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American Morning: Wake Up Call
No Vote Yet on Boehner Debt Plan; Bank: Stocks, GOP Suffer In Default; Will I Get My Social Security Check
Aired July 29, 2011 - 05:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALI VELSHI, CNN ANCHOR: Good morning. It is Friday, July 2nd (sic). This is your A.M.: WAKE-UP CALL.
I'm Ali Velshi, joining you live from New York this morning.
Yes, about the debt deal vote I told you about 24 hours ago, it didn't happen. Sorry. Congress made a liar out of me.
Honestly, I have no idea what's going to happen in Washington today. There could be a vote unless there isn't a vote. And the House might pass a bill that meets a quick demise in the Senate.
I do know that the Tuesday deadline to raise the debt ceiling remains in place. It's right around the corner.
Here is the current U.S. debt ceiling. It is $14.3 trillion. We hit it in May. If lawmakers don't get a deal done, you might be rewarded with higher interest rates, a tanking dollar and a hit to your 401(k).
The House Republican Caucus has a scheduled meeting in about five hours. Listen to how far apart Republicans, other Republicans and Democrats are each other
This is from "ANDERSON COOPER 360" late last night. You're about to hear from Republican Congressman Joe Walsh.
But, first, Minority Whip Steny Hoyer:
(BEGIN VIDEO CLIPS)
REP. STENY HOYER (D-MD), MINORITY WHIP: Even within their own party, it is deeply factionalized, deeply divided party -- divided against their leadership, angry at their leadership, and a party that has divided itself, has difficulty working with the president or working with us. And that's unfortunate, and the country is the poorer for it.
REP. JOE WALSH (R), ILLINOIS: I don't buy this notion of d default. To me, that's a false choice. Default means you can't service your debt, you can't pay off your debt, Anderson, and there's plenty of government revenues to do that.
One of the things that's been harmful in this debate is there's been this obsession with August 2nd, August 2nd. We need to get this right. We need a balanced budget amendment. If it takes us a few days more to make sure we get it right, let's do it.
(END VIDEO CLIPS)
VELSHI: So, Congressman Walsh doesn't sound too worried. Maybe he hasn't read the new reports, say, from Credit Suisse which says if the U.S. eventually defaults on its payments stocks could fall 30 percent in the next year and the economy could contract 5 percent over the same period. And every month that there's a stalemate, 1 percent comes off the U.S. gross domestic product, the GDP.
Happy Friday.
On the upside, by the way, Credit Suisse says there's less than a 1 percent chance that the default scenario actually happens.
But what if it does happen? The president has suggested that the August Social Security checks might not go out. Many senior citizens depend on them for 90 percent or more of their income.
Not everyone agrees that those checks are hanging in the balance however. CNN Money points out that Social Security has an enormous trust fund and that the Social Security Act requires the fund and payroll taxes to be used to pay those benefits.
Medicare and Medicaid represent another huge bill. The Treasury has to pay out several billion dollars for those programs next week and they represent some of the biggest payments.
And a debt default doomsday could mean students who took out or will take out private loans to cover their education will pay higher interest rates.
Executives from some 20 major banks are meeting with Treasury officials today and it's a fair bet to say the debt issue will be a major topic on their agenda.
Let's check on how the world markets are doing right now. The Nikkei and Hang Seng both closed down a short time ago. The FTSE and DAX are down at this hour.
Let's go to Kristie Lu Stout. She is live in Hong Kong right now, watching those world markets.
What's the big headline this morning, Kristie?
KRISTIE LU STOUT, CNN INTERNATIONAL ANCHOR: The U.S. debt deadlock -- no surprise here -- it's weighing on global investors. It is literally all arrows down across the globe.
Now, here in Asia, the Nikkei fell about seven-tenths of 1 percent. (INAUDIBLE) didn't help. And the yen, as you've been saying all along, seen as a safe haven, continues to rise, given fears of a U.S. default.
Now, meanwhile stocks in Europe are also declining. Europe is battling its own debt crisis. Moody's has placed Spain's AA2 government bonds on review for possible downgrade. It says funding pressures and weak growth opportunities were behind that decision.
Ali, back to you in New York.
VELSHI: Kristie, we always worry when we get into a weekend and we are heading into a deadline, that we don't have one -- we don't have a deal here. That's going to start touching Asian markets more quickly than it's going to touch U.S. markets on Monday.
What's the reaction to the U.S. not having a deal so far?
STOUT: Well, let's look at the political reaction out of China, the largest foreign holder of U.S. financial assets. Now, Chinese leaders, they're not just worried, they're angry.
Stephen Roach of Morgan Stanley Asia, he speaks regularly with Chinese leaders and he's been telling CNN that Chinese leaders are appalled and that they think that America's behavior could create havoc in the global economy.
Meanwhile, the Chinese news agency Xinhua recently released a strongly-worded op-ed saying this, quote, "The wellbeing of many other countries is also in the impact zone." That's referring to other foreign holders of U.S. debt, including Japan.
So, Ali, there's a lot of fear, there's a lot of anger here in Asia.
