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Shutdown Showdown Reaches Its Ninth Day; Shutdown Sends Market Lower; Off-Duty Cop Arrested in SUV Attack; Interview with Former U.S. Senator Olympia Snowe; 9-Year-Old Still in Custody in Nevada

Aired October 09, 2013 - 09:00   ET

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

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CAROL COSTELLO, CNN ANCHOR: Plus, an illegal work stoppage.

UNIDENTIFIED MALE: I want to follow the rules. That's all.

UNIDENTIFIED MALE: The keys are in their hands. If they honor this contract, we will be driving tomorrow.

COSTELLO: Drivers of Boston school buses off the jobs angry over a GPS app that tracks their driving. Leaving families trapped in the middle.

UNIDENTIFIED FEMALE: It is a great hassle. Almost late getting here because of the traffic.

COSTELLO: Also.

UNIDENTIFIED MALE: We're not bad parents. We didn't think nothing of it. I don't have an angel. I have a 9-year-old.

COSTELLO: The father of a 9-year-old who sneaked onboard a plane is speaking out calling his son a charmer but trouble.

And Kanye, Kimmel, go toe to toe tonight.

You're live in the CNN NEWSROOM.

(END VIDEOTAPE)

COSTELLO: All things Kanye in just a minute. But first good morning, everyone. I'm Carol Costello. Thank you so much for joining me. It is day nine of the partial government shutdown and in Washington the posturing of politics may have met its match. It is the power of shame.

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SEN. JOHN MCCAIN (R), ARIZONA: Today shutdown outrage, military death benefits denied to families of fallen troops. Shouldn't we -- shouldn't we as a body, Republican and Democrat, no matter who we are, shouldn't we be embarrassed about this? Shouldn't we be ashamed?

(END VIDEO CLIP) COSTELLO: From military death benefits going ignored to needy children finding their preschools closed. Charities step in and our dysfunctional government gets called out.

Are Americans finally fed up with this?

Well, this morning there may be just a glimmer of compromise poking through all the bomb pass and the blame. President Obama says he may be ready to talk. But Republicans say he's really just demanding their unconditional surrender.

CNN's Brianna Keilar is at the White House this morning.

Good morning, Brianna.

BRIANNA KEILAR, CNN SENIOR WHITE HOUSE CORRESPONDENT: Good morning to you, Carol. Well, let me first tell you that we now understand House Democrats will be coming to the White House this afternoon for a meeting. So you have that going on. One White House official telling me not really to read too much into this. This is congressional outreach. They'll be having House Republicans as well as House or Senate Republicans and Senate Democrats in the coming days as well.

So this isn't necessarily to discuss a short-term measure that we've been hearing the White House and House Republicans may be open to. So at this point, this discussion isn't exactly a breakthrough. But it may be a positive development because you have both sides sort of talking about how they may be open to this. And it come as politicians are really feeling a lot of pressure.

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KEILAR (voice-over): Day nine the government shutdown is getting real. For families of troops killed in combat they will not get automatic death benefits during the shutdown, $100,000 to help cover funeral costs and travel to Dover Air Force Base to witness the dignified transfer of their loved one's remains.

In North Carolina food assistance for poor women and children cut off. And 27,000 furloughed government workers have signed up for unemployment as they go without pay.

Just eight days until the United States could default, President Obama phoned House Speaker John Boehner. Both sides indicating the divide is as deep as ever.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: You got to stop repeating this pattern.

KEILAR: But later President Obama appeared in the White House briefing room opening the door to negotiations if Republicans agree to a short-term solution to reopen the government and increase the debt ceiling.

OBAMA: If there's a way to solve this, it has to include reopening the government and saying America is not going to default, it's going to pay our bills.

KEILAR: How long might a short-term measure last? Four to six weeks, one GOP source tells CNN. Republicans may agree if the president promises to negotiate. But it's far from a breakthrough without some sort of concession like a cut in spending, a stop gap measure may not clear the House.

REP. JOHN BOEHNER (R), HOUSE SPEAKER: The long and short of it is there's got to be a negotiation here. We can't raise the debt ceiling without doing something about what's driving us to borrow more money and to live beyond our means.

