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Obama, Top GOP Remarks This Hour; Congressional Leaders Dig In Over Shutdown; Middle America's Message To Washington; Middle America's Message To Washington; Treasury Sounds Alarm On Debt Ceiling; AEG Not Liable For Jackson's Death; 94 Killed As Boat Sinks Off Italy; Eight Dead In Church Bus Crash; SUV Driver's Wife Defends His Actions; Military Families Hurt By Shutdown

Aired October 03, 2013 - 10:00   ET

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

CAROL COSTELLO, CNN ANCHOR: Good morning. I'm Carol Costello. Thank you so much for being with me.

It is day three of the government shutdown and the stalemate drags on and party leaders continue to dig in. At any moment, we'll hear from top Republicans in the House. Their topic, funding pediatric cancer research, one of the many emotional offshoots of this shutdown, and later this hour, President Obama will speak to the nation. Also this hour, both the House and Senate return to session. Frustrations build and fractures deepen.

But first, let's look ahead to the president. This will be his first public comments since last night's meeting with congressional leaders last night. CNN's Brianna Keilar is at the White House. Brianna, what do you expect the president to say?

BRIANNA KEILAR, CNN SENIOR WHITE HOUSE CORRESPONDENT: Carol, he will be making the point today specifically related to small businesses. He will be visiting a small business, a construction company, and the specific objective is to point out that a shutdown and not increasing the debt ceiling would have a really bad effect, because small businesses wouldn't be able to get loans, the cost would be higher for them.

This would be difficult for them in terms of keeping their business going and certainly creating jobs. But this does come on the heels of that meeting yesterday here at the White House between congressional leaders and President Obama. It was Mitch McConnell, the Senate Republican leader, who said it was unproductive and sadly, that may be the one point where there is bipartisan agreement.

(BEGIN VIDEOTAPE)

KEILAR (voice-over): For the first time since the government shutdown, congressional leaders met face-to-face with President Obama at the White House Wednesday night, both sides emerging with no deal and no signs of progress to end the stalemate.

REPRESENTATIVE JOHN BOEHNER (R), HOUSE SPEAKER: The president reiterated one more time tonight that he will not negotiate.

SENATOR HARRY REID (D), MAJORITY LEADER: We're through playing these little games.

KEILAR: Republicans still demanding President Obama accept a delay to his signature health care program.

BOEHNER: All we're asking for is a discussion and fairness for the American people under Obamacare.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: Am I exasperated? Absolutely I'm exasperated.

KEILAR: In an interview with CNBC, the president reiterated that he won't give in on Obamacare, but said he will negotiate on budgetary issues like taxes, spending, entitlement reform, if the House Republicans first agree to re-open the government for several weeks.

PRESIDENT OBAMA: We have a situation right now where if John Boehner, the speaker of the House, puts a bill on the floor to re-open the government at current funding levels, so that we can then negotiate on a real budget that allows us to stop governing from crisis to crisis, it would pass.

KEILAR: The president is probably right, but that's not happening anytime soon. Instead, House Republicans held votes again on funding the government in a piecemeal way that the Senate will surely reject.

Meanwhile, not far from the capitol, the World War II Memorial, operated by the largely shuttered National Park Service has become a proxy in this battle. To counter images of world war ii vets showing up to the barricaded memorial, the RNC offering to pay to keep it open.

REINCE PRIEBUS, RNC CHAIR: Our veterans deserve the freedom to see this memorial. We're willing to pay the bill. Now it's up to the president just to let them in.

(END VIDEOTAPE)

KEILAR: Carol, now the National Park Service is letting us in. They announced that they will be letting World War II veterans come to the World War II Memorial. And Carol, you will probably note, when it comes to veterans, this is really one of the most unsightly effects of a government shutdown.

And certainly here in Washington, where you have all of these memorials and veterans visiting, it's very visually obvious, a lot of cameras have been catching this. So now this outrageous image is off the table for Republicans and for the white House.

COSTELLO: I kind of like to see the World War II veterans in the halls of Congress. Maybe they can help get things done there.

KEILAR: Right? Perhaps.

COSTELLO: Brianna Keilar, thanks so much, reporting live from the White House this morning. All right, let's talk about the president now. President Obama called it useful. Nancy Pelosi deemed it worthwhile for John Boehner it was quote, "a polite conversation," but Mitch McConnell said it was unproductive. That was the reaction to last night's White House pow- wow, which by some accounts brought the shutdown closer to an end.

