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Clock Ticking Toward Government Shutdown; Rep. Sean Duffy Talks Obamacare, Government Shutdown; Threat of Shutdown Rattles Market; Israeli Prime Minister Comes to Washington.

Aired September 30, 2013 - 13:29   ET

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

WOLF BLITZER, CNN ANCHOR: Certainly a lot of blame to go around in Washington right now as we edge closer and closer to a potential government shutdown. You can see the countdown clock on your screen. The House and the Senate, they're certainly pointing fingers at each other, while Republicans of both chambers are pointing fingers at the president and at other Republicans at the same time.

Joining us now, two of the co-hosts of CNN's new "Crossfire," Van Jones and Newt Gingrich. They are here.

You lived through this, Newt Gingrich, what, in '95 and '96. You remember what happened then. It was not pretty for a lot of Republicans and it helped propel Bill Clinton to his re-election in '96.

NEWT GINGRICH, HOST, CNN'S "CROSSFIRE": I don't believe that.

BLITZER: You lost seats.

GINGRICH: No. No.

BLITZER: You lost seats in the midterm elections in '96.

GINGRICH: We picked up - we picked up two Senate seats, we lost a couple of House seats. The fact is, Nate Silver has gone back, "The New York Times" polling specialist. He looked at all the data and he said he can't find any significant change.

But there's a deeper -

BLITZER: But - but the polling numbers for the president, President Clinton, were - he was down and he did much better after the -

GINGRICH: They were actually falling --

BLITZER: -- and he did much better after the --

GINGRICH: They were actually falling during the shutdown.

BLITZER: During the shutdown. But after the shutdown --

(CROSSTALK)

BLITZER: -- he went on to easily get re-elected. GINGRICH: Look, we were the first re-elected majority since 1928.

VAN JONES, CO-HOST, CROSSFIRE: For Republicans.

GINGRICH: For Republicans. I think that --

BLITZER: With a smaller number of seats than you had.

GINGRICH: With six fewer while we gained two in the Senate.

But here's the key thing, which nobody in the current generation remembers. There were 12 shutdowns under Tip O'Neill. Suddenly, it was all right for Democrats to get involved in shutdowns. It was part of how they the negotiating process, part of how they dealt with Carter and Reagan, and part of the legislative process of the United States. It wasn't some gigantic crisis. It's not a gigantic crisis right now. There's a fundamental difference. The president believes he can run a bluff and he can play golf and do nothing but attack Republicans. Once the government closes, the president's going to discover that he's the head of the government. He has a real obligation to negotiate.

BLITZER: Which is a fair point.

JONES: He's not negotiating.

BLITZER: You heard Dan Pfeiffer say he's not making any concessions whatsoever.

JONES: Why should he? You're talking about a two-month --

(CROSSTALK)

JONES: You're talking about a two-month --

(CROSSTALK)

BLITZER: 800,000 federal employees are about to lose their paychecks.

JONES: Yes. And the Congress can fix that right now by passing a clean continuing resolution. It's a continuing resolution for America's government. It's not a discontinuing resolution for Obamacare. They interjected this. The president is not -- why, for a two-month -- think what they're asking: for a two-month continuing resolution, throw away your key program. We'll be in the same situation two months from now. You can't negotiate with hostages, let along hostage takers. Boehner is a hostage of the Tea Party. You can't negotiate with the hostage or the hostage taker.

BLITZER: Go ahead.

GINGRICH: You just repudiated 240 years of American history. It is the natural process for the Congress to say to the president we will not give you money unless we reach an agreement.

JONES: There's a majority of people in Congress who would pass the continuing resolution. It's a small minority. Right now, what's happening is the Tea Party tail is wagging the Republican Party dog.

BLITZER: Hold your thought for a second. Jay Carney is answering some questions at the briefing.

GINGRICH: OK.

BLITZER: Let's just listen in a little bit.

(BEGIN LIVE BRIEFING COVERAGE - IN PROGRESS)

UNIDENTIFIED REPORTER: -- a little bit more about what the president just said about having conversations with leaders on the Hill. Does that include Speaker Boehner, and is he making any progress in these talks or whatever he's (INAUDIBLE)?

