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Obama Remedy; Treasury Sounds Alarm; Shutdown Halts Flu Tracking; Rising Mutiny Inside GOP; Shots Fired on Capitol Hill

Aired October 03, 2013 - 14:00   ET

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

BROOKE BALDWIN, CNN ANCHOR: Great to be with you here. I'm Brooke Baldwin.

Count with me, day three of CNN's special live coverage of the first U.S. government shutdown in 17 years. See what we're watching here? The Dow is sinking. The Gulf Coast preparing for a hurricane. Both sides pulling out the big guns in this fight, poster boards, of all things. You see this? We'll tell you what they say coming up.

And one of those men you see there, Senate Majority Leader Harry Reid, the Republicans' new public enemy number one, has a message for House Speaker John Boehner.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D), MAJORITY LEADER: A very simple message today for Speaker Boehner. Let the House stop this irresponsible reckless games and just reopen the government. He single-handedly is keeping the government shut. Some recent stories have even suggested that the speaker is keeping the government shut down because I hurt his feelings. That's true. I'm sorry I hurt your feelings.

(END VIDEO CLIP)

BALDWIN: Hearing some chuckles there. So from the Senate majority leader to the House majority leader, Eric Cantor. Boehner's number two, he's firing back.

(BEGIN VIDEO CLIP)

REP. ERIC CANTOR (R), MAJORITY LEADER: I think the speaker and I have both said that the Republican position is, we believe we should fund this government, but we also believe that this should not be any special treatment for anyone. And that is why we believe the right solution to that is to provide for a delay of the individual mandate under the health care law.

(END VIDEO CLIP)

BALDWIN: And we heard from the president of the United States today. He did not mince words about his frustration, speaking from a construction site in Maryland.

(BEGIN VIDEO CLIP) BARACK OBAMA, PRESIDENT OF THE UNITED STATES: There will be no negotiations over this. The American people are not pawns in some political game. You don't get to demand some ransom in exchange for keeping the government running. You don't get to demand ransom in exchange for keeping the economy running. You don't get to demand ransom for doing your most basic job.

And if the speaker of the house, John Boehner, simply let the bill get on the floor for an up or down vote, every congressman could vote their conscience, the shutdown would end today.

As reckless as a government shutdown is, as many people as being -- as are being hurt by a government shutdown, an economic shutdown that results from default would be dramatically worse. In a government shutdown, Social Security checks still go out on time. In an economic shutdown, if we don't raise the debt ceiling, they don't go out on time. Heed the warnings of the Chamber of Commerce and CEOs and economists and a whole lot of Republicans outside of Congress. They're all saying, do not do this. They're all saying to Congress, do your job. And the sooner you do your job, the less damage you'll do to our economy and to businesses like this one. So pass a budget, end the government shutdown. Pay our bills. Prevent an economic shutdown. Just vote and end this shutdown and you should do it today.

(END VIDEO CLIP)

BALDWIN: The president's message to Congress couldn't be clearer, the American people are not your pawns.

Let me take you to Capitol Hill to our correspondent there, Athena Jones.

And, Athena, on the president here, we know we're 48 hours away from Barack Obama leaving the country. We know they've shortened his trip already. I mean are there any chances this thing will crack before them? I mean what's happening on Capitol Hill?

ATHENA JONES, CNN CORRESPONDENT: Brooke, I wish I could say that we know that there's going to be a big development, a big step forward before the president departs for Asia. That's set for Saturday afternoon, as you mentioned. But as of right now, I can tell you it sounds like more of the same. It's maybe a new day, there may be a new turn of phrase that folks on either side are using, maybe some new examples to show the harm that this shutdown is doing. But the basic argument remains the same, Republicans right now are pushing through a series of votes on piecemeal spending bills that would fund the parts of the government they want to fund.

For instance, that sound you heard from Eric Cantor, the majority leader, was at a press conference talking about the need for the Senate to pass a bill on the national -- funding the National Institutes of Health so that children stricken with cancer can get access to clinical trials. The argument on the Senate side and the Democrat side remains the same, they want Republicans to pass a bill funding the entire government, reopening the doors of the government, allowing these hundreds of thousands of workers to get back to work, and then sit down and have negotiations on some of these budget issues.

