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Government Shutdown Appears All but Certain; What a Shutdown Will Look Like; Radio Host Lashes Out at Teens' Parents

Aired September 30, 2013 - 10:30   ET

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

(COMMERCIAL BREAK)

CAROL COSTELLO, CNN ANCHOR: Good morning. I'm Carol Costello. Thanks so much for joining me.

The Senate is expected to convene later this afternoon as it's expected to shoot down a House spending bill that delays the President's health care law. That means a government shutdown could be just hours away.

Congressman Steve Israel, a Democrat from New York is with me now. Good morning, Congressman.

REP. STEVE ISRAEL (D), NEW YORK: Thanks for having me on, Carol.

COSTELLO: Thanks for being with me. I don't know if you have the pleasure of seeing our latest poll: 58 percent both think Democrats in Congress are acting like spoiled children, 69 percent feel the same about Republicans. That has to bother you.

ISRAEL: Well it does bother but even more so this bad for our economy. If we allow a shutdown to occur it's going to hurt our gross domestic product, it's going to hurt the economy I hop that Republicans will listen to reasons.

And I think that we should remind people about what -- what this is really about, Carol. You know this is a continuing resolution, this is about at what level do we fund government? The initial debate was that the Republicans wanted a lower level, the Democrats wanted a slightly higher level. We've agreed to the lower level. We've agreed with the Republicans. They have to learn how to take yes for an answer.

COSTELLO: Well I think that's why many Americans are blaming both side of the aisle and they're asking this question. If the government does shutdown, are you willing to suspend your pay?

ISRAEL: No, I don't -- I don't agree with that at all, and here is why. We already have a Congress that is composed of a lot of elites and so if you're a member of Congress and you're a multimillionaire and you don't know what it's like to be in the middle-class, your congressional salary is like play money and so you can afford not to have your pay.

Some of us actually represent middle-class districts and some of us actually are in the middle-class, so to -- to say to members of Congress that you're not going to be paid, it helps those who don't need the pay. It is unfair to those who actually use their paychecks to pay their mortgages and things of that nature.

COSTELLO: But -- but Congressman do you know how -- I don't think that makes anybody feel any better out there, they -- they want -- they want you guys to pay in some way for their pain.

ISRAEL: Well how about this -- how about this, Carol? How about those of us who have shown an ability to compromise and have shown reasonableness and have actually agreed to the Republican budget number that is low, we should get paid. But those who are saying that we should bring down the government over continuing the Affordable Care Act or that we should shutdown the government because it is their way or no way, maybe they are the ones who shouldn't get paid.

So maybe we should get a performance bonus for those of us who are willing to compromise. And if you take a look at every single fiscal cliffs and every single shutdown and showdown, it is a matter of fact that it was Democrats who have stepped up to the plate to compromise, whether it was Hurricane Sandy relief or whether it was the fiscal cliff on January 1st or whether it's the continuing resolution.

COSTELLO: Ok.

ISRAEL: Those of us who say there is room for agreement should be paid, those who say my way or the highway and the highway veers to the far right, maybe they shouldn't be paid.

COSTELLO: Ok. Well, let me lay this on you, Republicans say Senate Democrats are using that old football strategy running out the clock. In other words they'll pass something and then send it to the House at the very last minute too late for a vote to avert a shutdown.

I know you're in the House, but why aren't the Senators working right now? Why are they waiting until 2:00 this afternoon to convene?

ISRAEL: Well, because they said to the House of Representatives, the Republican majority in the House of Representatives on Saturday, we will agree to your preference for a lower budget figure, we are just not going to defund the Affordable Care Act.

So can we at least compromise lower budget figure and then we'll negotiate going forward --

COSTELLO: Well the Republicans might say they did compromise they want to delay Obamacare -- and they say that's a compromise.

ISRAEL: No they didn't compromise. Carol they double downed. They said ok we won't defund Obamacare we'll just defund it for a year. Oh and by the way we're going to take away a woman's right to contraception if she wants and by the way we're going to put all these other poison pills. And a compromise would have said ok this is a budget and so we'll agree, we'll all agree on the lower figure in the budget and then negotiate going forward. But their compromise was not a compromise but to demand more. Learn how to take yes for an answer we can get this done. This is avoidable if reasonable people will agree to some solutions rather than the constant game playing.