A GOP source telling CNN that no one even discussed making a deal. At least one House Republican says there's a reason his democratic colleagues are prolonging the fight.

(BEGIN VIDEO CLIP)

REPRESENTATIVE DEVIN NUNES (R), CALIFORNIA: The Democrats are giddy about this behind closed doors. I mean, they think that this is going to give Nancy Pelosi back the gavel. They are very cocky. They are very confident. I assume they're just looking at polling information and they want to continue down this. They want to keep the government shut down as long as they can, and they're encouraging our folks to do it.

(END VIDEO CLIP)

COSTELLO: Joining me now, Democratic Senator Mark Udall of Colorado. Good morning, Senator.

SENATOR MARK UDALL (D), COLORADO: Carol, good morning. I'm smiling because I'm thinking of my father who was a World War II veteran and how he would approach what's going on. But if I might, I would just say that none of us over here in the Senate are giddy about this shutdown. To the contrary, in my state, we just got hit hard by biblical rains and floods.

And I'm very worried that my constituents aren't going to have the relief and support that's necessary to help us rebuild after these floods. We have to get the government open, let the House vote. There was a vote on the Senate, clean funding measure.

We would put the government back in operation and then we could sit down and talk about budgets and taxes and Medicare and social security. But let's get the government open.

COSTELLO: Is there any wiggle room at all? Because this meeting last night, President Obama called congressional leaders to the White House, but then supposedly, he said to these congressional leaders I'm not going to negotiate. So why even call that meeting? What kind of negotiating is that?

UDALL: I think you first do have to sit down, look at each other, realize we're all in this together. I think what the president was saying is he wasn't going to negotiate on the affordable care act. Look, the Supreme Court ruled it's constitutional. It was passed legitimately through the Congress. It's being implemented. I think the president was saying you can't govern if you're going to refight old battles.

Let's get the government open, let's sit down and talk about the budget and tax policy and how we strengthen Medicare and social security. I know the bulk of the Congress, both Republicans and Democrats, think that's the way forward.

COSTELLO: Yes, but that's where we are right now. There's this group of conservative Republicans and they want something done about Obamacare. They want some sort of talks going on, some sort of delay. That's where we are now. So why not sit down with them, Mr. President, and talk it out?

UDALL: They're in the distinct minority. You have one faction of one party in one House of one branch of the three branches of government that's holding up all of us. At some point you just have to say no, we're going to hold the line. This would set a terrible precedent, Carol, if this small group could hold the entire country hostage over a law that's already settled, already being implemented.

COSTELLO: But I must say, Senator with all due respect, there are many Americans unhappy with Obamacare. A lot of them don't understand it and a lot of them frankly don't like it.

UDALL: If you look, most Americans are willing to give it a chance, most Americans want to see it implemented. Let's sit down and work on ways to make it even better. This group in the House wants to end Obamacare. That's basically what they're saying, we're going to defund it and delay it and eliminate it, and that's just not where we are.

COSTELLO: OK. Well, what about this piecemeal plan? That the Republicans are again going to put forth in just a few minutes, actually? They're going to say why not fund things like clinical trials at NIH and take care of the kids? Why not go ahead and pass that sort of resolution and fund that program?

UDALL: Look, that's tempting but we will pick winners and losers and again, we set a precedent that we can piecemeal solutions in the situation where we just ought to open the government. It's very easy. The Senate sent a bill over to the House on a number of occasions. Let the House vote. We all know if the House voted, if it was a fair vote, it would pass by a significant margin. There would be many Republicans that would join many Democrats in the House to begin the funding of the government. Then we can sit down and talk.

COSTELLO: But you know this NIH and cancer trials, House Republicans are going to use that because I'm just going to show you an image from their coming press conference. They have an image of the majority leader, Senator Reid, you know, our Dana Bash asked a question about possibly funding these clinical trials and Senator Reid said, why would we want to do that. Now they're going to use this as a political tool against Democrats and this is sort of where we are right now.

UDALL: I think however, it's transparent. It's playing a game. It's picking winners or losers. In Colorado, we have a national park, Rocky Mountain National Park, which is key to the recovery of Estes Park, which was hit so hard by these floods. I chair that subcommittee in the Senate. I want to get that park reopened. But not while being held hostage, not while having a gun held to our heads. This would set a terrible precedent for the future and it would let a small group hold us hostage whenever they felt that was a useful tactic. It isn't. Let's fully fund the government then sit down and talk.

COSTELLO: Senator Udall, I have to ask you this question just in fairness because I have asked this of Republicans. Are you foregoing your paycheck?

