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First-time Jobless Claims Jump; House GOP to Float Compromise; Warnings of Obamacare Glitches Ignored?; Libyan Prime Minister Freed after Abduction; Interview with Representative Steve King

Aired October 10, 2013 - 09:00   ET

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

CAROL COSTELLO, CNN ANCHOR (voice-over): Extinguished four times on its run to Sochi for the Olympic Games. Russians call it a conspiracy.

You're live in the CNN NEWSROOM.

(END VIDEOTAPE)

COSTELLO: Torch gate coming. But first good morning, everyone. I'm Carol Costello.

We have breaking news on the economy to start off and it's not so great news because the number of Americans filing for unemployment benefits surged this week.

Alison Kosik live from the New York Stock Exchange to tell us why.

Good morning.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Good morning, Carol. And this is certainly catching our eye this morning because these are the first hard numbers that we're getting of what kind of effect that the shutdown is having on Americans.

Now this is a huge increase in this first-time claims for unemployment benefits. They jumped 66,000 last week.

A bit of perspective here, this is the biggest jump that we've seen since Superstorm Sandy hit a year ago. It brought the number of claims to a total of 374,000.

Now of that 66,000 that put in these new claims 15,000 people, 15,000 of those claims are people directly impacted by this government shutdown. Now this is -- these are people who work in the private sector, these are government contractors who are tied to getting their jobs to getting their paycheck. They're tied to getting their jobs with the government -- excuse me.

So these are the people who work in the private sector industries like Defense that rely heavily on federal contracts. And as we know things have pretty much come to a standstill there.

We are going to see, Carol, though the impact of the government workers who were furloughed, those numbers will come out next week. As for stock this morning, ahead of the Opening Bell ringing in about 30 minutes we are expected to see the Dow jump at least into the triple digits on the glimmer of hope coming from -- coming from Capitol Hill that lawmakers may be talking -- Carol.

COSTELLO: Yes, they're going to talk later on this afternoon. We're going to talk about that in just a minute.

Alison Kosik, thanks so much.

This less-than-stellar economic news, though, as the partial government shutdown drags into its 10th day but the debt deadline keeps racing closer. Now just one week before a potential economic disaster, a glimmer of hope.

Sources tell us House Republicans are working on a plan to raise the debt limit and offer a temporary reprieve to break the budget deadlock.

Right now on Capitol Hill Treasury Secretary Jack Lew is delivering his dire warnings on default. Some Republicans on the Senate Finance Committee publicly doubt his doom and gloom claims, like this.

(BEGIN VIDEO CLIP)

JACK LEW, TREASURY SECRETARY: If Congress fails to meet its responsibility, it could deeply damage financial markets, the ongoing economic recovery and the jobs and savings of millions of Americans. I have a responsibility to be transparent with Congress and the American people about these risks and I think it would be a grave mistake to discount or dismiss them.

(END VIDEO CLIP)

COSTELLO: CNN's Brianna Keilar, our White House correspondent, is at the White House this morning.

So tell us more about this GOP plan to at least raise the debt limit for a short period of time.

BRIANNA KEILAR, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Carol, sources on the Hill tell us it would be four to six weeks extending the debt ceiling that far, but not ending the government shutdown. You can imagine that's not something on the shutdown certainly that the White House is a fan of but President Obama yesterday talking to House Democrats giving the clearest indication as of yet that he would be on board with some sort of stop gap measure if Republicans are.

(BEGIN VIDEOTAPE)

KEILAR (voice-over): Finally, they are talking. House Democrats met the president at the White House last night.

REP. NANCY PELOSI (D), MINORITY LEADER: We just had a very positive meeting with the president of the United States. KEILAR: President Obama's message, he is open to a short-term deal to increase the debt ceiling for six weeks, according to a lawmaker in the meeting. Republicans are warming to the idea of a shorter deal, followed by negotiations with the president on reducing the debt and deficit.

House Budget Committee chairman Paul Ryan penned an op-ed in the "Wall Street Journal" that did not even mention GOP demands to delay or defund Obamacare, but Tea Party-backed Republicans still want that fight after a brief debt ceiling increase and to arguing against ending the government shutdown.