COSTELLO: Ok so your prediction, will the government shutdown?

ISRAEL: I hope not, Carol. I hope that those who actually compared, like one member of Congress, what's happening to 9/11 and said "Let's roll" and shut the government down. I hope that that is the voice of a minority, and that the majority, Democrats and Republicans can find something to agree on. And what can we find to agree on low budget figure that the Republicans want, we'll take it and negotiate forward but don't put all of this other stuff on this deal.

COSTELLO: Congressman Israel thanks so much for joining me this morning I appreciate it.

ISRAEL: Thank you.

COSTELLO: Home buyers who've applied for FHA-backed loans will have to put their plans on hold if there is a government shutdown. CNN's Christine Romans is in New York to tell us more about that. Good morning.

CHRISTINE ROMANS, CNN BUSINESS ANCHOR: Hi good morning Carol. That's right, these are FHA-backed loans and quite frankly if you haven't had that endorsement yet from FHA, you're going to have to wait until after a shutdown is over.

Let me tell you exactly what we're talking about here, we're talking about FHA-backed loans these are about 45 percent of all mortgages last year and comes out to about 60,000 on average a month, so there could be you know some 60,000 deals that will have to wait or could fall through

The shutdown here really affects this agency when you look at the HUD, the Housing and Urban Development, which you know, is the I guess the parent agency for FHA loans they're going to have about 8,900 of their workers sent home, Carol. They'll be sent home. And only about 350 will stay there and less than 40 percent of the staff so to be a skeleton staff and they will no longer be able to do these loans in the event of a shutdown.

But let me be clear here Fannie Mae and Freddie Mac they guarantee the vast majority of home loans. They are funded by fees, so that will keep going. So when you look at folks watching the real estate market, the real estate recovery has been tentative they are worries of the higher mortgage rates could be slowing the housing recovery. A lot of people are watching this part of the mortgage market to see if maybe the shutdown Carol could be a problem for the recovery at this point -- Carol.

COSTELLO: Well, they've got 13 hours to go. We'll see what happens. Christine Romans thanks so much.

ROMANS: You are welcome.

COSTELLO: Still to come in the NEWSROOM, will the last person at Capitol Hill turn out the lights? The government shutdown now less than 13 hours away. But what exactly will happen? Details coming up next.

But before we go to a break here's what some of you told CNN about a shutdown threat and the lawmakers who are making it all possible.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Words fail me really that with regards to all this kind of position where we can't, we can't compromise to the point that we've got to shut the government down.

UNIDENTIFIED MALE: It's terrible and it shows the malfunction of the government process.

UNIDENTIFIED FEMALE: It's a shame. They behave worse than my own kids behave. They can't just sit down and come to an agreement about something, and work it out. This is affecting everybody around us.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

COSTELLO: If Congress can't cut a deal, our government is set to run out of money when the clock strikes midnight. So what can you expect from a shutdown? Tom Foreman has more.

TOM FOREMAN, CNN CORRESPONDENT: The first thing you may notice about a government shutdown if one comes is that there is really not that much to notice, because we're not talking about single grand event, but rather a series of events that simply start with the shutdown.

So if you go to the airport, it's still going to be operating, and the military, customs, border patrol they're all been in business the postal service, the federal courts. The banks will all be open, and of course all those local services that are paid for by your local taxes like schools and police and firemen they'll still in business.

Still, "USA Today" did an analysis where they said about 41 percent of the government would shut down. That's got to be producing an effect somewhere, so let's bring in the next layer here and talk about that. If you go to a national park or a museum, or a monument connected to the federal government you may find that it is closed.

If you need a loan for your business or your home backed by the federal government, you may find that becomes a very slow process.

And if you need a new passport or a gun permit, that may also be slowed down. There may be even be a little a delay in some federal checks like Social Security although generally lawmakers try to keep that from happening.

