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CNN NEWSROOM

House GOP Working on New Bill; House, Senate Making Separate Plans; War Hero Gets Medal of Honor Today; Racing to Thursday's Debt Deadline

Aired October 15, 2013 - 10:30   ET

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


DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: But -- here is the big but, they want to keep -- they want one more chance at putting their stamp on it. And their stamp in this particular bill would be to deal with the whole question of members of Congress and what Republicans say is a question of fairness. Members of Congress and members of the cabinet.

And they -- this bill would take away employer help. And by "employer," we mean the federal government because they're obviously federal employees, so employer help for buying the health insurance if they're going through the exchange.

So to sort of drill it down and to sum it up for people out there who might work for a big employer or a small employer, they know that if they have health insurance through their employer, they get some -- in some cases kind of a big chunk of change to help them buy their health insurance. Same goes for federal employees. Federal employees will continue to get that help from the federal government. This would carve out and make it impossible for the members of Congress to get that federal help and make it impossible for the President, members of the cabinet to get that federal help. And you know this is -- this is symbolic. It also would hurt a lot of members of Congress who don't have a lot of money and others. But it is also trying to make the point that they should not benefit from federal dollars to get their health care.

So that's just kind of -- it's been a very controversial issue. Earlier versions of this Carol included conversational staff which is even more controversial because you know they can hope -- many of them tend to make a lot less money. That did not appear to be a part of this. So that would be one portion.

The other things that they're including are bigger issues regarding Obamacare. Obamacare, they would delay the medical device tax, which helps pay for Obamacare for two years. This is something that the President had said he didn't want to do right now. And Harry Reid the Democratic leader says he doesn't want to do right now. This will be in the House bill. And so there are some changes in there.

But House Republicans want to do is pass this -- their version of this bill re-opening the government and extending the debt ceiling with their additions later today. And then it seems as though that would go to the Senate and it would be up to the Senate to maybe I presume the Senate Democratic leader would strip out those extraneous provisions that they don't want. But we will see what happens.

One other development that's happened in the last few minutes is that Senate Republicans were supposed to meet at the top of the hour, at 11:00 a.m. They've now delayed that and they're going to wait to have their regular weekly lunch at 12:30 so they can discuss the way forward. Perhaps part of that is because they're trying to figure out this dance with the House Republicans and try to figure out what the choreography will be after the House Republicans, assuming that they will pass this bill because they do have the majority, later today.

COSTELLO: Ok having -- having said all of that and we appreciate it. This is really complicated should we see this as a hopeful sign?

(CROSSTALK)

COSTELLO: We've got two days until we default. Should we see this as a hopeful sign?

BASH: That's a good question. I think the answer to that will be yes, if. This is a big if. If -- let's just play this out -- House Republicans pass this bill today. The Senate -- the Senate takes it up and if there are -- let's just say they have the votes we assume to strip out some of the more controversial elements, Obamacare-related elements.

The big "if" is whether or not the House Speaker John Boehner then will be willing to finally take up what the Senate passes even though a lot of conservatives will vote no; even though a lot of conservatives will not be happy. It appears just looking at this that, as I said, this is sort of John Boehner and the conservatives' last stand to sort of make their point one more time that they don't want anything, quote-unquote, "clean", but they want to chip away at least at Obamacare as part of this deal to raise the debt ceiling, as part of this deal to re-open the government.

But you know as we've said, we sort of been down this road before. So that is going to be the key thing to watch. How the Senate deals with it. But maybe more importantly, if they do pass something along the lines of what we've been reporting, a bipartisan deal in the Senate, what John Boehner will ultimately do because at that point -- this is Tuesday -- at that point we will probably be maybe late tomorrow, Wednesday night, a day before the debt ceiling is supposed to be reached and the U.S. is supposed to default.

COSTELLO: All right Dana thanks so much. I know you'll continue to follow this throughout the day and the night and the next day and the night.

Joining me now: CNN senior political analyst David Gergen and CNN political commentator Donna Brazile. Good morning to both of you.

