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White House Press Conference on Debt Ceiling; Interview With Congressman Joe Walsh; On The Chopping Block; Checking The Truth-O- Meter; Talk Back Question
Aired August 01, 2011 - 11:57 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DREW GRIFFIN, CNN ANCHOR: Let's go right to the White House.
(JOINED IN PROGRESS)
JAY CARNEY, WHITE HOUSE PRESS SECRETARY: -- by the legislation, that will be bicameral and bipartisan, with equal representation between Republicans and Democrats. And that committee will be charged with finding ways to ensure -- finding ways to reduce the deficit even further -- $1.5 trillion further.
And everything is on the table for that committee, everything including both entitlement reform and tax reform.
And, let's be clear: The president thinks, as you know, that the biggest possible overall accomplishment in terms of deficit reduction is a desirable goal, as long as it's balanced. And he looks forward to -- through the process set up by that committee, to having that debate about what our priorities are.
If we need to, as legislated through this deal, find another $1.2 trillion to $1.5 trillion in deficit cuts, how are we going to do that? Are we going to do it by asking sacrifice only of middle-class Americans or seniors, parents of children who are disabled, or are we going to ask that others, including oil and gas companies, corporate jet manufacturers or the wealthiest Americans, share in the sacrifice?
CARNEY: I think that is, again, a debate he's looking forward to.
QUESTION: But why should Democrats be confident that you'll be able to get those commitments in this special committee if you weren't able to get them up front?
CARNEY: Well, we came very close, as you know, in a -- to achieving a grand bargain with the speaker of the House.
And let's be clear: Belatedly, it was conceded that, in that agreement that was negotiated very painstakingly between the speaker of the House and the president of the United States, revenue was on the table -- and I quote the speaker in that -- including $800 billion as a minimum of revenue. So that was envisioned by the speaker as part of a grand bargain, had that been achieved.
Secondly, we saw close to 20 Republican senators endorse the ideas behind the gang of six proposal, which included not just revenue but $2 trillion in revenue, OK?
So I think there is an enormous potential here for those who work on this committee and those who then consider it with their votes to see that the best possible way to achieve significant further deficit reduction beyond the initial $1 trillion is through a balanced approach.
And as you know, the legislation has within it an enforcement mechanism, a trigger, and the metaphor is apt because the trigger -- well-designed triggers create huge incentive for Congress not to pull them. And that is the case here, where those cuts that would be mandated if Congress failed to act -- if the committee failed or Congress failed to pass the committee's product, would be across-the- board cuts split evenly between defense and domestic spending, including entitlements, although I will note that Social Security, Medicaid and beneficiaries in Medicare would be excluded from any harm.
And again, but the whole point of the trigger is that nobody wants to do them, and that it's equally onerous for both sides. And that, again, creates a greater potential for the committee's action to bear fruit.
QUESTION: And finally, when you look at the big picture, this debate was so contentious and it was partisan. What can the American people realistically expect Washington to be able to do, particularly on jobs between now and the election?
CARNEY: That's an excellent question. And there's no doubt that the process we have seen in the past several weeks and months was kind of a mess. And the president made clear a week ago today, when he spoke to the nation from the residence, that while Americans voted clearly last November, November, 2010, for divided government, they certainly did not vote for or choose dysfunctional government. And, in fact, they expect when they have divided government, when they have one party controlling some parts of the government, another party controlling others, that they will work together, and together find the kind of compromise that is balanced, that is more representative of where the American people want to go.
Now, this was a mess. There is no question. It was a circus at times.
We unnecessarily sent the message around the country and the globe that the United States might in fact default on its obligations for the first time in its history. But in the end, compromise won out, and an agreement that we believe strongly is in the interest of the American people was achieved. So, looking forward, we hope to be able to build on that.
None of this is easy, because all the issues are hard, but you do begin to build more capacity for compromise in the future the more you get under your belt. We certainly hope that to be the case, because we will not stop.
This is, assuming, as we do and hope, that Congress will pass it and the president then signs it. We then move on to the work of the committee and to all the other initiatives that we need to get going that will help create jobs and drive the economy. And we believe fundamentally that there is broad consensus in Washington that we need to focus on growth and job creation.
QUESTION: What is the message to Democrats who see this as a situation, who see it as a bill that reflects more the Republican priorities than the Democratic priorities?
CARNEY: Well, I just went through, I think, a number of arguments that we are making about why this is such a strong agreement and why it is -- no doubt, it is a compromise. It is not a perfect agreement, it is not the one the president or Democrats would have crafted if only they controlled all levers of government themselves, obviously. But it does accomplish some significant things which I just went through with Julie.
QUESTION: Why should Democrats in particular support this bill?
CARNEY: Because it protects key investments up front in the cuts that are launched initially, the trillion dollars including, like I said, Pell grants, which are so vital, to our future economic growth and to the education of Americans, because it creates a firewall in those discretionary domestic cuts -- or rather those discretionary cuts. It creates a firewall that insures that savings are gleaned not just from non-defense discretionary programs, but from defense. And then it creates a process through the joint committee which will allow for the president and Democrats and others, including a lot of Republicans, who have this view and have expressed it recently, that we need to take a balanced approach going further as we seek more deficit reduction. And that balanced approach would include revenues.