KEILAR: The House voted Tuesday to create a congressional committee on government spending and the debt limit, as well as pay federal employees currently working without pay. But the Obama administration threatened vetoes. A stalemate still. And the clock is ticking louder and louder.

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KEILAR: Now if, Carol, the U.S. were to default in the middle of this month, not only would the credit standing of the U.S. be at risk, but you also have tens of billions of dollars in payments that are due come November 1st that would go unpaid presumably and they include to Social Security recipients. You're talking about Medicare, disability, and to active duty military.

These are very real consequences that put a lot of pressure on politicians on both sides of the aisle.

COSTELLO: Brianna Keilar live at the White House this morning.

And speaking of consequences, the stalemate in Washington is hitting Wall Street, too, where it hurts the most. And that would be the bottom line. Stocks have fallen four out of the last five days. But the threat of default could mean even bigger losses for investments like your 401(k). But some on Capitol Hill seemed tone deaf to the dire warnings about the consequences of refusing to raise the debt ceiling.

Here's Republican Senator Tom Coburn on CNN's "NEW DAY."

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SEN. TOM COBURN (R), OKLAHOMA: The problem is we continue to kick it down the road and pretty soon everything is going to continue as it is until it doesn't. And when it doesn't, that's when the catastrophe comes. So I'd rather have a managed catastrophe now which I don't think will be there.

You know, here's the thing that all the media does. They say it is default equals not raising the debt ceiling. That's not true. That is not true. Those are two different and distinct things.

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COSTELLO: CNN's Christine Romans joining me now.

I'm just trying to figure out what a managed catastrophe might look like.

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COSTELLO: Can you manage a catastrophe?

CHRISTINE ROMANS, CNN BUSINESS ANCHOR: A catastrophe that's been managed. Look, you know, it's interesting to me that he said that, too, because talking about kicking the can down the road. We've been doing this for a very, very long time. And now it is business leaders, Carol, business leaders who are lobbying in a very different way in Washington.

They are going to Congress members and they are saying, look, we really need to raise this debt ceiling. The economy is too fragile here to be messing around with all of this. They lived through the financial crisis, Carol, once before. They don't want another one. They don't want something that looks like the great recession. Listen.

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ROMANS (voice-over): Stock markets are tumbling as the debt ceiling deadline looms and the government remains partially shut down. And you may start feeling the repercussions. Lawmakers are talking to the country but that isn't helping ease Wall Street's concerns.

OBAMA: The greatest nation on earth shouldn't have to get permission from a few irresponsible members of Congress every couple of months just to keep our government open or to prevent an economic catastrophe.

ROMANS: As the president spoke, the selling continued. The Dow dropping 159 points or 1 percent by Tuesday's close.

BOEHNER: We can't raise the debt ceiling without doing something about what's driving us to borrow more money and to live beyond our means.

ROMANS: Since the shutdown began, the Dow is down 2.6 percent and with no solution in sight, America's top CEOs are getting fed up.

LLOYD BLANKFEIN, CHAIRMAN AND CEO, GOLDMAN SACHS: 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.

MUHTAR KENT, CHAIRMAN AND CEO, COCA-COLA: The way forward is not easy. It requires a lot of sacrifice, it requires a lot of flexibility. It requires a lot of compromise. We expect the same will happen with the political architecture. ROMANS: Starbucks CEO Howard Schultz has written an open letter asking for an end to the gridlock, saying he is disappointed by the level of irresponsibility and dysfunction with our elected political leadership.

The debt ceiling debate is the biggest threat to your investments like your 401(k), your mutual funds, your portfolio.

WARREN BUFFETT, CHAIRMAN AND CEO, BERKSHIRE HATHAWAY: So a debt ceiling really doesn't make any sense. So it ought to be banned as a weapon. It should be like -- it should be like nuclear bombs, I mean, basically, too horrible to use.

ROMANS: The result of the government's inaction could be catastrophic. While the world waits for a solution, your money hangs in the balance.

