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Awaiting Delayed House Vote on GOP Debt Plan; 'We Are Almost Out of Time;' President: 'Keep the Pressure on Washington'; Who Could Benefit from Debt Crisis?; Interview With Jon Huntsman; Speaker Boehner Addresses House; 'Strategy Session'

Aired July 29, 2011 - 17:00   ET

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


WOLF BLITZER, HOST: Brooke, thanks very much.

Happening now, breaking news. That critical House vote on the Republican debt plan back. It's back on right now, almost 24 hours after a huge rift in the party brought it to a screeching halt.

Do the Republicans now have the 216 votes needed to pass?

We're only moments away from the vote. And when it happens, we'll bring it to you live right here in THE SITUATION ROOM.

Plus, it's arguably his most defining moment as the House speaker.

John Boehner now desperately struggling to prove he has what it takes to keep a new generation of Republicans in line.

And President Obama warns -- and I'm quoting him now -- "We are almost out of time," urging all Americans to keep the pressure on Washington and bring this devastating crisis to an end.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

You're looking at a live picture right now of the House floor, where just a short time from now, we expect to see that critical vote on the GOP debt plan. The vote was supposed to happen yesterday around this time, but was abruptly postponed when the House speaker, John Boehner, failed to get the 216 votes it needs for passage.

Meanwhile, with only days left to solve this unprecedented crisis, Wall Street is already reeling. Stocks posted their worst weekly performance in more than a year, while the Dow fell about 97 points today. This on the heels of a dismal new economic report out today, showing the country's economic growth has now slowed to a crawl.

Let's go straight to our Congressional correspondent, Kate Bolduan.

She's on Capitol Hill, where it's shaping up to be not only a very long night, but a very long weekend.

Set the scene for us -- Kate.

KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: Hey, Wolf.

Well, the breakthrough for House Republican leaders seemed to come early today in a closed door meeting with Republican members. Republican members emerged from this meeting and the no votes from last night seemed to turn to yeses.

Listen here to a couple.

(BEGIN VIDEO CLIP)

REP. PHIL GINGREY (R), GEORGIA: Absolutely, now. An enthusiastic, yes.

BOLDUAN: And why?

For the American people who don't understand this --

GINGREY: Well --

BOLDUAN: -- and it's like why are you an enthusiastic yes now?

GINGREY: Because we're -- we've got the short-term in regard to the -- the cuts. We've got medium term financial reform in regard to the cap. And we've got long-term financial reform in regard to the balanced budget amendment.

REP. SCOTT GARRETT (R), NEW JERSEY: I -- I'm on board because, as I say in there, I -- I see this as a, you know, just as a variation of "Cut, Cap and Balance," a good variation that gets us through this logjam, if you will.

(END VIDEO TAPE)

BOLDUAN: So what changed?

Well, leaders changed the bill, making the second debt ceiling extension, which would happen early next year, contingent upon Congressional passage of a balanced budget amendment. The original bill only called for a vote on the amendment, not passage. And this comes as a result of the serious push back that leaders were getting from conservative members, who didn't think the bill went far enough. And it clearly was part of what was holding up the vote last night.

But while leaders are not themselves predicting certain victory, I'll tell you, Wolf, that members emerging from this meeting, they, at this point, are predicting that they will have the votes to pass this.

But the reality is, as we've been talking all along, is that if this bill passes, it still seems to be dead on arrival in the Senate.

Listen here to the Senate majority leader, Harry Reid.

(BEGIN VIDEO CLIP) SEN. HARRY REID (D-NV), MAJORITY LEADER: I'm not standing in line to see how many times they can amend the constitution. But, you know, yes, if people wanted to vote on that, fine. But as Senator Schumer pointed out, to show the extremism of these people the extremism of these people -- the extremism of these people, they're not satisfied with a vote on it. They want a guarantee that it pass -- it gets passed before they'll allow an extension of the debt limit.

I mean how bizarre can anyone be?

(END VIDEO CLIP)

BOLDUAN: The bottom line, it looks like once this step, the House vote, this vote is over, and -- and we do have finality here in the House, then the real negotiations, it seems, toward this, whatever the end game is, will begin -- Wolf.

BLITZER: The negotiations will begin in the Senate first and foremost. And then they'll eventually have to bring members of the House in. We'll see how they work all weekend.

Kate, thanks very much.

Let's go to the White House right now, where President Obama is warning that Washington, quote -- he's warning Washington: "We are almost out of time." One senior administration official there saying the president has been suffering some sleepless nights lately.

Our chief White House correspondent, Jessica Yellin, is over at the White House with more -- Jessica, set the scene over at the White House for us a little bit.

What's the mood there?

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Wolf, there's deep frustration here that it's Friday already and the entire city is waiting on what Democrats view as a political exercise in the House, when they feel there's an urgent need for a solution that Democrats and Republicans can both sign on to, to get a compromise bill done. That is the word the White House has been using. But it's also a reality that you need both Democrats and Republicans to pass something in Congress.

Here was the president earlier today.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And right now, the House of Representatives is still trying to pass a bill that a majority of Republicans and Democrats in the Senate have already said they won't vote for. It's a plan that would force us to relive this crisis in just a few short months, holding our economy captive to with Washington politics once again. In other words, it does not solve the problem. And it has no chance of becoming law.