VELSHI: All right. Kristie, we'll keep in touch with you on this. Kristie Lu Stout, joining us live from Hong Kong this morning.
Just how bad are we -- how bad off are we, the United states, when it comes to the nation's debt?
Team Coco has some ideas.
(BEGIN VIDEO CLIPS)
CONAN O'BRIEN, "CONAN": Our government is days away from being broke.
Congress's latest plan is to se how much cash they can get for John McCain on antiques road show.
Thirty-three soldiers from the Mexican army were allowed to return to Mexico yesterday after they excellently crossed the border into America? Did you hear about that? That's right, folks, think about it. Things have gotten so bad in this country that people are only crossing the border now by accident.
According to a recent survey, this year kids are receiving an average of 40 cents less under their pillows from the tooth fairy. Yes, the economy is so bad even make-bee believe people are feeling the pinch.
(END VIDEO CLIPS)
VELSHI: All right. Let's go to meteorologist Alexandra Steele, live from Atlanta. Alexandra is watching tropical storm Don, which could hit Texas by tonight.
Alexandra, what's it looking like?
ALEXANDRA STEELE, AMS METEOROLOGIST: Hi. Good morning.
You know, this is the first tropical storm to impact the U.S., the fourth named storm of the season. So, let's show you where it is. This is in the Gulf of Mexico, getting better organized. Right now, winds at 50 miles per hour. And you can see we are seeing gusts to 65 miles per hour. It is moving west-northwest, with its sight set on south central Texas, moving at 13 miles per hour.
But here's what we're going to see in terms of the forecast track. Again, you heard Ali just say expectation is landfall late tonight or early tomorrow morning, should not, though, come ashore as a hurricane -- shouldn't make hurricane status at all. Its wind should stay in the 50s to low 60-mile-per-hour range.
You can see what we're going to watch. Late fall late tonight, early tomorrow, some slight strengthening is expected. It has gotten a lot better organized today than it did yesterday. What we are going to see, though, is tropical storm force winds extend out about 10 miles from the center of the core of circulation.
On the average, rain, three to five inches all the way to south central Texas, isolated seven inches. But, Ali, this area is in such a desperate drought they need 15 inches of rain. So, it certainly will be beneficial.
What we really would hope for -- it's a small type circulation. Expectation is it will stay small, but what they need as a state is a big expansive system that moves pretty quickly so it brings the beneficial rain but the flooding is really kept at bay.
VELSHI: All right. And, Alexandra, what are we looking at in terms of flight delays this morning?
STEELE: All right. Well, we got a few things. We do have some thunderstorms in Chicago, also Detroit -- areas that have seen these thunderstorms day after day, again today and tonight.
We will see delays in Chicago, also in Detroit. The San Francisco, morning fog.
But a big story also we could talk about later in the morning: the heat. Mid-Atlantic, 100-degree heat, Richmond, Virginia, Washington, D.C., intense heat, record heat -- we're flirting with 100, 101 d degree degrees, breaking temperatures from 1800s.
So, Ali, we'll talk about, touch on that a little bit later on the morning.
VELSHI: Alexandra, we'll check with you later. Thank you so much.
STEELE: Sure.
VELSHI: Hey, our quote of the day is about the debt ceiling -- surprise, surprise. Quote, "Washington may be broken, but it will not break me." Find out which newsmaker said this about the debt ceiling debate.
But before you go, your voice needs to be heard in this debt debate. So, throughout the hour, we're going to hear from you, my viewers.
Here is Vernon Hill.
(BEGIN VIDEO CLIP)
VERNON HILL, IREPORTER: The United States of America is about to go broke. We're about to lose our credit ratings. The people of the world are looking at us and wondering what the hell is going on with the greatest nation in the world.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
VELSHI: It's 11 minutes after the hour.
Now, back to our quote of the day on the debt ceiling: "Washington may be broken, but it will not break me."
That was Democratic Senator Joe Manchin. He is against the Republican House plan, as well as the Democratic plan in the Senate. What plan does he want to vote for?
Time for your morning punch line on the debt debate. Comedian Jay Leno gets very candid about the players in Washington.
(BEGIN VIDEO CLIP)
JAY LENO, "THE TONIGHT SHIOW WITH JAY LENO": I don't understand. The Republicans have cut, cap, and balance. That's no good. Of course, the Democrats have their plan, duck and cover. That doesn't work either.
And House Speaker John Boehner urging Republicans to support his bill by telling them to get their asses in line. That's what he said. Get their asses in line. This is typical Washington. If it's not Obama kissing Wall Street's ass, it's Boehner kicking ass, or it's Congressman David Wu grabbing ass. OK? It's all -- they're a bunch of asses. That's the trouble.
(END VIDEO CLIP)
VELSHI: Time now for your Political Ticker with Tim Farley, host of "Morning Briefing" on Sirius XM POTUS, live from Washington.
Tim, you know, I woke up this morning and tweeted it's like Groundhog Day.
TIM FARLEY, "MORNING BRIEFING," SIRIUS XM POTUS: I know exactly what you're saying. My favorite quote, Ali, is Jennifer Robin (ph), who blogs and writes "The Washington Post." "The House aide just emailed me buckets of crazy." That's pretty much the way it's been characterized.