UDALL: I am. Here's how I've structured how we should move ahead. I'm one of 40,000 federal employees in Colorado. I'm honored to be a federal employee. If the federal employees in Colorado aren't paid, I will donate my paycheck to charity.

COSTELLO: Senator Udall, thank you so much for joining me this morning. We appreciate it.

As the stalemate grinds on, and the realities set in, we're asking Americans what they think. Today, CNN's Ted Rowlands is in Peoria, Illinois, asking Middle America what's their message to Washington. Hi, Ted.

TED ROWLANDS, CNN CORRESPONDENT: Peoria is the ultimate spot in iddle America, going back to Vaudeville. People aren't buying what's happening in Washington. We talked to people here this morning. Take a listen to what they have to say to folks in Washington.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: It's not fair. It's not fair because this decision was made by people who only want to put up roadblocks. They're not interested in moving forward. They're interested in their own private needs and desires.

UNIDENTIFIED FEMALE: It's always disappointing. I'm very disappointed in politics in general.

ROWLANDS: What message would you send lawmakers?

UNIDENTIFIED FEMALE: Get your acts together and work together.

ROWLANDS: I think anybody who ever had to work with other people knows that collaboration and compromise are part of how you do it. I don't think it's very smart or helpful.

ROWLANDS: What message would you like to send to lawmakers on Capitol Hill?

UNIDENTIFIED MALE: Get real.

ROWLANDS: What message would you like to send to lawmakers?

UNIDENTIFIED MALE: To get their act together and get the Congress back open again. This is ridiculous.

ROWLANDS: Why?

UNIDENTIFIED FEMALE: It's just nonsense. I mean, they're grown adults. They can't get along and come to a conclusion. Maybe we don't need them in there after all.

(END VIDEOTAPE)

UNIDENTIFIED FEMALE: I suspected we might -- Ted, we're having a problem with your wireless microphone, probably because you're inside that restaurant. But if I could, I would have you go on. We got the gist. Thank you so much.

After all you heard about the government shutdown, what is your message to Washington? Make a little video for us and send it to ireport.com. As the shutdown continues, we will share your views on CNN.

Still to come in NEWSROOM despite the president signing a bill to keep military members paid, the shutdown is still having a devastating effect on military families. We'll talk to an Army wife next.

(COMMERCIAL BREAK)

COSTELLO: All right, you're taking a look at that shot, that's actually in Maryland, where the president will speak in just about, oh, a half hour or so if he's on time. The president is expected to talk about the economy and jobs and I'm sure he will mention a few things about the government shutdown as well. We'll take you will there live when the president begins speaking.

We are also talking about lawmakers accepting paychecks when federal workers are not getting paid. These are the four House members who decided to keep their paychecks coming in. Danny Davis, Todd Roxita, William Clay and Howard Coble, all of the other lawmakers in the House of Representatives have either decided to forego their pay or donate it to charity. We'll keep following that part of the shutdown.

Talking about paychecks, the government shutdown also means that every day, hundreds of millions of federal dollars that are usually pumped into the U.S. economy in other ways are not being spent. Our Tom Foreman looks at just how much money we're talking about, how much it's costing us during this government shutdown.

TOM FOREMAN, CNN CORRESPONDENT: Take a look at this number back here, $300 million per day. That is one estimate of how much money is disappearing from the economy right now because it's not being spent by the federal government. We knew there would be expenses in some ways. In this red tier, federal workers who have been sent home without money, people who do direct business with the government.

We also knew there would be a green zone back here of some things that wouldn't be affected so much like air traffic control and border patrol and the federal courts and postal service. The cost seems to be happening most of all in the yellow zone, the in-between places, things like intelligence gathering, the national security agency now down about 70 percent in terms of civilian employees, or so we're told.

Some food inspection not happening because those people have been sent home, there is the case where certain head start programs have been shut down around the country, about 19,000 families involved with that. Of course, the panda cam turned off over at the national zoo. Here's another way of looking at it.

If you combine all of this together and say let's not talk just about the money directly not being paid to federal workers, but the ripple effect of that, there is analysis out there by moody analytics that say if you combine it all, it will be equal to the economic impact of Hurricane Katrina and super storm sandy minus the property damage, or about a quarter to half million dollars from the time I started speaking.

COSTELLO: Wow. Tom Foreman is live in Washington now. Tom, is it possible that volunteers could pick up critical work left by furloughed workers?