DONNA BRAZILE, CNN POLITICAL COMMENTATOR: Good morning.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Good morning.

COSTELLO: Ok so the House has a deal, a potential deal that they're going to send to the Senate. So Donna, are you hopeful?

BRAZILE: A little hopeful. Look I think everyone understands that the clock is really running out right now and it's time to just really put forward a clean bill so that we can re-open the government, raise the debt ceiling. There are a lot of issues that as you can tell from Dana's reporting that the House and Senate may need to work out on the health care bill, on the future budget agreement.

But right now the American people, they really just want the government to re-open and raise the debt ceiling and get this, you know, manufactured crisis out of our way.

COSTELLO: Ok so -- so Donna is hopeful.

But David, I'll ask you this. Included in this potential deal that House Republicans have come up, there are little "gotcha" moments for President Obama and Dana mentioned them. they want to eliminate the tax subsidies for the President and the Vice President so that they can force them into Obamacare. And I'm just going to read a line here. "If the President and Senate Democrats are going to force the American people to live under Obamacare, then they and all Washington leaders should not be shielded from the law," -- thoughts?

GERGEN: Well hi Carol, the fundamental point here is that we're moving very close to a deal now. I think we're going to get something before -- I don't think we're going to default. The fact that the House leadership instead of waiting for the Senate to send over a bill and then having conservatives revolt against it and having a real mess in the House, they're trying to come up with something that keeps their caucus together.

Yes, I think they've got these little add-ons. But I think it's within -- you know time is running out as Donna says -- but I think that everybody knows now they're going to try to get this done before the default hits us, which is the good news. The bad news is, they're going to keep fighting when this is over and it's going to go on and on and on and we're all sick of it.

And this "gotcha" moment, you know the Republicans retreated on a lot of things. I imagine they'll have to retreat on some of this before it's over. They have not played their hand as well as they might have.

COSTELLO: Right. And Donna I think David is right. Because the deals in both the Senate and House, it's just like you know we'll deal with it in 2014. That's basically what they say.

BRAZILE: That's three months away, Carol. And you know what? That's -- that's a lot of time to again, bring back a grand bargain. Look at the longer picture. I really do think that the American people are just sick and tired of these, you know, every four or five months we're back in a standstill and we're back shooting at each other and finger pointing. They want these leaders to really to come together and solve these issues so that we can focus on what the American people care about and that is job creation and getting our economy up and running again. COSTELLO: And David, a last question to you. It's been so vitriolic this time around. And I'm surprised I'm saying that in light of what happened just two years ago or in 2010 when they debated over Obamacare --

(CROSSTALK)

GERGEN: You didn't think it would get any worse.

COSTELLO: I know I didn't think it would get any worse.

GERGEN: You didn't think it could get any worse. Right and it does.

COSTELLO: But -- but I think it has. Is this a turning point?

GERGEN: I think we're on a downward slope. And we -- and it feels a little bit like toboggan ride, we're picking up speed as we go downhill. And it would be wonderful if as Donna says we could bring back the grand bargain. Simpson-Bowles will be back on stage.

But there's so much distrust now. And it's not just between parties anymore. House Republicans don't trust Senate Republicans, vice versa. And there's extremism especially in the Republican Party. I -- I'm not sure what's going snap us out of this in the near term I think that we're going to see a contentious next few months.

I would love to see a grand bargain emerge. But I -- the atmosphere just doesn't -- you know the best thing that everybody could do is go home for a little while and get over their sore heads and see if they can recover a little balance in their perspectives in life.

COSTELLO: Wouldn't that be nice. David Gergen and Donna Brazile thanks to both of you. We'll be right back.

BRAZILE: Thank you.

GERGEN: Thank you.

(COMMERCIAL BREAK)

COSTELLO: Dead lock in Washington. First D.C. languished in a stalemate because there was no plan to solve the shutdown or the debt crisis. Now the problem may be two plans: one taking shape in the House of Representatives, one being finalized in the U.S. Senate.

John Avlon is a CNN political analyst and executive editor the "Daily Beast". John, welcome. I'm just keeping an eye on this.