(END VIDEO CLIP) YELLIN: And tonight, all eyes will be on two things -- one, to see what Speaker Boehner and Leader Cantor say after their bill is voted on.

Will they signal a willingness to sit down with Democrats and talk to them about the next steps?

And, two, to see what happens in the U.S. Senate between Harry Reid and Mitch McConnell.

Can they strike a deal -- Wolf.

BLITZER: Because what happens next is going to be very, very intense. We have one position, the Republican House position, there has to be another vote within a few months, basically, this whole process, they have to go through it once again. They have -- have to vote at that time on a balanced budget amendment to the constitution. Harry Reid, the Democrats in the Senate, say that's a nonstarter. The president says it has -- he would -- he would veto that. So it looks like they're potentially at an impasse.

YELLIN: Potentially at an impasse. But again, the hope is that there could be some kind of a negotiation between the leaders in the Senate, Harry Reid, the Democrat and Mitch McConnell the Republican. And as you know, Vice President Biden has had a long relationship with Leader McConnell and that Leader McConnell has made deals in the past.

My understanding is that so far to date, McConnell and Reid have not been able to come to terms and that the Republicans are holding out, waiting to see what happens with Speaker Boehner's vote before negotiating anything. But the hope remains that something will be negotiated after Speaker Boehner's bill is voted on.

Here from the White House, I can add, Wolf, that it is -- my sources -- my Democratic sources are telling me that President Obama has not speaken -- spoken with John Boehner still today, that the president has been in touch with other members, both other members on the Hill. Vice President Biden has been in touch both with the House and the Senate and staff discussions continue. But still, no progress toward a compromise solution.

So we remain at that impasse we've been at all week -- Wolf.

BLITZER: And so basically, what we knew yesterday, the president hasn't spoken to Boehner. That continues yet for another day.

Why doesn't he just pick up the phone and just call him and say, John, we've got to do something?

YELLIN: It's my understanding that the speaker has been focused on his bill. And that has been made clear, that he's focused on getting his bill passed through the House. And that it's a sense that right now, it's up to Congress to get their job done.

I'm also given to understand that if it's decided that a meeting here at the White House, would be helpful to get things done over the weekend, we could see one added to the schedule -- Wolf.

BLITZER: All right. We'll stay in close touch.

We'll see what happens. Jessica, thank you.

President Obama is pushing all Americans to keep the pressure on Washington as time runs out on a deal. And it appears thousands now are doing just that.

Let's go to CNN's Athena Jones.

She's up on Capitol Hill, where the phone calls, the e-mails, the Tweets, they are pouring in Athena, right now.

What's going on?

ATHENA JONES, CNN CORRESPONDENT: Wolf, you know, people are asking what's the public's role in all this?

Well, as we found out, voters are not staying silent.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Congressman Tim Murphy's office.

UNIDENTIFIED MALE: Congressman Mike Murphy's office.

JONES (voice-over): It's down to the wire.

UNIDENTIFIED MALE: The House will be in order.

JONES: Constituents are flooding Congressional offices with calls. Fort again urging Americans to make their voices heard.

OBAMA: So please, to all the American people, keep it up. Make a phone call, send an e-mail, Tweet.

JONES: The Obama campaign used their official Twitter account to push followers to pick up the phone.

UNIDENTIFIED MALE: Congressman Murphy is working down here to -- to work with both sides.

JONES: And about an hour after Mr. Obama spoke, the House Administrative Office sent out an alert, saying some telephone circuits were near capacity, with callers getting busy signals and long ring times.

We decided to check it out with one Republican.

(on camera): We're here at one of the Congressional office buildings, talking to members and their staffs about the high volume of phone calls, e-mails and even Facebook messages they're getting from constituents about this debt ceiling vote.

I'm going to go in here and talk to Congressman Tim Murphy from Pennsylvania.

(voice-over): Staffers here say the number of phone calls, e- mails and faxes they're receiving has tripled since last week.

What are they saying?

Where are they coming down on -- on this debt ceiling vote?

REP. TIM MURPHY (R), PENNSYLVANIA: I guess the universal comment is enough is enough, fix this problem.

JONES: Murphy, who made up his mind to support the Boehner bill in the last few days, says he gets daily updates on constituents' comments.

(on camera): One thing I think that a lot of constituents would ask is, does my phone call or my e-mail or my Facebook post really matter?

How -- has it affected how you made this decision?

MURPHY: Yes, it does matter. And I tell people, the call you don't make, the fax you don't send, the e-mail you don't write, we don't read. But if you send something, we go through them all.

JONES (voice-over): Texas Republican Ted Poe's office has gotten over 2,000 e-mails in the last two days. And dozens of people have taken to Facebook to urge the congressman to vote for or against the Boehner bill. Like this one: "Don't compromise what you know to be right in your heart." And this one: "The debt ceiling must be raised now. What is wrong with Congress that they can't see that?"

And the phones keep ringing.

UNIDENTIFIED MALE: Congressman Mulvaney's office.