QUESTION: You mentioned job-creating measures. What's the strategy at this point on getting the payroll tax extension which wasn't included in this measure? Is the president still committed to doing that? And how do you do it?
CARNEY: The president is committed to doing that. And I think it's important to remember that the president publicly and vocally talked about an endorsing the idea of including an extension of the payroll tax cut as part of the grand bargain, or a big deal.
That is not the case in this deal. It is short of a grand bargain, but there is no question that he will continue to push for this. And he will make the argument that it is absolutely essential to continue to put extra money in Americans' pockets as they deal with high energy prices and high food prices next year because it was so important this year.
We certainly look forward to having that debate in the fall, and he will press very strongly for it. I note that there was broad bipartisan consensus beyond a creation of this tax cut at the end of 2010, and so we certainly expect there would be broad bipartisan consensus to extend it for next year.
Yes? QUESTION: House Republicans seem to be arguing that this super committee is going to have a difficult time doing any tax reform because it's going to be supported by the CBO, and the Bush tax cuts are set to expire in January of 2013.
Could you comment on that?
CARNEY: Well, I've seen that, and I would simply say that the suggestion that it is impossible for the joint committee to raise tax revenue is simply not accurate. It's false.
If the joint committee decides, for example, that part of a balanced deal should be able to eliminate tax subsidies for oil and gas companies, or corporate jets, or if they decide to limit the value of itemized deductions for high-income earners, as the president has called for, they could do that and they would raise revenue through doing that.
Second, nothing in the legislation that's being considered by Congress specifies at all that the committee operate under any specific baseline. Any suggestion otherwise is simply false.
CARNEY: But doesn't it apply to the budget act?
CARNEY: But the committee can act according to whatever baseline it chooses. It could act -- for example, it could decide to use -- operate under the baseline used by the fiscal commission, that assumes the expiration of the Bush high-income tax cuts, or they could operate under a current policy baseline, which is what Speaker Boehner was relying on when he said he had agreed to $800 billion in revenue.
So it's simply not accurate that this committee can't consider and act on revenue raises.
QUESTION: And that includes lowering rates, not just the provisions you talked about, but --
CARNEY: Well, again, I mentioned the Bush tax cuts as part of that. And let's also be clear that the president has made -- whatever the result, if Congress does not act on tax reform, which, by the way, broadly speaking, is supported by both parties, a desire for tax reform. So there is great incentive created in this committee to deal with tax reform because of the -- remember, it will be a balanced committee between Republicans and Democrats. And they need to produce a product that will then have fast-track authority and be voted on by Congress.
It is certainly our expectation that that product will include revenue, as well as other areas of finding deficit reduction. If it fails either to produce something, or if Congress fails to act on it, you can be sure that the president will honor his promise to veto any legislation that would extend the Bush high-income tax cuts beyond 2012, which would of course create nearly $1 trillion in revenue raisers when that happens.
QUESTION: In Afghanistan, the most recent month for which statistics are available, I think May and June, indicate that ISAF casualties are down 40 percent and civilian -- Afghan civilian casualties are up 50 percent. Why is that?
CARNEY: You know, I would refer you to the Department of Defense. I confess, I haven't studied those numbers of late. But obviously, the situation is -- continues to be a tough one, and fighting continues to occur. But we believe that we have made significant progress in implementing the policy proposal that the president put forward, and we are now in the process of implementing the drawdown, as he made clear in his address not long ago, in drawing down the surge forces beginning now.
QUESTION: Is it of concern to the administration, the president that --
CARNEY: Well, again, I haven't looked at those numbers, so I don't have a specific response related to those numbers. But obviously we believe very strongly that we are in a position where we can begin to draw down those forces, and we are continuing to do so.
QUESTION: (INAUDIBLE) I should say that this plan would help avoid a drawdown in the credit rating?
CARNEY: Well, we take action and control the things that we can control. And what is important about this is that we have not simply averted what would have been an absolute disaster, assuming, again, Congress acts, which would have been passing a period beyond which we would no longer have had borrowing authority, and risking or creating the possibility of default on our obligations for the first time in history, but we lifted that cloud of uncertainty for a sustained period of time.
And we think that, coupled with the real and significant deficit reduction that is part of this package, and the enforcement mechanisms that guarantee further deficit reduction is taken before the end of the year, we believe that that should send a very reassuring message around the world, as well as around the country, obviously, that Washington is beginning to get its fiscal house in order.
QUESTION: So is it fair to say that your concern in that area is much diminished?
CARNEY: Our primary concern was that we reach an agreement, a compromise, a bipartisan deal that would ensure that we lift the cloud of uncertainty created by this debt crisis, we have done that, and that we would, through that process, ensure that we would have significant balance reduction, and have done that as well. We certainly hope that that sends a signal that Washington is getting its act together in dealing with these tough issues.
QUESTION: Do you think it's enough?
CARNEY: Enough for?
