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House GOP Working on New Bill; Obama rejects House Bill Proposal; Investors Wait For Washington Plan; U.S. Federal Government Partial Shutdown Continues; Debt Ceiling Deadline Approaches; Wall Street Wants End; Californians Disgusted; Sen. Isakson Says Shutdown "Dumb Idea"

Aired October 15, 2013 - 12:00   ET

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

WOLF BLITZER, CNN ANCHOR: Government shutdown, the debt ceiling extension. We're now only 36 hours away from that moment when we officially, according to the Treasury Department, hit that debt limit. Without a deal, the U.S. government won't be able to borrow enough money to pay all the bills that we've already racked up. The Senate has been working on a framework for a deal since the weekend. And this morning, the House revealed its own competing plan. The White House just released a statement rejecting the House proposal, but the House speaker says he's still optimistic that lawmakers eventually will find a way out of this mess before the default deadline.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), HOUSE SPEAKER: Our leadership team met with our members today, trying to find a way forward in a bipartisan way that would continue to provide fairness to the American people under Obamacare. There are a lot of opinions about what direction to go. There have been no decisions about what exactly we will do. But we're going to continue to work with our members on both sides of the aisle to try to make sure that there's no issue of default and to get our government reopened.

(END VIDEO CLIP)

BLITZER: So there's action on the House side. There's also action on the Senate side. Senator Marco Rubio of Florida speaking on the Senate floor right now. Let's listen in.

SEN. MARCO RUBIO (R), FLORIDA: Enrichment capability and that now is not the time to suspend sanctions but to increase them on the Iranian regime. You see, all of us would like to wake up tomorrow to the news that the ayatollah has decided to abandon -

BLITZER: All right, So Senator Rubio is speaking about Iran right now. We'll monitor what he's saying, see if he says anything about this Senate proposal, a bipartisan proposal, to deal with this debt ceiling and get the government fully operational. Senator Rubio speaking there. We'll check in with him later.

The House speaker is rather upbeat about his own plan, but the Democratic minority leader, Nancy Pelosi, isn't feeling quite as good about it. Moments ago she said the House Republicans are sabotaging the Senate's efforts to end the crisis.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D), MINORITY LEADER: So why are they doing this to the American people, sabotaging a good faith bipartisan effort coming out of the Senate, wasting the public's time and, in this case, time is money. Time is money. This is going to be very costly to our economy, even if eventually we do lift the debt ceiling, the cost in interest payments will be in the billions of dollars. This republican sabotaging of any effort to move forward is a luxury our country cannot afford.

(END VIDEO CLIP)

BLITZER: Strong words from Nancy Pelosi.

Let me show you exactly what's in the potential Senate deal to end the stalemate. Take a look at this. It would reopen the government, keep it running through mid-January. The debt ceiling would be extended till early February. There could be some slight changes to Obamacare, but nothing near what some conservative Republicans have been pushing for. Those possible tweaks include new income verification requirements for people seeking health care subsidies and delaying what's called the transitional reinsurance fee, which would cost employers about $65 per employee per year for three years. Relatively modest tweaks to Obamacare.

Let me tell you also about the House plan that apparently is on the table. About two hours or so ago, lawmakers there announced they have their own bill. It would include most of what is in the Senate agreement, but it would also add a two-year suspension on the tax on medical devices that -- that tax helps fund Obamacare. The plan would also remove federal health care subsidies for President Obama, members of Congress and the cabinet and their staffs. In other words, if they want Obamacare, they would have to pay for it for themselves and it would forbid the Treasury Department from taking so-called extraordinary measures to prevent the government from defaulting.

So let me bring in our A team to help us explain what's going on right now. Dana Bash is up on Capitol Hill, Jim Acosta is over at the White House.

Dana, the House speaker says he's optimistic the country will not default. There will eventually be some legislation. But there are clearly some major sticking points.

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Major sticking points. He might be optimistic about the country not defaulting, but he's certainly, according to many House Republicans, is not optimistic that he can pass his own plan right now. That has been the development in the last hour, that this plan that House Republican sources told us about earlier this morning was presented in a House meeting, which went very long.

And the reason we now know that it went so long and the House speaker and other leaders weren't more aggressive in describing that plan before cameras in the last hour, is because they are struggling to find the votes within their own party. And the reason they're struggling is because, I am told, that there was that core bloc of conservative members who have been really pushing to, you know, go for broke, go all or nothing. That bloc who is working sort of hand in glove with Senator Ted Cruz in -- of Texas in the Senate who, again, is pushing principle over everything else. They really pushed back, I'm told, inside this private meeting to House Republican leaders, said they didn't like this.

