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Government Shutdown; Investors Worry About Shutdown; Federal Government Shutdown Looms

Aired September 30, 2013 - 12:00   ET

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

SUZANNE MALVEAUX, CNN ANCHOR: Parks will close, federal museums, including the Smithsonian in Washington, will shut down. Hundreds of thousands of federal workers will be off the job. That is just for starters.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Words fail me, really. We've got ourselves in this kind of position where we can't -- we can't compromise to the point we've got to the shut the government down.

(END VIDEO CLIP)

MALVEAUX: But we are at that point. Welcome to CNN NEWSROOM. I'm Suzanne Malveaux.

MICHAEL HOLMES, CNN ANCHOR: And I'm Michael Holmes. Thanks for your company today.

Well, brace yourselves, believe it or not, that government shutdown does start to appear now as inevitable. The deadline for Congress to pass a budget now less than 12 hours away.

MALVEAUX: So we're talking at one minute past midnight, large sections of the government going to start likely shutting down, closing their doors. Hundreds of thousands of workers are going to be furloughed. Now, we've got reporters on all angles of the story. Dana Bash on Capitol Hill, where the political blame game, of course, intensifying, Christine Romans, focusing on how the shutdown could affect you directly, and Zain Asher, she's at the New York Stock Exchange, where the markets are already, already reacting.

Let's first bring in Dana.

And, Dana, the Senate is expected to reject a spending plan passed by House Republicans that would delay Obamacare for a year. So is that the point of no return? Are we heading down this path?

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Yes. It looks like there is -- it's looking a lot more likely that the government will shut down for even a little bit. And here's why. I was just talking to some Republican sources who, by the way, are going to meet -- House Republicans are going to meet at 2:00, so in two hours, to figure out their next move in this chess game. And I am told that a leading option for them to respond with isn't a clean bill, isn't a bill that Senate Democrats and the president are demanding, which is fund the government no strings attached, but perhaps to attach something else delaying Obamacare, and that is the leading option I'm told by Republican sources is to delay the individual mandate inside Obamacare for one year. That, of course, is going to be a nonstarter, just like the other ways that they've tried to change, either defund or what we're going to see now, the active bill that's going to be in the Senate, which is delay Obamacare entirely for a year, repeal the medical device tax. Democrats down there in the Senate insist all of this is a nonstarter.

Now, Suzanne, you hear Republicans talking about the fact that they -- they're not shutting down the government. It's the Democrats because they won't negotiate. It is true that if Republicans just got a win, any win, then they could give in and they could allow this to go through. But Democratic sources I've talked to say this is just a temporary bill funding the government and they simply will not negotiate now because if they give in on anything now, they're going to be in a bad negotiating position down the road when we get to big things like the debt ceiling. But for now, the ball is in the Senate's court and John Boehner made a big deal on the House floor today out of saying that the Senate isn't even in. They didn't come to work yesterday and they're not even coming to work until 2:00 today to run out the clock.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), HOUSE SPEAKER: The Senate decided not to work yesterday. Well, my goodness, if there's such an emergency, where are they? It's time for the Senate to listen to the American people, just like the House has listened to the American people, and to pass a one- year delay of Obamacare and a permanent repeal of the medical device tax.

(END VIDEO CLIP)

BASH: So, again, just to be clear, the Senate is going to come in and vote shortly after they get into session in about two hours. Then the ball is going to be back in the House Republicans' court. They're going to meet to finalize their next move in a couple of hours as well. And I'm told that it looks like, at this point, they're not going to send up back anything that the Senate Democrats will agree to. And that does put us on a collision course with this government shutdown deadline.

Suzanne.

MALVEAUX: All right, Dana.

HOLMES: OK. Yes, extraordinary situation.

The battle over the budget, of course, having many people wondering how a government shutdown could impact them.

MALVEAUX: Christine Romans shows us what is at stake, why all the uncertainty. I mean it is a rather scary situation and people are responding to fear, especially this time of year. (BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN BUSINESS ANCHOR (voice-over): A month before this --

KIDS: Trick or treat.

ROMANS: These children are brewing up a scary reality in Washington. Call it "budget hell-oween."

Here's a guide to the horror unfolding in Washington. The sequester, forced budget cuts have been squeezing agency budgets and sending home some federal workers all year. It's also been a drag on the economy according to the Congressional Budget Office. That is already happening. What could happen, a government shutdown. That begins midnight, October 1st, unless Congress passes a spending bill.

