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Interview with Chris Van Hollen; Winners, Losers in Government Stalemate; Warnings, Dismissals About a Debt Default; How Secure Are Obamacare Websites?

Aired October 10, 2013 - 13:30   ET

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

WOLF BLITZER, CNN ANCHOR: Welcome back.

A Republican offer to temporarily raise the debt ceiling might give Washington the budge it needs to get out this current mess. Then again, maybe not. Democratic Congressman Chris Van Hollen of Maryland is the ranking member of the House Budget Committee. He's joining us right now.

Congressman, thanks very much for coming in.

REP. CHRIS VAN HOLLEN (D), RANKING MEMBER, BUDGET COMMITTEE: Good to be with you, Wolf.

BLITZER: All right. So what's your reaction to the latest proposal from the Republicans in the House, Speaker Boehner and the others, to go ahead and extend, to raise the debt ceiling for six weeks until November 22nd? What's your reaction to that proposal?

VAN HOLLEN: Well, Wolf, I should stress at the outset that we have seen nothing in writing. And the way things have been going around here in the House of Representatives, things change minute to minute. So I need to stress that.

But number one, we believe we should immediately reopen the government. I think Republicans have forgotten why they shut down the government to begin with. The speaker has in his power to have the vote and get that done today. Number two, we believe we should commit to paying our bills on time for another year, as Harry Reid and the Democrats and the Senate have proposed. Number three, we have been trying to sit down to negotiation on budget issues since last March. We also welcome that opportunity for a Republican -- if Republicans want to do that.

BLITZER: Two conditions I heard -- as you say, nothing in writing yet. We heard the press conference from the Republican leadership in the House. But Dana Bash, chief congressional correspondent, is saying, one of the conditions for a six-week extension until November 22nd of the debt ceiling would be the Department of the Treasury, the secretary of the treasury, would have too promise or commit that there wow be no, quote, "extraordinary measures" that would be taken after November 22nd, to play around with the debt, if you will. Does that sound acceptable to you, as the ranking member of the Budget Committee? VAN HOLLEN: Well, Wolf, I really have to talk to the secretary of the treasury to determine exactly what impact that would have in terms of our obligations and our ability to pay. So again, that would be one thing that we would want to take a very close look at.

But I should also stress the fact that simply by extending the debt ceiling for a short period of time, you're really guaranteeing that you have a continued crisis mentality not just in Washington, but the spillover from that uncertainty throughout the economy. So the president has said that obviously we want to eliminate that uncertainty. He's also said we will do everything we can to prevent a default.

But I should be really clear that the position that we think is right for the country and to eliminate the uncertainty is to make sure we pay our bills on time for at least a year.

BLITZER: The other thing we heard from the Republicans, Kevin McCarthy, majority whip of the House of Representatives, a man you know, suggesting that, go ahead, pass the six-week extension, raise the debt ceiling, get that out of the way, but during the next six weeks, even while government remains partially shutdown, because it would presumably, you launch the House/Senate conference committee discussions to deal with the budget issues that you, as the ranking member of the Budget Committee, have been dealing with, that Paul Ryan, chairman of your committee, have been dealing with, go ahead and start. What the Republicans earlier were refusing to do, but at least begin right now during the next six weeks, see if you can work this out. What do you think about that?

VAN HOLLEN: Well, Wolf, what we don't understand and what Republicans have not been able to make clear is, why in the world you have to keep the entire government shut down while you're having a conversation? Again, we've been trying to have that conversation since last March. As you well know, Republicans in both the House and the Senate repeatedly blocked the appointment of budget negotiators throughout the year, drove us up to this point of the government shutdown and the debt ceiling crisis. And we don't know why we shouldn't open the government. And they have not stated a very clear reason. Everything we are reading is that they've sort of said we'll give up trying to kill Obamacare, which was their original reason for shutting down the government. So why don't we vote today to open the government, Wolf? We always have wanted to talk. But why wouldn't we also open the government today? They just haven't answered that question.

Again, I haven't seen that proposal yet. But as I understand, they are still unwilling to have the speaker to have democracy work its will and Democrats and Republicans vote today to open the entire government.

BLITZER: Are you still adamantly opposed to what they've been trying to do, Republicans on the House side, pass piecemeal pieces of legislation to reopen the Veterans Department, National Institutes of Health, make sure that those troops killed in action in Afghanistan families get the gratuity to pay for a funeral, come to Dover Air Force Base? Are you adamantly opposed to supporting that piecemeal legislation, even while the government, as a whole, remains partially shutdown?