Brooke.

BALDWIN: Athena Jones, thank you.

And, you know, I mentioned poster board at the top of the hour. Let me loop back to that because Republicans, including some who are doctors and nurses, are broadcasting Harry Reid today, making him a poster board over a comment the Senate majority made to CNN. You saw it first right around this time yesterday on this show. Each week, hundreds of patients, including kids with cancer, are admitted to these clinical trials at the National Institutes of Health, the NIH. But now, as you know, with the government closed, they can't be admitted. So, Republicans, they want to cherry pick that part and pass a bill to fix that. So our chief congressional correspondent, Dana Bash, she sat there yesterday and she asked and she pressed Senator Reid about that particular effort, which did not sit very well with him. Here it was.

(BEGIN VIDEO CLIP)

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: You all talked about children with cancer unable to go to clinical trials. The House is presumably going to pass a bill that funds at least the NIH. Given what you've said, will you at least pass that? And if not, aren't you playing the same political games that Republicans are?

SEN. HARRY REID (D), MAJORITY LEADER: Listen, Senator Durbin explained that very well. And he did it here, and he did it on the floor earlier, as did Senator Schumer, and it's this -- what right do they have to pick and choose what part of government is going to be funded? It's obvious what's going on here. You talk about reckless and irresponsible, wow. What this is all about is Obamacare. They are obsessed. I don't know what other word I can use. I don't know what other word I can use. They are obsessed with this Obamacare thing. It's working now and it will continue to work and people will love it even more than they do now by far. So they have no right to pick and choose.

BASH: But if you can help one child who has cancer, why wouldn't you do it?

REID: Listen -

UNIDENTIFIED FEMALE: (INAUDIBLE).

REID: What -

SEN. CHUCK SCHUMER (D), NEW YORK: Why pit one against the other?

REID: What - why - why would we want to do that? I have 1,100 people at Nellis Air Force Base that are sitting home. They have a few problems of their own. This is -- to have someone of your intelligence suggest such a thing maybe means you're irresponsible and reckless.

BASH: I'm just asking as question.

UNIDENTIFIED MALE: Senator Reid.

REID: Yes.

(END VIDEO CLIP)

BALDWIN: Dana Bash.

Meantime, Republicans, they are pouncing all over that. Take a listen.

(BEGIN VIDEO CLIP)

REP. ANDY HARRIS (R), MARYLAND: You know, when the president and the Senate shut down the government Tuesday morning, I don't think they realized the impact on things like cancer trials at the NIH for children with cancer. But yesterday on the floor of the House, we solved that problem. We passed a bill that will restore funding and make sure that children with cancer are eligible and can be enrolled in trials at the NIH. Look, I've taken care of many children with cancer when I was in my medical practice. And as a parent, every parent can appreciate the seriousness of that and the need to solve those kind of problems. That's what we did yesterday. I hope the Senate does the same today.

REP. RENEE ELLMERS (R), NORTH CAROLINA: Before coming to Washington, being a nurse, I've seen these families. I've seen the looks on their faces when they're given hope. We have taken that hope away and we need to replace it. And I say to Harry Reid and the Senate, bring this up for a vote. Don't take hope away from those families.

REP. ERIC CANTOR (R), MAJORITY LEADER: As Renee and others have said, these parents are at a critical point. These are clinical trials that somehow have been determined not essential by the NIH. This is life- saving stuff here.

(END VIDEO CLIP)

BALDWIN: So this whole conversation is about to take another turn. It will happen on this show. Stay tuned. Senate Majority Leader Harry Reid will respond to this at the top of the hour in an exclusive interview with Dana Bash. Do not miss that.

Alarm bells, they're going off over a deadline that is just now two weeks away, October 17th. We've been talking about this here. That's the day Congress has to raise the nation's debt limit or else the country won't be able to pay all its bills, default on some of its obligations.