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: I think the president said what we've said, which is you can expect that he will be having conversations with leaders on the Hill as he has in the past. And I assume that would include the speaker of the House.

The point I think, though, is that we are at a moment where the House of Representatives has to decide. And the speaker of the House, as the leader of the House and the leader of House Republicans, must decide whether roughly 60 members of his caucus, the Tea Party faction, will dictate to the American people whether the government will shutdown because they have not been able to achieve through normal means their ideological agenda, which is to repeal and do away with, in some manner or other, the Affordable Care Act.

The irony, of course, being that tomorrow, enrollment begins in the Affordable Care Act, and millions of Americans for whom access to affordable insurance has been but a dream, there be the opportunity to enroll in the Affordable Care Act through the exchanges and the marketplaces and receive, come January 1st, affordable health insurance for the first time. And that's going to happen.

(END LIVE BRIEFING COVERAGE)

BLITZER: All right. So you get the point. The president is apparently willing to negotiate, at least talk with the Republicans.

You're smiling and smirking or what?

(LAUGHTER)

GINGRICH: Because this is pathetic. The president of the United States can talk to Putin and have people negotiate with Assad. He can have a very pleasant talk over the weekend with the president of Iran. He can find it in his heart to sit down with the chosen leader of the U.S. House, picked by the American people in a process which has been going on for 200 and some years, and the president is above having a conversation with the speaker? This is crazy.

JONES: I'll tell you what's crazy. What's crazy is for us to be in a situation where both the full faith and credit of the country is going to be threatened in a couple weeks, the government will be shut down all over a program that comes from the Heritage Foundation that was approved by Mitt Romney that's a conservative market-based program, Obamacare.

I think what's happened is that the Republicans got so worked up attacking this program that now the kindergartener's have taken over the classroom. Boehner can no longer controls his own caucus.

The Hastert Rule is not in the Constitution. A majority of people in Congress would vote for this right now and move on.

BLITZER: But there is divided government. The Republicans do control the House.

JONES: Yes. That's fine. But there's a majority of people in the House who would vote for a clean resolution right now. The Hastert Rule that says only a majority of Republicans -- that's not in the Constitution. We could get this done tomorrow.

Now, listen, I am --

(CROSSTALK)

BLITZER: Will the speaker allow that up-or-down vote on a clean resolution?

GINGRICH: The speaker --

(CROSSTALK)

BLITZER: It probably would get 218 votes.

GINGRICH: The speaker is going to do what the Republican conference ultimately concludes in the series of meetings they're going to do.

The point is this is not new. We have had fights on debt ceilings. We have had fights on continuing resolutions. As I said, there were 12 shutdowns under Tip O'Neill, the Democrats. So this is not new. It is not inappropriate. And, frankly, if there are kindergarteners around, they are as much in the White House as they are anywhere else in the city.

BLITZER: All right. You guys will be back later in "The Situation Room."

(LAUGHTER)

Back on "Crossfire" at 6:30 p.m. eastern. We have a lot more to talk about.

JONES: Good point.

GINGRICH: Thank you.

One of the things I want to talk to you about as well as the difference between Bill Clinton in '95, '96, dealing with you as speaker as opposed to President Obama dealing with John Boehner in this current crisis.

JONES: That's going to be fascinating.

BLITZER: We'll talk about that later today.

GINGRICH: All right.

BLITZER: All right, guys, thanks very much.

Just ahead, we're going to Capitol Hill. We have the House Republican Congressman Sean Duffy, will tell us why Republicans passed a bill they knew would fail in the Senate and potentially lead to a government shutdown. Sean Duffy right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back.

The Senate expected to meet at the top of the hour to consider a bill passed by the Republican-controlled House that would delay Obamacare for a year, but the Senate's Democratic leadership has consistently said it would reject tying the spending resolution to Obamacare. That means we could be only hours away from a partial government shutdown.

Let's bring in the House Republican Congressman Sean Duffy of Wisconsin joining us right now.

Congressman, thanks very much for coming in.

REP. SEAN DUFFY, (R), WISCONSIN: Hi, Wolf. Thanks for having me.