And then there would be the real immediate effect. If you're for example a federal worker, you're very well could be told go home and you won't get a pay check until this thing is over, and even then retroactive pay which has happened in the past is not a guaranteed thing. With all those federal workers missing, if you have to contact a government office to for example sign up for Medicaid, you may find you can't really do that. And of course a lot of to congressional staffers will have time to go to the beach. Time is really what this is about.

If this only lasted a few days, you would probably all stayed back here in the green zone and not really that much aware of it and not really seeing that much in terms of the results, but the longer it goes on, the more economists and analysts say the red zone here, these things would start spilling over and more of us would feel the impact and the whole economy could ultimately suffer.

COSTELLO: Ok. Tom Foreman is out of the virtual room and he's joining me now live from Washington. So Tom, what are the federal workers being told today?

FOREMAN: Well, some of them are being told a lot, a lot of them have already seen the contingency plans for their department so they have an idea of how this is going to play out; some may not. But by and large, these departments have seen this coming and it had time to draw up some plans and some of which run for dozens and dozens of pages explaining specifically what they're to do with their Blackberry and their phones and when they are supposed to go home and what they are supposed to do -- Carol.

COSTELLO: Tom Foreman reporting live from Washington.

Still to come in the NEWSROOM -- his home vandalized by hundreds of partying teenagers, then threats from their parents -- now one woman has a message to those and she's not holding back. She'll join me live next.

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COSTELLO: A wild party involving 300 teenagers who has trashed and damaged a former NFL player's New York home while he was out of town -- you have heard that story before. Well, now a New York radio host is lashing out at the teenagers' parents for making threats against the homeowner Brian Holloway.

Kelly Lynch writes in an open letter, quote, "Instead of sitting little Johnny and reminding him that what he did is not acceptable and then dragging him by the collar to apologize to Mr. Holloway, you chose instead to harass and threaten the victim. How dare you respond with anything other than regret, embarrassment and a sincere apology instead of righteous indignation, threats of violence and lawsuits?

Kelly Lynch with WGY News Radio joins me now. Good morning Kelly.

KELLY LYNCH, WGY NEWS RADIO: Good morning, Carol.

COSTELLO: Any responses to the letter? LYNCH: Oh, my gosh, yes. I posted this last Friday, and kind of went about my day. And I checked in later in the day, and it had just taken off. It has been met with such an unbelievable response. I have heard from people all across the country, and even people overseas.

And I think it strikes a chord with parents everywhere who see what is happening with the way we are raising our kids and what happens down the road. It is just a sense of entitlement, a lack of accountability and a lack of responsibility, and people are angered by it.

COSTELLO: You seem to be indicting all parents of the millennial generation. I mean is that really fair though? I mean, I know these kids were awful. They were so awful --

LYNCH: No, I'm not.

COSTELLO: -- but there are many good kids in America.

LYNCH: I know, I have a few of them. Not every kid is bad and not every parent is bad. I think the overwhelming majority of parents and kids are really good. They are trying to instill values in their kids.

Kids want to work hard. They want to do a good job, but I think there is a set of parents out there who believe in being their parents, their kids' friend, instead of their parent who give them everything that maybe they never had, and so we are raising not an entire generation, but a good number of kids who feel that they are entitled to have everything handed to them.

We give every kid in sports a trophy. We give -- we have parents who are raising kids to blame the teacher for their failing math, and we give our kids iPhones in middle school and we wonder why they want everything handed directly to them. They don't have to work for it.

COSTELLO: Well, you know, this problem has been going on for quite some time. And everybody thinks oh parents are changing, and this is the year that they are going to change. Why aren't parents changing, because they don't seem to be?

LYNCH: Well, I think it is very easy. It is easy to be a lazy parent and say, "Oh, you want the iPhone, here you go." It is easier to buy the iPhone than listen to your kid complain about it for days and weeks and months until they get it. So I think part of it is lazy parenting. But I think the other part of it is we're just seeing this generation of kids that's growing up and expecting things, because they have gotten it all along.

And so that is what we see with the Holloway case is that they felt entitled to break into this man's house and entitled to have a party there and there are no repercussions. Their parents weren't holding them accountable. If I had done that when I was in school -- and not to say I never made mistakes as a teen, because I certainly did -- but my parents held me accountable. And I would have never dreamed of anything else than expecting to be marched up there and apologize and do my part in cleaning up.

