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Government Shutdown Appears More Certain; Grandstanding Versus Governing; Shutdown Fears Sending Stocks Down; Shutdown Could Impact Jobs Report; Tea Party Is Back Front And Center; NSA Monitors Social Media Accounts

Aired September 30, 2013 - 10:00   ET

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

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I just wish that people that we elected into office would do their jobs. It seems like a lot of grandstanding from the people they are trying to win the votes from rather than doing what is best for the country.

UNIDENTIFIED FEMALE: I think it is another scheme to get us citizens very worried and try to get us on board with an agenda that we don't want. I think that it is politician's efforts to really just put their agendas through and not get the work done.

(END VIDEO CLIP)

CAROL COSTELLO, CNN ANCHOR: The impact of a shutdown would be far reaching. It would hurt the economy and putting a hold on the paychecks and hiring. Some 783,000 federal workers would face unpaid leave, and this morning, Wall Street is facing a hit. Investors hate uncertainty, and stocks are down quite a bit this morning. We will take you to Wall Street in just a second.

Also, it is affecting everything from home buying to small businesses. Now it is worth noting that about three quarters of all government employees will still go to work even if there is a shutdown. That is 2.5 million workers who are deemed essential employees like postal workers and members of the military.

We are covering all angles of this story from the White House to the Capitol Hill. This hour, we'll have the view from both within the debate and outside the fray, but let's begin at the White House with Brianna Keilar. Good morning, Brianna.

BRIANNA KEILAR, CNN SENIOR WHITE HOUSE CORRESPONDENT: Good morning to you, Carol. The White House, of course, is keeping an eye on the Hill as the Senate is expected later today to take up that House passed bill and then very quickly dismantle it and send it back. Barring some unexpected breakthrough, it looks like we are heading for a government shutdown.

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UNIDENTIFIED MALE: This is the old football strategy. KEILAR (voice-over): House Republicans rallied on the steps of the capitol, calling on the Senate to come back to work, inside, a ghost town. Not long after the House GOP passed a bill in the early morning hours Sunday.

UNIDENTIFIED MALE: A motion to reconsider is laid on the table.

KEILAR: It funds the government, but delays Obamacare for one year, now just hours to go before a deadline for a deal, the first government shutdown in 17 years seems all but certain. The blame game is in full swing, with Republicans on pre-emptive damage control.

SENATOR TED CRUZ (R), TEXAS: So far, Majority Leader Harry Reid has essentially told the House of Representatives and the American people, go jump in a lake.

SENATOR RAND PAUL (R), KENTUCKY: He is saying 100 percent Obamacare or the highway. The president is the one saying, I will shutdown government if you don't give me everything I want on Obamacare.

KEILAR: They argued, they budged, demanding the president's health care program be delayed after initially voting to defund it altogether. But Senate Democratic Leader Harry Reid won't put this latest House bill up for a vote and President Obama, who met Sunday afternoon with his economic team at the White House, has threatened to veto of any measure that delays or defunds Obamacare.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: Let me repeat it, it's not going to happen.

KEILAR: The Senate is expected to strip out the Obamacare delayed today and send it right back to the House. Meanwhile, the clock is clicking towards midnight when a government shutdown would close national parks, furlough hundreds of thousands of federal workers and stall new passport applications.

There was one area of possible agreement, however, a repeal of a tax on medical devices that was included in the bill Republicans passed this weekend. A top Democrat said he was opened to the measure, but not with a shutdown looming.

SENATOR RICHARD DURBIN (D), ILLINOIS: I am willing to look at that, but not with a gun to my head, not with the prospect of shutting down the government.

(END VIDEOTAPE)

KEILAR: Now, there are two chances where we could hear from President Obama today. He will be meeting with Israeli Prime Minister Benjamin Netanyahu. That will happen in the 11:00 hour. We may get some video of that around noon or so of that, Carol, and then he also has a cabinet meeting later today -- later in the 4:00 hour, he'll be meeting with his cabinet. Obviously, to discuss the looming shutdown and what exactly this means for the administration, so we will be keeping our eyes and ears open for any of the comments that the president may make on this -- Carol. COSTELLO: All right, Brianna Keilar reporting live from the White House this morning. So now you know the politics of the government shutdown, but what about the bigger picture? Trust in government. My next guest says that the stalemate is more concern of lawmakers with grandstanding than governing. John Avalon is a CNN political analyst and executive editor for the "Daily Beast." He is in New York. Good morning, John.

JOHN AVLON, CNN POLITICAL ANALYST: Good morning, Carol.

COSTELLO: OK, so I went to a Pink Floyd cover band concert over weekend and when the song "Mother" came on and the band sang the lyrics, "Mother, can I trust the government." It was like a cathartic awful, no, people were on their feet shouting "no!" It was sad frankly and kind of scary.