The vote was postponed yesterday. There's a meeting as you mentioned earlier of the Republican conference this morning. There will be a vote at some point today, we anticipate, although maybe not.
Here we are just a few days away from what will be a default. And as you made the point so well this week, is default and downgrade. And downgrade looks even more likely the way that things are playing out.
I talked to Senator Mike Crapo yesterday on the air. He was one of the "gang of six." And he says, you know, the Senate can move pretty quickly on this. They can do unanimous consent. The question is what they'll move quickly on.
So, we wait to se what happens in the House today. We wait to see what happens in the Senate because both the House and the Senate will be in session all weekend so they can move quickly and -- I know, hard to believe -- they can do this, to get something done.
VELSHI: This is the key point. That there's -- the Boehner plan -- Boehner's working to get his folks behind him to get the votes to pass that in the House. But that may not be the plan the Senate is interested in. There's another plan in the Senate that the House doesn't seem to like.
So, they're going to be working through the weekend. But we're actually -- the one advantage we've got over last weekend is we've got solid plans on the table. But we don't have agreement on those plans.
FARLEY: No, and we could have just a simple, one page agreement. That is something that's been done in the past. And whatever gets to the president's desk, I have maintained all along and I maybe alone in this, he will sign, because it may not be the most optimum outcome, but it is preferable to have a debt ceiling raised as to whatever might result from not raising the debt ceiling.
VELSHI: He's going to -- he may have to sign it like this, closing his nose.
FARLEY: Or use the auto pen.
VELSHI: The auto pen. That's it. That might happen.
All right. Tim, have a good show this morning. Good to see you.
FARLEY: Thanks, Ali.
VELSHI: Tim Farley, host of Sirius XM "Morning Briefing" on radio.
An AWOL Muslim Army private is jailed this morning, suspected of plotting the murders of Fort Hood soldiers. Authorities say Private First-Class Naser Abdo was arrested with enough materials to make two bombs.
Law enforcement sources tell CNN they also found gun powder, gun shells and Islamic extremist literature in his hotel room.
And a tip from a g un store employee helped lead to Abdo's arrest. You'll remember Fort Hood, by the way, is where the shooting spree left 13 people dead nearly two years ago.
A close call for a pilot of an F-16 fighter jet attempting to land in Wisconsin.
Take a look at this. As you can see, the pilot is making what appears to be a routine landing when something goes wrong. The jet ended up crash landing off the runway and stopped in some grass. The pilot managed to walk away. The mishap is under investigation.
A former astronaut who made headlines for going her cross country drive wearing diapers and a disguised has now been forced to retire from the Navy within other than honorable discharged. Prosecutors accused Captain Lisa Nowak of driving nearly 900 miles from Houston to Orlando to confront a colleague she believed was dating her former love interest.
Prosecutors say Nowak wore NASA diapers driving the drive to cut down on the number of stops. In a statement, the assistant secretary of the Navy said Captain Nowak's conduct fell well short of that expected of senior officers.
Talk of the debt in the elevator today or at least just talk to yourself because July 29th is National Talk in an Elevator Day.
Don't be shy. You know you ride up the elevator with the same person every day. Ask them where they're from, what they do, what floor they work on.
We also want to make sure your voice is heard in the debt debate. RSPeters7 posted comment on CNN.com. Quote, "When I was a small boy, I used to think we had the greatest country in the world. At this time of our history, we are a mockery of global economy and politics. We can't seem to work together any more. Why does it take something catastrophic like 9/11 to make us come together as a nation?"
That's a good question.
Seventeen minutes after the hour.
(COMMERCIAL BREAK)
VELSHI: Twenty minutes after the hour.
Here are three things that you have to have on your radar today:
Tropical storm Don could reach the Texas coast by midnight by tonight. It's expected to bring heavy rain falls to the state. Texas is suffering from its third worst drought in recorded history.
President Obama is set to announce new fuel economy standards for cars and trucks today because he doesn't have anything else to do. We're expecting the proposal to call for all vehicles sold in 2025 to average roughly 54.5 miles per gallon.
And we're watching the latest from Capitol Hill as House Speaker Boehner tries to muster enough votes to pass his debt plan. CNN will bring you extensive coverage throughout the day.
All right. Let's talk about that debt ceiling. The deadline is just days away. If August 2nd comes and goes without a deal, who will get paid and who won't? That's the $14.3 trillion question. This is unchartered territory.
Here is our chief national correspondent John King.
(BEGIN VIDEO CLIP)
JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: There's a funny date on the calendar called August 2nd at which something bad is going to happen. Are they exaggerating how bad? Who knows? We've never done that before.
But something bad is going to happen and it could cost somebody, probably not a Social Security check. But it might cost some family whose son or daughter, husband or wife, who is in Iraq and Afghanistan, might cost them their check if we get three or four or five or six days past August 2nd.
(END VIDEO CLIP)
VELSHI: As John says, we don't really know what's going to happen.