The scary politics on this is changing by the hour. Already, furlough notices are being prepared for hundreds of thousands of workers who will be sent home without pay. Critical employees who do work, they won't be paid right away. They'll have to wait until this mess is settled.

In a shutdown, airports stay open. So do banks. The mail is delivered. Social Security checks go out. The border is protected and the power grid supports. But military pay could be delayed.

But there's an even more fright ling date on the calendar, October 17th, the day that could lead to a debt default. It's the date this guy, the Treasury secretary, says the government could run out of cash. That's why the next budget horror is so dangerous. In jeopardy, all the bills coming due for Social Security checks, military pay and interest on the money America owes.

Every day the government has to pay its bills. Some days those can add up to $60 billion. But the Treasury is only expecting to have about $30 billion on hand October 17th. That math just doesn't work. Somebody won't get paid. If the U.S. defaults on its debt, any of its debt, interest rates could spike and stocks could tumble. That could be scary.

(END VIDEOTAPE)

ROMANS: We have had government shutdowns before. That is something we know. But we have never, ever defaulted on the obligations of the United States Treasury. Treasury Secretary Jack Lew says if we did, the results could be catastrophic you guys.

HOLMES: And big picture, Christine, when it comes to confidence, and that's what the markets really operate on is confidence and security, you know, even if they kick the proverbial can down the road, the very denied and much muddied and sullied can that has been battered already, kick it down the road again, that really doesn't help with confidence, does it, because here we go again?

ROMANS: No, it doesn't. And, you know, it's one of the reasons why we -- in the piece we talk about the sequester and then a budget shutdown and then the debt ceiling. These things have all, I think in the public's mind, started to blend together. They are all separate but related examples of Washington failing. I mean this is business as usual that we're not - we're just not able to keep the car on the road here. And that is a real, real problem. Kicking the can down the road does not go any farther to solving this.

And you know what is interesting you guys, at the root of all of this is, many people in the House in particular are very concerned about debt and deficits. If we were to go over the debt ceiling, it could spike our interest rates and dramatically increase our debt and deficits. So the very thing they want to avoid and they're against could end up happening if this isn't handled properly.

HOLMES: All politics. Christine, thanks so much.

ROMANS: Politics.

HOLMES: Christine's going to be back with us, by the way, to tell us all about the new health care program. Opening enrollment for Obamacare, of course, does start tomorrow.

MALVEAUX: And that's at the heart of the debate. At least some Republicans are putting it that way.

HOLMES: Yes.

MALVEAUX: And you can see more details on the government shutdown from national parks and museums, to government offices, military facilities. Just go to our interactive site. This is cnn.com. A full list of what is going to be closed, what's going to remain open and how you can handle this. It's going to be a difficult time.

HOLMES: Yes. And when we talk about sentiment and security and insecurity and uncertainty, Wall Street, investors keeping a keen eye on Capitol Hill.

MALVEAUX: At the opening bell, stocks tumbling ahead of a possible government shutdown with just 12 hours to go, less than 12 hour. Economists now warning a shutdown would do more than just rattle the markets.

HOLMES: Let's bring in Zain Asher at the New York Stock Exchange.

Zain, tell us about how the markets are looking now, because we saw Europe tumble, we saw Asia tumble. This goes outside of Wall Street.

ZAIN ASHER, CNN CORRESPONDENT: Right. Right. Yes, and you know what's interesting is that we are actually a lot better than we were this morning. At one point this morning the Dow was down about 170 points. Now we've dipped about 100. And just checking now, 110 points.

But either way, guys, this is going to be very interesting to watch. We know that the market hates uncertainty. But this hasn't come out of nowhere, right? So stocks have been taking a hit for the past few days. The Dow fell 1 percent last week. There's so many unanswered questions. The first question, of course, on everybody's mind right now is, will the government shut down? By the way, a lot of traders I spoke to downstairs are surprisingly optimistic. They are hoping that Washington will come to its senses last minute and pull us back from the ledge.

Second question, which is equally important, I think, is that if there is a shutdown, how long will it last? Citigroup analysts estimate that a one-week shutdown will reduce quarterly economic growth by 0.1 percent.

But the good news, guys, is that if you look at previous shutdowns, the effect on stocks has actually been short-lived. The difference this time is that these are stormy times. Christine Romans talked about it a second ago. The debt ceiling deadline, you've got that in two weeks. You've got the Fed meeting coming up. And also, we're about to go into third quarter earnings season as well.

