The $5 billion of $300 billion we owe is to our nation's veterans and those who are serving on our battlefield.

I can talk about senior citizens because of course my father keeps saying, will the eagle land? That's his euphemism for talking about his check that he receives. This is how they pay their rent. This is how they pay their utilities. This is how they buy their medicine. This is how they survive.

And we owe it to every American who will get a check, including our federal employees, to pay their bills on time next week. These games, the brinkmanship, I'm so over it, I'm so sick of it. It is like the humidity now in Washington, D.C., Mary. It's just unbearable.

(CROSSTALK)

BRAZILE: Let's solve the problem tonight. Go to former Speaker Pelosi, Mr. Hoyer. Cut this deal. Collaborate. Wolf, we can talk about Tea Party or Obama reelection, everything next week. But pay these bills so that our nation's seniors, our militaries will be able to pay their rent and buy their medicine on Monday.

BLITZER: All right, guys, don't go too far away. Because the breaking news is continuing.

By the way, we are told by our reporters and producers up on Capitol Hill that some Republican members who were inclined to vote against the speaker's plan to raise the debt ceiling have been seen coming out of this office so the arm-twisting is going on right now.

What options does President Obama have if a debt deal is not reached in time? We are taking a closer look at some ideas that are being floated right now from the extreme to the totally outrageous. And we will meet one man trying to motivate lawmakers to reach a deal. He's offering free ice cream to almost everyone.

(COMMERCIAL BREAK)

BLITZER: Jack Cafferty is here with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: The general feeling, Wolf, about the economy in this country hasn't been very good for a long time now.

And this pathetic charade on Capitol Hill over raising the debt ceiling is only making Americans more nervous, not just about the state of their own households but about the future of the U.S. economy as a whole.

Unemployment's 9.2 percent, probably not going to improve much anytime soon. With all the uncertainty surrounding the debt ceiling, companies not exactly rushing to ramp up hiring. "Wait and see" is rather the prevailing game plan. You see, uncertainty is business investment's worst enemy.

Home prices down 4.5 percent from a year ago, a housing crisis that may not be over for years. Bad news for a seller sometimes means good news for a buyer, but not now. Even if you're lucky enough to get a mortgage, rates are already headed up. They're starting to rise in the short-term Treasury market. And if the U.S. defaults on its debt obligations, interest rates will happen -- will rise faster and higher than any of us expect they might.

Investments, don't be optimistic about that either. If lawmakers don't raise the debt ceiling and the U.S. defaults on its payments for the first time in our history, the stock market could drop 30 percent in six months to a year. That is according to a report out today from Credit Suisse.

Polls have shown Americans have been growing increasingly concerned with our economy. The number of Americans feeling this way has been on the rise over the last few weeks. Nearly three-quarters of Americans in Gallup's daily tracking poll say the U.S. economy is getting worse now. That's up 11 points since July 6. In a separate CNN/ORC poll, nearly six in 10 Americans now say the economy will be in poor shape a year from now.

And in Washington, these pathetic games just go on and on and on.

We are waiting with bated breath to see if the House passes something that is going into a wastebasket in the Senate when it gets there.

Here's the question. What's your view of the current state of the U.S. economy?

Go to CNN.com and post a comment on my blog.

I feel like we are living in a parallel universe of some kind. None of this is making any sense at all.

BLITZER: Yes, but you're absolutely right, Jack, but the stakes for average people out there if they don't do the right thing here in Washington will be enormous.

(CROSSTALK)

CAFFERTY: They haven't been doing the right thing for months. This didn't happen yesterday. They have known this train is coming down the tracks. This is pathetic. It's absurd, what they're doing.

(CROSSTALK)

BLITZER: Four days, that's it.

All right, Jack, thank you.

Can President Obama find a way to bypass Congress if America starts running out of money on Tuesday? There are some suggestions being floated, some of them pretty far out.

Let's go to CNN's Mary Snow. She has been looking at some of these ideas for us.

Mary, what did you find?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, we have been talking about the 14th Amendment. That's been discussed.

But as the August 2 deadline approaches with no deal on raising the debt ceiling, other scenarios are now being examined, including one involving minting a trillion dollar coin. It's not being considered seriously, but it speaks to the nervousness as the deadline draws closer.