JOHN AVLON, CNN POLITICAL ANALYST: Thanks, Carol.

COSTELLO: Yes because House leaders are supposed to speak and they haven't yet. I'm just keeping an eye on things so that we can go to that live. I kind of wanted to ask you first off, what we've learned through all of this mess if anything so we can take something from this that's valuable. AVLON: You're asking for a positive lesson to feel good about in the middle of this total debacle, a self-created fiasco? Nothing yet is the honest answer. I mean look we're in day 15 of a shutdown. Two days away from a default -- a totally manufactured crisis imposed on the American people by Congress. And -- and they're busy trying to rearrange deck chairs on the Titanic right now with competing proposals in the House and the Senate.

I mean the logical thing to do here and it looked like it was this way as of this morning even was the Senate to pass a bipartisan bill with broad support and then for that -- Speaker Boehner to realize that he didn't need to be held back by the Hastert Rule and to open it up for a broad vote.

Instead House Republicans are kicking back and calling the folks of the Senate to surrender caucus all that typical old rhetoric. And -- and -- and we are still very far from a deal that saves us from default which would be a disgrace to the nation's greatest -- to the greatest nation in the world.

So the positive lessons right now? There's none to be found. Let's hope some emerge. I tell you one that will be, at the end the day when the extremes call the shots America suffers.

COSTELLO: Well America is suffering right now. You have a group of veterans on Capitol Hill saying please end this government shutdown. We need our benefits. What are you doing?

AVLON: Yes. That's right. You know, it is the role of government to try to make things a little better for folks who can't necessarily help themselves. The shutdown does the exact opposite. And all of a sudden when you ratchet it up to the debt crisis, then all of a sudden you get the attention of donors particularly folks who've helped fund some of these Tea Party groups and they say look, you know you want to take on Obamacare you want to try to -- you know if the whole purpose of this Tea Party exercise was to try to instill fiscal responsibility and get people more serious about spending about restraining deficits and the debt, this whole exercise, this whole kamikaze kabuki does the exact opposite. It has actually made us more fiscally irresponsible.

Shutting down the government actually costs tax payers. And that's before we get our credit ratings reviewed and without the danger of the debt ceiling. So this whole thing is a giant self-defeating measure about putting ideology over problem solving and helping people.

COSTELLO: And in the end it's not really getting them what they want. They did not succeed in defunding Obamacare and they won't.

AVLON: No. No.

COSTELLO: So what did it all matter? What can it do?

AVLON: You know we had -- what it did was, it's the politics of throwing tantrums in a public place. You know, one Republican congressman complained today and said it's awfully hard to go back to my constituents after shutting down the government two weeks and only getting a two-year delay in the medical device tax.

Well, I feel his pain, I guess. But again, he bears responsibility for that series of votes. This was always a charge in the debate in that by House ideologues trying to say they're standing up for ideological purity when responsible voices of the Republican Party -- from the "The Wall Street Journal" editorial page on down warned this was always a fool's errand.

And I think people are realizing it but not yet enough to really be able to look those folks on the far right in the face and say, "Stop holding our country and our Party hostage." That's what needs to be done.

COSTELLO: But -- and on the Democratic side it's frustrating to so many Americans that these exchanges aren't working properly. That healthcare.gov can't get off. I mean how does that happen with their signature piece of legislation that they --

AVLON: Yes. That's part of the scandal here. And it raises the irony. You know, if Republicans had let the problems in Obamacare create popular dissatisfaction for itself it would have been a far greater strategy. We would all be talking about how the Obamacare exchanges aren't working. How people spent over $300 million in taxpayer money and didn't get a functioning Web site that seems to be able to sign up people effectively. You know, those bugs may be well worked out but it's yet another problem with the Republican strategy.

We'd all be talking about the failure of this comprehensive reform in the technological side at the very least if we weren't focused instead on the urgent problems that are being created by a few folks trying to hold the full faith and credit of the United States hostage. So it's yet another fundamental problem with the quote/unquote "strategy" we've seen. I'd put it in quotes because strategy has an end game -- this doesn't.