Guys.

MALVEAUX: Zain real -- two quick questions here. First of all, the People you talk to downstairs, why are they optimistic? Why do they think this could be avoided? And, secondly, are we going to see any difference in the jobs report out due Friday? Could that possibly be delayed?

ASHER: Right. So in terms of people I spoke to downstairs, I mean I think the idea is that they've grown emotionally numb to stalemate in Washington. They're sort of used to this. And they're hoping that, you know, Washington will come to its senses, as I mentioned.

In terms of the jobs report, the answer about the jobs report coming out on Friday is possibly. We're not sure yet. The Bureau of Labor Statistics that issues the report, they're saying that all survey and program operations will stop if the government shuts down and its website won't be updated. So on the one hand it sounds like there won't be a jobs report. However, on the other hand, quickly, is that since the data has already been collected, there is a chance the jobs report may still come out if the White House authorizes it.

Guys.

MALVEAUX: All right, Zain, thank you very much.

ASHER: You're welcome.

MALVEAUX: And, you know, Michael, I covered a government shutdown back in the Clinton years and it was different back then. The economy was a lot more stable.

HOLMES: Booming economy in many ways.

MALVEAUX: They already had appropriations bills that had been passed before. There was a sense that they could afford this. This is not the time.

HOLMES: Uh-huh, this is a vastly different economy and the impacts are going to be very different to back then. You're absolutely right.

All right, more of what we're working on this hour. There's plenty to talk about.

Forty-eight million American who's don't have health insurance begin enrolling tomorrow as part of Obamacare.

MALVEAUX: We're going to take a look at how the government's new health care exchanges are actually going to work.

And just days after the president held a historic phone call with Iran's new president, Israel's prime minister, Benjamin Netanyahu, is visiting the White House.

HOLMES: And he's pretty cynical about the relationship the U.S. hopes to have with Iran's new government. He sees things differently.

Also, we are talking about the likely government shutdown throughout this hour.

MALVEAUX: We're going to speak with a House Republican from Texas about why he thinks it's worth risking a shutdown to delay Obamacare.

(COMMERCIAL BREAK)

HOLMES: Welcome back.

Well, with the clock ticking down to the start of that government shutdown, there is an uptick in the level of frustration that many Americans feel towards lawmakers. Can you blame them? Obamacare now is at the core of the impasse in Washington, or at least the associating of Obamacare with the budget. Some CNN i-Reporters have been weighing in on both sides of this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It's easy to view everyone who was hopeful for Obamacare as, you know, takers or loafers or looking for a free ride. And, you know, the great majority of us are nothing that even resembles that. You know, we just want health insurance. We want to be able to take care of our family. We want to be able to take care of ourselves, not at the expense of our entire financial stability.

UNIDENTIFIED MALE: Because part-time equals no health insurance. And come January, me and millions of other Americans are going to be forced to do and to pay for Obamacare? I don't think so. Obamacare is unconstitutional and needs to be overturned. And maybe it's going to take my voice and millions of others to do that. And if that's what it's going to take, then so be it.

(END VIDEO CLIP)

MALVEAUX: House Republicans and tea party-backed senators say they're only going to vote to keep the government open if ObamaCare is defunded or delayed.

But even if the government shuts down, the president's health care program will kick off tomorrow as planned.

Want to bring in Christine Romans, back from New York with us.

So, Christine, first of all, explain to us to us how ObamaCare still goes forward, still happens, even if we are possibly facing a government shutdown.

ROMANS: Because this is considered mandatory spending.

I mean, health care is funded by taxes, fees and other mandatory spending. In fact, some say the implementation of ObamaCare even keeps going, keeps going even in a shutdown.

The exchanges launch tomorrow, the exchanges where you can buy health care, Healthcare.gov is that website.

Let me explain what it is that you'll be able to see on these exchanges tomorrow. Four tiers of health insurance levels plan. Low- cost catastrophic option for people under 30, the bronze plan covers 60 percent of your costs, all the up to 90 percent for the platinum plan.

So let's dig into the bronze-level coverage. Your premiums are probably going to be lower. You're not going to pay a lot up front, but your co-pays and your deductibles will be higher.

Platinum, that's the opposite, high premiums but lower co-pays and deductibles. It depends on whether you want to the money first or you want to pay the money later, what level of coverage you want.