(END VIDEO TAPE)

JONES: Now, Congressman Poe has been on the fence. And earlier this afternoon, he was still undecided. No word yet on whether he's made a decision in the last couple of hours.

And, Wolf, one more thing about those phone calls and e-mails. One Congress -- one Congressman's staffer told me they'd like to see the public this engaged all the time, not just at times like this -- Wolf.

BLITZER: All right, Athena.

Thanks very much.

CNN's Athena Jones, our newest correspondent up on Capitol Hill. Welcome, Athena, to CNN.

We're looking forward to a nice, long ride with you.

Appreciate it.

JONES: Thanks.

BLITZER: You picked a busy week to start working.

Bracing on Wall Street for an unprecedented crisis -- just ahead, we'll take you behind investors' growing anxiety as time runs out to raise the debt ceiling.

Plus, why some now say it's time for the cash-strapped U.S. government to borrow a page from the Apple playbook. Those details next.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Some new talk that maybe the U.S. government should consider borrowing a page from the Apple iPad. According to the latest statement from the U.S. Treasury Department, the country has an operating cash balance right now of about $73.8 billion, while as of June, the digital giant was worth a whopping $76.2 billion.

Let's go to Wall Street now, where the looming crisis is already taking a toll.

CNN's Mary Snow is in New York.

She's joining us with this part of the story -- Mary.

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, stocks had their worst week in a year, with the Dow down 4 percent for the week. And as one trader put it, people are now just crossing their fingers that a deal will be done by Monday.

(BEGIN VIDEOTAPE)

OBAMA: We are almost out of time.

UNIDENTIFIED MALE: Is it a deal?

UNIDENTIFIED MALE: (INAUDIBLE).

SNOW: In Washington, an impasse. On Wall Street, growing anxiety. Stocks had their worst week in a year.

(on camera): How nervous are people right now?

ALAN VALDES, DME SECURITIES: They're very concerned.

SNOW: Trader Alan Valdez says while a deal to raise the debt ceiling is expected to happen, there's also the belief that a downgrade of the U.S. credit rating will happen. And he is bracing for what's to come. Not far from his memory, the market losses prompted by the collapse of Lehman Brothers.

VALDES: With Lehman, it caught us by shock. But we knew the Feds would come in and save the day eventually. And right now, there's not that feeling out there. We don't know for sure what's going to happen.

SNOW: One bank took a look at the what ifs in the worst case scenario of a first ever default in U.S. history, even though it doesn't expect it to happen. But if it did, stocks could drop 30 percent over the next six months, according to a Credit Suisse report. And the economy could shrink by 5 percent during a period of six months to a year.

While different scenarios are being mapped out, behind-the-scenes executives from the country's banks met with Treasury Department officials at the Federal Reserve in New York.

WILLIAM O'DONNELL, TREASURY STRATEGY, RBS SECURITIES: These events in Washington have gone much further than anybody expected. And so we're all concerned. I mean, that's -- it's not a unique position. They're concerned. We're concerned. Everybody is concerned.

(END VIDEO TAPE)

SNOW: Wolf, in a sign of the nervousness, gold, which is considered a safe haven, once again today reached a record high -- Wolf.

BLITZER: A lot of nervous people out there.

All right, Mary.

Thank you.

Economists now say if there's no deal on raising the debt limit, the end result will likely be a downgrading of the U.S. credit rating and rising interest rates. That's certainly bad news for the economy and for most Americans. But it could present an opportunity for some investors who buy U.S. debt.

CNN's Casey Wian spoke with the head of the world's largest mutual fund, Bill Gross of the Pacific Investment Management Company.

CASEY WIAN, CNN CORRESPONDENT: Wolf, PIMCO is 3,000 miles away from the debt ceiling debate in Washington, DC. It manages more than $1 trillion in assets. Here on its trading floor, the man in charge is paying very close attention.

WILLIAM GROSS, FOUNDER, PIMCO: Will Rogers said way back when that he wasn't so much concerned about the return on his money as the return of his money. And -- and today, it's the return of your money that's of primary importance. WIAN: Bill Gross took most of the $1.3 trillion PIMCO manages out of U.S. Treasuries months before Tuesday's debt crisis deadline. This feels to me like a politically manufactured crisis, not necessarily an economic one.

Is that a fair assessment?

GROSS: I think it is. President Obama said this morning that we have AAA credit, but not AAA government. And to a certain extent, that's true, although we suspect that we're not exactly a AAA credit, either. But, yes, the government has proved itself to be dysfunctional.

WIAN: He says if the U.S. defaults and suffers a ratings downgrade, he would likely buy U.S. Treasuries again, because their interest payments to investors would rise enough to cover the risk.

GROSS: Oh, it would make them more attractive to us. You know, our assumption would be that if -- if the credit was downgraded to a AA or AA+, that interest rates would rise by a quarter of a percent, 25 basis points, not just for Treasuries, but for mortgages and for corporate bonds and for private credit -- credit cards. And that's obviously a problem for the economy. But for an investor, it makes it more attractive.

WIAN: So if you would be spurred to buy Treasuries if there's a quarter percent increase in the interest rate, or perhaps even a half a percent, as some have suggested, I would assume other buyers would come in, as well.