Consequences could hit your home, your neighborhood, your city, your country, your world. It's like dominos. If the U.S. defaults, the country's credit rating could be downgraded, driving the cost of government borrowing higher. That is likely to trickle down and everybody would pay higher interest rates, higher mortgage rates for those with a fixed rate, a bigger credit card bill. It could spook companies leading to job losses and the stock market could take a big hit. Other than that, probably no problems.
Right now, these are all ifs. The world is watching. We've got to get our stuff together.
Let's go around the world with Zain Verjee from London.
Zain, a Libya rebel commander has been found dead along with two senior rebel officials. What's the latest?
ZAIN VERJEE, CNN INTERNATIONAL ANCHOR: His name is Abdul Fatah Younis. And he was assassinated in Benghazi, which is the rebel stronghold and the center in the eastern part of Libya.
This is a really significant development and could be a major blow to the rebels. But it's really unclear who killed him. Was it Moammar Gadhafi's forces, or was it the rebels, many of which who don't like him are responsible for his death?
The circumstances are really not clear. One version that we're hearing that we understand is that Younis, the general, was actually on his way to meet with some kind of a panel of judges because they wanted to question him about military strategy and concerns and some military concerns. The rebels, though, have been making some strategic advances. They've seized some important town.
But there were questions about how Younis was conducting military matters. But this is really significant development because this guy was pretty crucial to the rebels -- Ali.
VELSHI: Now, he's crucial. But, you know, these rebels were not a standing force before all of these problems started up. What was his standing? Did the guys in his group trust him?
Well, you know, there was a lot of internal rivalry and is with the rebels, particularly in the top echelons. Younis was one general. And he was pretty much in a standoff with another top general, too. So, the rebels have been divided.
And because he was Gadhafi's interior minister for a long time and even helped Gadhafi come to power back in 1969, he was also responsible for cracking down on a lot of dissidents in Libya.
So they just didn't trust him. So it's unclear whether the rebels themselves may have taken him out, the faction that didn't want him and didn't like him -- Ali.
VELSHI: All right. It continues to be complicated.
Hey, what's the latest, Zain? I know you're following Amy Winehouse. Her "Back in Black" is selling out everywhere. It's become the number one in a lot of places.
VERJEE: Yes. Yes. It is sky rocketing. It's just make its way back up to number one. What a lot of people are saying, too, is she laid down some kind of "Bare Bones" tracks as well for a third album that she had been working on for a long time, and they may be releasing that, too.
But "Back to Black" -- I mean, I've been listening to it a lot. I know a lot of people I know have as well. The words have stuck in my head.
But, yes, it could be number one again.
VELSHI: A lot of people are saying she was one of the most creative musicians to come out of Great Britain a long time.
All right, Zain, we'll continue to follow that and all the other stories. I'll take to you later on -- Zain Verjee in London.
Hey, pay one price, jet set all you like. JetBlue is rolling out new all-you-can fly travel packages, but those ones are a little more targeted than the old version. These blue passes as they're called are tailored to businesspeople flying out of Boston and Long Beach. There are three versions based on where you're coming from and where you want to go.
The cheapest blue pass costs 1,300 bucks. It covers flights for three months beginning August 2nd. If you travel lot to the West Coast, check it out.
Don't steal the hotel towel, by the way. It might be tagged with an electronic microchip. A small but growing number of hotels are sewing the chips into the linens for you people who steal hotel linens.
"USA Today" reports that up to 20 percent of hotel linens seem to be go missing. Twenty percent -- one in five pieces of linen go missing? You sticky-fingered guests.
Apparently, you're not the biggest concern, by the way. It's outside laundry services that are responsible for that. So, you're off the hook.
Tequila and driving, not a good combo but we could soon be topping off our gas tanks with a tequila byproduct. Behold the agave plant. It's a source of tequila and researchers say the leftovers can double as biofuel. Better yet, they say its environmental impact is way lower than conventional ethanol crops like corn. That's worth a toast or shot.
If you drank too much last night or suffering from a debt ceiling migraine, you got to check out our "Businessman Special" coming up after this quick break. We've got some new guidelines for Tylenol that can help save your liver.
Of course, we want your voices heard about this debt debate. Here is CNN iReporter Zet Harris.
(BEGIN VIDEO CLIP)
ZET HARRIS, IREPORTER: The American people out there do not hold the same financial weight as the top 2 percent. They pay for the campaigns, they pay for lobbyists to push their agenda. And because of that, our voices aren't heard.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
VELSHI: Twenty-nine minutes after the hour. Good morning. It's Friday, July 29th. This is your A.M.: WAKE-UP CALL.
I'm Ali Velshi, joining you live this morning from New York.
No vote but plenty of white knuckles on Capitol Hill as time ticks down to the debt ceiling deadline. August 2nd now just a few days away and House Speaker John Boehner is trying to coax GOP holdouts, calling them into his office, ordering pizza. Some just won't budge.
(BEGIN VIDEO CLIPS)
REP. JASON CHAFFETZ (R), UTAH: I simply cannot raise the debt ceiling if we another going to fundamentally change the way we do business. I just -- I just kept vote for it the way it is.