QUESTION: To avert that? CARNEY: Again, I don't really have a comment on how the rating agencies make their judgments. All I know is that we, in Washington, the policymakers and the elected officials, can do the things that we can do to make sure that the American economy is going in the right direction, and that we are demonstrating that we're getting our fiscal house in order, and then hope that that message is made clear.
QUESTION: What kind of assurances did Democratic and Republican leaders give the president that they can get the votes to pass this?
CARNEY: Well, I think it was part of the agreement, was the expectation that they could get the votes to pass this, and hopefully they will.
QUESTION: And did you have a signing ceremony?
CARNEY: I don't have any announcement or scheduling announcements to make on that.
Yes?
QUESTION: You mentioned that the president and the vice president are selling this to get members of Congress by saying it's a victory for the American people. How is it a victory to the American people when it still adds $7 trillion to the deficit over the next 10 years?
CARNEY: Because it significantly reduces the deficit, it significantly addresses some of the drivers -- or will address some of the drivers of our long-term debt. And if you are asking does the government continues to function, and do we still owe -- do we still have to borrow money to pay our bills, yes, that has not been eliminated. We will continue to have a debt.
The point is, economically, is to begin to get the growth in our deficits and the growth in our debt under control. And that is what this agreement begins to do very significantly.
Will all the work be done? Absolutely not. That's why the joint committee's work is so important, and I'm sure even as that occurs and takes place, there will be more work that is necessary.
But this is significant and it should not be discounted. The ink hasn't even been printed on the paper yet, let alone signed into law. And we're already talking about how it's not substantial enough or what the next step is.
I think we ought to take a step back and remember where we were 24, 48 hours ago, a week ago, two weeks ago, the prospect that was hanging out there that America would not honor its obligations for the first time in its history, and the impact that would have on our economy and the global economy. And the fact that while I got a number of questions, understandably, during briefings in recent days and weeks about why we were optimistic that we could reach a bipartisan compromise, because it looked so unlikely, the fact is here we stand today, less than 24 hours after that compromise was reached, anticipating votes in both houses of Congress that will achieve something rather significant. Yes, that's a victory for the American people.
QUESTION: You talked about two weeks ago. Two weeks ago, the president talked a lot about shared sacrifice. He talked about ending subsidies for oil companies. He talked about ending tax breaks for corporate jet owners. He talked about that this was a very fair deal where he was offering 3-1 spending cuts and wanted tax revenues.
Where are the tax revenues?
CARNEY: Well, Norah, I think we just addressed this, but I'll be happy to do it again.
We did not get the grand bargain up front, and we all know why. OK?
There were, as the Speaker himself said, $800 billion on the table in revenue as part of a grand bargain. There were tough choices made by both sides in that potential agreement that was not reached, and we did not get that done. The Speaker decided --
(CROSSTALK)
QUESTION: He gave them everything they wanted and we get nothing.
CARNEY: Norah, I feel like I have taken this question two or three times already, and I've been very clear about how that is not the case. And, in fact, we got significant achievements -- well, let's step back, also.
The president of the United States believes that deficit reduction is important. It is a false setup to suggest that somehow a dollar in deficit reduction is a loss. It is a positive thing for Democrats --
(CROSSTALK)
CARNEY: Well, he does. And that's why he fully expects that the joint committee will include tax revenue as part of this consideration and its product.
But as you know throughout this process, there were cuts identified through the vice president-led process in domestic spending, and also in the presidential-led process with the Speaker of the House. And you see that embodied in the first trench of spending cuts that are part of this deal.
I mean, that is not a negative. That is a positive.
As the president made clear, progressives need to understand -- and we think most obviously do -- that deficit reduction is essential, done in the right way, because we need to get our fiscal house in order, in order to ensure that we can do the things we need to do to grow the economy and make the key investments that we need to make. QUESTION: Finally, can you address the word that "The New York Times" used today in a front page piece that the president had been diminished?
CARNEY: Well, I disagree. I think the president showed enormous leadership through this process.
Again, he directed the vice president to lead talks with the House majority leader that produced basically the foundation of the initial round of spending cuts that were part of any envisioned compromise. He then initiated and had sustained negotiations with the Speaker of the House, which, while they did not bear fruit in the terms of an agreed-upon grand compromise, they made clear through that process that for significant deficit reduction to be achieved beyond the initial round of spending cuts that are part of this agreement, there has to be balance.
That was agreed upon. It was on the table, rather, put on the table by the Speaker of the House, and acknowledged -- it was certainly acknowledged by the nearly 20 Republican senators who endorsed the ideas behind the Gang of Six.
I think a threshold has been crossed here. And the beauty of that is that the elected leaders here are catching up to the American public, who overwhelmingly support the president's position that balance is really essential as we approach these hard choices.
So we think the president's leadership has been essential to that process and will furthermore ensure that the kind of deficit reduction we get in the future will be the right kind for the American people.