So where's the crisis?

GROSS: Well, the crisis really is in the long-term. Twenty-five basis points or a quarter of a percent is not onerous. To our way of thinking, the U.S., with Medicaid and Medicare and Social Security, has a $60 trillion liability going forward over the next 20 to 30 years. To the extent that the Congress is now addressing the media problem with $1 trillion to $2 trillion worth of cuts, to our way of thinking, they have $58 trillion to go. It's an enormous problem.

WIAN: Gross expects a resolution to the debt crisis before Tuesday's deadline. But even if that happens, he's very concerned about the long-term implications of the debt on the nation's jobs and economy -- Wolf.

BLITZER: Casey Wian.

Thanks very much.

Right now, all eyes here in Washington on the House of representatives. We're standing by for a critical vote on the GOP plan to raise the debt ceiling. And it's expected very, very soon. We'll, of course, bring it to you live.

We also expect to hear from the House speaker, John Boehner. We expect that he will be speaking, as well, just before the vote. We'll also talk about why some Republicans are wondering if Boehner has what it takes to keep Republicans in line.

(COMMERCIAL BREAK)

BLITZER: We're only moments away from the vote on the House floor on raising the nation's debt ceiling. This is a procedural vote that's necessary. In advance of that, we expect to be hearing directly from the speaker of the House, John Boehner, immediately before the next vote.

Stay with us for live coverage.

We'll go there, of course, once the speaker starts speaking.

Meanwhile, other news. A soldier charged in connection with an alleged bomb plot in Texas will remain in jail.

Lisa Sylvester is monitoring that and some of the other top stories in THE SITUATION ROOM right now.

What's going on -- Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: Hi there, Wolf.

Well, a judge in Texas is ordering that a U.S. Army private be held without bond on charges connected to an alleged plot to attack soldiers outside Fort Hood. Naser Jason Abdo allegedly told police he planned to bomb a restaurant near the base that's popular among military personnel. At a hearing this morning, Abdo reportedly refused to stand when the judge entered the courtroom, then shouted an apparent reference to the 2006 rape of an Iraqi girl by U.S. soldiers.

It was a solemn day in Norway. A memorial for the 77 people killed in two terror attacks last week was held in Oslo. Speaking at the service, the country's prime minister called it, quote, "a vicious attack on all our common values." The service was organized by the youth movement of the Labour Party. A summer camp organized by the party's youth movement was the target of one of the attacks.

And President Obama was joined by auto industry leaders in Washington today to announce a proposal for new fuel-efficiency standards. The plan would require cars and light trucks sold in the United States to have a combined fuel-efficiency average of almost 55 miles per hour by 2025. That's about double the current requirement. The president also took time out from the discussion of fuel- efficiency to make a personal request.

(BEGIN VIDEO CLIP)

OBAMA: I'm glad that I have a chance to see some of the great cars that you are manufacturing. As some of you may know, it's only a matter of time until Malia gets her learner's permit. So I'm hoping to see one of those models that gets a top speed of 15 miles an hour, the ejector seat anytime boys are in the car. So, hopefully, you guys have some of those in the pipeline. (END VIDEO CLIP)

SYLVESTER: And I guess every parent fears the first time they have to turn over the keys to one of their kids -- Wolf.

BLITZER: I can relate.

All right, thanks very much.

The critical House debt vote only a few moments away, we're now told. We're standing by for live coverage. You'll see it. You'll hear it. You'll also hear directly from the speaker of the House, John Boehner. He's going to speak just before the vote.

And a key Republican presidential contender refusing to stay on the sidelines of this debt debate.

Just ahead, my interview with the former U.S. ambassador, the former Utah governor, Jon Huntsman.

(COMMERCIAL BREAK)

BLITZER: With only three days left for President Obama and Congress to solve this grave debt crisis, many of those vying to be the next president of the United States are staying largely on the sidelines, while other GOP presidential contenders say now, now is the time to speak up.

(BEGIN VIDEOTAPE)

BLITZER: And joining us now, Republican presidential candidate, Jon Huntsman, the former governor of Utah, the former U.S. ambassador to China. Governor, thanks very much for coming in.

JON HUNTSMAN (R), PRESIDENTIAL CANDIDATE: Thank you, Wolf.

Delighted to be here.

BLITZER: All right. Let's imagine you're president of the United States right now. You have a divided Republican Caucus in the House of Representatives, a Senate majority, a Democratic majority in the Senate and you're president. And you've got three or four days before the debt ceiling runs out.

What do you do?

HUNTSMAN: Use the bully pulpit in ways that speak to clear-cut and defined goals that the people of this country want to achieve. They want cuts. There's a cancer growing in this country And it's called debt. And everybody knows it. And some people are trying to hide from it.

So first and foremost, there's got to be serious cuts associated with whatever we do with the debt ceiling.

Second, we have to be very clear about meeting our obligations as a country. We're 25 percent of the world's GDP. We're the most significant financial services country in the world. And the eyes of the world are on us, as well.

Use the bully pulpit for things other than DNC talking points. Use the bully pulpit to get very specific about where you want to take this debate. And then you've got to work both houses of Congress.