BLITZER: Our chief congressional correspondent, Dana Bash, spoke a little while ago live with your Republican colleague from Pennsylvania, Charlie Dent, who says, at this stage, if the Senate sends back what's called a clean continuing resolution to keep the government operating after midnight tonight, the speaker should allow it to come up for an up-or-down vote. He thinks well more than 218 members, Democrats and Republicans, would support it. There would be no government shutdown. Are you with Congressman Charlie Dent on that?

DUFFY: In about 20 minutes, our House conference will get together and have a conversation about what the best strategy is moving toward, how we keep the fight up on Obamacare but also how we keep the government open. What we're going to do in our conference is have an open dialogue with people who have a lot of different opinions about how we should move forward. What we're doing is exactly what our leaders in government should be doing. Barack Obama, Harry Reid, John Boehner should be sitting down talking about their differences just like we'll do in our House conference in about 20 minutes.

(CROSSTALK)

DUFFY: Listen, Obama's out golfing. Harry Reid has been gone for 36 hours. You don't get resolution unless people sit at the table, work together and try to bridge divides in policy and ideology. BLITZER: Are you going to speak out during that Republican meeting that's about to begin? If you are, give us a preview. What will you say to your fellow Republicans?

DUFFY: Listen, I think many of us want to keep the fight going on Obamacare. As I look back to my home district, my constituents don't have big lobbyists in Washington, D.C. All they have is me. I keep getting phone calls, yesterday, today, about the pains of Obamacare from many of them. A lot of them are losing jobs. And these aren't high-income earners. These are middle class to lower-income earners who are going from full time to part time jobs. They're looking at health care premiums that aren't going down. Those premiums are going up. They want me to fight this fight. But they also want meet to keep the government open.

So again, we're going to have a dialogue internally how we can find the sweet spot where we can get the president to come to the table and hopefully keep the government open but also delay this bill that isn't ready for prime time. You know, Wolf, that the president has already delayed the employer mandate. All we're asking for him to do for the American people, what he's done for the bigger businesses, give them too a delay.

BLITZER: He says he's not going to do that. I guess the dilemma you will face will be, do you keep the government operating or stand on your principle and try to link the spending bill to defunding or delaying or doing -- making significant changes to Obamacare. That's a serious dilemma you and your fellow Republicans will face. Do you have any idea how the speaker might deal with this? I know you're going to have a discussion on it now. Do you think it's possible the speaker would allow the Senate language that comes back in the next few hours to come up for a vote on the House floor?

DUFFY: I don't know that he will allow that. But there's also an opportunity maybe we'll have a week extension of funding so we have more time to have this conversation. There are a number of different opportunities that we have.

But I think what the speaker has learned over the last two and a half years, at least that I've been here, that we've been in the majority is to be successful as a speaker, you have to listen to your conference. I think he'll do that today.

BLITZER: All right.

DUFFY: And we've gotten to know each other pretty well. We have no problems sharing opinions.

I want to leave you with this: We want to keep the government funded and operational but we want to keep the fight up on Obamacare, Wolf.

BLITZER: Let be precise because we're out of time. Would you allow a week-long extension to go forward, a clean continuing resolution, no links to Obamacare, at least for a week in order to avoid government shutdown?

DUFFY: I would consider that. That's definitely an option we have.

BLITZER: All right. That's encouraging. At least it would avoid a government shutdown maybe for a week. Cooler heads could prevail over the course of the next week.

Sean Duffy, as usual, thanks very much for coming from.

DUFFY: Thanks, Wolf.

BLITZER: The markets really don't like the threats of a shutdown. We'll tell you how much the Dow is down. We'll find out if this could trigger a full market correction. Much more right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I think it's about time we spend way too much money. I think Obamacare is a total disaster. I think it needs to be defunded so whatever it takes to do that, I'm for it.

UNIDENTIFIED FEMALE: It's a shame. They behave worse than my own kids behave. They can't just sit down, come to an agreement about something and work it out.

(END VIDEO CLIP)

BLITZER: You saw there patience wearing thin for some people. That might be said for investors. The threat of a shutdown, taking its toll apparently on the markets. The Dow Jones Industrials down about 81 points right now. That also follows losses through most of last week.

Let's bring in Zain Asher. She is joining us now at the New York Stock Exchange.