AVLON: Yes. Well, as you said, trust in government is going down. It is not just Congress that has historically low approval ratings. There is a reason the new CNN poll shows that nearly seven out of 10 Americans say that Congress is acting like spoiled children. I mean, here's the fundamental disconnect. We elect Congress with the idea that they will act like adults and be responsible at the heart of representative democracy, and the dereliction of duty and the hijacking of the caucus by ideological members who doesn't have an end game or solution further erodes the people's already frayed trust in government.

That becomes a larger problem. When the strategic competitors around the world look at the fact that the U.S. Congress is the single most liability to the economic recovery, they laugh at us, and that should frustrate folks on Main Street as well. The Congress is in large part the problem right now, and that goes to the heart of the faith in government.

COSTELLO: So let me ask you a hard question. What do we do about it? What can we do about it? I mean, people elect these people into office, right?

AVLON: Well, I don't believe in kicking the can to the next election. I mean, I do think this is one of the moments where the average Americans need to speak as loud as the activists. If their votes are frustrated at the government gridlock and dysfunction and the fact that the divided government means dysfunctional government, they need to speak up to have their voices heard. It is so often the activist class on either side with a disproportionately loud voice.

The folks on Capitol Hill need to see the pain that comes from acting like spoiled children, and refusing to reason together. Look, I think people realize it. You saw the messaging over the weekend from some of the conservatives on the Sunday shows trying to flip the script, if you will, and saying that it is the president who is being absolutist, and unwilling to compromise.

And the polls show that compromise is value that Americans do every day, but absent from the playbook they are per suing, and so some folks think it is a shutdown that is need for the real trinity check, and the people to stop living in fantasy land of you know, political ideology and start living in practical reality and feeling pressure from their constituents when things hit the financial crisis.

COSTELLO: What is the prediction? Will the government shutdown because many analysts say 99.9 percent chance that it will?

AVLON: Look, Carol, I hate to make you sound even more discouraged, but I mean, the Senate is not even getting to this until midday and then there's going to be a lot of flurry back and forth. But right now, the clock is ticking and all of the smart money on the shutdown and what then? Will there be a pressure ahead? It's better to have a shutdown now to compel the people to reason together than to do this closer to mid-month when the debt ceiling is coming due. Because then it is not political grandstanding, that is the full faith and credit of the United States and that is a gut shot to economy if we screw that up and somehow --

COSTELLO: And speaking of the economy, let's head to Wall Street now, the New York Stock Exchange where Zain Asher is there. As you can see, the Dow is down 127 points. Bring us up to date.

ZAIN ASHER, CNN BUSINESS CORRESPONDENT: All right, Carol, yes, we are also down on the Dow right now, and yes, 17 years since the market has come face-to-face with a potential government shutdown, and this market is constantly showing us just how fragile it is. The last two government shutdowns in 1995 didn't dead in the markets too much though. Stocks actually rose in the month after the last government shutdown, the Dow actually rose 5 percent.

The impact today looks like it will be more negative. We are down about 130 points. The market is used to stalemates in Washington, but this one seems to be a bit more aggressive, because it is not just about the shutdown. We've also got the debt ceiling debate on the horizon, too.

Not raising the debt ceiling does have a much bigger effect because you have the full faith and credit of the U.S. will be in jeopardy and that could hurt business confidence, but overall, what is interesting is that traders downstairs are crossing their fingers hoping that the government does not shutdown.

They are hedging themselves just in case and that is why you see the Dow is down 130 points, but the hope here is that Washington will try their best to pull us back from the ledge -- Carol.

COSTELLO: I hope so. Zain Asher, thanks so much.

A government shutdown now could affect the reporting of a key snapshot of the economy that will be the jobs report due out Friday, but maybe not this Friday. CNN's Christine Romans has that side of the story. Good morning.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Isn't that show you how crazy it is, that something as important as a job report, and something that we rely on and the fed relies on to figure out how the economy is healing that a self-inflicted wound from Washington could delay that or cause it not to be reported?

Here is the status of the jobs report. You could see the BLS, the Bureau of Labor Statistics, you know, furlough all of the statisticians and economists, and then who would put that number together? An executive order saying or some kind of executive action saying, no, we need the skeleton crew to put it together and release it as normal on Friday.

And so we are watching to find out. But Carol, that is what happens in the government shutdown, you are doing the defense, and not doing the daily business for the American people, but instead, you not doing any business and that highlights how dangerous it is.