BLITZER: All right. So if it comes down to this issue three, four days before the debt ceiling runs out, a second vote sometime next year, early next year, in the middle of presidential elections, campaigns, all of that, or a longer raising of the debt ceiling so you don't have to deal with this crisis again in the middle of 2012, you let it continue on until 2013, what do you do if that's the final issue that could avert default?

HUNTSMAN: Well, as president, I would look at the plans, and the dialogue is devoid of plans. Nobody seems to have a plan. There's a Boehner plan which I like, and that takes care of our immediate needs. It then pushes into next year some very important aspects --

BLITZER: But the White House says that's dead on arrival.

HUNTSMAN: Well, that's totally political. I mean, the fact that they're trying to push it out beyond 2012 is totally political.

BLITZER: It's not necessarily completely political. I'll tell you why. Because if the country has to go through a wrenching debate like this again next year, the whole word, the credit rating agencies, they're all watching.

HUNTSMAN: But the country needs this debate, is the point. This is the most important issue of our time. It's the cancer that I referred to earlier that is metastasizing in this country.

It needs to be radiated, it needs to be excised, it needs to be cut out. And the only way we're going to get there is by the people of this country speaking out in specific terms about how deep and what our priorities, the size and role of government, ought to be going forward. So having that as part of the 2012 election cycle I think is a very healthy thing for this country.

BLITZER: Even right now, at this critical moment, with the whole world watching, the AAA rating of the United States -- you're a businessman -- the AAA rating in the United States could go down. If it's AA, interest rates could go up. That would be a hidden tax, in effect, for almost all Americans.

HUNTSMAN: Maintain the AAA status. I come from a state, one of very few, where we maintained our AAA status. That was very important to the people of our state because it controlled the cost of capital. You first and foremost have to address your obligations.

Second, I think we push a lot of this debate into next year and make it part of the overall presidential debate.

BLITZER: So you want this debate to continue next year, including letting the debt ceiling hang over this entire election?

HUNTSMAN: Absolutely. I think that's not a bad thing at all, for the people to be part of continuing a deliberation about the most important policy issue of our time.

BLITZER: You wrote a letter to the president and called him a remarkable leader. Do you think right now he's still a remarkable leader?

HUNTSMAN: He put a Republican in his administration. I thought that was pretty remarkable. He was getting off in the early days of his administration, which is when I wrote that note. I was raised to be gracious and raised to write thank you notes. And so that's what I said back then.

There is no leadership today. Times have changed over the last couple of years. And I've got to say, the one thing that is missing in this whole debate is presidential leadership.

Using the bully pulpit, using the weight and the power of the presidency to define in specific terms where this whole debt ceiling issue goes, that's one of the reasons we're in this fix. You know, we're 25 percent of the world's GDP, the most powerful financial services sector in the world right here in the United States. And the fact that we've let it come down to the 11th hour I think is evidence of lack of leadership.

BLITZER: Because he has used the bully pulpit. He's giving addresses to the nation, he's going out on television almost every day. He is using the bully pulpit.

HUNTSMAN: They're broad, generic, ill-defined talking points. I don't see specifics, I don't see anything on paper that he's sharing basically with Congress, with the American people. This is a time to get serious.

BLITZER: Michele Bachmann says the country does not need to raise the debt ceiling right now. Do you think she understands what's going on?

HUNTSMAN: She's an elected representative. She has her point of view. I would only say that we have obligations to meet as a nation. I think we should take those obligations seriously.

We've had a AAA bond status for almost 100 years in this country. It impacts the cost of capital, which means it impacts every family in this country. And I say it's important that we step up and meet those obligations.

BLITZER: So you disagree with her on this issue. You believe the nation needs to raise the debt ceiling?

HUNTSMAN: Absolutely.

BLITZER: And so she's wrong from your position? HUNTSMAN: In exchange for cuts. Let's be very clear. We've got to cut in a way that's commensurate with whatever you're going to raise the debt ceiling.

BLITZER: And are you also insisting on a balanced budget amendment to the Constitution?

HUNTSMAN: That's going to be the most important debate I think we have next year.

BLITZER: Do you believe that there needs to be a balanced budget amendment?

HUNTSMAN: As governor, I had a balanced budget amendment. Most governors do.

BLITZER: But as president, would you want --

HUNTSMAN: Absolutely, I'd want a balanced budget amendment. I think for the next year or two, for our country to be having that discussion, it's extremely important. I think it's the will of the people to get there.

BLITZER: Use this opportunity to address Michele Bachmann and tell her why she's wrong.

HUNTSMAN: Well, I think I just did. The country has had a AAA bond rating for 100 years. It impacts the cost of capital, which means increases on every family in America. It's not a wise thing to be doing right now, to say nothing of our credibility in terms of the financial marketplace.

BLITZER: President Obama's political adviser, David Axelrod, recently tweeted this about Mitt Romney, arguably the front-runner for the Republican nomination right now, suggesting he's MIA in this whole debate. "Anyone heard from Mitt Romney lately? Where is he on the McConnell plan, on the debt talks, on the impact of a default? Why so quiet?"

All right. Is David Axelrod right?

