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Get It Done: Countdown To Debt Crisis

Aired July 31, 2011 - 21:00   ET


WOLF BLITZER, CNN ANCHOR: Hi, I'm Wolf Blitzer in Washington.

We want to welcome our viewers in the United States and around the world to the CNN special report GET IT DONE: COUNTDOWN TO DEBT CRISIS.

DON LEMON, CNN ANCHOR: And I'm Don Lemon at the CNN Headquarters at Atlanta where for the next two hours we'll be tracking breaking developments in Washington and around the world, Wolf.

BLITZER: It is an amazing moment here in Washington, I must say.

As many of our viewers have been watching here on CNN, our live coverage, President Obama now says a tentative agreement is in place to raise the nation's debt ceiling averting a potential default on the United States' financial obligations.

LEMON: Yes and it's just been amazing to watch and see the president come out on a Sunday night like this, Wolf.

We'll have complete coverage on every single angle of this story, what's in the deal, how it finally came about and how all the various players in this debate are reacting tonight.

Several Asian markets already opened, others will be opening soon. And we are going to take you there live to see how the traders are reacting to this.

BLITZER: It's been an amazing day, Don. I must say.

Earlier today the Senate Democratic Leader Harry Reid signed off on the deal with his final approval dependent on the support of fellow Senate Democrats.

Just a little while later Nancy Pelosi, the Democratic Leader in the House of Representatives, said she would take the deal to her caucus tomorrow. But that she wanted to see the final product before committing her support.

LEMON: We want to say again, CNN is devoting all of its resources to this breaking news story and you know -- you've been saying this all day -- this is very important for the country and the world.

Our Jessica Yellin is at the White House.

Kate Bolduan is staying by on Capitol Hill.

Ali Velshi and Richard Quest will add their financial expertise to this.

All of these and many, many more all straight ahead this hour.

Two hours on a Special Report here on CNN, Wolf.

BLITZER: All right. Let's first of all listen to what the president of the United States said. He delivered these remarks just a little while ago.


BARACK OBAMA, PRESIDENT, UNITED STATES: There are still some very important votes to be taken by members of congress, but I want to announce that the leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default, the default that would have had a devastating effect on our economy.

The first part of this agreement will cut about $1 trillion in spending over the next ten years, cuts that both parties had agreed to early on in this process.

The result would be the lowest level of annual domestic spending since Dwight Eisenhower was president.

But at a level that still allows us to make job creating investments and things like education and research. We also made sure that these cuts wouldn't happen so abruptly that they'd be a drag on a fragile economy.

Now I've said from the beginning that the ultimate solution to our deficit problem must be balance. Despite what some Republicans have argued, I believe that we have to ask the wealthiest Americans and biggest corporations to pay their fair share by giving up tax breaks and special deductions despite what some in my own party have argued, I believe that we need to make some modest adjustments to programs like Medicare to ensure they are still around for future generations.

That's why the second part of this agreement is so important. It establishes a bipartisan committee of Congress to report back by November with a proposal to further reduce the deficit which will then be put before the entire Congress for an up or down vote.

In this stage, everything will be on the table to hold us all accountable for making these reforms, tough cuts that both parties would find objectionable would automatically go into effect if we don't act.

And over the next few months I'll continue to make a detailed case to these lawmakers about why I believe a balanced approach is necessary to finish the job.

Now, is this the deal I would have preferred? No.

I believe that we could have made the tough choices required on entitlement reform and tax reform right now rather than through a special congressional committee process. But this compromise does make a serious down payment on the deficit reduction we need and gives each party a strong incentive to get a balanced plan done before the end of the year.

Most importantly, it will allow us to avoid default and end the crisis that Washington imposed on the rest of America.

It ensures also that we will not face this same kind of crisis again in six months or eight months or 12 months. And it will begin to lift the cloud of debt and the cloud of uncertainty that hangs over our economy.

Now this process has been messy. It's taken far too long. I've been concerned about the impact that it has had on business confidence and consumer confidence and the economy as a whole over the last month.

Nevertheless, ultimately the leaders of both parties have found their way toward compromise and I want to thank them for that. Most of all I want to thank the American people. It's been your voices, your letters, your e-mails, your tweets, your phone calls, that have compelled Washington to act in the final days and the American people's voice is a very powerful thing.

We're not done yet. I want to urge members of both parties to do the right thing and support this deal with your votes over the next few days.

It will allow us to avoid default, it will allow us to pay our bills, it will allow us to start reducing our deficit in a responsible way, and it will allow us to turn to the very important business of doing everything we can to create jobs, boost wages and grow this economy faster than it's currently growing.

That's what the American people sent us here to do, and that's what we should be devoting all of our time to accomplishing in the months ahead.

Thank you very much, everybody.


BLITZER: That was the President of the United States, Don.

The president coming out into the briefing room at around 8:40 p.m. Eastern to make that statement saying that he has reached an agreement and the United States will now avoid a default.

The agreement of course though has to be approved by the Senate and the House of Representatives. They've got tomorrow to do that before that August 2nd deadline comes into play.

Stand by for a moment Don because I want to go to Capitol Hill where Kate Bolduan is getting details on what the house speaker, John Boehner, just briefed the Republican caucus.