VAN HOLLEN: Wolf, we voted unanimously just yesterday in the House to make sure those death benefits were provided. As you know, the administration was able to deal with that separately.

But the answer to your question is, if you care about the NIH -- and I happen to represent the district home to NIH -- if you care about the Food and Drug Administration or the other federal agencies, the best way to help them and the rest of the government is to vote to open it all today. This has been government by press release, right? The Republicans seem shocked day by day to find out shutting down the government has bad consequences. And they read something in the paper and say, oh, let's reopen this or that. It will never end until we reopen the entire government.

And again, I can't stress more strongly, I'm hearing from Republicans, Independents and Democrats, why won't the speaker of the House allow democracy to work its will? Why won't he allow the simple act of a vote to open the government, make sure we pay our bills on time and, yes, let's try to get to those negotiations that we've been trying to have since last March?

BLITZER: One final question before I let you go. The chairman of the Budget Committee, Paul Ryan, had that important article in the "Wall Street Journal" yesterday, no mention of Obamacare in his various solutions. But is he someone that you're encouraged that you like working with? Is he someone that you trust, someone that could perhaps help Democrats and Republicans work together to resolve this mess?

VAN HOLLEN: Wolf, I have a very good personal relationship with Paul. We have very deep differences. We've been trying to get to the negotiating table through the budget conference to negotiate those differences between the House Republican budget and the president's budget, and find a midpoint between those two things. What worried me about Paul Ryan's article in the "Wall Street Journal" was he wanted to set up the negotiation this way. He was saying that, in order for Republicans to do the right thing, the thing we should all do together, which is pay the country's bills on time, in order to do that, we have to accept major portions of the Republican budget. That's not the way it works. We should have a negotiation between the Republican budget and the Democratic budget and we should all do our job in making sure we pay bills on time, which this entire Congress has voted for in the past.

Let me ask you this. If the president of the United States were to say, Wolf, that he was going to veto the debt ceiling, he was going to prevent the country from paying its bills on time, unless the Republicans in Congress voted for the president's budget proposal and the president's jobs proposal, you know that Republicans would say the president had absolutely lost his mind. But that's the way they want to shape this negotiation, that in exchange for them agreeing to do what they should do anyway, pay our bills on time, we have to somehow adopt their budget. That's not going to happen.

What we are absolutely prepared to do and have wanted to do is negotiate between the Republican budget and their priorities for the country and the Democratic budget and its priorities. Let's absolutely not just find common ground but make some tough compromises to get that done for the good of the country. That's the way we should move forward.

BLITZER: Chris Van Hollen, the ranking Democrat on the Budget Committee, thanks very much for coming in.

VAN HOLLEN: Thank you, Wolf.

BLITZER: So are there winners and losers in this latest stalemate? CNN's top political analysts standing by to join me. We'll discuss, when we come back.

(COMMERCIAL BREAK)

BLITZER: There may be or maybe not a limited breakthrough in the current stalemate in Washington.

Let's discuss what's go on with our chief political correspondent, Candy Crowley, anchor of "State of the Union." And our senior political analyst, David Gergen, is joining us.

David, I'll start with you.

You've heard the back and forth. The speaker, the Republican leadership in the House, about to go into the White House now. They may already be there for the meeting with president. You've heard the reaction from the White House from the Press Secretary Jay Carney. Are we on the verge of at least a limited breakthrough, a limited ability to raise the debt ceiling over the next six weeks?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: I'm afraid not, Wolf. It sounds good on the surface, in some respects, and Jay Carney said at least they're talking about raise the debt ceiling.

But the proposal as a whole is a nonstarter. There's no way the White House is going to accept a short extension of the debt ceiling and then go into negotiations with the government still closed down. That's exactly what the president said he would not do. He's made it very clear from the beginning. I think we were so close to an agreement, so close to getting this resolved, and now I'm afraid we're still in a pickle here. I don't think -- I don't think there's any way the president can or will accept this proposal.

BLITZER: Candy, you did hear Jay Carney specifically say they want to discuss, they want to negotiate, but, first, reopen the government completely and the partial government shutdown, extend the debt ceiling and then everything can be on the table.

CANDY CROWLEY, CNN CHIEF POLITICAL CORRESPONDENT: But the question then is, what is everything? What are they going to negotiate? Once you pass the budget and once you pass the debt ceiling, the urgency is not there, as far as Republicans are concerned. They feel that this is a way to get -- particularly the debt ceiling, actually, is a way to start talking about how much money the country spends. I tend to agree with David that both sides are hemmed in by their initial positions that it's hard to see the president saying, yes, I'll do it. We'll see more of the same, come down to the White House and talk to me. But they're not negotiations.