(END LIVE COVERAGE)
DREW GRIFFIN, CNN ANCHOR: OK. That's White House Press Secretary Jay Carney, as you've heard, trying to defend the president's deal that he's trying to get through on this debt ceiling, talking about possible tax hikes in the future when the super committee meets, and also talking about protecting key investments like Pell grants and creating a firewall to protect Social Security, Medicare and Medicaid.
As that goes on, we continue to watch the drama up on Capitol Hill, expecting both the House and the Senate to take some sort of action on this. We're watching all the angles, waiting for those particular speakers and Senate leaders to come out and talk to us about how they are getting their votes.
It looks like -- Congress is looking like -- this is from our producers Ted Barrett and Deirdre Walsh, up on the Hill, that it looks like this will pass the Senate. The question is at the House.
Democrats may not deliver enough votes to pass that. And we're also wondering if enough Republicans, particularly those conservative Republicans who wanted much more than this deal, will vote for this and get this through the House.
I understand that Congressman Joe Walsh from Illinois is joining us from the Capitol. There he is right now.
And you are one of those conservative "Tea Party caucus guys" that we're talking about. Are you voting for this, Congressman?
REP. JOE WALSH (R), ILLINOIS: Yes, I'm one of those troublemakers, those House conservative Republicans. Thank God we're here. We have changed the entire debate.
Look, Jay Carney has got a tough job, because if he thinks the president likes this compromise, he has got another thing coming. The president has had to have been dragged kicking and screaming into this. This is a victory for our leadership. John Boehner did a great job.
Yes, it's --
GRIFFIN: so I take it you're voting yes?
I'm not sure if Congressman Walsh can hear me.
Congressman, this is Drew Griffin in Atlanta. Go ahead.
WALSH: Hey, Drew. I'm sorry. I lost you there for a moment.
Look, I think the Republicans have done a great job of getting the best that they can. And they have had a difficult time dealing with what I would say is another side that just hasn't been serious to the problem. I was one of 22 Republicans, though, a couple days ago who voted against the Boehner plan, and this plan isn't even quite as bold as that.
GRIFFIN: Well, let's not read the tea leaves here, and I don't mean to say that in jest. Are you voting for this or are you voting against this?
WALSH: No. Yes, I can't vote for this.
Again, I give leadership great credit forgetting the best they can. It very well may pass out of the House, but there's just too much of a deal here when I really believe we needed a big, bold, solution.
We're talking about maybe $2 trillion to $3 trillion cuts over 10 years. We're going to borrow another $7 trillion to $9 trillion to $10 trillion to $12 trillion regardless. We're bankrupting future generations. And though this is a great step and Republicans have changed the dynamic, this does nothing to change the fiscal disaster that we're in right now.
GRIFFIN: Well, Congressman, let me look at reality right here. You say that John Boehner has done a great job. Your Speaker obviously wants you to vote for this. You are telling me you are not going to vote for this.
Let's say other members of the Tea Party Caucus won't vote for this. So we've got the far right who's not going to vote for this, the far left appears not going to be able to vote for this. So this could fail in the House.
WALSH: Again. Yes, Drew, I'm not a prognosticator. I don't know.
I can tell you that there is clearly a strong sentiment in this town to get something done by tomorrow. I mean, that's been weighing on people's minds.
I think that sentiment may carry the day. I've always been one who said don't be obsessed with August 2nd, be obsessed with the debt crisis, get it right.
So, the thought of going a day or two or three to come up with something really bold has always been the way I recommend. But I may be in the minority in that type of thinking.
GRIFFIN: So you're a definite no vote on this. Michele Bachmann is a definite no vote on this.
I'm just wondering, are you being pressured by your leadership, or have they given up on you?
WALSH: Well, I don't know. We will talk to leadership in a few minutes here. We'll go into conference.
They have done a great job. John Boehner has got the toughest job in the world.
I will tell you, though, that I think these band of fiscal conservatives in the House, we have done a great job of moving this debate toward where, clearly, the president didn't want to go, and where a lot of the politicians who had been in this town for so long didn't want to go, which is real spending cuts. We needed spending reform. I voted for Cut, Cap and Balance two weeks ago.
Until we change the way this town spends money, we aren't going to solve the long-term spending crisis.
GRIFFIN: All right.
Congressman Joe Walsh, out of Illinois. A solid no vote on this deal. We'll see what happens later on in the House.
Thanks for joining us, Congressman.
WALSH: Thank you, Drew.
GRIFFIN: While all this debate goes on, the market continues to tank -- take a look at that -- down 130 points after rising at the opening bell.
We'll be following that as we continue the news.
(COMMERCIAL BREAK)
GRIFFIN: We have been following the White House press conference. We've also been hearing from Republican Tea Party Congressman Joe Walsh, who just told us that he is voting against this deal.
Let's bring in Gloria Borger and Joe Johns.
Wow, this thing is far from over. I thought this would have been a done deal, but it apparently is not.
Gloria, let's start with you.
Jay Carney, at the White House, trying to defend his president, and I think the defense and the selling point for the Democrats, if I am hearing correctly from Jay Carney, is look, we can still get our tax hikes down the road.
GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Yes. And I just was on the phone with somebody very close to these budget negotiations who makes the case to me that we will know the tax increase issue the minute that you see who the Republicans appoint to this committee. And that will be one sure sign.