(BEGIN VIDEOTAPE)

SNOW (voice-over): T-minus four days until the government can no longer borrow money. If Congress doesn't reach an agreement in time, could there be a plan B for President Obama to act on his own and raise money?

Fitting under the category of desperate times calling for desperate measures, there is actually some talk of issuing two $1 trillion coins. Why coins? Constitutional law expert Jack Balkin says there is a statutory limit on the amount of paper currency that can be in circulation, but not on coins. It's an idea he calls science fiction.

JACK BALKIN, YALE LAW SCHOOL: I think what it underscores is that people are now trying to investigate different ways of resolving an artificially created financial crisis, fiscal crisis. And I think the problem is that these solutions have been offered precisely because the situation we have been put in is so absurd.

SNOW: A potential option for the president that has been taken more seriously is the idea of him invoking a clause in the 14th Amendment where he would raise the debt ceiling without congressional authorization.

But the president himself has indicated that is not on the table.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I have talked to my lawyers. They do not -- they do not -- they are not persuaded that that is a winning argument.

SNOW: One way for the government to raise money is to sell assets. Gold now at record highs is one of those assets. But:

JAY POWELL, BIPARTISAN POLICY CENTER: There is no likelihood of that at all. If the United States government were to announce that it was going to sell some gold to pay its bills, one can only imagine what would happen to the price of gold. You would want to be out of the way of that collapsing price.

SNOW: Jay Powell was undersecretary at the Treasury Department under President George H.W. Bush. He has been briefing members of Congress, saying he's been separating fact from fiction, even getting asked if the government can issue IOUs.

POWELL: If the debt ceiling is not increased, if no deal is made, then people need to understand there's no secret bag of tricks, there's no magic bullet that will allow us to avoid defaulting on our non-debt-related payments.

(END VIDEOTAPE)

SNOW: And bottom line, Jay Powell says that there is really nothing the executive branch can practically do in the absence of a deal -- Wolf.

BLITZER: Mary Snow, thanks very much.

If the debt battle is leaving a bad taste in your mouth, this man has just the thing to take it away, ice cream. He was handing it out today on the Mall here in Washington, D.C., free to everyone, to everyone, except, except lawmakers. There he is, Guy Berliner. He hopes the frozen treats will be an incentive to them to reach a debt deal.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Thank you.

GUY BERLINER, GIVING AWAY ICE CREAM: Everybody qualifies to get a free ice cream, Democrats, Republicans, libertarians, Tea Party people, everybody. The only people that do not qualify are those people working up there on the Hill. And my thinking is when they look out their window and they see all the fun that everybody is having and they are not part of it and they don't qualify, they will sit down and say, folks, isn't it time we like compromise a little?

(END VIDEO CLIP)

BLITZER: Guy Berliner, thanks very much. A good idea. Delicious ice cream at the same time.

Meanwhile, big business leaders are growing increasingly nervous about this looming government default. We have details of their warning to Congress today.

Plus, it could have been another massacre in Fort Hood in Texas. We are learning more about the arrest of a Muslim-American soldier and what he may have been planning.

(COMMERCIAL BREAK)

BLITZER: Big business certainly worried about the debt crisis, the risk of default and a possible downgrade of America's credit rating. Wall Street is warning Washington right now, you better get your act together.

Let's bring in Lisa Sylvester. She's working this part of the story for us -- Lisa.

LISA SYLVESTER, CNN CORRESPONDENT: Hi, Wolf.

Well, we haven't seen a major sell-off of stocks yet, but the markets are losing ground, the S&P 500 and Dow Jones both down. And the business community says, yes, U.S. debt is too high and it needs to be addressed. But what's really a priority now, they say, is raising that debt ceiling.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): With the clock kicking, the business community is starting to get nervous. Today CEOs of the major financial firms, Bank of America, Goldman Sachs, JPMorgan Chase, and others sent a letter to Congress and the White House, urging them to hurry up and warning of the grave consequences of inaction.

Robert Nichols is CEO of the Financial Services Forum.

ROBERT NICHOLS, FINANCIAL SERVICES FORUM: If borrowing costs go up, what that means is that people who have loans for education, for auto, for their house, they become more expensive. As borrowing costs go up all across the U.S. economy, that will erode GDP growth and equate to less jobs.