COSTELLO: There doesn't appear to be any end game at all. But hey we have two more days. We'll see what happens. John Avlon, many thanks.

AVLON: Yes. Thanks.

COSTELLO: We're still waiting to hear from the House GOP leadership. We'll continue to monitor that.

We have to take a break now, though.

(COMMERCIAL BREAK)

COSTELLO: Let's check our top stories before we get back to the government shutdown. As you can see we're still awaiting House Speaker John Boehner to emerge from this closed door meeting to tell you all about this deal that House Republicans have come up with to end the government shutdown. We'll get to that as soon as House Speaker Boehner begins speaking.

In other news this morning, heartbreak on a Carnival Cruise ship -- a six-year-old is dead after drowning in a pool. A passenger jumped in tried to pull the boy to safety but her efforts failed.

(BEGIN VIDEO CLIP)

SHAINA SHAW, PASSENGER WHO TRIED TO SAVE CHILD: Out of nowhere I heard all of this commotion. I actually lifted the boy up. I actually helped prop his body into proper position so they could perform the CPR. Everyone was crying. They had to pull the mother away, and the father. The father was next to his son pleading and begging his son to stay alive.

(END VIDEO CLIP)

COSTELLO: Cruise ships are not required to have lifeguards on duty.

A possible break in the 2007 disappearance of three-year-old Madeleine McCann: on Monday British police released two sketches of a new person of interest. And they have now received more than one thousand fresh leads. They even have the name of this man seen in the area around the time Madeleine went missing while she was vacationing with her family in Portugal.

A young fisherman got a shocking surprise while out on a lake in east Texas. And I mean shocking. A lightning bolt struck right in front of the 16-year-old. Tucker Owens -- this is (inaudible) -- he's 16. His name is Tucker Owens. He was on a boat. He was fishing in Lake Athens on Saturday afternoon.

The lightning strike happened just a few yards in front of the boat. He captured the lighting on a camera mounted on the boat's windshield.

Today a retired army captain will get an honor a long time in coming. William Swenson is credited with trying to save the lives of his fellow soldiers. But it's a moment of compassion that he does not remember and may best describe the Medal of Honor recipient.

CNN's Barbara Starr has more for you.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT: It was a helicopter ride into the hell of war and the soul of Captain William Swenson, a soldier who refused to leave anyone behind and spoke up to senior commanders when it all went wrong.

CAPT. WILLIAM SWENSON, MEDAL OF HONOR DESIGNEE: What happened that day was a result of clouded judgment. It was a result of clouded judgment on behalf of people who did later receive letters of reprimand.

STARR: In this valley four years ago Swenson and his men were ambushed in one of the most brutal firefights of the Afghan war. Swenson his men did not get urgently needed air support a claim validated by the army. Then his nomination file was said to be lost. Now he is finally receiving the Medal of Honor, the nation's highest combat award. It was early morning when the column of more than 100 U.S. and Afghan troops started up the valley's narrow path. Enemy fire opened up from three sides.

SWENSON: We were now outnumbered and outgunned and we have taken casualties.

STARR: Sgt. First Class Kenneth Westbrook (ph) is shot in the throat and laying out in the open.

SWENSON: He called out to me and said, "I'm hit." He wasn't panicked. There was no indication of pain. I called out to him, "All right. Hold on. I can't get to you. I'm pinned down. Keep fighting."

STARR: Swenson runs across open ground dodging enemy fire to get to him. Sgt. Kevin Duerst was crew chief of the medevac helo coming to get the wounded. A helmet mounted camera captured Swenson flashing an orange panel so the helicopter can find him. But it makes him an enemy target.

STAFF SGT. KEVIN DUERST, CALIFORNIA NATIONAL GUARD: He was completely under control of the whole situation. He knew exactly what had to be done and when.

STARR: Swenson and a medic helped Westbrook to the helo. And then a moment amid the mayhem -- watch as he gently kisses Westbrook good- bye.

SWENSON: I was just trying to keep his spirits up. I wanted him to know that it was going to be ok. And I wanted him to know that he had done his job. But it was time for him to go.