SEN. CHARLES SCHUMER (D), NEW YORK: Our Republican colleagues in the House are playing a game here. Speaker Boehner has to keep throwing piece after piece after piece of red meat to the hard right lion that seems to be dominating his caucus. It's about time he tame the lion, not just continue to throw red meat to him, which isn't going to accomplish anything.
(END VIDEO CLIPS)
VELSHI: Now, Speaker Boehner must have ordered meat lovers pizza if all of the available House members are present and voting. Boehner's got to get 216 votes. White House correspondent Dan Lothian is on the phone from Washington right now.
Dan, what is going on at the White House? They kept saying that vote was going to be last night. They were going to get the votes do it, and then, late last night, they pulled the plug.
DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT (on the phone): Well, you know, first of all, I think that there is still this level of frustration at the White House because they see yesterday as another lost opportunity because yet another day that has passed without there being any progress. Having said that, you know, what the White House has been saying now is that they believe there's still some compromise possible, that the Boehner bill and the re-bill are not that far apart.
And so, you know, (INAUDIBLE) Bill Daley who said that, you know, he believes that there's some ground's repeal for compromise somewhere in between those two deals. And, so, I think that's what you're going to be hearing more about today. Now, that this appears to be, you know, having so much trouble, let's take a look at where their agreement is.
The big thing that continues to span out is the fact that the White House doesn't support, you know, the two-step process because, you know, they're saying you'll end up negotiating this all over again during the Christmas season, a time that's, you know, tough -- would be tough on the overall economy. So, I think that's what we'll be hearing more of today. Let's look between those two bills, find these areas of similarity, and get a deal done. VELSHI: All right. Dan, We'll continue to follow it with you. Dan Lothian. It's going to be a business day and weekend for him at the White House. Joe Johns is also joining us on the line from Washington. he's been covering this very closely. Let's just look at -- pick up where Dan left off. How does Boehner get to that magic number of 216 votes, and when are we -- are we likely to see this vote today?
JOE JOHNS, CNN CORRESPONDENT (on the phone): It's everybody's guess, Ali. Your guess is as good as mine. What we do know is that he's going to meet with the House Republicans again and try to drag this thing over the finish line sometime today. From what I've been able to discern, he threw in some sweeteners to try to get the votes close, and one of those was to have more votes on the balanced budget amendment and send them over to the Senate in the hopes that that would get some of the people off the fence that he needed actually to vote on his side.
So, it may be that they're looking for a few more tweaks just to get the very few votes they apparently need to try to finish this up. The thing that is a little strange obviously to anybody who just sitting there watching this is that the Senate Democrats have said it's dead-on-arrival. They're going to shoot it down. Nonetheless, the way things have always worked up there on the hill is that you have a bill like this, and it sort of serves as a template for something else.
And that something else would be an arrangement worked out between Reid and McConnell, and then, they take bits and pieces of whatever they can stand from Boehner, and hopefully, do it quickly over the weekend so everybody can go home, but we're a long way from the finish line right now.
VELSHI: It's going to be a long weekend. We'll all be working together this weekend. Joe, thanks very much. We'll catching you later on "AMERICAN MORNING."
Hey, attention, all you "Lord of the Rings" fans, Stephen Colbert goes to middle of Earth to explain what's up in Washington, and he begins with Senator John McCain.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN, (R) ARIZONA: Default crisis or gradual government shutdown will ensue, and the public will turn en masse against Barack Obama, and the tea party hobbits could return to middle Earth having defeated Mordor.
STEPHEN COLBERT, HOST, THE COLBERT REPORT: Gandalf is the tea party right here, OK? You shall not pass legislation raising the debt ceiling!
(LAUGHTER)
I get comparing the debt crisis to the "Lord of the Rings." They've both got elaborate plots, more characters than you can keep track of and talking about both of them repels girls.
(END VIDEO CLIP)
(LAUGHTER)
VELSHI: Let's go to Christine Romans live here in New York. Good Morning, Christine. You know, here's the weird thing about the markets this week. They are not just paying attention to the debt ceiling. We have had earnings. We have had economic reports, and those things are having some influence on the market. I think if investors were only paying attention to the debt ceiling, we'd have had worse markets than we've seen so far.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: I think you're right, but you know, we've got futures lower this morning because of what's happening in the House, the failure to vote on the deal late yesterday. We've had five days in a row of stocks down. So, I mean, it does tell you that the overriding concern continues to be what in God's name is going on in Washington and that's one of the things that's the big concern here for stocks, but we're also watching bonds, currencies, all these other markets as well.
Again, futures are lower this morning, and I wanted to quickly tell you about a report from Credit Suisse that says, Ali, that U.S. stocks could fall 30 percent, 30 percent over six months to a year if the U.S. were to default. So, worst case scenario, according to Credit Suisse, a 30 percent decline in the stock market. That means anybody in Congress who's like holding onto their ideology to try to make a point will be making a point, of course, with your 401(k).
VELSHI: It is ridiculous. That is exactly, exactly right. Make your point where it doesn't cost you money, but it's going to cost America money. All right. Let's say there isn't a deal. How much money does the treasury department actually have heading into August?