The second thing you have to also keep in mind here is that the Bush tax cuts, which would bring in what, $800 billion worth of revenue if the Bush tax cuts on the wealthy expire, is due to expire in the new year. And that somehow will play into this debate in one way or another, although it wouldn't be part of the purview of this joint committee.
That's a pot of gold, right, sitting at the end of the rainbow there? So, the question is, how does that play into this debate with all of these onerous cuts hanging over their heads? Maybe they just would decide to dip into that pot. So we have to see. And I think it's kind of the White House's hope that that would be part of this whole negotiation at some point.
GRIFFIN: Gloria, do you think that that already is a part of this conversation behind the scenes?
BORGER: I think it is.
GRIFFIN: Did the Republicans say look, we're not going to put one of these hard-line no-tax guy on that committee?
BORGER: Well, we don't know. I mean, for example, the chairman of the House Budget Committee, Paul Ryan, was also on the Erskine Bowles deficit reduction committee, and he was one of the Republicans who did not sign on to the plan, although he is in favor of some kind of tax reform that would lower rates. So, you know, it's very -- it's kind of very hard to tell right now.
But let me also add one other thing.
On today's vote in the House, if it does happen today -- one would assume it would -- I was told that the legislative folks who are counting votes for the White House feel OK, but I think as you and I were talking about earlier, Drew, the fear -- the fear is that unlike the vote on TARP, there is sort of not a lot of moderates around these days to make these things pass. And so, you know, they believe this is another question of whether Boehner's speakership is on the line here because he has to deliver.
GRIFFIN: Yes.
Let's get Joe Johns.
Joe, you are on the House side, right? And that seems to be where the drama is going to take place.
The House, very iffy, and it's iffy from both sides of the aisle. I'm not sure the far left nor the far right are going to go for this. And as Gloria said, are there going to be enough in the middle to pass?
JOE JOHNS, CNN SENIOR CORRESPONDENT: Right. This is what I used to call the concerns about a so-called Halloween commission, or a Halloween caucus, when you get people on the far right, people on the far left all voting against a bill for different reasons, and the question, of course, is whether the center holds.
We're actually hearing from a number of Democrats on the left who are expressing concerns. They're saying they're on the fence. They're saying they're not sure, they're not convinced yet. And then there is are some Republicans as well, some conservative Republicans, so-called Tea Party Republicans, saying the very same thing.
So, we're probably going to find out sometime this evening, early evening, I'm told. At about 1:00 Eastern Time, here at the Capitol, the Rules Committee is going to meet to get this thing on the floor, and then it will be up to the vote counters to go ahead and try to figure out how they push the bill through. But it's definitely not a sure thing -- Drew.
GRIFFIN: Wow.
Gloria, this is a reflection on the speakership you said, but is it also going to be a reflection on the president? I mean, after all, we have the vice president being sent over to Capitol Hill to get enough votes -
BORGER: Sure.
GRIFFIN: I am wondering if they can even get former speaker Pelosi's vote on this?
GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Right. You know, I think she is clearly not enthusiastic about this. They are all clearly worried, nervous, and focused on this joint committee. Some of them believe it's a trap for Democrats, that they won't get the revenues they want.
On the other hand, some of them also believe that if Republicans refuse -- if you look towards 2012 election; let's assume this is political and you are not really -- the debt ceiling issue is not out there. They believe it frames the debate for the Democrats because the Democrats will say we were for balance, and Republicans were for entitlement cuts.
And by the way, we don't have the outline of all of the specific entitlement cuts. They believe that once the cuts are on the table, these spending cuts, that people will understand how it's going to affect them and that will force Congress to work. So, that's the kind of argument that -- political argument at least, aside from the national argument we're making about raising the debt ceiling. That the political argument, that's the argument Joe Biden will be making in the caucus, which is that you have to do it for your country. And by the way, in the end, Biden would argue, and the Democrats would argue, Republicans will be exposed for only being for cuts, and we're for balance. That's their argument.
Boehner will make the argument to his caucus, look, we got most of what we wanted. We did not get tax increases in this bill, you're going to get a vote on your balanced budget, maybe, and so go do it. There's not much more we can get out of this president.
GRIFFIN: So frustrating, though, for Boehner. You heard Congressman Walsh said, he's done a great job, I'm voting no.
(LAUGHTER)
GRIFFIN: It's just incredible.
BORGER: You know, it helps to be one of a dozen children, I think, where you have the patience of a saint because you have to learn to work with others. And Boehner, he is a pro. He has been around the block once or twice before. He knows how to listen, he knows how to work.
Look, this measure, by the way, includes some extra money in it for moderates, moderate Republicans who were complaining they were not getting anything. So, he needs their vote, so there is something in there for them, too, so they can deliver for him.
GRIFFIN: All right. Gloria Borger, Joe Johns, thank you both. Drama happening behind the scenes. But on the Big Board in front of everybody, is the Dow Jones Industrial Average that's taking a pretty big hit today. Down 115.
We'll be right back.