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ROMANS: So Warren Buffett says it's too horrible to use, the debt ceiling. You just -- you just showed -- you just heard that from Senator Coburn that a managed catastrophe now is better than a catastrophe later. So clearly, they are using this line. But leaders -- business leaders, CEOs, the Fed chief, economists, so much consensus, Carol, that it simply is not a good idea to not raise the debt ceiling.

Some economists actually, Carol, saying not raising the debt ceiling is a vote for a recession in the near term -- Carol.

COSTELLO: Christine Romans reporting for us from New York this morning.

Despite the budget impasse, Wall Street did hear some news it liked. President Obama is expected to nominate Janet Yellen today to replace Ben Bernanke as the Fed chair. Yellen is the current vice chair of the Federal Reserve's Board of Governors and a former Fed president. If confirmed Yellen will be the first ever woman to head a major central bank.

We'll have special live coverage of Yellen's nomination. That starts at 3:00 p.m. Eastern with Wolf Blitzer.

An off-duty undercover New York City police detective is facing charges this morning in the violent confrontation between a group of motorcyclists and an SUV. And police say they have video of that undercover officer participating in the altercation but they have not released it publicly yet. The officer and another biker are expected in court later today.

CNN's national correspondent Susan Candiotti is outside the courthouse in New York with more for you.

Good morning, Susan.

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Good morning, Carol. Imagine five bikers charged so far in connection with this case. That's so far. And those five include, as you said, an off-duty undercover New York police detective.

Now our sources are telling us that this off-duty cop is seen on video. We haven't seen the video yet, but he is seen smashing the rear window of the SUV. And then this is a cop who didn't just graduate from the police academy. He's a veteran. He's been with the force for many years, 32 years old.

And another biker was also arrested. This one a civilian yesterday. He was charged with, and he is allegedly seen on camera, helping to pull the driver out of the car. He is seen at the driver's door.

Now our CNN legal analyst Paul Callan says that in regard to the undercover police officer who was charged, even if he is convicted, he still could lose his job.

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PAUL CALLAN, CNN LEGAL ANALYST: As police officers, they have an obligation under NYPD regulations to break their cover if they're undercover and to come to the assistance of any civilian who is in danger. And having looked at this video, clearly the civilians in that car looked like they are in danger.

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CANDIOTTI: And we fully expect to see that police officer in court sometime today. The Manhattan District Attorney's Office issuing a statement about what's been happening saying this, quote, "The NYPD and District Attorney's Office are methodically scrutinizing the evidence to build a strongest possible case and our continuing effort to hold accountable those responsible."

And, Carol, you know what else we're hearing. A new detail about how this whole thing might have started. This is coming to us from the helmet cam biker who turned on his camera after he said he saw the sun roof of the SUV open up and the driver -- someone threw out a water bottle that hit one of the bikers. And the helmet cam biker thought, something could go wrong here because the SUV is starting to swerve. And that's when he decided to turn his camera on, hit the record button -- Carol.

COSTELLO: Interesting. Going back to the undercover police officer, I'm struggling to understand how helping this driver out could have blown his cover.

CANDIOTTI: Yes. It's hard to understand why, according to our sources, the officer allegedly waited three days to tell anyone about what he had seen or the incident or anything else because he was afraid to blow his cover. It's hard to understand a reason why that might have happened. Now we reached out to his lawyer. Haven't heard back. The police union who represents him saying they have no comment at this time.

COSTELLO: Susan Candiotti reporting live from New York City this morning.

Still to come in the NEWSROOM, the tug of war between the White House and Congress continues. Now one former senator says it is time to reward those who actually want to build bipartisanship and punish those who don't.

Olympia Snowe joins me next.

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COSTELLO: Checking our top stories at 16 minutes past the hour.

A body in a stairwell in a San Francisco General Hospital is believed to be that of a missing patient. Fifty-seven-year-old Lynne Spalding was last seen in her hospital room on September 21st. Seventeen days later, the hospital staff didn't know where she was.

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DAVID PERRY, SPOKESMAN, FIND LYNNE CAMPAIGN: Any time to find a dead body in a stairwell of a hospital, hospitals are places for healing. And certainly San Francisco General has done a lot of that over the years. But what is happening here today is very distressing.