FOREMAN: No. I guess civilian volunteers could. That total amount would be if it goes on for a month so it does have to add up to reach that big amount. No, they really can't, because there are agencies out there like the NIH where there are people who very much care about these patients, would like to help them. There is a woman missing up in Idaho and there were people, federal workers who were involved in the search for them.

They got cut way back because they were not allowed to go on the land. They had to get an exemption for that and special permission to go out there. There are all sorts of rules that keep the workers themselves from doing this for free, no matter how much they may care about their jobs and because it's a closed federal facility, it's very hard for any volunteers to step in and say open the doors, let us go do it. That's part of the trap here. It just doesn't seem to be getting any better.

COSTELLO: No, it doesn't. Tom Foreman reporting live from Washington, thank you.

All right, a bit of breaking news to pass along, the Treasury Department is out with a brand new report and it's talking about the debt ceiling. That's the next big debate that will go in Washington -- that's going to go on in Washington between lawmakers and the president. Christine Romans is in New York to tell us what this report says. Good morning.

CHRISTINE ROMANS, CNN BUSINESSS CORRESPONDENT: Good morning, Carol. This is an urgent special report from the treasury department, essentially telling Congress it must act now, it has put the treasury, the finances of the United States in an untenable position and could quite possibly be catastrophic, what happens if the debt ceiling is not raised. Let me tell you what a senior administration official told us.

He said no telling how bad a default on our debt could be, it could plunge us into something that looks like the great recession if not the great depression. The report finds a default would be unprecedented, has the potential to be catastrophic, credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket.

The negative spillovers could reverberate around the world and there might be a financial crisis and recession that could echo 2008. It goes on with some supporting facts about what just happened in 2008, the credit freeze, how that felt, how it might ripple through the economy but clearly, this is an administration that is trying to tell the public and urge Congress that we are in a position where $30 billion in the treasury coffers by October 17th. There is some $67 billion in important bills that come due November 1st.

Unless you raise the debt ceiling and issue more bonds, you won't be able to pay all that's coming due in the beginning of the month. Reporters basically grilling senior administration officials about could we prioritize our bills, could you pay some bills and not pay another, could you give IOUs? The Treasury Department saying quite frankly, we shouldn't be in this position and they're not going to speculate on how they could prioritize their bills because doing that would send a signal to world markets that America frankly doesn't have its act together.

COSTELLO: It's just like deja vu all over again. We have been down this road before. I just don't get it.

ROMANS: Carol, I know. Let me tell you, you have this rare situation where just a few years ago the president was calling bankers on Wall Street fat cat bankers, and now you have the president and those fat cat bankers, they are speaking with the same voice. They met yesterday. I want you to listen to what Lloyd Blankfein, the CEO of Goldman Sachs, said could happen.

(BEGIN VIDEO CLIP)

LLOYD BLANKFEIN, GOLDMAN SACHS, CEO: There's precedent for a shutdown. There's no precedent for default. We're the most important economy in the world. We're the reserve currency of the world. Payments have to go out to people. If money doesn't flow in, then money doesn't flow out.

(END VIDEO CLIP)

ROMANS: Wall Street bankers and the president of the United States singing the same song for the first time in five years, Carol. That shows you what kind of territory we're in right now. It's just one of those things where urging Congress, trying to get cooler heads to prevail, the Treasury Department issuing this special report but at the same time, it doesn't look like there's any movement at all on Capitol Hill -- Carol.

COSTELLO: Christine Romans reporting live in New York, thanks so much. We'll be right back.

(COMMERCIAL BREAK) COSTELLO: Checking our top stories at 24 minutes past the hour, Michael Jackson's family says they're considering their legal options after a jury found a concert promoter not liable for Jackson's death. The jury said that while AEG Live was the one who hired Dr. Conrad Murray, it was Murray alone who caused Jackson's death. The ruling means that Jackson family gets no money.

At least 84 people, including a pregnant woman and her two children, have died after their boat capsized and caught fire off the coast of Italy. It happened near an island that's a magnet for African refugees. The Italian Coast Guard says at least 151 people have been saved. Rescues are ongoing.

Investigators will probably have to use dental records to identify some of the victims of a church bus crash in Tennessee. Eight people were killed, 12 others hospitalized. Two of them remain in critical condition this morning. The bus was carrying a group of seniors back from a religious conference. One of the bus' tires blew, sending the bus across a median and crashing into an SUV and tractor trailer.

The wife of that SUV driver who was beaten during a clash with motorcyclists in New York City is speaking out. She says her husband was quote, "placed in grave danger by a mob of reckless and violent motorcyclists and that he acted to protect the lives of our entire family." In the meantime, a biker who was part of the swarm told CNN that the bikers just wanted the SUV to stop.