He had some talking points on how good this deal is for the Republicans, Kate. KATE BOLDUAN, CONGRESSIONAL CORRESPONDENT: Actually, I just dropped the paper so let me grab it real quick, Wolf.

This is actually a power point presentation that speaker Boehner was going through with members on this conference call and it's really ticking of exactly what this deal is and also trying to make the case why they need to support it.

What I'm seeing in the notes that I'm reading here in this power point presentation and from the excerpts I'm reading from speaker Boehner's remarks, he's really trying to make the case this is not far off from the deal they've been working on themselves that they eventually agreed to with a little bit of an added sweetener, if you will, to get more conservatives on in the end.

What I'm just seeing briefly the top line of this deal says that it cuts up-front spending at $917 billion over ten years. That's just up front. That there are multi-step process then for the president to request to raise the debt ceiling and it would be raised first by $900 billion which would get the country through February.

And then there's this key -- I know you've been talking about this key role that this joint committee, this special committee that will need to be set up to then work towards further deficit reduction measures that the Congress would have to agree to and they put triggers in place in order to make sure that happens.

So it seems as we're learning the contours of this framework, a lot of what we've been hearing over the past couple of days, a number different here, a number different there but it is interesting that house speaker John Boehner is really trying to make the case to his members on this conference call and I'm sure we'll hear more about this, that for them it shouldn't be viewed, I'm sure he's saying to his members, that it's not that far off than what they've already agreed to obviously trying to make the case to get them on board to push this through as we are hard up against this deadline at this point.

BLITZER: So can we just assume Kate that John Boehner is on board, Harry Reid is on board, Mitch McConnell is on board. We haven't heard from Nancy Pelosi except a couple of hours ago she was sort of noncommittal. But can we assume that the president wouldn't have announced an agreement unless he was confident that the Democratic Leader in the House Nancy Pelosi was on board?

BOLDUAN: I tell you, I don't think it is safe to assume anything at this point with this agreement especially on such an issue that so big as this. Believe me I'm reaching out to find out where the democratic leader in the house stands on this issue at this point.

But I think it is fair to say to get this deal through there has to be bipartisan support around this deal and to get it through the Senate and to get it through the House.

I don't think John Boehner expects that he's going to be able to push this through with only Republican support like he did with his own bill just earlier this week.

So they're going to need to have some democratic support in the house to push this through and I'm working right now to find out where Nancy Pelosi stands on that.

BLITZER: All right, Kate. I know you are. Thanks very much.

Thank all of your producers as well. Well done.

You know Don, earlier in the day and you know this, we heard a lot of members of the congressional plaque caucus, a lot of members of what's called the progressive caucus in the House of Representatives.

They're not happy about this deal. They're not happy that there are no tax increases on wealthy Americans or the elimination of any loopholes or subsidies for big corporations.

A lot of them are making it abundantly clear they're not going to vote in favor of this deal.

That's why I raise the question about Nancy Pelosi. She's certainly one of the more progressive members of the democratic caucus in the house.

I'm actually waiting her say, I support this deal. I haven't heard yet.

LEMON: We haven't heard that but you heard the president just moments ago saying the same thing, saying this isn't the deal that I would have wanted. He wants the wealthiest of Americans, people he feels can make the most sacrifice to be able to pay and that means revenues as the Republicans have been calling it or taxes.

And listen you know Kate was just moments ago talking about Wolf this phone call and this power point presentation that John Boehner gave.

And he said this is what he said to his members. He said the press has been filled with reports all day about an agreement. There is no agreement until we have talked to you.

So he wanted to talk to them first.

Then he goes on to say, I will tell you this has been a long battle we fought valiantly and frankly we've done it by listening to the American people. Of course the president thanked the American people when he came out just moments ago.

He said now listen, this isn't the greatest deal in the world but it shows how much we've changed the terms of the debate in this town.

And I think Wolf that's a great way to get to the White House now because except for tonight, the president has been -- hasn't been very visible in the past couple of days.

But he with was in front of the cameras and he came out just moments ago. I want to go to our White House correspondent Dan Lothian who's standing by now.

Dan, you heard what I said. John Boehner says it is not the greatest deal but it shows that we have changed the terms of the debate in this town. It certainly backed the president into a corner and put Democrats really on the defensive here because Republicans got mostly what they want, Democrats didn't.

DAN LOTHIAN, CNN CORRESPONDENT, WHITE HOUSE: That's right. And you heard the president essentially say that this is not a perfect deal but it did accomplish a couple of things.

First of all, raising -- or will, if it is supported by with the bi- party support, raise the debt ceiling and avoid what many here were calling a major meltdown for the U.S. economy which already has been having a difficult time in the economic recovery.

So first of all, that has will potentially be avoided.

Secondly though as the president himself pointed out, that this is yet another opportunity to show that compromise can come.

While you may not have a perfect deal, you can still reach some agreement on compromise.

And the third thing that I thought was interesting is that the president pointing out which is White House had been pushing for now for quite some time, is they did not want to have to sort of relitigate this again around the holiday season.

The president said this is a time that is sensitive for the U.S. economy so they wanted to have a deal that was long term through the end of next year and at least the president did get that. He didn't get everything he wanted but he was able to get some of those things.