SYLVESTER: The Dow Jones Industrial Average has had five consecutive declines. The dollar has been losing ground against all of its major trading partners, and home mortgage rates are starting to creep up. The possibility of a U.S. credit downgrade is not good for business.

Goodyear's chairman and CEO, Richard Kramer, on an earnings call, said, "concerns over prevailing debt issues were having a discernible impact on confidence among customers." Officials at defense and aerospace company Raytheon also emphasized to investors the need for lawmakers to act.

WILLIAM SWANSON, CHMN. & CEO, RAYTHEON: As a county, we need to make sure the nation doesn't default on its obligations. We need a balanced plan that reduces the deficits and burns down our national debt. And the administration and the Congress need to get it done.

SYLVESTER: Some companies like Ford are reportedly making sure they have enough cash reserves on hand should the worst happen.

JACK ABLIN, HARRIS PRIVATE BANK: We are starting to see companies build up their cash reserves. We are starting to see companies trying to access more lines of credit. Keep in mind that it isn't debt that puts companies out of business, it's the lack of cash, it's the lack of liquidity.

SYLVESTER: The prevailing view on Wall Street is that congressional lawmakers will pass a debt ceiling increase one way or another by August 2nd. But markets don't like uncertainty. There is a lot of uncertainty going around.

(END VIDEOTAPE)

SYLVESTER: Financial analysts say if we see a big drop in the stock market, that would be really bad. But stocks, they go up and they go down. What financial experts say will really put the breaks on the economy is if interest rates go up, because when interest rates go up, they tend to stay there and it takes a lot longer to bring interest rates back down -- Wolf.

BLITZER: It certainly does. The stakes, as they say, are enormous. Thanks very much for that.

Wall Street obviously nervous, does that make lawmakers here in Washington nervous about the risk of a debt crisis? Let's go to Republican Senator John Barrasso of Wyoming, he is joining us live.

Senator, thanks very much for coming in.

SEN. JOHN BARRASSO (R), WYOMING: Thank you for having me, Wolf.

BLITZER: Are you willing to compromise with the Democrats in order to avert a potential default on Tuesday?

BARRASSO: Well, my bottom line is I think we actually need to prevent a default and cut the spending. Those are our problems. The bottom line of the president's though is different. He said the only thing that is his bottom line is raising the debt ceiling beyond the next election.

And I think you ought to be focused on today's issue, the jobs, the economy, the debt, and the spending. He ought to be embracing a bill...

(CROSSTALK)

BLITZER: Yes, but they don't want to put the country through this ordeal again in six months or in eight months. You understand that, right?

BARRASSO: Well, I know that the president wants to take the eyes of America off of the economy and the lack of jobs and the 9.2 percent unemployment that we have. For the times they have raised the debt ceiling, Wolf, it's on an average of about every eight months.

The president is asking for the largest increase in the debt ceiling ever, and for one of the longest periods of time ever. That's not a responsible way to do it. Our problems is as a nation we're going broke and it is the debt, not just the debt ceiling, it is this $14 trillion debt. And if we have a downgrade of our bonds and the interest rates go up, it's going to be much more because of the debt than the debt ceiling issue.

BLITZER: It may already be too late for that downgrade given what has happened over these past several weeks. What do you know about what's happening in the other chamber, the House of Representatives, because it looks like the vote was supposed to be at least a half an hour or so ago. They've had to delay it. And everyone is suggesting that the speaker does not have all of his Republicans in line to get the 216 votes needed to pass his proposal. Is that what you are hearing?

BARRASSO: I was on the Senate Floor a little earlier speaking about this very issue. I believe they are going to have a vote tonight. I believe it will pass the House. It needs to pass the House so we can prevent a default and at the same time actually cut spending. That's the key that we don't need to raise taxes. We need to cut spending.

That's where we ought to be focused. You know, I don't think you balance the budget by raising taxes when it's 9.2 percent unemployment. We need to get people back to work, Wolf. We ought to be focused on that. So we need to get beyond this by passing the Boehner proposal, getting it to the Senate, passing it there.

And what does the president do? He goes on television. He makes a speech. He does a veto threat. The president doesn't have his own plan. He ought to be leading.