ROMANS: Well, you know, treasury gets money, gets billions of dollar from tax receipts. Money is coming in all the time. Of course, more money is going out all the time, and now, trying to assess how much cash is on hand. The Bipartisan Policy Center says there's probably enough cash on hand coming into this period, and there's a lot of checks that go out, of course, in the first week of August, that you could stretch it until August 10th to pay off all of our obligations, but there is money coming in -- don't forget, Ali, we are the biggest economy in the world.
The U.S. economy accounts for 26 percent of all the global output. So, we have a lot of money coming in. We have a lot of money going out, too. So, all of this is a day-by-day kind of thing, but according to the Bipartisan Policy Center, we have enough money in theory probably to pay bills in full until August 10th. And, of course, as you know, the treasury department continues to say, no, August 2nd is our hard deadline here. I mean, we know that there's enough for August 2nd for sure. That's the only certainty.
VELSHI: We shouldn't have been be talking about this. This should have been settled a long time ago, but -- ROMANS: Yes. Yes.
VELSHI: It's nice to see you everyday. (INAUDIBLE)
ROMANS: Hey, this doesn't repel me. Whatever Stephen Colbert says, this kind of talk doesn't repel me.
VELSHI: That's right. Yes. Yes.
(LAUGHTER)
VELSHI: Christine, I'll see you on "American Morning" very shortly.
All right. Now, back to today's businessman special. Tylenol, be careful how much you take today. The vision of Johnson & Johnson now recommends that you only take a maximum of six pills as day instead of eight pills. You can do some major live damage if you take too much of that a day. Just so you know, the drug inside it is in more than 600 over-the-counter in prescription drugs, and be sure to double and triple check everything before taking it.
Here's today "Get Smart" question, if there is no debt ceiling deal, who gets paid first? A. Social Security Beneficiaries, B. investors, C. defense vendors. We're going to ask you after this quick break. It is 38 minutes after the hour.
(COMMERCIAL BREAK)
VELSHI: Forty-one minutes after the hour. Now, back to our "Get Smart" question. If there's no debt ceiling deal, who gets paid first? Social Security beneficiaries, investors, or defense vendors? The answer is sort of B. It's a tricky question. The consensus thinking has been the treasury will first pay investors owed (ph) interest on U.S. debt. If those investors aren't paid, that would constitute a default, and, of course, we don't want that.
All right. It's 41 minutes after the hour. Three things to put on your radar today.
Tropical storm, Don, could reach the Texas Coast by tonight. It's expected to bring heavy rainfall to the state that is suffering from its third worst drought in recorded history.
President Obama is set to announce new fuel economy standards for cars and trucks today. We're expecting the proposal to call for all vehicles sold in the United States by 2025 to have average 54.5 miles per gallon.
And, we're watching the latest from Capitol Hill as House Speaker Boehner tries to muster enough Republican votes to pass his debt ceiling plan. CNN will bring you extensive coverage throughout today.
Now, let's go around the world with Zain Verjee live in London. Zain, the U.S. consumed with this debt ceiling debate right now. The right and left can't come together. Japan has seen a similar scenario play out.
VERJEE: Yes. Japan in the 1990s was going through the exact same situation. It was really awful. The deficit was so high, the real estate bubble burst, and private sector situation was a total mess. The balance sheets were under water. Listen to how a senior economist in Japan today watching the situation in the U.S., listen to how he puts it/
(BEGIN VIDEO CLIP)
RICHARD KOO, NRI CHIEF ECONOMIST: It's exactly replay of what we went through in Japan 10 or 15 years ago.
(END VIDEO CLIP)
VERJEE: That's Richard Koo, the chief economist there in Japan, speaking, and this is the exact situation they were facing, but you know, they dealt with it very differently, Ali. Just look at some of the video here of parliament. I mean, people were fighting each other. They broke out into fist fights. They even blocked the door of parliament so people could not go in and debate any of the bills on the table.
Now, I don't think you're going to see any of these kinds of pictures either in the House or the Senate, but it was a really difficult situation. What ended happening in 1997 that they decided to reduce government borrowing, to increase taxes, what happened was Japan ended up in six quarters of negative growth during a recession. The whole banking system went into a total meltdown, and it's still dealing with the effects of the stagnation. So, they're warning the U.S., be careful.
VELSHI: That is a big deal. Pushing us into recession is a problem. All right. Zain, thanks very much. We'll chat with you later on "American Morning."
Hey, on this day in history, back in 1981, I think you're going to remember this. Prince Charles and Lady Diana were married. And just for those of you keeping track of Royal weddings, their son, Prince William is celebrating his three-month anniversary with Kate Middleton today.
(COMMERCIAL BREAK)
VELSHI: Good morning. It's Friday, July 29th. This is your A.M. WAKE-UP CALL. I'm Ali Velshi joining you live this morning from New York. It's 46 minutes after the hour now. About that big debt deal vote I told you about on Thursday, it didn't happen. Congress made a liar out of me. Honestly, I have no idea what's going to happen in Washington. There could be a vote today, unless, there isn't a vote today.