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COSTELLO: Hospital officials say they have no idea how her body ended up in an exterior stairwell. Police and the hospital are both investigating.

Two high school football players in Ohio are facing charges over a sex video authorities say the two made with a 14-year-old girl. CNN affiliate WBNS reports the two male students are 17 and 18 years old. Both have been charged as juveniles. School officials in Circleville, Ohio, are cooperating with police.

Frustration with the government shutdown isn't just being felt out side of Washington. It prompted John McCain to head to the Senate floor and slam Congress for not being able to, quote, "talk like grownups."

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SEN. JOHN MCCAIN (R), ARIZONA: Let's find a way out of this. Let's find a way to sit down -- I don't care if it's disappointing people. I don't care if it's informal conversation that's we've been having back and forth. But there should be a way out of both of these dead- ends that we are in.

We know how it's going to end. We know how it's going to end. Sooner or later, the government will resume its functions. Sooner or later, we will raise the debt limit. So why don't we do this sooner rather than later?

There's a number of issues that we could sit down and negotiate within an hour if we will stop -- stop attacking each other and impugning people's integrity and honor.

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COSTELLO: Integrity and honor.

One of the McCain's former colleagues joins me now. She is Olympia Snowe, senior fellow at Bipartisan Police Center and former Republican senator of Maine.

Good morning, Senator.

OLYMPIA SNOWE (R), FORMER U.S. SENATOR: Good morning, Carol.

COSTELLO: Are you kind of glad you're not part of this?

SNOWE: Well, I'm sad about it. Sad for the reasons why I left which was the polarization. I didn't expect to diminish in the short term. And sad for the country right now that it's reached this point once again. Another low, you know, in congressional action.

And that's regrettable for the country, frankly. I travel around the country, I can assure you, people are so frustrated, they're angry. They're despairing. They feel anguish, because, you know, they're facing hardships in their own lives. They expect to have strong leadership if Washington to solve the nation's problem, not create and exacerbate them.

COSTELLO: Your group Olympia's List spot lights lawmakers who seek common ground. Absent from that list are people like Ted Cruz and Michele Bachmann. You say there should be a penalty for lawmakers who do not attempt consensus. What penalties should Ted Cruz pay?

SNOWE: Well, I think, frankly, you know, what the penalty should be and obviously it's going to work in some cases and not in others, depending on constituencies, but the fact is that as Americans, we have to value bipartisanship, building consensus and compromise among our lawmakers, that it isn't a capitulation on your principles or it isn't a dirty word. We've got to value it.

We are representative democracy and we get the government we demand. And we demand bipartisanship, we will get. And we can weigh in on elections. We can weigh in on the interim right now.

The public should be engaged. I urged audiences, you know, make sure you're communicating about how upset you are about what is transpiring in Washington. I just read recently where people are surprised that there hasn't been a major outcry or backlash on the public.

Well, I can tell you, the public feels very differently. They're angry. And so, they should communicate that to their lawmakers to make sure there is no question about how people feel about this lack of action, and it's deplorable.

COSTELLO: Is Ted Cruz hurting the Republican Party?

SNOWE: I think, you know, most certainly. I think that this all or nothing, win at all cost and this lockdown without any regard to the implications and ramifications, it was never an acceptable strategy to begin with to tie repealing or defunding the Affordable Care Act to the funding of government. The fact is, there's failure to go around I think in all respect.

The fact is the Congress has not passed a budget this year as it has not passed in last four years. The largest economy on earth operates without a budget for four consecutive years. That's why we're in this situation we're in today, because they didn't pass any appropriations and they didn't pass a budget and reconcile the differences and do what they need to do as lawmakers and uphold their responsibilities.

COSTELLO: In your mind, Senator, what is the way out of this?

SNOWE: I think the president and leadership has to sit down right now and determine a way out. Which is, you know, they started that process by indicating their prepared to end the shutdown and to raise the debt ceiling.

It's a question of which is going to come first in terms of discussions. I think they should have a discussion on a framework that can work in tandem with those votes. But it has to happen soon, Senator McCain said, you know, take some action. Move forward. And that's the key for this country.