BLITZER: David, what if they reached -- I don't think this is necessarily on the table -- but a six-week extension not only of the debt ceiling until November 22nd on the eve of Thanksgiving but a six- week extension of the federal government and the shut down for the next six weeks, and during the period over the next six weeks, then you have these House/Senate conferees start working about long-term issues like entitlement spending, tax reform, stuff like that?

GERGEN: That's exactly the deal, I think, that will work, Wolf. I think the White House would accept that. If -- if -- if the president's made it clear, look, if I -- if you reopen the government and give me a short -- I'll accept a short-term tension, we'll have a pause of about six weeks and then we'll have serious negotiations. We wouldn't try to go for a grand bargain, but as Paul Ryan wrote yesterday in the "Wall Street Journal," we could get certain things done and get out of the mess. I thought that's where we were going to be today. I'm disappointed that the Republicans right now are saying we'll still keep the government shutdown. I think if they left both of those, we'll get negotiators to the table. I talked to a senior House Republican yesterday and he said that's a deal they can work with.

BLITZER: The day's not over with, so maybe they can come up with that.

Candy, do you think that kind of deal would fly, six weeks, you reopen the government fully for six weeks, you extend the debt ceiling for six weeks, November 22nd be the deadline and, in the meantime, negotiations on all these other issues begin?

CROWLEY: It is hard for me to believe that in six weeks they can solve what they've been fighting by for six years. But, OK, let's assume there would be honest negotiations for six weeks, I think the problem and I think the reason that they backed off from six-week extensions on both is that there may be a problem now on the other side, within the House Republican caucus, about letting both of those have six-week extensions. So I think that's where the problem goes. Whereas, the president's the problem when there's only one problem solved, and I think the House caucus, there's a he problem when there's both.

BLITZER: David, you're a real smart guy. You worked for four presidents over the years. Talk about winners and losers. Are there any winners now or just a whole bunch of losers?

GERGEN: I think it's --

(LAUGHTER)

I think there are almost all losers. The question is, who is losing the most? With the Gallup poll yesterday, with Republican favorability, 28 percent, the lowest level Gallup has ever reported in the last 21 years, you know you have to say the Republican Party's losing badly on this. And Congress is losing badly. There's a poll out now, approval rating for Congress 5 percent. 5 percent. You wonder about those 5 percent, why didn't they get the word?

BLITZER: David Gergen, Candy Crowley, guys, thanks very much.

Opinions ranging from "catastrophic" to "no big deal" on what the consequences would be if the U.S. were to default on its debt. You're going to hear the warnings and the dismissals. That's next.

(COMMERCIAL BREAK)

BLITZER: If a deal to raise the debt ceiling is not made by October 17th, how dire would the consequences really be? Obviously, that depends on whom you ask.

Some strong words from the treasury secretary, Jack Lew, this morning in his testimony before the Senate Finance Committee, his warning about 11th-hour deals. Listen to this.

(BEGIN VIDEO CLIP)

JACK LEW, U.S. TREASURY SECRETARY: There's a parlor sport in Washington of when is the last minute? You can't do that with the debt limit. With the debt limit, if you look for the last minute and make a mistake, you've done serious damage to the U.S. economy, to the world economy. It's not responsible. It's reckless.

(END VIDEO CLIP)

BLITZER: Strong words from Jack Lew.

Moody's Investor Service says the Obama administration may be wrong. In a memo being circulated on the Hill, it says the U.S. doesn't necessarily have to default even if the debt ceiling isn't raised by the October 17th deadline.

Moody's chief economist, Mark Zandi, is joining us now to explain.

Tell us why, Mark.

MARK ZANDI, MOODY'S INVESTOR SERVICE: Wolf, I'm not part of the rating agency, so that's from a different part of my organization.

So in my view, if the U.S. government does not make a payment, either whether it be on U.S. treasury debt or on -- that would certainly be a default. And if it didn't make its payments on other obligations, in my view, that would be a default in anything perhaps but name. It would be almost semantic. But either way, it would be very hard on the economy and it would be the prescription for a very deep recession.

BLITZER: So let's just be precise. You're an excellent economist. Let's walk through. Let's say they don't -- I hope they do reach at least a temporary agreement to raise the nation's debt ceiling, but let's say they don't. Come October 17th, how much flexibility is there that the treasury secretary would have to make sure that the U.S. doesn't default?