The job number one is to create jobs, and that is what Washington has been saying it wants to do, but what we expect to see from the jobs report is that 180,000 jobs report and unemployment rate of 7.3 percent, which is still more work needs to be done, but the real risk, Carol, if you have a shutdown and some big fight over the debt ceiling in just a few weeks, that kind of job creation will slow quite quickly.

And the cost of a shutdown by some estimates starts at maybe $200 million a day and then rapidly getting more expensive as the days wear on. If you saw the four-week shutdown, Carol, Mark Zandi at Moody's says it will cut the economic growth in half, and that is not going to create any jobs.

And if you go over the debt ceiling and you don't raise the debt ceiling, that is sending a signal to the world, and the borrowing costs up, and making the debts and the deficits worst at the time when we are arguing about growing debts and deficits, and so that the world is upside down, and the shutdown is just proof of that.

COSTELLO: I guess I have to agree with that even though I don't want to. Christine Romans live for us in New York this morning.

Still to come in the NEWSROOM, the Tea Party is back front and center in fight to defund Obamacare, as we look at the looming government shutdown. I will talk to the leader of the Tea Party next.

(COMMERCIAL BREAK)

COSTELLO: The Tea Party rises again orchestrating, thanks to large part to Senator Ted Cruz, a spending bill tied to defunding Obama care which may lead to a government shutdown. This is from a movement that according to Gallup only 22 percent of Americans support, and is often ridiculed.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: People are still talking about Ted Cruz's 21-hour speech.

UNIDENTIFIED MALE: Yes, 21 hours.

UNIDENTIFIED MALE: During Ted Cruz's 21-hour anti-Obamacare speech on the Senate floor, he read a Dr. Seuss book. He said it is what he like tots read in the hospital when they are wasting our resources.

(END VIDEO CLIP)

COSTELLO: Ouch, Amy Kremer, the head of the Tea Party Express, the group that actively persuaded members of Congress to do what they could to defend Obamacare. Amy, welcome. I don't know if you heard John Avalon said just a couple of minutes ago on our air, he said that extremists are running the government, and by that he means the Tea Party extremists. How do you respond?

KREMER: Well, I have to disagree with him. There is nothing extreme about it. The House passed 40 something Democrats voted to delay the employer and individual mandate, and the House is the most direct form of representation, and those people are connected to the constituents and the Democrats voted with the Republicans, and why would Harry Reid not take it up on the floor, and we would end up at this point with the spending --

COSTELLO: Well, Amy, let me ask you, Amy, why would the Democrats when Obamacare was passed by both Houses of Congress, upheld by the Supreme Court as constitutional, and President Obama was re-elected and why should the Democrats compromise on that? Why should they?

KREMER: Because Carol, it is not working. It is not ready for the implementation, and this is fact that --

COSTELLO: Sell, it is the law of the land, why would they and why would that tie in with the budget?

KREMER: Well, no one is talking to us, twice now. We have seen discuss it unless we have this right now. Right now, nobody is talking to us, and twice we have sent the CRS to the senate, and it is, I mean, we don't know what is going to happen now, but where is Harry Reid? Instead of going to work yesterday and calling them back into session, he is not there, and the president is golfing over the weekend and where is the House?

They are there working, and how can you negotiate anything when one side is unwilling to negotiate. The Republicans have negotiated. We wanted full repeal. We didn't get it. We wanted to defund. We didn't get defund, and now, delay it for a year, and even Senator Joe Manchin said he would support a one-year delay, and he is a Democrat, and he is listening to the people. It is not working.

KREMER: I disagree. The President and Harry Reid need to negotiate. What have they given so far, they've given nothing, and this is not working, the president stands up in Maryland and gives a speech, and then within an hour or two hours later the White House is a admitting that the small business exchanges are not ready and bad news after bad news.

And this is about fairness. He has given exemptions for delays for big business, special interests, and even congress. I mean, what about fairness for the American people? This is about fairness. Why should the average middle-class American be, I mean, subjected to the enactment of this? KOSIK: It will hurt the average middle-class Americans the most.

KREMER: Harry Reid wants the government to shutdown, and no Republican is advocating for it.

COSTELLO: And everyone is saying that known wants it to shutdown, and if the Tea Party has 22 percent of the support of the American people, how it is representing a larger portion of what America wants?

KREMER: Well, the approval rating is still higher than Congress.

COSTELLO: And Democrats are with us, and they have said that they support a one-year delay. Why not delay it? Why not delay it for a year and have that conversation? That is reasonable.

KREMER: And you understand that the health care exchanges go into effect at midnight.

COSTELLO: Well, most of them are not going to be open, because there are problems, and this is a real issue, and Harry Reid is pushing this, because he thinks it is a political win in 2014, and quite honestly, it is a diversion with what is really going on with the act and the problems with the implementation. And to say otherwise is not true.