We should never suggest that we're going to default, you know, on the full faith and credit of the United States of America. It has enormous ramifications and implication, particularly in this harsh political environment. People have raised real questions as to whether or not we even have the capacity to make any decisions anymore as a country because of the dysfunction that exists in Washington.

COSTELLO: Senator Olympia Snowe, thank you so much for joining me this morning. I appreciate it.

SNOWE: Thank you, Carol.

COSTELLO: Still to come, the father of that 9-year-old boy who hopped aboard a flight to Vegas is speaking out.

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UNIDENTIFIED MALE: I don't know what to do. I love my son. Anyone, please help me? Please?

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COSTELLO: We'll tell what you other trouble authorities say this 9- year-old has gotten into and how much longer he may be staying in Sin City.

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COSTELLO: We're hearing for the first time from the father of that 9- year-old boy who sneaked onboard a plane from Minneapolis to Las Vegas without a ticket. The man says he thought his son was at a friend's house at the time. Authorities say he was flying across the country actually.

The dad also says he's been trying to address his son's behavioral problems since the boy was 5 years old.

CNN's George Howell is in Minneapolis with more for us this morning.

Good morning, George.

GEORGE HOWELL, CNN CORRESPONDENT: Carol, good morning.

So for the last six days plus we've watched this saga played out between two different states, but we now know whatever happens in Vegas, the boy will not stay in Vegas. A source with information close to this investigation tells me that he will be returning here to Minneapolis.

His father who is anxious to see him admits his son has a history and that he's no angel.

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UNIDENTIFIED MALE: I'm not giving up on my son. He is just confused.

HOWELL (voice-over): An emotional father of a 9-year-old boy speaking out for the first time after his son slipped through TSA security cracks and sneaked on to a Delta flight from the Minneapolis St. Paul airport to Las Vegas without a ticket.

UNIDENTIFIED MALE: I don't have an angel, OK? I have a 9-year-old. To me he's got a behavior problem.

HOWELL: The boy whose father says he's a charmer has been in protective custody in Nevada for the last six days.

UNIDENTIFIED MALE: I don't know what to do. I love my son.

HOWELL: Passing through the security checkpoints of TSA screening, an airport spokesman says surveillance video shows the child boarding the plane while the Delta agent was distracted.

The father claims he's been asking for behavioral help since his son was 5.

UNIDENTIFIED MALE: Anyone, please, help me? Please?

HOWELL: According to a report by the Minneapolis "Star Tribune," the director of the Hennepin County Human Services and Public Health Department says there have been four child protection assessments on the boy's family since 2012.

In an e-mail obtained by the paper, the agency's director, Jeneen Moore, described the boy as, quote, "challenging." And says he stole a car and was arrested on Highway 35 just weeks ago.

Finally, there are allegations concerning a troubled past. Moore in her e-mail wrote that the boy claimed his mother once held a knife to his throat and that his mother was, quote, "stabbed and died."

UNIDENTIFIED MALE: We're not bad parents.

HOWELL: His mother has not spoken publicly yet, but a source close to the investigation confirms to CNN that she works at the airport.

(END VIDEOTAPE)

HOWELL: We've been working to backstop of some that information. We reached out to the health department to try to confirm some of the information in that report. But at this point, Carol, they are not commenting on the content of that e-mail that was obtained by the paper.

COSTELLO: It's just so unusual to hear of a 9-year-old stealing a car unless, of course, he was afraid he was trying to get away from something. But we just don't know the details yet.

HOWELL: Still unclear exactly why he ran away. But again, keep in mind that the pattern here. According to what we see there from the "Star Tribune," this sort of thing happened before. In fact, there is even a report according to that report that the child went to a water park nearby, used the metro system to get there.

So he's not an unfamiliar with how to use the metro system. He gets around town, knows how to do it. So there is a pattern, it seems.

COSTELLO: All right. George Howell reporting live from Minneapolis this morning.

Still to come in the NEWSROOM: Congressman Paul Ryan has been called the standard-bearer of the Republican Party. We'll tell you why his op-ed is raising eyebrows this morning, not for what he says, but for what he doesn't say.

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