HUNTSMAN: Well, he's a political consultant. All I would say is this is a time for people to stand up and show real leadership.

If somebody wants to be president of the United States, this is a time to stand up and actually lead out on one of the most important issues of our time. If you're not willing to lead out during a time of this debt ceiling debate, that should raise some questions about when you are, in fact, going to take a position and lead out.

BLITZER: And Mitt Romney's not standing up and taking a leadership role?

HUNTSMAN: I see no evidence in any of my opponents stepping up and taking a position on it.

BLITZER: Any of them?

HUNTSMAN: I haven't seen -- it's one thing to wish the whole debate away and just say we'll crash and burn. I don't consider that to be a position.

BLITZER: You don't like Grover Norquist's no new tax pledge. You have refused to sign that. Is that right?

HUNTSMAN: I have refused every pledge. I pledge allegiance to my country. I have a pledge to my wife. But beyond that, I don't do pledges.

I don't think it's fair to tie somebody up once they do get elected in ways where they can't properly serve the people who got them there in the first place. So I started out as governor from the very beginning basically saying, look at what I do. I mean, actions ought to speak louder than anything else.

We had record tax cuts in the state of Utah. Record tax cuts. I refused to sign the no new tax pledge. We never raised taxes. We cut historically.

I don't need to sign things in order to prove a point. Actions should speak a whole lot larger than pledges.

BLITZER: But would you say you have no intention if elected to raise taxes?

HUNTSMAN: Not going to raise them.

(END VIDEOTAPE)

BLITZER: We'll have more of the interview next week. But here's John Boehner, the Speaker of the House.

(JOINED IN PROGRESS)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: -- and they're worried about the mountain of debt that's facing them and their children.

Today we have a chance to end this the debt limit crisis. With this bill, I think we're keeping our promise to the American people that we will cut spending by more than the increase in the debt limit.

The Congressional Budget Office has certified this commonsense standard, and it's been backed by more than 150 distinguished economists from across the country. We're also imposing caps to restrain future spending so that we can stop the expansion of government while giving our economy a chance to grow and to create jobs. And we're advancing the great cause of a balanced budget amendment to the Constitution.

(APPLAUSE)

What this bill now says is that before the president can request an additional increase in the debt limit, two things have to happen. A joint committee of the Congress must produce spending cuts larger than the increase in the debt limit, and both houses of the Congress must send to the states a balanced budget amendment.

Listen, a balanced budget amendment, it's time for this to happen. It enjoys support in both houses of this Congress and it enjoys bipartisan and widespread support across our country.

The bill also ends this crisis without raising taxes which would cripple our economy, and there's no gimmicks. There's no smoke screens here that represent the old ways of doing things.

Now, the bill before us still isn't perfect. No member would argue that it is. It's imperfect because it reflects an honest and sincere effort to end this crisis by sending a bill over to the Senate that at one time was agreed to by the bipartisan leadership of the United States Senate.

And to my colleagues in the Senate, if they were here, I would say this: If this bill passes, this House has sent you not one, but two different bills to cut spending by trillions of dollars over the next decade, while providing an immediate increase in the debt ceiling.

And to the American people I would say, we've tried our level best. We've done everything we can to find a commonsense solution that could pass both houses of Congress and end this crisis. We've tried to do the right thing by our country, but some people continue to say no.

My colleagues, I have worked since the first week of this session when we were sworn in, in January, to avoid being where we are right this moment. But two days after we were sworn in, the treasury secretary sent us a letter asking us to increase the debt ceiling. I immediately responded by saying we would not increase the debt ceiling without serious cuts in spending and serious reforms to the way we spend the people's money.

(APPLAUSE)

We've passed a budget. The other body spent over 800 days and still, no budget, no plan. This will be the second bill we send over to the Senate, and yet, not one piece of legislation out of the Senate has passed that deals with this crisis.

And my colleagues, I can tell you that I have worked with the president and the administration since the beginning of this year to avoid being in this spot. I have offered ideas, I have negotiated. Not one time -- not one time did the administration ever put any plan on the table.

All they would do was criticize what I put out there. I stuck my neck out a mile to try to get an agreement with the president of the United States. I stuck my neck out a mile.

And I put revenues on the table in order to try to come to an agreement to avert us being where we are. But a lot of people in this town can never say yes. A lot of people can never say yes.

This House has acted. And it is time for the administration and time for our colleagues across the aisle, put something on the table! Tell us where you are!

(APPLAUSE)

Thank you.

And yes, people can be critical of what we've done, but where are the other ideas?

At this point in time, the House the going to act, and we're going to act again. But it is time for our colleagues across the aisle to tell us what they're for. Tell us how we can end this crisis.

You know, Ronald Reagan has been quoted throughout the debate over the last few weeks. And Ronald Reagan would probably be flattered I'm sure if he were here. But Ronald Reagan on his desk had a little placard, and that little placard was real simple. It said, "It can be done."

I have a replica of that placard on my desk. And let me tell you, members of this House, it can be done. It must be done, and it will be done if we have the courage to do the right thing.

So for the sake of our economy, for the sake of our future, I'm going to ask each of you, as representatives of the people of the United States, to support this bill, to support this process, and end this crisis now.