So now what's going on is the House is actually coming into session, but there have been meetings going on trying to figure out if they can salvage this plan and how to do that. One idea, I'm told, is the concept of -- one of the provisions of this House plan, Wolf, was to take away any federal subsidy for members of Congress and the cabinet and presidents -- the president, I should say, that they get to help pay for their health care. The staff, congressional staff, was not included. What I just was told is that one thing that could placate conservatives is to include staff. So what that would mean is that somebody who works for a member of Congress, who is a federal employee, just like all other federal employees across the country, they would be -- their money for their health care would be taken away. So they would be actually treated differently than other federal employees.

Now, unclear if that's how things are going to pan out, but that' is among the discussions that House Republican leaders are having right now with conservatives to salvage the votes from within their own caucus for their own plan that they just announced this morning, which was supposes to be the beginning of the end of this saga.

BLITZER: The beginning of the end? It's continuing and continuing and continuing. Dana, stand by for a moment.

Let's go over to the White House, get some reaction to this latest decision by the House Republican leadership. Jim Acosta is standing by.

What are they saying over there about these latest ideas coming forward from the House Republican leadership?

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Wolf, the only way you could read the reaction from White House Spokeswoman Amy Brundage to this House Republican plan is dead on arrival. Let me just read to you a quote from a statement released by the White House Spokeswoman Amy Brundage in the last hour. It says, quote, "the president has said repeatedly that members of Congress don't get to demand ransom for fulfilling their basic responsibilities to pass a budget and pay the nation's bills. Unfortunately, the latest proposal from House Republicans does just that in partisan attempt to appease a small group of Tea Party Republicans who forced the government to shut down in the first place."

So, Wolf, it could not be more strongly worded than that. Obviously this White House has major issues with some of those anti-Obamacare provisions that are tucked into the House proposal. And note the juxtaposition, Wolf. Yesterday, when the president was at that food shelter here in Washington, D.C., he talked about how if the Republicans don't stop playing games, we stand a good chance of defaulting. And then almost in the same breath, he said that the Senate is making progress, that there's being - there's progress being made over in the Senate and almost -- he almost brought all of the leaders over to the White House yesterday presumably to talk about that plan.

That is, in essence, and I don't want to say it's a complete blessing of the Senate plan, but it is a strong indication from the White House, from the president, that he strongly prefers what is coming out of the Senate right now. A I talked to a White House official who said, yes, they believe that the bipartisan framework that is coming out of the Senate is the preferred choice. Wolf, the way they feel over at the White House is that the House of Representatives has had its chance and it's blown it.

Wolf.

BLITZER: And so the White House press secretary, Jay Carney, he's getting ready, he's scheduled at the bottom of this hour, in about 20 minutes or so, for a news conference. I assume it's still taking place. Based on the latest information, still taking place, right? And we'll hear officially what the White House thinks about all of this.

ACOSTA: It has not been canceled, Wolf. But as you saw last Friday, that White House press briefing drifted from early in the afternoon to after the market closed at 4:00 p.m. I'm not saying that that's what's going to happen today, but that - it is not always set in stone when this White House press briefing starts. I know that's probably the understatement of the year. And my White House colleagues will probably - will probably needle me for saying that one. But these things don't always start on time.

And, Wolf, here - I mean here's the thing that is, I think, very much the crux of the issue here. The crux of the issue is, can this White House, can President Obama sign anything into law that reopens the government and raises the nation's debt ceiling that has some kind of provisioning in there that tinkers or toys with Obamacare? It may not be critical to that law and the way it operates and the way it covers millions of Americans and requires people to buy insurance and those major pillars of the law, but, you know, can the additional requirements to prove that you're eligible for those subsidies in Obamacare, can that fly with this White House? My sense from talking to people here is that, yes, that sort of thing, because it's not critical to the heart of the law, that sort of thing could fly with this president. I think that is going to be one of the major questions to Jay Carney if and when that briefing starts, Wolf.

BLITZER: Well, and we assume it will start at some point and we'll see how long it's delayed, if it's delayed. We'll have, of course, live coverage here on CNN.

Jim, thanks very much. So we're waiting for Jay Carney. We'll get reaction from the White House. You're looking at live pictures from the Briefing Room there in the West Wing. Once he starts speaking, answering reporters' questions, we'll bring it to you live right here in the CNN NEWSROOM.

Even if there is a deal, many steps remain before it becomes law. So what happens next? Here are five things to look for right now.

Any deal passed by the Senate or House has to, obviously, be adopted by the other chamber without any changes. If their bills are different, the House and Senate will conference to create a unified bill.

Then there would be further debate, procedural votes and amendments. In the Senate, it would need at least 60 votes to overcome any filibusters. After a unified bill has passed in both chambers, it would then go to President Obama for his signature. If he likes it, he signs it. He could veto it and then the process begins all over again.