Folks, this is uncharted territory. This has never happened before and now the Treasury Department is warning that defaulting could be, and I'm using Treasury's word here, "catastrophic," possibly bringing on a financial crisis as bad or even worse than what we all witnessed back in 2008.

So in this urgent special report out this morning, Treasury outlined these possibilities -- credit markets could freeze, the dollar could plummet, interest rates could sky rocket. Zeke Miller, political reporter for "Time" magazine, wrote about this.

And, Zeke, the headline to me was this, if Congress does not, you know, raise the debt limit, Treasury could be seeing results worse than the 2008 Great Recession. If that's right -

ZEKE MILLER, POLITICAL REPORTER, "TIME": Exactly. Exactly, this is unchartered territory, as you said. Nobody knows what would happen if they shut down here. You know, and the shutdown rolls into a default, and that really is not clear how long Treasury can sustain the payments beyond October 17th. But if that date comes and goes, then, you know, unchartered territory. This could be worse than anything we've seen since the Great Depression according to the Treasury Department.

You know, in 2011, we came awfully close to cost billions upon billions of dollars to the economy. It cost the federal government, according to one estimate, $19 billion over the course of 10 years just in terms of increased borrowing costs for the federal government. So, nobody knows how bad it is, but it certainly will, you know, won't be anything close to good.

BALDWIN: We came precariously close in 2011. What did happen, as we reported, the S&P AAA, you know, credit rating, that was knocked down. That was a big, big deal. But, you know, as you look at the interest rates, they are so incredibly low. Practically speaking, what impact did that downgrade have?

MILLER: Well, it raised borrowing costs both for the federal government in the short term and then for all sorts of companies in terms of, you know, what they - what they pay to raise money so they can fund investment to borrow for their normal capital expenditures. So it had sort of a -- it trickled down both from, you know, initially for the federal Treasury bills, those -- the interest rate from those rose initially, increasing what the federal government has to pay out in interest on those bonds, and then that trickles down to everything from mortgages. You know, if you were to buy a mortgage, usually those are priced based on top of what the prevailing Treasury rate is. So it hurts everybody. But, you know, individuals who are looking -- maybe looking to buy homes, companies that are looking to raise, you know, raise capital so they can go invest in, you know, new factories or launch entire new businesses.

BALDWIN: Zeke Miller, "Time" magazine. Once again, that deadline, October 17th. We're going to be talking about that in the coming weeks.

Meanwhile, the Gulf Coast all the way from Louisiana down to Florida on hurricane watch. You see this? Could the federal government shutdown impact disaster response? We'll talk about that.

Plus, if you have not gotten your flu shot yet, and I'm talking to myself here as well, you have to do it now. Flu trackers have been sent home because of the shutdown, and the Centers for Disease Control is sending out a big warning today. Also, most lawmakers still cashing those paychecks despite the government being closed, and one lawmaker not at all apologizing. You will hear from him coming up. Day three of the government shutdown. You are watching CNN's special live coverage.

(COMMERCIAL BREAK)

BALDWIN: October is here. Flu season is right around the corner, but the national's flu trackers have been sent home during this government shutdown. And that means though Centers for Disease Control maps we all rely on to warn you of a flu outbreak is headed your way, yes, that's not being updated right now. The most recent one was posted at the end of the last flu season. And there was a big warning about the shutdown on the CDC website. But the real impact goes beyond the maps and the numbers. Senior medical correspondent Elizabeth Cohen is here.

The CDC, just up the road, it's a ghost town.

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Right, they let go of most of their people.

BALDWIN: Yes.

COHEN: So these are the people who are supposed to be protecting us against disease.

BALDWIN: Great. Awesome.

COHEN: Isn't it wonderful? Isn't that great?

So, here's the way it works. They track the flu. And when they see a big outbreak, they make sure that they send a lot of vaccine that way. But they can't do that because they can't track it.

Now, flu season is not up in full force, thank goodness, but they're gearing up for it. It will be soon. So, all sorts of ways that it will be harmful. So, they're also supposed to be tracking the flu so that they can see if it was well matched. Did they match the vaccine well? Well, they're not going to know if they can't track it.