LEMON: I also want to talk about something Wolf Blitzer just mentioned moments ago -- Nancy Pelosi.

We know that Nancy Pelosi was at the White House yesterday, Harry Reid as well. They've been in close contact with the president and the vice president.

Do we know where Nancy Pelosi stands on this? Has the president reached out to her and have they come up with something to tell their members as well?

LOTHIAN: We don't know where Nancy Pelosi stands on this. It's unclear if the president has reached out to her. But it is important. We were reporting this earlier, Don, where we talk about how there was concern here at the White House about whether the GOP and whether John Boehner were on board. But it's also important whether or not Democrats are on board.

The White House realizes that as well because you have some of these progressive Democrats who are unhappy because of the issue of not having any revenue here, no taxes, they believe, on the wealthiest Americans. They're getting away with it and yet middle class Americans and senior citizens are the ones who are carrying the heaviest load here.

So the president still has some selling to do. Unclear though where Nancy Pelosi is in the process.

LEMON: All right Dan Lothian, stand by.

Wolf Blitzer, I just printed out a copy of that power point presentation.

At the top it has everything that the speaker says he wanted. Two- step approach, president Obama accountable, no tax hikes it says at the top of this, cuts that exceed the debt hike, caps that control future spending, balanced budget amendment, entitlement reforms and savings, entitlement reforms and savings.

Those are the headlines from the presentation, here we go, that John Boehner gave to his members, Wolf Blitzer.

BLITZER: Yes. And you know that enthusiasm that's coming from the Republican leadership in the House of Representatives may explain why the democratic leadership of the House of Representatives specifically Nancy Pelosi, at least as of a little while ago, not all that enthusiastic.

She said just a little while ago before the president announced that there was an agreement she said I don't know all the particulars and what the final product is in writing and the ramifications will be.

She said she wants to see the whole deal in writing before she makes her announcement. She says she'll meet with her democratic caucus on Monday morning, and then she says this and I want everyone to listen very carefully to what she said a few hours ago, Nancy Pelosi.

"We all may not be able to support it or none of us may be able to support it."

Very cryptic remark. Gloria Borger is here, our chief Political Analyst.

You know they're going to need a lot of Democrats in the house representatives to vote in favor of this deal because you know they're going to be many Republicans, tea party supporters who will not vote in favor of this --

GLORIA BORGER, CNN POLITICAL ANALYST: They're going to lose, I would argue, probably most of the freshmen Republicans but it seems to me what the president was saying is you're going to get another bite here of the apple because in this joint committee we're going to be able -- reading between the lines in what he's telling Democrats is, we're going to be able to sort of do a deal, maybe it's going to have tax reform in it but we're going to say that it's got to have revenue increases which is my whole question about this panel which is what makes us think that they can do a deal whereas all these panels in the past have not been able to do a deal?

And Mitch McConnell's answer to that this morning, the Senate Republican leader, was, well, these are members of Congress and of course you've got a sword hanging over their heads with all these kinds of cuts.

BLITZER: The triggers.

BORGER: The triggers that nobody really wants to do, so they're going to essentially be forced into action because there is a presumption that they wouldn't be able to act on their own and maybe that's true.

So I think what the president is going to say to liberals is, we're going to get our shot at a more balanced approach down the line so just bear with me now, let's get this done.

BLITZER: And very quickly, Richard Quest, you're here from London watching what's going on.

The world is watching right now. Give us a 30-seconds what the world sees as they watch the United States go through this process.

RICHARD QUEST, CNN CORRESPONDENT: Torture, confusion, chaos. Is that enough for you?

I think they'll be relieved that the debt ceiling is going to be raised. Certainly I'm seeing that in the markets. Australia's up two percent, Tokyo's up on and a half percent. And the dollar is strengthening on all the major markets but ultimately as you go into the next stage of that, everybody's going to be very concerned that they can continue this momentum.

BLITZER: It is a messy process but it is a democratic process and we're glad we have it, as you know.

QUEST: Absolutely.

BLITZER: OK. Let me go back to Don.

Don, we're watching all of these and our coverage is only just beginning.

LEMON: Absolutely, will put to end and you know before we go to the break here I want to say something that Richard Quest said to me before the show. And I thought it was very interesting.

He said everyone around the world is watching that we have driven the bus to the edge of the cliff and they are trying to determine when we're going to hit the brakes here in the United States.

I'm going to talk to you about that in just a bit so stick by, Richard.

Asian markets have already started reacting to the news of the new debt deal.

Next, we'll go live to Tokyo and we'll talk with two guys that you count on when it comes to news about your finances.

Talking about Ali Velshi and Richard Quest. Right after the break.



VERNON HILL, IREPORT, NORTH CAROLINA: Why are they so stupid and refuse to realize that they cannot keep spending money when the bank is broke and they have no more money in the bank? Who are they fooling?

LEMON: Americans speaking out through CNN's IREPORT. IREPORT is about their frustration about what's going on in Washington.

I'm Don Lemon. Here our special coverage, Wolf Blitzer is in Washington. We'll get back to Washington in just a moment.

We want to check the markets now around the world to see how they are reacting. CNN's Kyung Lah joins us now from Tokyo where Japan's bench mark Nikkei has been open for trading for just about an hour. How is the Nikkei responding?