(COMMERCIAL BREAK)
GRIFFIN: The debt limit drama going down to the wire on Capitol Hill. If Congress does not approve a deal in the next 12 hours, we're told the nation may not be able to pay its bills. The Senate had been expected to take up the bill first. Now we're learning it's going to be the House that's going to vote before the Senate.
And that's where the drama is. One Democratic official is telling CNN the effort to line up the votes for the deal is very close. We're following the story minute by minute as it plays out on Capitol Hill.
North of there on Wall Street, it's playing out not so well today. Alison Kosik watching the Dow as it - I don't know if you call this a tumble, but certainly a big hit. Alison?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: It is a big hit. So much for that debt relief rally that we saw at the open. We saw, Drew, stocks pop 120 points for the Dow, but then we got this dismal manufacturing reading coming in much weaker than expected. That stripped away all the gains we saw.
You know what this showed? It showed there was almost no growth in manufacturing in June, and that's why investors are selling today. Many analysts believe that the manufacturing sector really needs to help lead the way in getting the economy back on its feet.
So, pretty much what Wall Street sees this as is the debt deal, it's pretty much behind them. And Wall Street is sort of ilooking ahead. And investors are looking forward at the bigger picture of the economy, and it's not a pretty picture. It's really a harsh reality. We had that anemic reading on GDP on Friday. You know, there's just not enough growth happening, Drew, in the economy to create jobs. And that's really got everybody bracing for the big jobs report that comes out on Friday. Drew?
GRIFFIN: All right, Alison. Thanks for all that. We will continue to follow this right after this break.
(COMMERCIAL BREAK)
GRIFFIN: Scrambling up on Capitol Hill right now, we're hearing the House is now preparing for a vote on the new debt bill. That could happen soon. And it's going to happen before the Senate. The House is where the trouble could be. A lot of folks on both sides of the aisle not yet sold on this deal. Vice President Biden is going to meet with House Democrats, trying to answer questions and get them in line with the president.
The president did get his deal. Now the clock ticking, he has to get it through Congress, but did he give up too much in the compromise? John Avlon, a senior columnist for "Newsweek" and "The Daily Beast," joins us from New York.
John, liberal press just laying into the president, thinking he surrendered to this. What is he getting out of this that's going to be able to sell his party to pass it?
JOHN AVLON, "THE DAILY BEAST": Well, first of all, he's avoiding default. And all the folks up in Congress right now who are grousing about the ideological imperfections of this bill need to take a step back and ask themselves would they prefer the alternative, which is default? That's just the reality we're dealing with right now.
And yes, this is a jump on (INAUDIBLE) up in Congress, and there a great deal of uncertainty on the Hill about whether this will pass. There are people who are organized in opposition on the far left and the far right. Activist groups on both sides. But given our current polarized political environment, you know, if the far left and far right are both complaining, sometimes it's a sign that something common sense is actually happening.
And the big question now is whether the center can hold, and the president is trying to position himself at the head of that effort to bring people together to help our nation avoid default and move our nation towards bringing down the deficit in the long run.
GRIFFIN: John, this is such a complex issue. I can't recall seeing one quite like this before. A lot of people believe the Tea Party forced this issue, forced the vote, forced this deal, and a lot of people in the Tea Party in the end are not going to support it. I don't know what that says.
AVLON: Well, it does say that there is a certain strain of all- or-nothing absolutism in some of these folks, that they approach politics primarily ideologically.
But look, the Tea Party does deserve credit for changing the debate in Washington and prioritizing deficit reduction. And the president has tried to meet them halfway with Speaker Boehner on a grand bargain. I think one of the frustrations for the president and with the bill is we've essentially kicked the can down the road in terms of a grand bargain to this special committee. And in that, the devil is in the details. The questions of what are the triggers and who is appointed to that committee?
But some of the Tea Party folks should be asking themselves whether they can take yes for an answer. I mean, this is a significant cut in spending. That should be a win. In the long run, any massive dealing with the deficit and the debt needs to involve entitlement reform and tax reform. And those will be some of the things that the committee may look at.
But the Tea Party really needs to ask themselves, it seems to me, whether their first priority is deficit and debt reduction, or whether it's anti anti-taxi absolutism. And I think one of the things they've done to their disfavor is by positioning themselves in opposition to Speaker Boehner, even though he's delivered more cuts than the debt ceiling raise, which is a significant accomplishment for the speaker, is whether they can be considered folks who are interested in governing or whether are interested primarily in grandstanding.
GRIFFIN: John, let me ask you just one more question. The president has at least gotten one thing out of this, he doesn't have to deal with the debt ceiling until his re-election bid goes to the voters,. But does he in the meantime have to deliver a tax hike on those people that the Democrats consider rich? Is it all or nothing on a tax hike between now and the election?
AVLON: No, I think this has actually been a real false dichotomy the whole way around. Republicans obviously want to position themselves against a tax hike. But what has really been discussed, and if you go back to the previous commissions we've had, which have done great work in a bipartisan manner - the Bowles-Simpson commission, the Gang of Six, they have looked at revenue increases through closing tax loopholes. It's essentially earmarks embedded in the tax code.