BLITZER: But even if the Boehner proposal passes the House tonight, it doesn't have the votes to even come up for a serious vote in the Senate. It will be tabled right away, 51 Democrats, two independents who vote with the Democrats, and a few Republicans are already saying they are going to vote to table this resolution.

So what do you do next, Senator, after the Boehner proposal goes down? Are you going to support Harry Reid's proposal which does not include any tax increases?

BARRASSO: I think that the only thing that can pass the House is the Boehner plan. And as a result, you need to get that to...

BLITZER: It can pass the House, but what about the Senate? It can't pass the Senate.

BARRASSO: We need to get that to the Senate. And the president then needs to show the leadership and come in and say, pass this proposal. It's the only thing that has made it through the House and can still get through the Senate in time to avoid a default before August 2nd.

But for the president, if he wants to stay fixated on trying to raise the debt ceiling to get him beyond his reelection effort in 2012, he should not be putting his reelection ahead of the country. He ought to be focused on the country and working with everyone else to avoid default.

BLITZER: But you heard Harry Reid, the leader in the Senate say the Boehner proposal is DOA, dead-on-arrival in the Senate. And you've heard White House officials say they will recommend to the president, even if it were to pass the Senate, and it doesn't look like it will, that he would veto it.

So what do you do next to avert the disaster for all of your constituents in Wyoming, indeed, around the country, so many people watching around the world, if, in fact, the U.S. government defaults on its payments?

BARRASSO: The people of Wyoming don't want to default. I don't want to default. There is a way to avoid the default, and that's to adopt the Boehner proposal, get it through the House, and then have Harry Reid say to his members, we need to pass this because it's the only way we avoid default and then have the president show some leadership.

You know, The New York Times today, what did it say, it said the president is on the sidelines. The president needs to get in the game, show some leadership, say, I'm going to put the country first, I want to avoid default, and then endorse and sign into law the Boehner approach.

BLITZER: John Barrasso is the Republican senator from Wyoming, I appreciate it, Senator, thanks for coming in.

BARRASSO: Thanks, Wolf. Thanks for having me.

BLITZER: You might be happy to hear, by the way, that Paul Ryan, the Republican congressman from Wisconsin, the chairman of the Budget Committee, just walked into the whip's office -- the Republican whip's office, and was overheard saying, I think it's coming together, meaning, there might be a vote coming up tonight.

BARRASSO: Good news.

BLITZER: And we'll see what happens.

BARRASSO: Good news for the country. BLITZER: I don't think the speaker would allow vote to come up unless he was assured that it would have the 216 votes necessary to pass it, otherwise it would be a huge, huge embarrassment for him, for his Republican leadership as well.

Senator Barrasso, thanks very much.

We are staying on top of the story, not going away too far. But there are other important news we're watching, including a new alleged plot to attack Fort Hood in Texas. The plot thwarted. Authorities say a Muslim-American Army private planned to attack fellow soldiers and had enough bomb material to do it. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Two years ago it was the scene of a shooting rampage allegedly by a Muslim-American soldier that left 13 people dead. Now another Muslim-American soldier has been arrested, suspected of plotting an attack of Fort Hood, Texas. Our Pentagon correspondent Barbara Starr has the latest details.

Barbara, what are we learning about this young soldier?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Wolf, Private First Class Naser Abdo once said his Islamic faith prevented him from going to war and possibly having to kill. Apparently that feeling has changed.

(BEGIN VIDEOTAPE)

STARR (voice-over): When he was arrested just outside the Fort Hood Army base in Central Texas, Private First Class Naser Abdo had enough material in his hotel room to make two bombs, military sources say. He planned to attack fellow soldiers.

CHIEF DENNIS BALDWIN, KILEEN, TEXAS, POLICE: Military personnel were a target of this suspect.

STARR: Police found gunpowder, shotgun shells, a pressure cooker, 18 pounds of sugar to enhance an explosion, shrapnel, and battery-operated clocks to be used as a possible timer.

It was a phone call from this gun shop that alerted police to his suspicious behavior.

GREG EBERT, GUNS GALORE EMPLOYEE: He selected six canisters of smokeless gunpowder, placed them on the counter and then asked the manager, what is smokeless powder? If you don't know what it is, why in the world would you buy that much?