KYUNG LAH, CNN CORRESPONDENT: Well, what a difference a weekend and some news make.

Last weekend we were down some 2.2 percent, Don, and this morning about a little more than an hour ago when the Nikkei opened it literally came screaming out of the game on the news that there may be a debt deal.

And you can actually watch the ticker. It was climbing and climbing right up until the point that the president spoke and it's now beginning to level off.

Something else we've been watching is the value of the U.S. dollar which is also climbed as well. And that's very important to these companies here in Japan who then invest in America.

So the good news out of this side of the globe is that today is certainly a better trading day. The long-term impact though we have to see how much the U.S. dollar and the reputation of the U.S. economy is taking a beating on this side of the globe, Don.

LEMON: Kyung Lah, stand by. Thank you very much.

And Wolf, you know the concern here and all the guys that are around here, Ali Velshi, Richard Quest, can tell you this.

There's been a lot of talk about the U.S. triple-A credit rating being downgraded even, even if a debt deal is reached.

BLITZER: And you know some people think that even though it looks like a deal has been reached, it still has to be voted on in the Senate. We expect it will pass in the Senate. Still has to be voted on in the House of Representatives. The speaker says he now supports it. Nancy Pelosi still a little bit up in the air. We don't know if she supports it. We'll see what happens in the House of Representatives.

But we want to assess what all this means for America's Triple-A credit rating.

Ali Velshi is standing by; Richard quest is here as well.

Let me go to you Ali.

First, you're in New York. Is it a done deal now? Do you believe that now that -- assuming the house and Senate pass what the president said is an agreement that America's triple-A credit rating will remain firm?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Mixed views on that. We spoke to Mark Zandy earlier today from moody's economy he said yes this deal is big enough that it will avert a downgrade.

I spoke to Bill Gross from PIMCO, largest bond dealer in the world who said probably not. But remember Wolf what Ben Bernanke said -- a long time ago.

He said you don't actually have to have a bond rating agency. All you have to do is read a newspaper to know that the U.S. has got debt problems.

So it is not clear whether the downgrade is going to be as important as the U.S.' ability to show the rest of the world that it will not use this as a bargaining chip for obligations it's already made. I think that's the bigger problem here.

The second thing, Wolf, that's very important to consider is that the most important thing to the recovery of the U.S. economy right now is jobs. This doesn't do anything to help job creation. It probably does something to hurt job creation. That in the long run might be more economically dangerous than not having made this deal in the first place.

So smart economists will look at this and say, you know what? On balance out three years and five years, this may not have been the right thing to do right now.

This is not on everybody's doing a victory lap about it. Don't think it is really that good a deal.

BLITZER: Well, a deal is a deal. At least the United States is not going to default on Tuesday or Wednesday.

VELSHI: That is true. That's a good deal.

BLITZER: That's the good news. That's very important news for people who were worried about interest rates in the United States, unemployment in the United States, indeed for other parts of the world as well.

Ali, stand by. Richard, stand by.

Senator Mike Lee, Republican of Utah joins us live right now.

Senator Lee's very active in the tea party movement.

Senator, what do you think? Are you going to vote in favor of this agreement?

MIKE LEE, (R) SENATOR, UTAH: You know I haven't seen the legislation yet. I haven't had an opportunity to read it yet. Based on the summary that I've received so far I am not inclined to support it.

What I've said since before I was even sworn in to office, Wolf, is that I cannot support any effort to raise the debt limit that isn't accompanied by immediate and permanent structural spending reform.

I think for reasons I explained in my new book, "The Freedom Agenda," that can't happen without an amendment to the constitution that restricts congress' borrowing power.

BLITZER: What do you say to those who say you can't let the perfect being the enemy of the good. This is a good deal, it averts default, it allows the process to go forward. A super committee, Democrats and Republicans, equal in number, will now have a chance to come up with and even better deal by thanksgiving.

What do you say to those people, including the president, the speaker, the Republican leader in the Senate, your leader in the Senate?

LEE: Well, I say to that I'm very happy with the fact that we're now talking about cuts.

You know six or seven months ago here in this town there were a lot of people who were talking about another stimulus package, about more spending. Now we're not talking about those things. We're instead talking about cutting trillions of dollars.

Not withstanding that, we can't lose sight of the fact that this is a permanent problem, it is a long-term problem, and a short-term solution can't solve it.

We can't commit that future congresses will actually carry through with the spending cuts that we are presupposing right now in anticipation of raising our debt limit by an unprecedented $2.5 trillion.

LEMON: Senator Mike Lee, it's Don Lemon in Atlanta that have a question for you.

Here's what we're hearing from the other side, that liberal Democrats should be just as outraged as the tea party was about spending because they believe that this is all politics and little economics in this deal. LEE: Yes, well look. I'm not going to script anyone on the left or the right on how they have to vote on this. I'm certainly not going to be critical of others who might vote against it for other reasons.

But as I've said all along, whether you are a liberal and you're most concerned about protecting entitlement programs or you're a conservative and you're most concerned about protecting national defense, you ought to care about the fact that we need a balanced budget amendment because if we don't have one we'll continue this out of control deficit spending pattern, a pattern that if left uncheck will eventually put us to the point where we'll be spending more on interest on our national debt than we spend on any other program and that will rob everything from defense to entitlements.