Now, depending on your income, the government may pick up some of the cost. If you're a single person making less than $46,000, if you're a family of four making about $94,000, you will likely qualify for a subsidy, a subsidy from the government.

Prices also will depend on where you live and how old you are. What shouldn't matter, a pre-existing condition. No higher premium if you get sick. No denial of coverage if you're sick. No fees for preventive care like vaccinations, mammograms, colonoscopies.

Open enrollment starts tomorrow, but you have till March 31st to sign up. You have to buy a plan by December 14th if you want your coverage to kick in on January 1st.

That's just the nuts and bolts of what will be rolling out tomorrow.

MALVEAUX: So, thank god, Christine, you're explaining all this because a lot of people, this poll from the Kaiser Family Foundation says, almost two-thirds of the public, including 75 percent of the uninsured, they don't know that ObamaCare is going to kick in tomorrow, and they could be fined if they don't actually go forward and pay for their insurance.

So how does this work? I mean, are they actually going to get fined?

ROMANS: Yeah, they're going to get fined. You're going to be fined if you don't have health insurance by the deadline.

And how do they get it? They collect it through your tax return. You could see the penalty subtracted from your income tax refund, or you might get a nasty letter from the IRS.

Now the IRS has not been given aggressive power to go after people who don't pay. The law specifically does not allow jail as a penalty, but it is a fine.

And the fine, Suzanne, is going to get higher over the next four years to try to coax people into the system.

MALVEAUX: So it pays off to pay attention.

Christine Romans, thank you very much.

ROMANS: You're welcome.

MALVEAUX: Appreciate it.

HOLMES: And starting tomorrow, our very own Dr. Sanjay Gupta, hitting the road with the CNN Express, traveling the country to see how the ObamaCare signup really, works, what problems crop up along the way, and he's going to answer all your questions and make sure you understand what is really going on with your healthcare.

MALVEAUX: Israel's prime minister, Benjamin Netanyahu, talks with President Obama at the White House.

Hear why he is skeptical about the new relationship that the president is forming with Iran's president.

(COMMERCIAL BREAK)

HOLMES: Welcome back.

So what's so hard about all of this? That seems to be the takeaway from a lot of people trying to understand why Congress can't reach a deal to avoid shutting down the government.

MALVEAUX: And John King is breaking down the numbers from this new poll. Check this out.

(BEGIN VIDEO TAPE)

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: First and foremost, there is no question that the American people think this is a bad idea, to have that shutdown clock run to zero.

Look, seven-in-10 Americans, 68 percent, say it would be a bad thing to shut the government down for a few days.

What about the prospect of a shutdown that ran on longer, for a few weeks. Hard to get eight-in-10 Americans to agree on any political question, but they agree on this, a bad thing to shut the government down for more than a few weeks. However, we should note. These are national numbers. Remember the old adage that all politics are local? Forty-to-50 of the most conservative House members, four or five of the most conservative senators are pushing this strategy for the Republican Party. They think they're on safe ground back home.

Fifty-six percent of tea party supporters say it's a good thing to shut down the government. That is why some of those conservatives are not afraid to go to brink right here.

However, if we come back to the national numbers, if this happens, who would the American people think is most responsible. Thirty-six percent say the president would be responsible, but nearly half say Republicans would be responsible and 13 percent say both.

So the president on safer ground at the moment on the question of responsibility. This is interesting, though, again. How you vote impacts what you think of this political brinkmanship.

If you're a Democrat, you overwhelmingly blame Republicans in Congress. If you're a Republican, you overwhelmingly blame the president.

But independent voters, evenly divided on this question of who is responsible. That tells you the president has a sales case to make to the middle of the electorate, if you will, as this debate goes on.

Now some Republicans say we're on safe ground here because the American people don't like the president's healthcare law, and it's true. Our new poll shows 57 percent, nearly six-in-10 Americans oppose ObamaCare.

However, this is a critical distinction. Break that number down. Eleven percent of those who oppose the president's healthcare law, oppose it because they think it didn't go far enough. They wanted a single-payer system or they wanted more government involvement.

So that is a critical point as Republicans say, hey, the American people oppose this law. Some oppose it not for the reasons Republicans cite.

What's the fundamental question of this debate right now, as that clock ticks down? What's most important for the Congress to do? Avoid a government shutdown or block parts of the healthcare law?