STARR: Abdo was AWOL from Fort Campbell, Kentucky, after being told he would face court-martial for possession of child pornography. He had already gained attention because he had won his case to become a conscientious objector. In an interview last year he said as a Muslim he didn't want to go to war. NASER JASON ABDO, FORT HOOD ARREST SUSPECT: I have come to the conclusion that the consequences I would face of refusing deployment are a lot less than the consequences I would face should I go.

STARR: Fort Hood has faced violence from the Army's own. Major Nidal Hasan is charged in the 2009 shooting that killed 13 and injured more than 30. Both Hasan and Abdo went to the same gun store. But this time police were able to stop any potential attack.

BALDWIN: We would probably be here today giving a different briefing had he not been stopped.

(END VIDEOTAPE)

STARR: Wolf, law enforcement officials say there was also jihadist literature found in Abdo's backpack, but so far they believe he was acting alone -- Wolf.

BLITZER: All right. We will stay on top of this story together with you, Barbara. Thank you.

Those high gas prices we have been paying here in the United States are fueling massive profits for oil companies. We have new details of the latest financial report.

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BLITZER: Huge profits coming in for big oil. Lisa Sylvester is monitoring that and some of the other top stories in THE SITUATION ROOM right now, lots of big numbers out there

SYLVESTER: Yes, there certainly are, Wolf. Recent high gas prices helped push Exxon Mobil's second-quarter profit to $10.7 billion. That is up 41 percent from the previous year. The company also topped revenue estimates, but its earnings per share fell short of what analysts were predicting. That pushed Exxon Mobil stock down about 2 percent today.

Health care costs in the United States will almost double by 2020 with Washington footing half the bill. That's the finding of an annual government report which forecasts total health care spending to skyrocket from $2.6 trillion to $4.6 trillion. It also estimates health care reform will expand insurance to 30 million more people by 2020.

A date has been set for the trial of Hosni Mubarak. It will begin next Wednesday with the former Egyptian president facing charges of corruption and ordering the killings of anti-government protesters. If he is convicted, the ailing 83-year-old could get the death penalty. The trial will be open to the public and shown on state television.

These brothers, take a look here, they are charged with attacking an American Airlines pilot at the Miami Airport. Police say Jonathan Baez, he is the one on the right, he was suspected of being intoxicated and asked to get off a San Francisco-bound flight. His brother Luis left the plane with him, but police say Jonathan came back on the plane and started punching the pilot in the face. Then both men chased the pilot into the terminal and they continued to beat him.

What has this world come down to, Wolf?

BLITZER: Terrible. All right. Thanks very much.

I just want to update our viewers, we are following the breaking news in the House of Representatives right now. The vote was supposed to take place at least 45 minutes or so ago, but guess what. There has been no vote yet on the floor of House or Representatives apparently because the speaker, John Boehner, is not guaranteed the necessary 216 votes needed for passage of his proposal, his legislation that would raise, that would raise the nation's debt ceiling.

In fact, the House has gone into recess right now. There you can see the House is in recess subject to the call of the chair. Boehner, we are told, and his top leadership, the whips, they are trying to get some recalcitrant Republican members in line, but right now it's problematic to get that majority, 216 votes, that is needed. We're staying on top of this story. Much more on the debt crisis deadlock coming up and the efforts to do something about it.

John King, by the way, for our North American viewers, he is up on Capitol Hill right now. He will have the latest coming up at the top of the hour. We will have much more right here in THE SITUATION ROOM right after this.

(COMMERCIAL BREAK)

BLITZER: Let's check back with Jack for "The Cafferty File" -- Jack.

CAFFERTY: The question this hour, Wolf, what's your view of the current state of the U.S. economy as all of this goes in the nation's capital? Paul writes: "If economic policy continues to be held hostage by a minority group, things look decidedly grim indeed, it's obvious that changes need to be way in the way taxpayer money is spent. But without the willingness to work cooperatively, the status quo is all we'll get and we know where that leads."

Tom in Michigan: "I believe it's a failed economy that has pandered to the wealthy and corporate interests and continues to do so. Too few control the wealth in America and the world. Wall is manipulated. Congress is bought and paid for. Government no longer represents the people. Insurance companies and banks own the world. Big business is greed-infested. And people are apathetic."