BALDWIN: But so quickly, selfishly, because I have not gotten my vaccine, and I'm sure a few other people haven't either, does this mean - if we're talking flu trackers, does this affect getting flu shots or is that - that's a whole separate issue?

COHEN: No, we're told that's OK.

BALDWIN: OK.

COHEN: Those have been sent out. For the most part, those have been sent out. They're there. You can get your shot. Go upstairs, 10th floor, they'll give it to you.

BALDWIN: Few (ph).

COHEN: So, yes, so that's not - that's not a problem. But the problem more is that they can't track where the flu is and what strains are out there.

BALDWIN: OK. Just something else we're watching as this shutdown continues.

COHEN: Yes.

BALDWIN: Elizabeth Cohen, thank you very much.

COHEN: Thanks.

BALDWIN: And coming up here, the brewing war within the Republican Party. We will debate who has the power right now, who's got the ball, as one Republican congressman says in a small group has hijacked the party, his words.

Plus, CNN i-Reporters, many of you, sounding off on this government shutdown. One vet says he doesn't even know this country anymore. We'll share those stories with you, next.

(COMMERCIAL BREAK)

BALDWIN: You know this. You have seen the polls. They indicate that the majority of Americans thinks Democrats and Republicans are acting like, quote, "spoiled children," as they try to fund the government. Well, House Speaker John Boehner could be considered the dad who quite simply cannot control his children. And that sentiment is coming from within his own party. I want you to listen to one Republican congressman talking about how Texas Senator Ted Cruz seems to be the one who is controlling the House.

(BEGIN VIDEO CLIP)

REP. PETER KING (R), NEW YORK: And basically I consider myself a solid conservative. But I think what's happened here with the ted Cruz Republicans is absolute insanity. We've allowed them to hijack our party. And there's any number of people in our party who call themselves moderates or whatever who say this is wrong.

(END VIDEO CLIP)

BALDWIN: Joining me now, CNN political commentator Ana Navarro, who is also a Republican strategist.

Ana Navarro, nice to see you.

ANA NAVARRO, CNN POLITICAL COMMENTATOR: Hi, Brooke.

BALDWIN: Before we chat, let me just play - let me play a little bit more sound from Congressman King. Take a listen.

(BEGIN VIDEO CLIP)

KING: Yes, they realize that Ted Cruz just led us - led the party down a dead end. I said from the start this guy was a fraud, that he was laying out a strategy that had no strategy. This was a dead end he was leading us into. He was saying that if we voted to defund Obamacare in the House and sent it to the Senate, that's all we had to do, that the Senate was going to cave into that, the president was going to cave into it, and Obamacare would be defunded. That was false and fraudulent from the start and yet we had 30 or 40 people in our party who believed that, who made promises over the summer that they were going to vote that way, and then they threatened basically to bring the House down if we didn't go ahead and defund Obama care. John Boehner -

(END VIDEO CLIP)

BALDWIN: Ana, I just took notes just listening to those two sound bites. Words like "insanity," "hijacking," "dead end," "fraud." This is talking about his own party here. What is your party's strategy out of this whole thing?

NAVARRO: Well, I think, you know, I think we're looking increasingly dysfunctional. And I think what you're hearing from more and more Republicans is a frustration with the kind of pressure that Senator Ted Cruz and his friends are -- you know, his followers, are trying to exert on other Republicans.

Look, Brooke, when I vote for somebody, I vote for them to exert their conscience and exercise their conscience in voting. What Senator Ted Cruz has been doing is ginning up the base. He's also aligned himself with some organizations that are raising money, that are threatening to primary some incumbent Republicans, that are making it very, very difficult and trying to pressure people into voting a certain way.

I'm no Ronald Reagan Republican. Ronald Reagan used to bring Republicans into the fold and used to grow the Republican base through persuasion, through wanting to include them, not through exclusion, not through threats. I think that's what we've got to get back to as a party.