Instead these kids are making threats and their parents aren't holding them accountable, and it has made a lot of people really angry because it is so symbolic of what is happening in parenting these days.

COSTELLO: So Mr. Holloway -- he has been very generous through all of this. He says, you know, come on apologize. Help me clean up my home. Of course only five of the teenagers showed up, but do you think that he should have went another route in these times?

LYNCH: Well, you know what; I have to say he was an incredibly gracious man in doing what he did. I don't think I would have been able to rise to that. And I think that is probably what has everybody so angry. If it had been a party at some house, we probably wouldn't even be paying much attention to it. But because this man went so far out of his way to say "Hey, listen, I'm not going to press charges, I want you all to come and help clean up. Let's use this as an opportunity, a teachable moment so to speak, and use this as an opportunity to look at ways we can better spend our time than drinking and doing drugs and whatever."

And what they did instead of saying, you know what; you are right, let's take advantage of this opportunity, they instead -- their parents went and started making threats against him and threaten lawsuits for putting their pictures on Twitter and Instagram. And I think we've lost sight of what this guy had in mind. He wanted to help these kids. And instead, we are seeing this kind reaction.

And now, because they didn't step up and take responsibility, we are starting to see them being charged. We saw six kids charged on Friday and they expect to have more. When all is said and done, it's going to be the largest round up of criminals in this county, because they didn't step up to the plate and accept responsibility from day one.

COSTELLO: I must say, I'm so glad because that is just -- it's just despicable.

Kelly Lynch thank you so much for joining us this morning, we appreciate it.

LYNCH: Thanks, Carol.

COSTELLO: Still to come in the NEWSROOM, fed up with paying all those bank and the ATM fees? Well, you're certainly not alone. According to a new report, those charges have been climbing for 15 years straight.

(COMMERCIAL BREAK)

COSTELLO: Checking our top stories at 54 minutes past the hour. Right now in Italy a retrial is under way for Amanda Knox, the Washington exchange accused of murdering her British roommate. She was first convicted and then she was acquitted and now she is facing a new trial. But Knox has refused to return to Italy for the proceedings.

How successful was BP at stopping the gulf oil spill and how much oil was actually released? These questions are at the center of a second phase of a trial beginning today against BP and its partners. Fines could reach into the billions of dollars. Testimony is expected to last a month with a judge's ruling possibly happening by next year.

Alex Rodriguez takes his fight against the 211-game doping suspension to the commissioner's office today. A-Rod's high-powered legal team will argue against Major League Baseball attorneys at an arbitration hearing. The hearing could go as long as five days with a decision coming soon after.

Bank fees have been spiking for 15 straight years; that's according to "USA Today" and bankrate.com. Both say overdraft fees and out of network ATM costs have also hit record highs. Overdraft charges now average $32.20, and you can expect to pay an average of $4.13 if you use another bank's ATM.

Apple computer is now the most valuable brand in the entire world. Apple has replaced Coca-Cola, according to a top branding consulting firm. It looked at financial performance and the ability to change consumer behavior.

And two boaters from the Florida Keys are getting up close and personal with water spouts. Take a look at these amazing pictures. There are five water spouts here. Aaron Osters and Kevin Johnsen were fishing for lobster when they came face to face with the twisters and they steered right into them.

Of course, that can be deadly, but Johnsen says he's a veteran charter boat captain and says he's done it twice before when conditions were right. And I guess they must have been right this time, too.

Thank you so much for joining me this morning. I'm Carol Costello.

"LEGAL VIEW" with Ashleigh Banfield up next.

(COMMERCIAL BREAK)

ASHLEIGH BANFIELD, CNN HOST: T-minus 13 hours to shutdown. Washington, we have a problem.

We are looking beyond the blame game this hour. We're checking the facts and we're finding out what this mess means for you, because when the clock runs out at midnight, so does much of the money. Coming up, what exactly closes and what stays open if the government does in fact shutdown.

It could mean pay delays for 1.4 million U.S. troops. Families who already live paycheck to paycheck would just have to do without. But guess whose paychecks will not stop coming.