Brian in Illinois writes: "I thought the economy was recovering, Jack. Dow was up. Financial markets stabilizing. The auto industries were paying back their loans. And the job numbers were improving. Unfortunately, with this tea party-inflicted wound, the economy is headed off a cliff again." Tom in Virginia writes: "The media reminds me daily the U.S. economy is in trouble. I'm not convinced. My grown kids have jobs and homes, albeit not necessarily the jobs or homes they envisioned during their formative years. The current economy is more like a dose of tough love, balancing choices between wants and needs."

And finally, Randy writes: "A fitting question looking at Parade Magazine's annual "What Americans Earn" issue, Oprah made $315 million, Dr. Phil $80 million, Charlie Sheen, $30 million, further down the chart a lifeguard made $7,000, and the mayor of Bowling Green, Kentucky, made $16,000. Is there any doubt this country has lost its collective mind regarding economics and how a successful economy works?"

If you want to read more on this, you'll find it on my blog, cnn.com/caffertyfile -- Wolf.

BLITZER: All right. Jack, thank you.

We'll take a quick break. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Some people are seeking divine sign in an unlikely place. Here's CNN's Jeanne Moos.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Do you see just overgrown vines on a telephone pole or does this look like the big operator in the sky?

UNIDENTIFIED MALE: The figure of a -- oh, my goodness, Jesus. Jesus.

MOOS (on camera): Does it look like...

UNIDENTIFIED MALE: Jesus Christ.

MOOS (voice-over): Now often the Jesus sightings require a lot of imagination, whether it be Jesus on a moth or Cheeto Jesus.

UNIDENTIFIED MALE: I don't think God makes Cheetos that look like Jesus.

MOOS: Even the famous Virgin Mary on grilled cheese could arguably be Madonna, but this telephone pole in Littleton, Colorado, strikes most people the same way.

(on camera): What do you see?

UNIDENTIFIED MALE: God or Jesus.

UNIDENTIFIED MALE: Jesus on a cross.

UNIDENTIFIED MALE: Jesus. MOOS: What do you see?

UNIDENTIFIED MALE: Oh!

MOOS (voice-over): Folks pointed out what looks like a crown of thorns, the body's positioning.

UNIDENTIFIED FEMALE: Then look at the legs, see, like, you know, he's, like this, yes.

UNIDENTIFIED MALE: Head is down like this, he's like that.

MOOS: But while you might think a telephone pole Jesus is pretty unique, it turns out he's not alone. Vine-covered utility poles have been sprouting religious images for years all over the country.

UNIDENTIFIED MALE: It does look like Jesus hanging on the cross.

MOOS: From North Carolina to Louisiana.

UNIDENTIFIED MALE: That is a group of vines, man.

UNIDENTIFIED MALE: That was brought there by him.

MOOS: This one in Lake Charles, Louisiana, from last fall was said to be most striking when seen as you drove by. While one local was quoted as saying, "you can't spray Jesus with Roundup." Workers did cut down the vines. Officials were worried believers would climb the pole to touch the greenery then get an electrifying jolt.

(on camera): Now, if you're having trouble seeing Jesus on telephone poles, maybe what you need is the Jesus Pan. It's supposed to put the image of Jesus right on food.

(voice-over): Advertising for the Jesus Pan says: "Imagine serving heavenly hotcakes at the next church breakfast, they'll flip!"

Of course, the image of Jesus was much clearer when an episode of "Glee" focused on the topic.

CORY MONTEITH, "FINN HUDSON," "GLEE": I had made a "Grilled Cheesus."

MOOS: Finn didn't just make the sandwich, he prayed to it.

MONTEITH: Dear "Grilled Cheesus," first of all, you're super delicious.

MOOS: Can't say that about a phone pole that looks like a holy Chia Pet.

Jeanne Moos, CNN...

UNIDENTIFIED FEMALE: He's trying to speak to us.

MOOS (on camera): But what is he saying? UNIDENTIFIED FEMALE: He's saying, call your mother.

MOOS (voice-over): ... New York.

(END VIDEOTAPE)

BLITZER: That's it for me. Thanks for watching. I'm Wolf Blitzer in THE SITUATION ROOM. For the international viewers, "WORLD REPORT" is next. In North America, "JOHN KING USA" starts right now.