So, for all of the Tea Partiers that campaigned against earmarks and removing them, they should be able to identify these tax loopholes as something they can live with. And the fact that you can raise revenue without raising rates and in some cases losing rates should be a win-win.
So, I don't think the issue of certainly this commission is going to be the Bush tax cuts. Those are set to expire at the end of 2012 after the presidential election. The real question is whether we can use that leverage to get real tax reform through, which is something that does unite serious fiscal conservatives on the center right and center left. And that's the opportunity here. And that's one that should be seized by people that are serious about getting the ball down the field, not simply playing to the base.
GRIFFIN: All right, John. Thanks a lot for that.
You know, one part of the bill that has people talking are the defense cuts, the potential defense cuts. Our Sandra Endo is in Los Alamitos. And members of the California National Guard returning home from Iraq, which should be a very happy day. But Sandra -- nothing is set in stone here -- but part of this new deal is that a congressional panel is going to recommend spending cuts, and if Congress rejects the plan, 50 percent of the cuts automatically come out of the Pentagon. What are folks saying to you about that?
SANDRA ENDO, CNN CORRESPONDENT: Yes, definitely some concern here, Drew, because these men and women who just served over a year now deployed in Iraq, just touched down here, a hero's welcome for them joined by their family and friends. But, coming home to the news, as you mention, of potential cuts to the tune of $350 billion over 10 years in defense spending. So a little bit of concern here.
And we are just getting to talk to these soldiers who just touched down here. And Sergeant Herrera is one of them, Drew.
You just came home. You, obviously, did not pay attention to a lot of the news that was going on in Washington. You had other important issues and a mission to accomplish in Iraq. But now you're hearing world of possible defense cuts. What goes through your mind when you hear that?
STAFF SGT. JUAN HERRERA, JUST RETURNED FROM IRAQ WAR: Well, I mean, they talk about cutting people off and, I mean, it's for military, National Guard and academic (ph) components. I think it actually effects the redness (ph) postures (ph) in the -- short notice to go anywhere in the world. I mean it is critical. Very critical. I mean but I've got to look -- I've got to listen to my boss, which is President Obama, and deal with it for now, I guess.
ENDO: Obviously, sergeant, we don't know all the details, where those cuts will be. Obviously there's also a drawdown, so perhaps spending will be less because of the wars drawing down. But clearly you're concerned because of the country and also from everything you've seen over there fighting for this country.
HERRERA: Yes, ma'am. We're in Iraq and we're in Afghanistan and stuff like that. Our readiness posture there, it's all good. But with all the cuts that they're talking about, I foresee jeopardizing our mission over there. So I would suggest to everybody that's in the Congress and stuff like that to reconsider and think out the well plan of how they're going to do our cut, especially the military, because the military is the foundation of our security of this country.
ENDO: Absolutely. And we thank you for your service and welcome home.
HERRERA: Thank you. Thank you very much.
ENDO: Enjoy your family.
HERRERA: Thank you.
ENDO: So, Drew, obviously a lot of concern out here as people, soldiers, the men and women fighting for this country just touched down to the news of these potential cuts.
Drew.
DREW GRIFFIN, CNN ANCHOR: All right. Well, good, I'm glad that they're reuniting with their families and this is a happy day for them.
Sandra, thank you so much.
Well, calling out the politicians, they're making all sorts of claims in the drawn-out debt debate. We're going to put their statements to the test in a Truth-O-Meter.
(COMMERCIAL BREAK)
GRIFFIN: We're hearing a lot of statements coming from Congress about what is and is not happening with the debt and the debt limit, but can they withstand the Truth-O-Meter. We're going to check right now with Angie Holan, a reporter from "The St. Petersburg Times." She and others at politifact.com have been putting these comments through the Truth-O-Meter.
Angie, let's start with a statement from Senator Rob Portman. He says, "34 of the last 44 debt ceiling increases have been for less than a year. So this notion that short-term is somehow the exception is actually the rule." That's the end of the quote. Is that true or is that false?
ANGIE HOLAN, "ST. PETERSBURG TIMES": We have rated this one true. Now if you dig through the history, you're going back to 1980, most of those increases were short term. Now people say the political climate is different. We just had this big fight about it. But looking at the history, Senator Portman's right, that most of the increases have been short term and we rated this true. GRIFFIN: All right. More history here. Congressman Allen West of Florida on CNN said this, "this is the first time in history that we've had the raising of a debt limit also with spending cuts." Angie?
HOLAN: We rated this one false. Now, if you look back again, in 1997, Newt Gingrich and Bill Clinton came to a budget agreement and that agreement did include spending cuts and a debt ceiling increase. And then, again, in 1990 and 1985, there were also agreements. So this one isn't right and we rated it false.
GRIFFIN: All right. One more we want to check is this coming from a video sent out by the Ohio Democratic Party which says that Ohio's Treasurer Josh Mandel "supports allowing the United States to default on its obligations." True or false?