LEMON: By all accounts I'm sorry, the Republicans have gotten pretty much everything that they have wanted here, much of with they wanted, Democrats didn't.

What do you make of that? People who say that there's been very little compromise on Republicans -- on the part of Republicans especially from freshmen tea party members.

LEE: OK, I want to be clear about something. That is we are getting a debt limit increase, a sizable one, in fact the largest one in history.

Now just a few years ago when it was a Republican in the White House and you had the Democratic Party in the minority in the Senate, you had every single democrat voting against raising the debt limit.

And so we have to remember that we are, as Republicans, if this passes with Republican support, notwithstanding the fact that it likely will not get my vote that is itself a huge concession.

I don't think it is fair at all to say Republicans are getting everything they want and Democrats are getting nothing that they want.

BLITZER: Senator Lee, we got to wrap it up.

But a quick technical question but an important one. Will you launch a filibuster in the Senate that would require 60 votes to break?

LEE: You know, I think everyone is anticipating and I have been anticipating, and I will fight for a of 60-vote threshold on this.

That does not mean we have to wait the entire 30-hour time frame you ordinarily would with something like that but I do anticipate a 60- vote threshold and I anticipate requesting one.

BLITZER: All right. Senator Mike Lee, thank you very much for joining.

That's Senator Mike Lee, the freshman senator from Utah, appreciate it very much.

All right. So the news is the president of the United States has announced there is an agreement, an agreement has been reached.

We'll hear a little bit more from what the president had to say.

Our continuing breaking news coverage will resume right after this.


BLITZER: Just over 26 hours left to raise the nation's debt ceiling or risk putting the United States of America into default. Tonight, the details appear -- emphasis on the word "appear" -- appear to be falling into place to get did all done. We heard from the president a little while earlier this evening. He was in the White House Briefing Room. We've also heard from leaders of both chambers of Congress. They say they have struck a deal to raise the nation's debt limit and cut the nation's spending.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: There are still some very important votes to be taken by members of Congress, but I want to announce that the leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default, a default that would have had a devastating effect on our economy.

The first part of this agreement will cut about $1 trillion in spending over the next 10 years, cuts that both parties had agreed to early on in this process. The result would be the lowest level of annual domestic spending since Dwight Eisenhower was president, but at a level that still allows us to make job-creating investments in things like education an research. We also made sure that these cuts wouldn't happen so abruptly that they'd be a drag on a fragile economy.


BLITZER: All right, so they have an agreement in principle, but both the United States Senate and the United States House of Representatives must approve this plan. It would initially raise the debt ceiling by about $900 billion, which will get the United States through for at least until next February, they say. Raising it again after that is a multi-step process involving a joint congressional committee that will have to be created to work toward more debt reduction measures.

In total, the plan calls for more than $2.4 trillion in deficit reduction. Don, this is a process that's only beginning. It's complicated, but it's essential in order to get a deal done.

LEMON: And Wolf, you know the reason we're here tonight -- and the president came out tonight to talk about this and wanted a deal tonight because they were concerned about the overseas markets, especially the Asian markets, which opened tonight. So we want to find out how the Asian markets are reacting right now. CNN's Pauline Chiou is in Hong Kong, where the Hang Seng opens right about now. And CNN's Stan Grant is standing by in Beijing, monitoring the Shanghai Composite Index. I want to start with you, Pauline.

PAULINE CHIOU, CNN CORRESPONDENT: Don, that's right. The Hang Seng has been trading for about three minutes. It was up at the open, and it's been climbing over the past three minutes. It's up by about 1.65 percent.

We also got a really good lead-in from Tokyo, Seoul and Sydney, which are all up by about 1.5 percent. Australia up by 2 percent.

Now, those three indices opened about an hour-and-a-half ago, so they gave Hong Kong a very good lead-in. Now, Hong Kong is Asia's financial hub, where many of China's biggest companies and banks list on this stock exchange. Also, the Hong Kong dollar is pegged to the U.S. dollar, so a lot of people interested in seeing how the U.S. dollar -- right now, it is strengthening -- Don.

LEMON: All right, thank you, Pauline -- Wolf.

BLITZER: We also want to go to Beijing, Don, because Stan Grant is standing by in Beijing. He's watching the Shanghai Composite Index. Stan, what's going on there?

STAN GRANT, CNN CORRESPONDENT: Wolf, it's opened flat. Last week took a bit of a hit, of course, with those concerns about potential default on the debt. You know, China is the biggest foreign holder of U.S. Treasuries, and that made them a bit nervous here that their investment could be dented by this political process in the U.S.

And really, it's been about politics here. There's been some frustration among some leaders in China about the process in the United States. They'll be breathing a sigh of relief now because they hold a lot of money in dollar denominations, and this is the only place for them to invest right now -- Wolf, Don.

BLITZER: All right, thanks very much, Stan, for that.

Don, as you've been pointing out, as I've been pointing out, the Asian markets are now open. They apparently, at least so far -- they like what they've seen and heard coming out of Washington.

LEMON: Yes, what a difference just a few minutes make, right? You know, as you've been saying, it appears there's a deal. And even with the debt deal that's on the table, the U.S. economy is still, Wolf, facing soaring unemployment, you know that, a sinking GDP and really a fragile housing market here.