(APPLAUSE)

BLITZER: All right. So there you see the Speaker of the House. He's animated, he's upset, understandably so. This is a critical, critical moment on what's going on. He made his points on what's going on.

Let's bring in our "Strategy Session," also Gloria Borger, our chief political analyst.

Let me bring you in, Gloria, first.

He makes some fair points. There's been no plan on paper that the Obama administration has put forward and no legislation put forward by the Democrats who control the Senate.

Those are fair points.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Right. That's why the Speaker felt that it was so important for Republicans to go on the record.

If they could not pass his proposal, then the Democrats in the Senate would feel that they had the wind at their back and would say, you know, you want to filibuster the debt ceiling? Go ahead and do it. Vote against us.

So I think this is very important for the Republicans here to lay down their marker. And then they can say, we tried to stop default.

BLITZER: Why haven't the Democrats, including the president, actually put some actual proposal with numbers on the table that could be considered or scored by the Congressional Budget Office?

DONNA BRAZILE, CNN POLITICAL CONTRIBUTOR: Well, first of all, Mr. Reid did that, and we know what the actual score is, because the CBO came back and said --

BLITZER: Why didn't the president do it?

BRAZILE: Well, the president of the United States, with the vice president, put $2.5 trillion in cuts --

BLITZER: But they didn't put any piece of paper out there. They just talked about it.

BRAZILE: Because it was the point of negotiations between the two parties.

But, Wolf, we can continue to figure out ways for Mr. Boehner to save face. He's trying to save face right now because of the failure and the ineffectual whipping that they did last night.

This approach that he's taken is a -- it's a very narrowly partisan approach that will not get us to Monday or Tuesday to raise the debt ceiling. What we need is a bipartisan approach, and what we need is a balanced approach. We know we will not get a balanced approach in terms of tax revenues, but we know that there are cuts on the table from both sides.

BLITZER: He's going to get this resolution, this legislation passed right now. He's got enough to get over 216, which is what he needs. The vote is going to take place right now.

He did leave open at the very end, you know what? Come back, talk to me, bring me something so we can continue this conversation.

Did he leave you, Tony Blankley, with hope that this can be worked out before Tuesday?

TONY BLANKLEY, REPUBLICAN STRATEGIST: Look, I think eventually this town is going to get to some kind of conclusion.

BLITZER: What does that mean, eventually?

BLANKLEY: I don't know. I hope by the 2nd, maybe not.

But I think a lot of people misunderstand. When they say that the Republicans are looking for a fig leaf or a vote that they voted on that doesn't result in anything, I think they misjudge where the passion of the House Republicans are. I think they came to town to try to get a job done, which is to reduce the debt and deficit, and they're not going to be easily rolled. I don't know how this plays out, but I think negotiations after this passes between Leader Reid and Speaker Boehner are going to be very tough. I don't know who blinks.

BLITZER: Yes.

Hold on, guys, because I want to continue this.

He says another vote is necessary within a few months. He says there has to be a vote approving a balanced budget amendment to the Constitution. Two points that the president says are no-starters, that he will veto. And we will see what happens.

Stay with us for a moment.

We're waiting for that critical vote in the House of Representatives on the Republican plan to raise the debt ceiling. When it happens, we'll bring it to you live.

Stay with us.

(COMMERCIAL BREAK)

BLITZER: All right. Moody's has just come out with its latest report on the potential of downgrading America's AAA credit rating, which has been in business now for more than 70 years -- almost 100 years, I should say. Let me read specifically what they say, because they're very, very precise.

They say, "The prolonged debt ceiling deliberations have increased the possibility of a rating change or outlook change or both for the United States' government's AAA bond rating." They then say this, and I'll put it up on the screen: "Nevertheless, it remains our expectation that the government will continue with timely debt service, and that our review for downgrade will more likely than not conclude with a confirmation of the AAA rating, albeit with a shift to a negative outlook. However, if there were a default on a treasury debt obligation, a downgrade would likely follow even if the default was swiftly cured and investors suffered no permanent losses."

So it looks like this is a very timely announcement from Moody's. Standard & Poor's, they have their own credit analysis of the U.S. government. But they are saying -- they are putting pressure basically right now on members of Congress. You guys have got to make sure you pay all of the U.S. obligations, otherwise the AAA rating, Tony, will go down.

BLANKLEY: And on the treasury. There can't be a default. We can't let there be a default.

But the question of a AAA relating relates also to the international bond markets' judgment of whether our debt to GDP numbers are right. And in that sense, the credit agencies will only eventually, perhaps, confirm the judgment of the markets rather than make the judgments of the markets.

So we're not quite there yet. But they make the good point that we can't possibly let there be a default on the bonds.

BLITZER: This will put pressure on the Democrats and the Republicans to get this deal done.

BORGER: Of course. But unless I'm mistaken, Wolf, they did talk about a shift to a negative outlook, which means to me there's a question about, no matter what the Senate and House do, is there enough deficit reduction in that to, in the long term, avoid a downgrade? And I'm not so sure we know the answer to that right now.