Here's the current U.S. debt ceiling. $14.3 trillion. I know that. I also know that Tuesday's deadline to raise the debt ceiling is right around the corner. If lawmakers don't get a deal done, you might be rewarded with higher interest rates, tanking dollar, or maybe a hit to your 401(k). The House Republican caucus has scheduled a meeting for 10:00 a.m. in Washington. I believe it if I see it.
Listen to how far Republicans, other Republicans, and Democrats are. Republican congressman, Joe Walsh and Democrat, Steny Hoyer, talked to Anderson Cooper late last night.
(BEGIN VIDEO CLIP)
REP. STENY HOYER, (D) MINORITY WHIP: Even in their own party, it is deeply factionalized, deeply divided party, divided against their leadership, angry at their leadership, and a party that has divided itself, has difficulty working with the president or working with us, and that's unfortunate, and the country is the poorer for it, and the image of America is poorer for it.
REP. JOE WALSH, (R) ILLINOIS: I don't buy this notion of default. To me, that's a false choice. Default means you can't service your debt. You can't pay of your debt, Anderson. And there's plenty of government revenues to do that. One of the things that's been harmful in this debate is there's been this obsession with August 2nd, August 2nd. We need to get this right. We need a balanced budget amendment. If it takes us a few days more to make sure we get it right, let's do it.
(END VIDEO CLIP)
VELSHI: So, Congressman Walsh doesn't sound too worried about this. Maybe, he hasn't read the latest report about what could happen. This one is from Credit Suisse. It says that if the U.S. eventually defaults on its payments, stock could fall 30 percent over the next year. The economy could shrink five percent over the same period. Shrink five percent. Every month, there's a stalemate one percent comes of the U.S. gross domestic product. So, happy Friday.
And on the upside, Credit Suisse says there's less than a one percent chance that the default scenario actually plays out. Now, CEOs from some of the biggest U.S. banks have sent the White House and Congress a letter urging them to hurry up and get a debt deal done or face, quote, "grave consequences."
Medicare and Medicaid represent another huge bill the treasury has to pay out several billion dollars for those programs next week, and they represent some of the biggest payments, but what does happen if this doesn't get done? Well, the president has suggested that August Social Security checks might not go out. Many seniors depend on them for 90 percent or more of their income. Not everyone agrees that those checks are hanging in the balance.
CNNMoney points out the Social Security has an enormous trust fund and that the Social Security act requires the fund and payroll taxes to be used to pay for those benefits. And a debt default doomsday could mean students who took out or will take out private loans to cover their education could pay higher interests. Now, executives from some 20 major banks are meeting treasury officials today. It's a fair bet to say that the debt is going to be a major agenda item for them. It's time for our "Political Ticker." Let's bring in our Washington bureau chief, Sam Feist. He's live on the phone from Washington. You know, we're bringing in big guns today, Sam, because this is a problem. It's Friday. The debt ceiling issue is on Tuesday. What's happening?
VOICE OF SAM FEIST, CNN WASHINGTON BUREAU CHIEF: It's absolutely amazing, Ali, that here we are, the last week in July -- the last day of July, the last weekday in July, Congress has not acted. We are less than four days away from the United States government completely running out of money. I mean, Republicans and Democrats in Congress should be completely ashamed of themselves. There seems to be no adult left here in Washington.
In the past, Bob Dole or Howard Baker or George Mitchell, even Ronald Reagan and Tip O'Neill figured out a way to put aside their differences and solve the nation's problems and come to a compromise, and that's not happening here in Washington, and it's frankly humiliating when the rest of the world sees the way our politicians are behaving. It's unbelievable.
VELSHI: And investors in the rest of the world, as well. Sam, explain this part to me, though. Explain the politics to this. The White House actually wanted John Boehner, the Republican House leader's plan to pass last night.
FEIST: That's exactly right. They need a bill to go to the Senate to begin the conversation. And they also need a partner at the end of the day, and they need John Boehner to have enough strength, enough support to be a -- have a seat at the table as the conversation begins between what the Senate passes ultimately, which will be the re-bill or a modification of John Boehner's bill.
And they need -- the White House needs John Boehner to be a part of that conversation, because whatever passes the Senate has to go back to the House, and they need to drive it through, and they're going to need John Boehner to be a part of it. So -- but, Ali, you know, there are going to be some big winners this weekend. You know who they are, right?
VELSHI: The winners?
FEIST: Yes. This weekend. Winners.
VELSHI: Who are the winners this weekend?
FEIST: The pizza delivery guys on Capitol Hill.
(LAUGHTER)
FEIST: There are going to be a lot of pizzas up on Capitol Hill. It's going to be a long weekend. These guys are going to be hunkered down, and, of course, we'll be there watching.
VELSHI: Yes, no kidding. We'll be ordering some of that pizza, too. Sam, good to talk to you. We'll speak over the course of the weekend a lot. Sam Feist is our Washington Bureau Chief.
Let's go to our meteorologist, Alexandra Steele, live from Atlanta. Tropical storm, Don, Alexandra, that's what you're looking at.