BLITZER: It's still a fragile recovery, if we can call it that. Let's bring in once again Ali Velshi in New York, Richard Quest -- he's here in Washington to talk about this.

Is this deal, Ali, so much focusing in on America's AAA credit rating, but at least in the short run, do you think it's going to spark this U.S. economy and we're going to see some growth, some job creation?

VELSHI: No, because this was not the problem. While Republicans and Tea Party members have been very effective at painting this as the single biggest problem that the U.S. economy is facing and that helped them succeed in the last mid-term elections, economically, it isn't. It was always a distant second to jobs and economic growth. So the problem is we've got way too many unemployed people.

Look, there's three things affect you, right, your ability to earn a living, your ability to have your investments increase in value, and your home. This isn't going to do anything for housing whatsoever. This does nothing for jobs. And in terms of investment, all this has done is cost us because of this game they've been playing in Washington. So no.

What would be fantastic, Wolf, as we saw -- if we had seen this kind of passion go into dealing with job creation and how we do that. This doesn't do anything for the things that -- the underlying things that make an economy better. This was a long-term problem. It was never the most pressing problem, and it's been painted as the most pressing problem, and basically, it's wasted a lot of time where we could have actually been solving the most pressing problems.

LEMON: Very interesting. Hey, Wolf, I want to jump in here because, Ali, I was watching your show yesterday. You were doing it live and you were talking to a conservative economist, Peter Morici.


LEMON: And you talked about spending cuts versus revenues and whether or not this argument...


LEMON: ... that the Tea Party's been giving about cuts, whether it's upside down. Don't go anywhere.

VELSHI: Right.

LEMON: I'm going to play that for you after the break, and then you are going to respond, Richard Quest, and we'll get back to our Wolf Blitzer in Washington.

You're watching our continuing coverage now of the debt deal in Washington, "Get It Done: Countdown to Debt Crisis." We're back in a moment.


LEMON: Back now to our continuing coverage. I want to bring in CNN's Ali Velshi. He is joining us from New York. And Ali, I posed a question before the break, is this argument upside-down? To many economists, and even some conservative economists, there should be revenues, in their estimation, and less cuts. Let's listen to Peter Morici on your show just yesterday and we'll discuss.


PETER MORICI, UNIV. OF MARYLAND SCHOOL OF BUSINESS: Well, increasing taxes wouldn't hurt any more than, say, cutting spending. Both would decrease the amount of demand in the economy. To say taxes would hurt the economy is kind of code for, Cutting spending's OK but taxes are not. That's simply not true.

VELSHI: Right.

MORICI: In fact, raising taxes may be less deleterious than cutting spending. Economic theory says so.


LEMON: So Ali, who do we believe? Has it been talking points? Is he right?

VELSHI: He's a conservative. I mean, this conversation about how cutting taxes is deleterious to the economy -- Peter Morici himself said that. Mark Skoda from the Tea Party, Memphis Tea Party, agreed with the same thing.

Here's the thing. If you spend too much, you either cut how much you spend or you increase taxes. It's all money. It's all the same thing. But when you cut spending, what you do is you cut money that generally goes to people who have less money, so when they have that money, they spent all of it and more in the economy.

When you -- when you deal with taxes, when you cut taxes, you're taking it away from a portion of the population. You're taking money away from a portion of the population that doesn't spend every last dollar they have, which is why the impact on the economy of spending, government spending, is greater than the impact of tax cuts.

Now, I put it out there on Twitter, Don. You saw it. I said, If somebody can provide me with evidence or a report that says cutting taxes is good for the economy or increasing taxes is bad for the economy, I'll read it. There is no such report. People just say it, and they've gotten everybody to believe it.

LEMON: Yes. Absolutely. That's a good way of putting it. If you say it or -- you know, some people will think that maybe it's ideological...

VELSHI: You say it enough...

LEMON: ... but according...

VELSHI: ... people start to think it's true.

LEMON: Yes. According to economists, and even conservative economists, it may not shake out -- be shaking out the way that it has been played out in Washington. Ali, stand by because I want to get back to Wolf Blitzer in Washington.

You know, Wolf, there's still a lot to work out, a lot of politics to work out and a lot of dotting the I' and crossing the T's in Washington. BLITZER: And they always say the devil is in the details. Certainly, the devil will be in the details when members of the Senate, members of the House look at the actual language that they will draft.

Kate Bolduan's our congressional correspondent up on Capitol Hill. What are you seeing up there now, Kate?

BOLDUAN: Hey, there, Wolf. Well, just a little bit of information on kind of the path forward. Obviously, members of both parties want their members to actually see the legislation. They need to discuss that.

But on the path forward, there's always this question of, you know, the procedure. Is there enough time actually to get any piece of legislation, any compromise through the House and through the Senate just procedurally in time.

Well, I've got a little reporting that probably is some good news for a lot of people watching this this evening, from a top Senate Democratic aide. They have -- they say the Senate is going to go first in this procedure. They're going to take up the compromise measure first. And the goal would be, if everything goes as planned and as they hope, that they would begin debate on it maybe between noon and 2:00 o'clock tomorrow, and then vote on it, hopefully, late afternoon tomorrow, and then send it over to the House.