ZANDI: OK, so if we're talking about default on the debt, that means the treasury not paying bond holders. Then there's some debate about that. Now, the treasury would say that they don't have the legal authority to do that. And, you know, even if they decided to go ahead and pay bond holders, there would be lawsuits. And if I were an investor, and I thought about the legal risks involved, I would still not be buying bonds, even selling bonds. So the implication would be higher interest rates. So almost regardless, interest rates are going to go higher whether bond holders get paid or not.

BLITZER: So am I hearing you suggest --

(CROSSTALK)

Does that make sense?

BLITZER: It makes sense to me. But am I hearing correctly that you agree with Jack Lew, it would be a catastrophe if Congress doesn't raise the debt ceiling, even for a few weeks?

ZANDI: I think that would be an unmitigated catastrophe. Right.

Let's extract for a second from paying the bond holders. Suppose the treasury figures out a way, gets around the legal issues and pays bond holders. What that would mean is there's less money for everyone else. Come November 1st, when there's a $60 million payment to Social Security recipients, they wouldn't get their check on time. If that happened, I would consider that to be catastrophic. Those folks will panic. There's going to be bedlam. And that's going to just run throughout the economy, the financial system, and it would be a catastrophe for those people and for the economy.

BLITZER: If you had to make a decision, if you were the treasury secretary or the president of the United States, and there's no deal on raising the debt ceiling by the 17th of October, and there are obligations that the U.S. federal government has, what would come first, paying off international investors who hold T-bills or whatever, whether the Chinese or Japanese or Saudis or whatever, or making sure that 60 million Americans get their Social Security checks on time?

ZANDI: That's a huge question. But let me answer it this way. I don't think that really matters because, whether you pay one or the other, it's still going to be a catastrophe because one group is going to panic. And when they start panicking, everyone is going to start panicking. It doesn't matter if it's Social Security recipients or bald holders. So we're all going to go down if that happens.

BLITZER: Mark Zandi, joining us as he always does. Appreciate it very much.

ZANDI: Thank you. BLITZER: Cyber thieves are always on the prowl. One target they're likely to try to crack, that massive database of personal information collected by Obamacare health exchanges. So how secure are those websites? We'll have an explanation when we come back.

(COMMERCIAL BREAK)

BLITZER: Over the next few months, lots and lots of Americans are expected to enroll in health insurance plans under Obamacare. That's going to create a massive database of personal information that will include Social Security numbers, and health and credit histories, all targets potentially out there for cyber thieves.

Zain Asher is joining us from New York.

You've been taking a closer look at this. How secure are these health care websites out there right now, Zain?

ZAIN ASHER, CNN CORRESPONDENT: Wolf, this is something critics are going to be watching very closely. I want to say, before the exchanges went live, there was a report of a data breach with Utah's state exchange about a year ago. But that helped Utah see the flaws and fix them in time.

But here are a few things to know if you're worried about your personal information. Firstly, the health exchanges don't actually store sensitive information. Yes, it does collect private data, but it's transferred to a data hub, a courier service between the various federal exchanges. If a hacker breached into an exchange website, they wouldn't end up with much.

The second thing people should be aware of is that these exchanges have hired people to continually test the sites for flaws and vulnerabilities. Think of it, if you will, as ethical hacking. The idea is any problems get fixed before a real hacker can actually get to it.

Thirdly, some state exchanges do have programs that check for malicious behavior. Others state exchanges block all international traffic. There are mechanisms in place, so that's important to remember.

We did speak to a health security expert. Her name is Devon McCraw. She says that even though there are security measures in place, state exchanges might be more of a ripe target for hackers than a federal exchange. Here's why.

(BEGIN VIDEO CLIP)

DEVON MCCRAW, HEALTH SECURITY EXPERT, CENTER FOR DEMOCRACY AND TECHNOLOGY: They haven't had as many resources to set these things up. There's not a lot of transparency about their privacy policies. And the thing about security is you can't tell everybody what you have done to secure the system or you have created additional vulnerabilities in it because you have essentially exposed all of your plans. (END VIDEO CLIP)

ASHER: So even though it's tough to know all that the exchanges are doing to keep their users safe, there's so much political heat around these exchanges and the Affordable Care Act that any data breach would be a major blow. Lots of pressure -- Wolf?

BLITZER: Pressure is enormous, indeed.

Zain, thanks very much.

Zain Asher reporting for us.

That does it for me this hour. I'll be back 5:00 p.m. eastern in "The Situation Room." Thanks very much for watching. I'm Wolf Blitzer, in Washington.

NEWSROOM continues right now with Brooke Baldwin.