(BEGIN VIDEO CLIP)

JEROME DAVIS, WITNESSED BIKER SWARM ATTACK: It was a few seconds. Everything happened so fast, it happened so quick. And to see the fellow rider underneath, totally right underneath the car, and he kept proceeding on. Not harassing him but wanted to have him pull over. Not in a way of threatening him. I kind of feel he was afraid. He was afraid.

(END VIDEO CLIP)

COSTELLO: The case has prompted authorities to look into an unrelated incident from 2011. This video seems to show bikers antagonizing a driver at a busy intersection. Police say they're looking for a pattern of biker gang activity.

Let's talk about the government shutdown now because it isn't just about money. It's about real families suffering in uncertainty and despite the president signing a law to keep military members paid, military families are still feeling the hurt by the shutdown.

Joining us now is Crystal Cavalier, a government analyst with the homeland security department, married to a soldier based at Fort Bragg. She has been furloughed. Good morning, Crystal.

CRYSTAL CAVALIER, ARMY WIFE AND MOTHER: Good morning. How are you?

IMUS: I'm probably much better than you this morning, sadly. So is your husband still being paid? CAVALIER: He is. We just heard that, you know, the government is going to pay him and that's what the president signed into law I believe midnight of September 30th. So yes, he's still getting paid as far as we know.

COSTELLO: He's probably not getting paid -- you're probably not a wealthy family, right?

CAVALIER: No.

COSTELLO: You're not getting paid. No?

CAVALIER: No.

COSTELLO: You need two incomes, right?

CAVALIER: Yes, we do.

COSTELLO: Tell us how this is hurting your family.

CAVALIER: I moved up here to Washington to take a job because there's not that many jobs in North Carolina, especially at Fort Bragg, and so we do need this dual income to help our family. It's just -- I thought it was going to happen but I never knew it was going to go this long. I thought they were going to have a plan in place, especially to help military families.

You know, you heard about the base, the commissary is being closed and there's ACS is closed. It's affecting a lot of people. I think the lawmakers just need to know that this stance they're taking is affecting everybody. I don't know if they really thought about that.

COSTELLO: I'm just looking again at what you do for a living. You're a government analyst with the Homeland Security Department. It's also disturbing that you're not on the job protecting our country.

CAVALIER: Yes, that's true. You know, that's that word essential and nonessential. I'm one of those nonessential employees and I really hope that the lawmakers will retroactive pay the government workers who have been furloughed. I mean, this is really important and it's been affecting everybody. I don't know if they're seeing that. It's just hard.

COSTELLO: Well, it's interesting, because there's been a lot of talk from lawmakers and the president about compensating military families to keep paying soldiers like your husband. The World War II Memorial, they opened that back up. In fact, the republican national committee offered to pay security guards so that World War II vets could go in and look at the memorial. When you hear things like that and then you look at what the shutdown is doing to your family, a military family, how do you feel?

CAVALIER: Well, I'm glad they opened the memorial, but it's just making me -- it just makes me sad because there's so many of my friends, I have friends that are in Maryland, I have friends that are in Texas and it's affecting us each individually, and you know, it's just terrible and I really wish they would come together and be bipartisan. I really hope the Republicans and Democrats and the president can all negotiate. That's what we need is a strategy. We need a plan.

COSTELLO: We need a plan. I know. I wish someone would come up with a plan. I mean, are people pointing fingers? Are you pointing fingers or you think they're all bums?

CAVALIER: Well, I'm not pointing fingers. I still have faith in our political system. I'm up here in Washington, the most political place in the world, so I still have faith. I just think it's just, it has a lot to do with each of the sides, like the Democrats and the Republicans, they want to take a stance and show their constituents back home that once they got voted in because of this health care plan, they want to show them they are taking this stance even though it's hurting them and it's hurting these people, the constituents.

So I just, I don't know, I just think the American people need to reach out to their lawmakers and say OK, enough is enough. We need to come up with a plan. We need to go into an office and see what needs to be negotiated, make a deal. Make it happen.

COSTELLO: OK, So one word description, how do you feel when I say that some lawmakers are continuing to accept their paychecks?

CAVALIER: Well, it kind of disappoints me, just sad.

COSTELLO: Just sad. Crystal Cavalier, thank you so much. Much luck to you.

CAVALIER: Thank you.

COSTELLO: You're welcome. Still to come in the NEWSROOM big concerns over small business --