And the goal, we're told by the speaker -- according to a call participant, he told members on their conference call today that the goal in the House, as well, would be to vote on it tomorrow. So if everything goes as planned, Wolf, this could be voted on by the end of the day tomorrow.

BLITZER: Yes, well, we'll see. You heard Senator Mike Lee of Utah say he's going to filibuster. I assume others will filibuster in the Senate. So it will require that 60-vote threshold for passage in the United States Senate.

We'll see what happens in the House of Representatives, as well. But if the speaker's on board and if Nancy blow Pelosi's on board, I assume they'll get the 216 votes that they need to pass it in the House, and then there'll be some celebration, some big signing ceremony with the president and the leadership and all of that.

Stand by, guys. Don, this process is going to be intense tomorrow as we watch it unfold.

LEMON: Yes, you know what, Wolf? There should be a celebration for the American people. Everyone should be happy tomorrow that at least -- at least this isn't hanging over their heads. So I'm sure a lot of people will be happy. It may not be a good deal for everyone involved, but at least there is a deal.

Hey, Wolf, you know, I was watching you earlier today and you pointed out something on television live, you and Gloria Borger. You said, Let's listen in now to the Senate, we might learn something and it will make us all smarter, because you saw it was a great piece of television playing out. It's what they're supposed to do, senators from each party -- we're talking about Republican John McCain, Wolf, and Democrat Dick Durbin. You saw that. They hold a courteous discussion on taxes, spending and the issues behind the debt ceiling debate. We're going to hear from them, Wolf.


BLITZER: Congress has been working non-stop this weekend in order to try to reach some sort of compromise on raising the nation's debt ceiling. Listen to this remarkable exchange earlier today on the Senate floor between Democratic senator Dick Durbin and Republican senator John McCain.


SEN. DICK DURBIN (D-IL), MINORITY WHIP: I'd like to respond to my colleague through the chair, my colleague from Arizona. Does he recall what happened with the Reagan tax cuts? Because what happened was we tripled the national debt during that period of time, and President Reagan came to Congress 18 times to extend the debt ceiling. He holds the record. So to argue the Reagan tax cuts led to great long-term prosperity is, I think, seriously in doubt if you're going to use the deficit as a measure.

SEN. JOHN MCCAIN (R), ARIZONA: If I could say, we believed and Reagan believed that cutting tax cuts would restore our economy, which was in the tank, thanks to the practices of the previous administration before him. And we -- Reagan presided over probably one of the greatest job creation periods in the history of this country, and those are numbers that I would be glad to insert in the record.

Compare that with what has happened since this administration took office, with the promise that if we passed "Obama care," if we passed TARP, if we passed all of these others, that the economy would then be restored and grow. And again, it's hard for my dear friend from Illinois to refute the fact that the -- categorically stated that if we passed the, quote, "stimulus" package, that unemployment would be at a maximum of 8 percent.

Unemployment today is 9.2 percent. And if you look at any indicator, whether it be housing starts, whether it be the deficit, whether it be unemployed, whatever it is, it's gotten worse since the stimulus package was passed, rather than better.


LEMON: All right. And that went on for longer. So I want to bring in now CNN contributors Donna Brazile and Alex Castellanos. Donna is a Democratic strategist who runs a political consulting firm in Washington. And Alex is a Republican consultant and a former adviser to Mitt Romney's presidential campaign.

To you first, Donna. Imagine that, using the Senate floor to come to some sort of consensus, to listen to someone else's arguments and to get your point across, but also being civil at the same time. DONNA BRAZILE, CNN POLITICAL CONTRIBUTOR: Well, look, there's nothing wrong with that, Don, as you know. Alex and I have civil conversations all the time. The question tonight, Don, is what's in the deal for the vast majority of Americans who wanted to see a balanced approach.

I think when the president tonight outlined that there are core priorities that are protected -- I think Democrats are going to look to see if Social Security was protected, Medicaid protected, of course, civilian and military pay protected. There are core -- student aid and student loans and many of the things that will not only help those who can least afford any more draconian cuts, but we don't want to see anything that will stall our recovery.

Of course, when I heard "super-committee," I said I hope this super- committee will consider job creation. We need to start growing jobs in this country. For the last few months, we've heard from the Republicans. We've heard from the Tea Party. We know that they want to cut, cut, cut.

But tonight, I think the American people want to know, is this a balanced and fair approach to reducing our deficit, paying our bills, paying our obligations, instill confidence in the global community of our leadership in the world, the United States of America? And ultimately, can the leaders, Don -- can the leaders sell this framework to the rank-and-file members of the United States Congress?

LEMON: Yes, and Donna -- and Wolf is going to jump in here, but just real quickly, I have to say, you know, Alex, you heard what Donna had to say, yet in the final hours, the House speaker was concerned about defense spending. And we didn't hear some of the points that Donna just brought up.

ALEX CASTELLANOS, CNN POLITICAL CONTRIBUTOR: Well, I don't think there's a great danger of civility breaking out in Washington any time soon...


CASTELLANOS: ... despite Senators McCain and Durbin's effort. But no, you know, something good has happened in all of this, and that is that we are talking not only about a serious issue like spending and the debt and are we going to spend ourselves along the path of Greece, but we're also talking about jobs and taxes, as I think these senators were just talking about.