HOLAN: This one got our pants on fire rating. Now, there are a few particulars here that make this statement particularly inflammatory and we get into that in the story on our website. But the main point is, even those who want to see more spending cuts, they don't endorse a default. And if you look at the history, again, we've seen both parties lodge protest votes, they've said there should be more concessions this way or that way. But again, these protest votes are not an endorsement of default. So, got the pants on fire rating.
GRIFFIN: All right, Angie, thanks a lot for keeping them honest with us. Thank you so much.
Hey, we want to bring in some tape that we just got in. It may be hard to hear. But Nancy Pelosi, the House minority leader, walking to a closed door session, was being asked about this debt deal, whether she supports it and whether she is going to vote for it. Let's try and listen in and hear what she said.
(BEGIN VIDEO CLIP)
REP. NANCY PELOSI (D), MINORITY LEADER: We're going to be -- I'm consulting with my caucus on the subject. They have had some successes in this in terms of protecting beneficiaries of Medicare, Medicaid and Social Security. That's important to us. And having 18-month at least extension to help us get on with the business of growing the economy and creating job, that's important to us.
The firewall between defense and domestic spending, and the (INAUDIBLE), also protection of initiatives for orphaned (ph) poor people in our country is important to us. On the other side of the grid, we have problems with no revenue in the bill when we are asked -- having (ph) severe cuts. And we need to make some cuts. Some severe cuts. And the initiatives that it's going to (INAUDIBLE) the education of our children, clean air, clean water, food safety, you name it, from not one red cent from (ph) the wealthiest people in our country. We have to weigh these efforts (ph). That's what we're doing right now. Thank you.
(END VIDEO CLIP)
GRIFFIN: Now that's Nancy Pelosi. She was also asked whether she's going to support the deal and apparently I'm trying to see -- this is from Deirdre Walsh (ph), one of our reporter producers up there -- said," I am not going to make any announcement on that," as she heads into a closed door meeting, trying to decide herself whether she is going to support this or not.
Well, you have been sounding off on "Talk Back" question. Carol Costello is back with your responses.
Carol.
CAROL COSTELLO, CNN CORRESPONDENT: Thanks, Drew.
Today's "Talk Back" question, do we get the government we want or the government we deserve?
This is from Michael. He says "in 2010, lots of Americans voted for Republicans out of fear, and instead of working for jobs for all, the GOP has attacked union rights, abortion rights, Social Security, Medicare and a host of other things Americans hold dear. Americans believe the GOP would work on the economy, not attack the fabric of American life. So much for believing."
This from Joy. "If you expect leader to lead with their brains, then voters have to elect folks with some brains, and that entails voters using their brains and not their emotions."
This from Matthew. We get the government that money buys. All the principals and values of our elected leaders goes swiftly down the drain when party and lobbyist influences are involved. And we're doomed to repeat this pattern over and over again. The days of finding great leaders like Washington, Lincoln and Roosevelt are over."
This from Jennifer. "I didn't get the government I deserve thanks to a bunch of morons who don't educate themselves and believe every ridiculous piece of propaganda fed to them. They get what they deserve, but the rest of us have to suffer for it.
And this from Colleen. "Neither, Carol. I'm tired of hearing lately that it's our fault because we elected them. We elect them in good faith that they will do what is in the best interest of our county and what we get are representatives who act on their own interests, and special interests."
Keep the conversation going, facebook.com/carolcnn. And thanks, as always, for your comments.
Going to toss it to a break. Drew will be back with much more news. Stick around.
(COMMERCIAL BREAK)
GRIFFIN: Let's get you up to speed on what's happening with this debt debate. We're hearing the House is going to prepare for a vote on that bill soon. It is going to happen before the Senate. The House is where there could be some sticking points. A lot of folks on the far left, far right, don't like it, are not sold on it. Vice President Biden is going to meet with the House Democrats. He might be meeting with them right now, trying to get them in line to pass this bill in the House.
Meantime, over in Wall Street, markets really got hit today. After a big jump, a big tank. It's down 102 right now on the big board as we are watching that financial information come in.
Well, some of the other stories our affiliates are covering across the country.
Today, the fourth anniversary of the deadly Minneapolis bridge collapse. They're going to have a service there this afternoon dedicating a memorial with the names of 13 people killed. Thirteen doves will be released. And another 145 people were injured when that bridge span collapsed. Do you remember that during rush hour. It dropped cars into the Mississippi River. It's the fourth anniversary today.
The FBI investigating, quote, "a credible lead" in a 40 year old hijacking mystery that's become the stuff of legend. The man known as D.B. Cooper, he hijacked a flight, parachuted out the back, had $200,000 in ransom money. The FBI says it's now looking at a new suspect and checking a certain item for fingerprints.
And it's not snakes on a plane, it's snakes on a car. A family driving down the highway in Memphis, watch this. The snake slithers out from under the hood of their SUV and right on to their windshield. That all happened, fortunately, Randi Kaye, outside the car and not inside.
We turn this over to you as the NEWSROOM continues on this big day.
Randi.
RANDI KAYE, CNN ANCHOR: All right, Drew, have a great day. Thank you.