Just ahead here in the NEWSROOM, we've been hearing about the so- called progress here in Washington, but is Wall Street buying any of it? Taking a closer look at the markets for a reality check of your money.

Plus, the tough decisions for John Boehner. He's under intense pressure from all sides. We're taking a closer look at some of his options, that's coming up, as well.

(COMMERCIAL BREAK)

BLITZER: All right, it's day 15 of the government shutdown. Wall Street getting increasingly weary, like all of us right now. Investors aren't convinced today that the politicians here in Washington will be able to hash out a plan to raise the debt ceiling. A lot of people are confused. They want to put an end to this government shutdown, obviously, at the same time. The Dow Jones Industrials down 41 points or so right now.

Let's bring in Zain Asher. She's over at the New York Stock Exchange.

I know I'm confused. A lot of folks in Washington confused. I assume, Zain, investors on Wall Street are confused, as well.

ZAIN ASHER, CNN CORRESPONDENT: Absolutely. You can say that again, Wolf. Yes, investors certainly cautious right now. We keep watching this volleyball go back and forth between Democrats and Republicans. We got some reinsurance yesterday from Mitch McConnell and Harry Reid yesterday only to wake up this morning and hear that the house has been working on its own bill. So every time traders think they are close to a deal, the goal post moves again.

But when you go downstairs and talk to traders, what they're really frustrated about is this idea of these continuous short-term fixes. I mean if you look at the latest proposal, this time they're really staggering the deadlines so that next time around they do have more room to negotiate. It's almost as if they're preparing for another political stalemate, which doesn't bode well for the markets.

Wall Street is obviously hungry for this to be over. We have seen four straight days of gains, partly because we've had so much talk of a deal. But now, Wolf, it really is show time. Two days left. No more talk. Wall Street really needs something concrete right about now.

Wolf.

BLITZER: The Dow Jones down 47 points right now. The ramifications not only enormous here in the United States, but around the world. And I want to welcome our viewers not only here in the United States but around the world who are watching CNN right now.

For the past two weeks or so, we've been traveling across the United States talking to people about how they are impacted by this partial government shutdown now in week three. Coming up, we're going to Huntington Beach, California, to hear their messages to the leadership right here in Washington. That's next.

(COMMERCIAL BREAK)

BLITZER: We're waiting for two briefings over here. On the left, you see the White House briefing room, Jay Carney, White House press secretary, expected fairly soon, supposedly at the bottom of the hour in about 10 minutes or so.

That's when it's scheduled to begin. It usually is delayed a little bit, at least could be delayed longer today. We'll hear what Jay Carney has to say about these competing pieces of legislation on the Senate and the House side.

On the right-hand part of your screen, you're seeing a stakeout there, reporters waiting to hear everywhere Senate Democrats and Republicans on what's going on on the Senate. There's a lot of competing activity in the House and Senate right now, so we'll be watching it.

We want to once again welcome viewers here in the United States and around the world to our special coverage. I'm Wolf Blitzer in Washington.

It's now less than 36 hours before the U.S. government risks defaulting on its debts. If it does so, the impact on everyday Americans could be catastrophic.

Our Stephanie Elam is joining us now from Huntington Beach, California.

I assume folks are nervous out there. What are you seeing, Stephanie? What are you hearing?

STEPHANIE ELAM, CNN CORRESPONDENT: Yeah, Wolf. There is a lot of frustration here. I know Southern California, especially out here in these beach communities, get very known for being very relaxed.

But when it comes to this issue of the government shutdown, we heard a lot of people who are extremely frustrated with what they're hearing.

Take a listen to what they had to say.

(BEGIN VIDEO CLIP) UNIDENTIFIED MALE: I know they have a tough job, but like anybody else, you hope they get their act together. I'm kind of tired of the kind of partisan bickering that goes on.

UNIDENTIFIED FEMALE: Get a budget. This is ridiculous.

If any of us did this at our jobs, we had a deadline, we didn't make it for a month, we won't have a job, which is what I think should happen in D.C.

UNIDENTIFIED MALE: I guess I'm disappointed. I'm disappointed that the people in Washington can't come together and move forward, get past this impasse.

(END VIDEO CLIP)

ELAM: And one thing that's really interesting to hear is one of the women there said they may be close to a deal, but how do we really know?

It's like saying you're running a marathon and you're on mile one. You still have over 25 miles to run.

They're very frustrated with the lack of clarity, and pointing out that if we did this in our jobs, we would all be out of a job.

And some of these people hear saying that they plan to make that move when they go to the ballots and they want to say get these people out the next time that they go to elect their congress people.

So some changes here that people are really feeling, Wolf.

BLITZER: Yeah, people are feeling it all over the country. Stephanie, thanks very much.

What is your message to the folks here in Washington? Make a little video for us. You can send it to iReport.com. As the shutdown continues, we may share your views right here on CNN.