I take exception a little bit to something Ali said, that we're not talking about jobs. That's all this debate has been about. No one's going to invest and create jobs in a country that's spending itself into insolvency. So the first thing you have to do is get some fiscal discipline. You know, if, Don, say some nice news network like CNN were going to hire you but you knew they were going bankrupt, it might affect your decision.

VELSHI: Alex! Alex! Alex!

CASTELLANOS: Spending and jobs and taxes...

VELSHI: We're not...

CASTELLANOS: ... we're now seeing a preview...


CASTELLANOS: ... of the next...


BLITZER: Go ahead, Ali.

VELSHI: Alex...

BRAZILE: There you go. Cut in.

VELSHI: ... what are you talking about? We're going bankrupt?


VELSHI: What are you -- come on! What are you talking about, Alex? We're not going bankrupt. America's never gone bankrupt. Greece can't issue bonds. America can. There was no question -- we have a AAA credit rating, Alex! We weren't close to bankrupt.


VELSHI: This was an invention of fiscal conservatives.

CASTELLANOS: Absolutely true.

VELSHI: Jobs is the issue, Alex!

CASTELLANOS: And Greece -- and as you know, Ali, Greece had this decision 10 years ago, and they chose to keep on going along the same path. You know, everybody keeps saying, Gosh, we've raised the debt ceiling automatically here 60 times. There's no problem. That's the problem. We keep going up to the bar like it's routine. We're now having a debate that says we cannot continue spending more money than we take in...

VELSHI: Alex...

CASTELLANOS: ... and we have to do something about it.


LEMON: Ali and Alex, both hang on. Do you agree, Alex, that what Ali said, that this was an invention? This was an invention to get to this point by connecting the debt ceiling to the...

BRAZILE: Yes, this is manufactured.

LEMON: ... deficit?

CASTELLANOS: No, no, no, no.

VELSHI: We all agree on one thing...

CASTELLANOS: Economic stability...


LEMON: Let him answer, Ali, and then...


BRAZILE: No, Alex, this was manufactured.

LEMON: Go ahead, Alex.

CASTELLANOS: Ali -- Ali, here's something we can agree on. This is money.


CASTELLANOS: The federal government can't spend any of this that it doesn't first take from someone else. We're now spending -- what, we're $14 trillion in the hole. The Democrats say the way to grow this economy is to keep doing that, keep stimulating the economy by...

BRAZILE: That's not what Democrats are saying, Alex.

CASTELLANOS: ... taking this money and sending it to Washington...


BRAZILE: That's not what we're saying.

CASTELLANOS: We're going to send it to Washington and then it's going to send it back to us.

LEMON: OK, Ali, go ahead.


CASTELLANOS: The way to grow this economy is to leave it in our pockets.

VELSHI: I think -- we're fully on the same side about the fact that jobs -- everybody has to have a job. Everybody doesn't have to have a house and everybody doesn't have to have a 401(k), but everybody has to have a job. I am not sure, Alex -- I would love for you to connect for me how this creates a job in America. You know, when we talk about companies staying on this sidelines, conservatives have been saying the reason companies don't hire is because there's uncertainty about taxes, there's uncertainty about health care. So now -- now I'm hearing that it was uncertainty about the debt ceiling. Companies will just use any excuse...

CASTELLANOS: No, no, no!


LEMON: I want to bring Donna in.


LEMON: Go ahead, Donna.

BRAZILE: Thank you! Don, we are not going to find any consensus on how we got here because Alex and I will disagree over who spent us out of money. Where we need to find consensus over the next 24 hours is on this framework. And Democrats must feel comfortable -- especially if the Republicans in the House would like to see some Democratic votes on the table, they must feel comfortable that this framework will protect those core priorities that they laid out, those core programs.

Alex, the Democrats have said from day one that they wanted to avoid default, but they wanted a balanced, bipartisan approach. The Republicans have ignored that and they have put forward their ideas, one-sided...


BRAZILE: ... will not look at the Democratic ideas. If this deal contains those -- those exemptions or those -- protect those core priorities, then I think Ms. Pelosi will have a very tough job, but she may have to come up with a few Democratic votes to get this over the finish line. We'll see what happens, but...


LEMON: Alex, before you jump in, I want to bring in Wolf Blitzer here. Go ahead, Wolf.

BLITZER: You know, very quickly, Donna, will the Congressional Black Caucus and what's called the Progressive Caucus -- and together, those are, what, well over a hundred members, a hundred Democrats in the House of Representatives -- Donna, will they be with the president of the United States and vote in favor of this deal?

BRAZILE: You know, the Black Caucus has always said that there are no permanent friends, no permanent enemies, just permanent interests. They will vote in the interests of their constituents.

And Wolf, I don't have to tell anyone on CNN that their constituents, like many Americans, are hurting right now. They want a deal that protects the most vulnerable citizens of our society, but a deal that also creates jobs long term for all Americans.

So I hope tomorrow, when they hold a press conference at 11:00 o'clock, they will outline exactly what they like in the deal or dislike in the deal and they will tell us how they will vote.

BLITZER: All right, everyone stand by. We're going to take a quick break. Much more of our coverage coming up right after this.