ALEXANDRA STEELE, AMS METEOROLOGIST: Yes. Hey, the winners could be Texas, really more a blessing than a curse. Tropical storm, Don, the first tropical storm to make U.S. landfall, they'll do so overnight tonight. You can see it's picking up speed, now moving west-northwest at 13 miles per hour. A lot better organized than it was yesterday. You can see that purple area, the core of convection, getting bigger and swiftly moving toward Texas.
It will make landfall overnight tonight in toward tomorrow morning, and we will see on average about three to five inches of rain. Hey, they need about 15 inches of rain. The worst drought they have seen in about a century. Fifteen inches of rain, won't see that localized, maybe about seven inches. Quickly, moves onshore and then dissipates. So, some coastal flooding a possibility on tropical storm force winds extending about 100 miles. Ali, back to you.
VELSHI: Wow. All right. Alexandra, thanks very much.
Hey, let's take a look at the word of the day. It's default. And with the debt ceiling debate going on in Congress right now, you need to know exactly what this means for you and your money. That's coming up right after this short break.
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VELSHI: Fifty-six minutes after the hour. Now, back to the word of the day. Default. You've heard it a lot. The definition is from Merriam Webster. Default is a failure to pay back - pardon me -- financial debt. I can't even get it out, because I'm so choked up about the idea. OK. I'm over it. If the debt ceiling is not raised, then the U.S. government isn't able to pay its bills, America defaults on those bills.
But remember this, Ben Bernanke, the chairman of the Federal Reserve and the S&P consider any failure to meet any financial obligation to be a default, even if it's not to bond holders. Others consider only the failure to pay interest to bond holders to be a true default. You'll be hearing about that a lot in the course of the next three days.
Here are things to put on your radar today.
Tropical storm, Don, could reach the Texas Coast by tonight. It's expected to bring heavy rainfall to the state that is suffering from its third worst drought in recorded history.
President Obama is set to announce new fuel economy standards for cars and trucks today. It calls for all vehicles sold in 2025 to average roughly 54.5 miles per gallon.
And we're watching the latest from Capitol Hill as House Speaker Boehner tries to muster enough votes to pass his dent plan. CNN will bring you extensive coverage throughout the day.
So, John McCain called tea party lawmakers hobbits and told them go back to middle Earth. Some name call back. Comedian, Stephen Colbert, takes it to a whole new level.
(BEGIN VIDEOTAPE)
COLBERT: Four days until the country could default, and these clowns in Washington are using the "Lord of the Rings" to say that John McCain is soren? That is ridiculous. McCain is clearly Saruman.
(LAUGHTER)
COLBERT: OK. There he is. Soruman is in league. He's in league with Soran back here.
(LAUGHTER)
COLBERT: All right. He's in league with Soran who is actually Obama, OK? And the hobbits -- the hobbits aren't the tea party. The hobbits are Canter and Boehner, OK? And let's say Lieberman just on appearances.
(LAUGHTER)
COLBERT: And Gandalf is the tea party right here, OK? You shall not pass legislation raising the debt ceiling!
(APPLAUSE)
(END VIDEOTAPE)
VELSHI: All right. Let's go to Carter Evans for a look at your money this morning. He's not going to use the dolls and, you know, representations. You're going to tell us what's really happening at the NASDAQ market site here in New York. Good morning, Carter.
CARTER EVANS, CNN BUSINESS CORRESPONDENT: Hi, Ali. You know, I tell you, though, I think that makes a lot more sense than what's going on in Washington right now, sadly enough. Our futures this morning on debt ceiling concerns are lower. We do have a big report to focus on today other than the debt ceiling. Our first estimate on second quarter gross domestic product, economists are expecting to see only 1.7 percent growth.
We're also going to get a report on consumer sentiment, as you know, Ali. We need to see at least three percent growth to see some significant gains in the economy. Earnings, just a handful of them today. As for what's on CNNMoney.com today, I want you to take a look at this. Debt debate deja vu. I think I heard you say that earlier, Ali.
VELSHI: Yes.
EVANS: It makes a whole lot of sense right now. One concerning thing, though, a lot of companies right now are quietly withdrawing cash. The debt markets roiled by banks and other companies withdrawing about $37 billion from investment funds it invest in U.S. treasury.
VELSHI: Hey, Carter, a lot of people asking a question. You got an answer for it, I believe, on CNNMoney.com. What do I do with my 401(k)? Do I transfer it to cash?
EVANS: Just about everyone I've spoken to about this has asked me about that these days. Should I turn my stash into cash? The answer here, hold tight if your portfolio is balanced. We all know something is going to happen on Tuesday if this doesn't pass, we just don't know what. What the analyst here is saying, if things go back up and you pull out, you're really just playing a guessing game of when you should get back in.
Finally, an interesting story on CNNMoney.com today. What are consumers complaining about now? Believe it or not, there are a couple new categories. One of them are group coupon deals like GroupOn. They're saying the rules are a little hard to understand, some of the guidelines are a little too strict. Also, wireless television, like Apple TV and Google TV, contracts, not so clear on exactly what services people will be getting. Back to you.
VELSHI: All right. Carter, we'll check in with you again on Monday morning. Carter Evans at the NASDAQ market site. That's it for us on WAKE-UP CALL. "AMERICAN MORNING" starts right now.