KREMER: I am not saying that there are not problems with Obama care, but they don't want it tied with the federal budget. They want Obama care dealt with in another way, and why not another way?

COSTELLO: Well, the thing is that they won't even negotiate with us on anything. Do you think they would have this conversation another way? We ended up here because the president and Harry Reid threatened to shut down the government if the sequester was not rolled back. They believe it is a good political win for them come 2014 and that is the objective. Final question, if the government shuts down, is it a victory for you?

KREMER: No, I don't want the government to shutdown. Nobody wants the government to shutdown. No one does and we want to negotiate with Harry Reid and the president, and they won't n negotiate with us. The president is talking to the Iran's, and not to Republicans. It is ridiculous. Let's need to get together to have discussions. We would have given and made concessions, and what have they given? Nothing.

COSTELLO: And what concessions have you made?

KREMER: I just said, from repeal to defend to delay.

COSTELLO: Because the final goal is still to get rid of Obama care and you want to delay a year, but isn't the ultimate goal to get rid of Obamacare.

KREMER: Well, obviously, right now --

COSTELLO: Well, that is the goal. So really it is not a compromise because the final goal is to get rid of it? KREMER: No, I think it is a compromise, and we are at the C.R. We are a allowing the president to spend at deficit spending levels, and so, what have they given? What have they given to us? Nothing.

COSTELLO: Well, you said they have delayed parts of the law for big business.

KREMER: Well, that is not part --

COSTELLO: You did say that.

OK, well, we could argue this way forever, Amy. But I do want to go back to Capitol Hill, because the House Speaker John Boehner, and the House is back in session, and they are work, and you are right about that, Amy, and House Speaker John Boehner spoke a short time ago, and we will listen to what he had to say.

(BEGIN VIDEO CLIP)

REPRESENTATIVE JOHN BOEHNER (D), HOUSE SPEAKER: The American people are worried about their job. They are worried about their incomes rising, because they are all under pressure, and the economy is not growing, and why isn't it growing? Well, one of the issues that is standing in the way is Obama care. It is time for the Senate to listen to the American people, and just like the house is listening to the American people.

(END VIDEO CLIP)

COSTELLO: I can see you are nodding there. Amy, the Senate goes back in session not until 2:00 p.m. Eastern, and I guess we will see what happens. Amy Kremer, thank you.

KREMER: Thank you for having me.

COSTELLO: The NSA is back in the spotlight and accusing Facebook and social media accounts to monitor Americans. The details are next.

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COSTELLO: Shocking new revelations about the scope of the NSA surveillance program. It involves what we do online, and the details are in "The New York Times," adding fuel to the growing concern over privacy rights. Pamela brown is in New York with more. Good morning, Pamela.

PAMELA BROWN, CNN CORRESPONDENT: Well, good morning to you, Carol. According to "The New York Times" the social mapping of certain citizens who officials believe have a foreign intelligence link have been going on since November of 2010. As one privacy expert put it, it is the digital equivalent of tailing a suspect.

(BEGIN VIDEOTAPE)

BROWN (voice-over): The NSA is not only tracking the metadata from your e-mails and phone logs, they are using the day to have a sophisticated web of social weapons of documents leaked to "The New York Times."

UNIDENTIFIED FEMALE: We assume that if the government is looking at your information it is because they have a reason and you are suspected of a crime.

BROWN: In this NSA PowerPoint presentation shows how they use a person's social information to track their personal information according the leaks of government contractor information leaked by Eric Snowden. When there is a link between an intelligence system overseas and U.S. citizen. They can also draw profiles and GPS information and property and commercial information and bank information from these analogs.

UNIDENTIFIED FEMALE: We know from the leaks that this is how the government is operating, and that a broader swath of people included in the mix.

BROWN: The NSA says that there is a false perception that the NSA reads the phone calls and e-mailings of everyday Americans in an effort to profile U.S. citizens, but it is not the case. The Chief Keith Alexander says that the person's data is analyzed only when there is a foreign indication. Some argue that the surveillance efforts are keeping Americans safer, critics say that the latest disclosure is yet another example of how the NSA is infringing on American's privacy.

UNIDENTIFIED FEMALE: Americans assume a certain right to privacy that usually starts at the door to their home.

BROWN: And "The New York Times" says that the leaked documents do not specify how many American citizens have been targeted by the NSA for social mapping, and how many have been involved in wrongdoing. And in the wake of the disclosure, Obama has ordered a full review of the NSA full procedure, and here we go again, more leaked documents.

COSTELLO: Pam Brown, thank you so much.

As the clock is ticking down, the likelihood of a government shutdown adds up, and we will talk to one congressman about the stalemate and the rising anger among Americans.

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