Zain, we're seeing an impact on markets today. But what's the concern for the markets and the economy over the medium and longer term.

ZAIN ASHER, CNN BUSINESS CORRESPONDENT: Wolf, listen, the market is used to stale mates in Washington. This is nothing new. But traders say this one might actually have a more aggressive impact on stocks because the shutdown or the potential shutdown, I should say, is really only one piece of the puzzle. The debt ceiling is on the horizon and that will have a much bigger impact if the government defaults on its debt for the first time ever in history. You can only imagine the ramifications. We've seen cuts in spending. Put a huge Dent in GDP, business confidence, that kind of thing.

I do want to say quickly though, the good news, if you can call it that, the market does have a little bit of wiggle room. A few weeks ago, we were at record highs in the S&P 500. The S&P is up more than 15 percent this year. There is some degree of wiggle room -- Wolf?

BLITZER: We know on Friday morning they'll have the new jobs report out for September. How is that likely to play as far as the markets are concerned?

ASHER: So we are not entirely sure if we are going to have a jobs report if the government shuts down. The government doesn't deem economic reports as essential. The Bureau of Labor Statistics said if the government shuts down, it won't be updating its website comes jobs day and also the operations will stop. On the other hand, since the data has probably already been collected, there is a chance the jobs report may still come out if the White House does authorize that. There is so much uncertainty right now --

(LAUGHTER)

-- Wolf?

BLITZER: 10 hours to go before there is a potential government shutdown.

Zain, thank you.

From chemical weapons in Syria to the fear of nuclear bombs in Iran, it's no surprise Israel may be feeling a bit insecure this day. Israel's prime minister is now at the White House. We'll find out what he and the president have been talking about in the Oval Office.

Also, Aaron David Miller, a former Middle East negotiator, is standing by with his perspective.

(COMMERCIAL BREAK)

BLITZER: A partial government shutdown only a few hours away. There's important other business going on at the White House. President Obama is hosting the Israeli prime minister, Benjamin Netanyahu. There you see pictures. The last time they met was in March in Jerusalem. Despite all the public smiles, the two leaders do not necessarily see eye to eye on critically important issues. Two years ago, the Israeli leader famously chastised Obama for suggesting Israel go back to the '67 borders with mutually agreed modifications, a starting point in negotiations with the Palestinians.

(BEGIN VIDEO CLIP)

BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER: I think for there to be peace, the Palestinians will have to accept some basic realities. The first is that while Israel is prepared to make generous compromises for peace, it cannot go back to the 1967 lines because these lines are indefensible. Because they don't take into account certain changes that have taken place on the ground, demographic changes that have taken place over the last 44 years.

(END VIDEO CLIP)

BLITZER: That was two years ago, but listen to what the prime minister said today in the Oval Office with the president.

(BEGIN VIDEO CLIP) NETANYAHU: The bottom line, again, is that Iran fully dismantles its military nuclear program. In this regard, I want to express my appreciation to you for the enormous work that's been done to have a sanctions regime in place.

(END VIDEO CLIP)

BLITZER: The Middle East expert, Aaron David Miller, is the vice president for New Initiatives, a distinguished scholar at the Woodrow Wilson International Center for Scholars in Washington.

Clearly, there's a difference in the nuance tone between the prime minister and president when it comes to a dialogue with Iran.

AARON DAVID MILLER, VICE PRESIDENT FOR NEW INITIATIVES & DISTINGUISHED SCHOLAR, WOODROW WILSON INTERNATIONAL CENTER: By and large, the end game is the same. Both want to see dismantling of the program. The real question is when you come down to the details. Centrifuges, how much enriched uranium will the Iranians be able to possess, what do they do with the stockpile they have, transparency, accountability? These are the things that may separate the parties. But my own view is this: the bottom line, either they get a deal that's good for Israel and the U.S., a two-fer, or there won't be a deal.

BLITZER: Because the prime minister has been making some statements suggesting he doesn't trust this new -- despite the new more moderate tone of President Hassan Rouhani of Iran, he doesn't trust them as long as they're continuing, from his perspective, to develop some sort of nuclear bomb.