STARR: Swenson, determined to get everyone out, went back into the battle with others still under fire to find and bring out the bodies of dead American and Afghan fighters. Sergeant Westbrook died a few weeks later.

Barbara Starr, CNN, the Pentagon.

(END VIDEOTAPE)

COSTELLO: Still to come in the NEWSROOM: closed doors and a closer deadline. What happens if Thursday passes without a debt deal? Christine Romans looks at the non-political realities of a potential default.

(COMMERCIAL BREAK)

COSTELLO: It is circled on the calendar and squarely at the center of the debt debate. Thursday is the last day to lift the U.S. debt ceiling and avoid potential default. What happens if Washington fails to hammer out a deal in time? Are we really facing doom and gloom? Are all those dire warnings just scare tactics. Christine Romans is in New York to tell us. Good morning. CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Oh Carol, you know, here we are talking about whether Uncle Sam would pay its creditors or pay grandma her Social Security check. It's a place you do not want to be.

And just this discussion, the shutdown and the discussion of not raising the debt ceiling has already hurt the economy to the tune of $20 billion. That's according to Mark Zandi at Moody's analytics. He says $20 billion is already the hit that we have seen. Now, that could be temporary and reversible if this doesn't go on forever but this has been going on forever. This has been going on since 2009.

You look at what that has done to the economy since Congress has been arguing about how to pay the bills and how to make its priorities in spending. And we've got 900,000 jobs by one estimate that have been lost because of the debt drama since 2009. And Mark Zandi of Moody's Analytics says it's more like a million jobs have been lost.

So it's hurting already. There's this worry about what happens after October 17th and then there's this reality of what has already happened. It's counter productive. It's been holding back the economy at a time when we don't need to be held back. We need to be moving forward.

So that's what's so distressing about the political process at odds with the idea of an economy trying to get back on its feet.

Now what happens on October 17th? The sky does not fall on October 17th. But the markets may very well tell you, get your act together. You may very well see a big stock market selloff pushing Congress to get some sort of a deal.

It looks as though the Treasury -- by my math the Treasury has enough money to pay bills Carol, for a few days maybe even a week after the October 17th deadline. But on November 1st, that's when I see a bunch of big bills coming due. There's a Medicare bill of the hospitals, billions and billions of dollars. Billions have to go to seniors. You've got to pay the interest on your debts.

You've got all these bills that are going to start to come due. We have less than that coming in everyday from tax receipts. It's impossible math. That's why so many economists and business leaders say you must just raise the debt ceiling and get your financial house in order -- Carol.

COSTELLO: Well, it's amazing to me how chilled business leaders seem right now or at least traders on Wall Street because the stock market is only down, what, 60 points. We expected that to be a steeper drop. Why isn't it?

ROMANS: Right. Because they don't think there's any chance in hell that they will not do something. That it's such a dangerous and silly place to be that they're just going to have to have some sort of a deal.

So the markets are betting on a deal. If they don't get a deal, then you could see the big stock markets selloffs which would force them to get a deal which is even more pathetic that Congress can only act when there's a big stock market selloff not when it's the right thing to do in the first place.

So markets are saying they're going to have to get something done. We just don't think there really could be a default or even get close to a default. Now, there is the market but I'm watching the T-bills where you are seeing some action there. They're starting to get worried. They're starting to get worried that Congress might not get a deal there.

COSTELLO: All right. Got to end it there. Christine Romans, thanks so much.

We're still awaiting John Boehner to come to the podium. But thank you for joining me today. I'm Carol Costello.

"LEGAL VIEW" with Ashleigh Banfield starts now.

ASHLEIGH BANFIELD, CNN HOST: Hello everyone. I'm Ashleigh Banfield. It is Tuesday, October 15th and welcome to "LEGAL VIEW". Nice to have you with us, even if it is one of those days, again. And even if calamity doesn't strike at 12:00 a.m. Eastern on Thursday in the absence of a hike in our debt ceiling and it's not going to be so stark either. It's going to be a lot more gradual than that.