It all started with a family feud among some Republicans in the House. Now it's day 15 of this partial federal government shutdown.

Coming up, I'll speak live with Senator Johnny Isakson of Georgia who says the shutdown was in his words "a dumb idea." He's standing by live.

(COMMERCIAL BREAK)

BLITZER: After weeks of stand still and stalemate, there are suddenly two plans to end the crisis over the partial government shutdown and the debt ceiling extension.

The Senate has been working on its own plan for the last couple days. This morning, the House Republican leadership announced its own competing plan. The House Minority Leader Nancy Pelosi says it's an attempt in her words to "sabotage" the senate's efforts. The White House says it's another attempt by some members of Congress, Republicans, to demand ransom, words from the White House officials, just for doing their job.

Any minute now, we're expecting the White House briefing to get started. You're looking at live pictures from the briefing room there in the West Wing, Jay Carney, the press secretary expected to walk out, answer reporters' questions.

We'll have live coverage, get the latest from the White House as soon as he walks into that room. Stand by for that.

One senator is pretty clear-cut about the possibility of a government shutdown. He says it's a dumb idea. That senator is Senator Johnny Isakson. He's a Republican from Georgia, is joining us right now.

Senator, thanks very much for coming in.

SENATOR JOHNNY ISAKSON (R), GEORGIA: Good afternoon, Wolf. Good to be with you.

BLITZER: So what was a dumb idea?

ISAKSON: Well, defunding ObamaCare or shutting down the government was an impossible goal to achieve because most of ObamaCare is mandatory spending, and you've got a Democratic president with a veto pen and a Senate majority of Democrats in the Senate.

So the goal should have been more achievable. Shutting down the government should never have been a predicate for it.

BLITZER: So that was a dumb idea, to shut down the government, knowing that the president would never sign into any law defunding.

What about delaying ObamaCare? Because that was the second pitch that the Republicans in the House put forward? Was that a dumb idea, as well?

ISAKSON: It's a better idea, and John Boehner talked about a two-year delay in the medical device tax, which, by the way, has not been totally ruled out by the other side in discussions I've been in.

So we're moving towards common ground. We're moving towards a solution. And I think everybody save a very few people in Washington realize we need to end the shutdown and bring America back to work.

BLITZER: So this latest proposal by the so-called "Gang of 12," six Democrats, six Republicans, Susan Collins, your Republican colleague from Maine among others putting forward this idea, it looked yesterday like it was moving forward, it would pass the Senate and then they hoped the speaker would let it come up without any conditions, without any modifications, on the House floor where it could pass.

The president would sign it and then this whole thing would be over with at least for a few months till mid-January or early February. Where does that stand right now?

ISAKSON: When John Boehner sent the signal this morning that he was going to have a press conference and they were meeting on the parameters of the deal, that immediately stopped the Senate negotiations for really a very good reason because nothing would be better than for the House to send us something they would pass with Republican votes and some Democratic votes.

That would be a good signal to us they're ready to deal, and I think John is ready to deal.

But we're ready to go on the Senate side. I think the fundamental parameters of a Senate deal are in place. We're waiting to see what the final move of the House will be some time this afternoon.

BLITZER: When do you think that there could be -- let's say the House doesn't act because maybe he doesn't have enough votes even among his conservative coalition, John Boehner, to get it passed. They think it's too modest, if you will.

The White House rejects it outright because it links various aspects of ObamaCare to this current issue of closing the government, or at least partial government shutdown, raising the debt ceiling.

You're -- you would support what Susan Collins and the others have come forward with. Would it get 70 votes, 80 votes? It looks like it's got strong bipartisan support in the Senate.

ISAKSON: I think it would. And it does have some parameters of ObamaCare. It doesn't change the program, but it puts in credibility on the subsidies that are offered, income verification and deals with the device tax.

There's a lot of support for it. Seventy votes is certainly within the realm of possibility.

BLITZER: The device tax thing, I thought, was taken out of the latest version of the Senate legislation. Are you saying that's back in?

ISAKSON: No, I'm not saying it's back in. It was a part of the original discussion. I think income verification for subsidy purposes is definitely going to be in.

BLITZER: Yeah, I think that's something the White House may be ready to accept. I'm not sure they're ready to accept the delay for two years of that medical tax device.

So looking back on this whole awful 15-day experience and two days away if that from a government -- potential government default, where do you put most of the blame?

ISAKSON: Well, I've never been a blame type of guy and there's plenty of blame to go around in Washington right now.

Obviously, there's been some problems on the Republican side, but today with the Democrats castigating John Boehner for actually coming forward with a deal, now is the time we shouldn't point fingers.

Now is the time we should look for the 80 percent of the areas where we agree. Let's make a deal. Let's don't fight over the remaining 20 that are still out there.