MILLER: Right. And I don't think the president trusts it either. The president's margin for error is pretty reduced. You have a Congress basically, assuming it's in session and the government continues to operate, that has tremendous unanimity on not trusting the Iranians. But more than that, if this president wants a deal with Iran, and deal on the Israeli issue, a management of the Syrian problem, he's going to have to find a way to work with this Israeli prime minister. Next year, Wolf, the longest serving prime minister in the state.

BLITZER: Benjamin Netanyahu.

MILLER: Benjamin Netanyahu.

BLITZER: Describe the relationship. It was testy a few years ago. It seems to have improved, especially with the president's visit in Israel back in March.

MILLER: It has. I have watched half a dozen secretaries of state and prime ministers interact. This was clearly the most dysfunctional. Benjamin Netanyahu though that the president was bloodless on the issue as well, didn't understand what it was like for a small country to live in a dangerous neighborhood, and the president, I think, though the prime minister was basically a con man and didn't trust him. I think a lot of that is gone, in large part, because the president of the United States earlier this year, Wolf, made a decision that the tensions with Israel were gratuitous politically, harming him, and also undermined his foreign policy --

BLITZER: You think there's mutual trust now between these two leaders?

MILLER: I think there's a willingness perhaps to give one another the willing of the doubt. And they're in a common effort. If both are going to find ways to deal with the critical issues facing both of their national security structures, they're going to have to find a way to work together, and I suspect they will.

BLITZER: Do you think there's any difference as far as Syria is concerned between Prime Minister Netanyahu and President Obama? Because that's another key issue in that neighborhood right now.

MILLER: I don't. I think the Israelis have drawn their own red lines, which they'll enforce. C.W. not falling into the hands of Hezbollah, sophisticated weaponry in the hands of Hezbollah, no shooting across the Golan Heights. Those are Israeli red lines, and they have acted four or five times this year to enforce them. No, I think this relationship is much improved. There's a lot of tension here because Benjamin Netanyahu has seen his own analysis and his own public narrative undermined by the smiling --

(CROSSTALK)

BLITZER: Last week, I was in New York and met with the Palestinian Authority President Mahmoud Abbas, last week, and I was impressed he's willing to make some major concessions. He's willing, at least those peace process John Kerry, the secretary of state, has embarked on. I walked away from the meeting where had with him encouraged there was a hope, not necessarily a guarantee, but a significant hope that potentially the Israelis and Palestinians might be able to work out a deal.

MILLER: I have been annoyingly negative on this for a long time, but I think John Kerry heard something from Netanyahu and Abbas, which they can't say to one another and they can't say privately, which I think inspires some measure of hope on borders and security, the two most tractable issues of the four or five that constitute the Palestinian conflict, maybe there's room for program, and who knows.

BLITZER: Yeah. I'm much more encouraged.

MILLER: Just remember that nobody lost money betting against Israeli peace.

BLITZER: Let's hope there's something.

MILLER: I do.

BLITZER: And that John Kerry can one day get a Nobel Peace Prize for making peace between the Israelis and the Palestinians.

MILLER: The president already has one. But, I agree.

(LAUGHTER) BLITZER: Let's see if John Kerry can get one.

Thanks very much, Aaron Miller.

MILLER: Thank you.

BLITZER: Let's get back to the stop story. I want to leave you with this thought. I was CNN's White House correspondent back in 1995 and 1996, the last time there was a partial government shutdown. Check out this live shot I did back in November, 1995.

(BEGIN VIDEO CLIP)

BLITZER: Washington historically has been a deadline-driven town, and with Thanksgiving next week and people anxious to get home and ready for the holiday, many administration officials believe there will have to be a deal by then.

(END VIDEO CLIP)

BLITZER: 17, almost 18 years ago. That first government shutdown in November of '95 lasts only five days. The second government shutdown in December of January of '95 and '96, lasted longer, more than 20 days. Eventually, Congress and President Bill Clinton got their act together. Everyone went back to work. And it was relatively smooth sailing. There was some progress on key issues that were made. The economy was strong. I still believe Washington is a deadline-driven town. Cooler heads eventually will prevail. Key word, "eventually."

That's it for me. Thanks very much for watching. I'll be back 5:00 p.m. eastern in "The Situation Room."

NEWSROOM continues right now with Brooke Baldwin.