BLANKLEY: No, because even $4 trillion is considered only a down payment because we're going to run up $10 trillion over the next 10 years.

BORGER: That's right. So they may be in fact saying that neither plan actually cuts it.

BRAZILE: Especially a plan that has a two-step process, which we know --

BLANKLEY: I would contest that.

BRAZILE: -- which is Mr. Boehner's plan. Because, Tony, if they don't have the political will to make the tough decisions today, what will bring them to their senses in six months?

BLITZER: Let me explain from our point of view that the reason we need the leverage of another vote next spring is to get the public attention on the entitlement reform. There's no entitlement reform on anyone's budget in this one, but we need entitlement reform. And just to have a vote without any engagement between the two sides, the president and Republicans in the spring, it will just go by and then we'll get to the end of the year without it.

(CROSSTALK)

BRAZILE: Entitlement reform without tax reform is --

BLITZER: No, both of them. But that's what you need six months for, because you can't write entitlement reform in 24 hours.

BORGER: But here's my question.

BRAZILE: Tony, six months with this group of leaders, we will face another crisis again.

BLANKLEY: No. Even with the president and the Congress we have, we can solve the problem.

BLITZER: Gloria.

BORGER: But here's my question. If you set up some kind of a commission, how do you ensure that the commission doesn't stalemate itself? Republicans can appoint no tax people to it. And it could be deadlocked.

BLANKLEY: But that's the danger of fixing a commission. If you use the regular committees, like the Ways and Means Committee, it reflects in both parties the will of --

BORGER: So how can you ensure?

BLANKLEY: You can't.

BORGER: And that's a problem, because then you're back where we are today.

BLITZER: How many presidential commissions have there been that have studied this and all those recommendations have been thrown away?

(CROSSTALK)

BLANKLEY: That's the danger. If you don't use a regular committee that reflects the opinion of the country and the Congress, unless you select that committee very well balanced to reflect all opinions, you get something that won't have any play.

BRAZILE: Well, if we're going to come back -- and I don't like to play the devil's advocate -- but if we're going to come back in six months, then why don't we have a clean debt bill? We gave President Bush 10. We gave President Reagan 17. Let's have a clean debt bill, and if we're going to come back in six months to rehash these fights, then let's have a clean debt bill passed tonight.

BLITZER: I doubt the Republicans-- the Republicans control the House of Representatives, and they won't accept that. That's why.

BRAZILE: And they don't want the Senate to also issue their plan.

BLITZER: Democrats control the Senate and they have their ideas. And it takes two to tango, as they say.

Guys, stand by.

We'll take a quick break. More of the breaking news. We're getting ready for the actual vote. Because the Speaker delivered his remarks, we expect that this language will pass, this legislation. But we'll see.

Stand by.

(COMMERCIAL BREAK)

BLITZER: All right. We're watching what's happening on the floor of the House of Representatives right now.

This is what they call a motion to recommit with instructions. It's a procedural vote. It's not the real vote on whether or not John Boehner's legislation to raise the debt ceiling passes or fails. That will still come up. This is a technical move right now. Donna Brazile, you worked in the House of Representatives. Explain this procedural vote to our viewers, what it means, because the big vote, still to come.

BRAZILE: Well, Wolf, they have something in the Rules Committee that allows members of Congress to basically strike the last word if there's other amendments and stuff that must go to it. But this is just a procedural vote until the main item comes up.

BLITZER: And you used to be -- work for the Speaker of the House when it was Newt Gingrich.

BLANKLEY: Yes. The motion that you read is the minority party's shot at an alternative. It will be defeated by the majority, and then there will be another vote on the final resolution, which should have the flip vote, pretty much.

BLITZER: It's been really intense over these past 24 hours. It looked very gloomy for the Speaker, John Boehner. But all of a sudden, they sweetened the pot for some of those Tea Party supporters, the freshmen Republicans, and now it looks like he's going to get this language passed.

BORGER: Right. A guaranteed vote on the balanced budget amendment.

But I think that, Wolf, the Speaker of the House would not even be bringing this up if he were not absolutely sure that he did not have the votes to pass it, which is why he didn't bring it up yesterday. And what's interesting about this is we watched for hours last night, people going in and out of his office, pizza being delivered and all the rest.

What's interesting is that in the old days, Speakers used to be able to say here's a little pork, here's an earmark or two. I can twist your arm this way or twist your arm that way.

This was all about substance, ideology, how we can get to entitlement cuts. You know, this was not about sort of petty. This was about big picture, how we get to where you want to be, because the 87 freshmen members of the House, like them or don't like them, they see themselves as a transformational caucus.

BLITZER: But do you think he's going to survive this in the long run, Boehner?

BLANKLEY: Yes. I think he's actually played a very difficult hand that he's had all year very shrewdly. He really has a similar problem to what we had with Newt in '95, the same situation, a freshmen class that came here to get a job done. And Newt had to persuade them that his political judgment of how to maneuver through it was reliable.

And that's what Speaker Boehner is doing. He's explaining that even though we can't get from point A to B, going this path I'm suggesting is a winner (ph). I think he's won that argument, at least for the time being.

BLITZER: All right, guys. Stand by, because we're following the breaking news.