Six-in-10 Americans say it's more important to avoid the government shutdown. That number speaks for itself.

(END VIDEOTAPE)

MALVEAUX: So a majority of Americans say the most important priority right now is keeping the government open.

But Republicans in the House, they don't necessarily see it that way. They say that, ObamaCare, that is the priority that has got to go or at least be delayed. HOLMES: Yeah, our guest is one of those conservative voices. Congressman John Culberson is a Republican from Texas, also a member of the House appropriations committee. Thanks for being with us.

Just, I think a lot of people, certainly people I've spoken to, want to know this. ObamaCare has in one way or another been voted on dozens of times, 40 times I think in the House, either to overturn or defund it.

Why should it be now that it's attached to funding the government? Why have another go at something that has been in law for three years? An election was held with it as the centerpiece.

Why bring down or shut down the government over something that has been dealt with time and time and time again?

REPRESENTATIVE JOHN CULBERSON (R), TEXAS: I would ask you to step back for a moment and look at this objectively. and don't assume that it is the Republicans shutting down the government or that that is our goal.

I serve on the appropriations committee, I chair the military construction and V.A. subcommittee, and we passed that bill out of the House on June 6th.

So the Senate has had for over 90 days the bill to fund the military. They also got the bill to fully fund the Pentagon from the House about 90 days ago.

We also passed homeland security over 90 days ago. We passed the appropriations bill for energy and water over 90 days ago.

And the Senate didn't even come into session yesterday.

HOLMES: But ObamaCare is still attached to this budget bill. That's the question. Why again?

CULBERSON: Well, because we -- we are only in control of one-half of one-third of the government. My job description is representative, and my constituents, the people of Texas, are adamantly opposed to this massive intrusion into our private lives.

We do not want the federal government socializing health care as they have in England and in France. And the Senate has had plenty of time to keep the government open.

This is not about -- step back for a minute. This is one of the most -- the right to be left alone as Americans is probably our most important right. That right of privacy, that right to be left alone, to let Texans run Texas, for example, that is sacred to us.

And this is a decisive moment. This is our best opportunity, the most powerful leverage we've got is with the appropriations bill.

But the Senate has had the key ones, military, homeland security.

MALVEAUX: All right. CULBERSON: They've had them for over 90 days and they're just sitting on them.

MALVEAUX: Congressman, you do say that it's your right to be left alone, but there are people are going to suffer because of this.

And just "USA Today" compiling these numbers, the V.A., for instance, you say, of course, that you support the veterans, but they're going to run out of money. This is more than 3.6 million veterans' checks, if this shutdown continues into October.

Not only that, you're going to talk about administrative costs of the Supplemental Nutrition Program for women and children if it goes longer than a couple weeks. That too will be delayed.

There will be middle class who will suffer as a result.

CULBERSON: I would encourage you again to step back and look at the facts. We've given the Senate the key appropriations bills over 90 days ago. Veterans benefits are funded a year in advance.

So there will be no effect on veterans even if the government shuts down. There will be no effect on social security if the government shuts down.

There will be no effect on Medicare if the government shuts down because those mandatory automatic programs continue.

The employees who administer a mandatory program are automatically considered essential, so they will be at work.

Social security checks will flow. Medicare checks will flow. Veterans benefits checks will flow, again, because they're funded a year in advance.

And the Senate, again, has had 90 days, over 90 days, to take care of this. And this is a matter of core principle.

Are we going to surrender our most fundamental right as Americans to be left alone, our right of privacy? Turn over all private information to the IRS?

I mean, to these incompetent navigators, all our stuff is going to be hacked out there on the Internet?

This is a matter of core principle. My constituents are furious about it.

HOLMES: Congressman, appreciate it. You make a point very clearly. Congressman John Culberson, joining us there, appreciate that, Republican member from Texas.

MALVEAUX: There are going to be a lot of people who are going to be furloughed. There are going to be a lot of people who are suffering.

There are a lot of people who are not going to be showing up at work. They're not going to be paid on time. It's just not accurate to say people won't be impacted by this.

HOLMES: We didn't really get an answer to that issue. This has been voted on 40 times in the past and attaching it to the budget really affects a lot of people.

MALVEAUX: We got a new poll that shows that -- who Americans are going to blame the most if we have a government shutdown.

We're going to break down those numbers for you, up next.

(COMMERCIAL BREAK)