BALDWIN: So you talk about Ted Cruz, you talk about some of his supporters. But at the same time, you know, it's been - it's been indicated through, you know, I don't know how many, a dozen or so other Republicans, who say, hey, let's put this clean funding bill, you know, to a vote today. The president, Jay Carney, both sort of hammering that home, why doesn't John Boehner do this? I mean do you not think he should - he should put this vote on the table today? Why isn't he?

NAVARRO: I also think that there's nothing wrong with the Senate putting up to a vote something like the medical device tax that earlier in the year in a non-binding resolution the repeal of that tax (INAUDIBLE) 79 votes.

BALDWIN: Hang on, Ana Navarro, let's -- let's go back to the House, though. Let's go back to the House, because that was my question, why don't they just throw (ph) that vote down?

NAVARRO: Well, here's the problem, Brooke. Look, the problem is this. This was a law that was passed, not in a bipartisan manner. It was passed by one party. You now have the Senate and the House divided between two parties. And you've got one party, the Republican Party, who feels they don't have a way to get their agenda through. So they end up using these must-pass bills, like the budget, as their only leverage. And that's the problem we have, that there is no will in Washington to work in a bipartisan way. And I fault both parties and both leaders and I fault the White House for that. And we, as Americans, need to urge them to come together and stop playing this blame game because in a couple of days, in a few more days, as this goes on, everybody's going to take the blame for this.

BALDWIN: OK, Ana Navarro, thank you very much.

NAVARRO: Thank you, Brooke.

BALDWIN: And make sure you watch "Crossfire" tonight at 6:30 p.m. A joint appearance by the Democratic Party chair, Debbie Wasserman Schultz, and Republican Party Chairman Reince Priebus. They will be going at it tonight, 6:30 p.m. Eastern Time right here on CNN.

And i-Reporters, many of you, sending these strong messages to Washington on this government shutdown, day three now. Want you to hear what this veteran has to say about the country he fought for.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: A 90-year-old World War II veteran. I don't recognize the country I fought for anymore.

(END VIDEO CLIP)

BALDWIN: We will hear from you.

Also, as Tropical Storm Karen barrels toward the Gulf Coast, could the shutdown impact the disaster response? Stay right here with me.

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN breaking news.

BALDWIN: All right, breaking news. We are getting reports here that the U.S. Capitol is currently on lockdown. There has been an incident. These are pictures. An incredible police presence swarming. Crime tape up. Dana Bash, our chief congressional correspondent, is joining me on the phone now.

And, Dana, what is happening?

Dana Bash, are you with me?

OK, as we work to get Dana, trying to see if we can tell what streets these are. But as you can see, and tremendous - you have -- I can't tell if these are Capitol Hill Police officers, if these are Metropolitan D.C. Police officers, but multiple officers, law enforcement. I'm seeing two streams of yellow crime tape here near the 95 sign. Ambulance in the bottom right-hand side of your screen here as we are trying to find out what exactly is going on, what caused this entire scene to swarm upon the U.S. Capitol. All I have right now, and guys get in my ear as soon as you give me -- get more information. OK. I'm going to go ahead and go with -- OK.

Wolf Blitzer, are you with me? Trying to get some --

WOLF BLITZER, HOST, CNN'S "THE SITUATION ROOM": Yes, I am. I'm here. Can you hear me OK?

BALDWIN: I can. Wolf, tell me what you know. All I know is that the Capitol is on lockdown.

BLITZER: We have a statement from U.S. Capitol Police, Brooke. And it's an important message from U.S. Capitol Police. It's an alert that was just sent out to people up on Capitol Hill. "Shelter in place. Gunshots have been reported on Capitol Hill," it says. "Requiring staff in all Senate office buildings to immediately shelter in place. Close, lock, and stay away from external doors and windows. Take enunciators, emergency supply kits and escape hoods (ph) and move to your offices, assigned shelter and place location, or the inner most part of the office away from external doors or windows. If you are not near your office, go to the office nearest you and shelter with that office and then check in with your OEC. No one will be permitted to enter or exit the building until directed by United States Capitol Police. Staff is advised to monitor the situation. Further information will be provided as it becomes available." That's from the Capitol Hill Police.