REP. RAUL LABRADOR (R), IDAHO: I would do a debt ceiling increase for six weeks so the president can actually negotiate with John Boehner and I would keep fighting on the continuing resolution and Obamacare.

KEILAR: In interviews with local news stations, President Obama was asked to explain his own vote against raising the debt ceiling in 2006.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I voted against a debt ceiling increase at the time because I had some concerns about what President Bush was doing.

KEILAR: Specifically the Bush tax cuts. And he argued it's OK for certain Republicans to protest policies with a no vote, but he said there must be a vote.

OBAMA: There should never be a proposition where the speaker of the House is not willing to put those votes to the floor right now.

KEILAR: Congress isn't faring well in this budget fight. A new Gallup Poll shows Republicans with a 28 percent favorable rate, down 10 points since last month, the lowest for any party since 1992. Democrats slid four points to 43 percent.

(END VIDEOTAPE)

KEILAR: The White House invited all House Republicans to the White House for this meeting today, Carol, but ultimately Republican leadership pared that down to about a dozen and a half members, all in leadership or key committee chairs. They are the ones who will be coming here. They said they want to negotiate and that's really not possible to do with 200 plus members here but a White House official tells me President Obama wanted to make his case to the entire Republican conference.

And you could imagine what that potential drama would have been if he were in the same room with a lot of these Tea Party Republicans that he blames for all of this.

COSTELLO: I wish that would have happened and I could be a fly on the wall.

KEILAR: Right?

(LAUGHTER)

COSTELLO: Exactly. So just to make this clear, they're just negotiating over a short-term deal to raise the debt limit, which means, you know, after six weeks, that's Thanksgiving, and we'll be right in the -- we'll be right back where we were on Thanksgiving.

KEILAR: Yes. Yes, that's exactly the concern that this gets pushed up towards the holidays and you know it's really interesting about that is business is very concerned about that. That's right into the retail time leading up to the holidays, a lot of uncertainty. Business really doesn't want to see this get pushed into that time but right now that is what is on the table and the White House says a short-term deal on the debt ceiling is much better than default.

COSTELLO: All right, Brianna Keilar, reporting live from the White House this morning.

Of course Republicans still despise Obamacare but so far it's also not winning many fans among the very people it was designed to help. The long anticipated rollout has been plagued by Web site glitches and crashes, and we're hearing more reports the Obama administration knew the risks and ignored the warnings.

CNN's Brian Todd is in Washington with that side of the story.

Good morning.

BRIAN TODD, CNN CORRESPONDENT: Good morning, Carol. Yes, we're hearing of contentious meetings between insurance executives and the White House in the months leading up to this rollout, where warnings were issued that the health care exchange was not ready.

One computer data expert took us through his own frustrations with the system.

(BEGIN VIDEOTAPE)

TODD (voice-over): Luke Chung operates a database company in northern Virginia. He's an expert on heavily trafficked Web sites but even he is frustrated navigating healthcare.gov.

LUKE CHUNG, PRESIDENT, FMS INC.: This is interesting.

TODD (on camera): What do you got?

CHUNG: I don't know what I have. I just tried to log in to my account that I have already established.

TODD: And?

CHUNG: And it says unexpected error.

TODD (voice-over): Since the Obamacare rollout last week Chung has been trying only to get quotes on prices, not even to enroll.

(On camera): Error messages, slow connections, getting booted out of the system, other problems have exasperated hundreds of thousands of uninsured who have tried to log on. And now we're hearing the Obama administration was warned well ahead of the rollout that the online exchange had big problems.

(Voice-over): One Democratic ally of the administration, Congressman Robert Andrews, says he spoke to the White House months before the unveiling.

REP. ROBERT ANDREWS (D), NEW JERSEY: I discussed with the White House people things they already knew which was -- undertaking of this size is going to be very complex.

TODD: Andrews believes the White House was on top of the situation.

Robert Laszewski, a health care consultant, disagrees. He says many of his clients, major insurers, had contentious meetings with the administration ahead of the rollout.

LASZEWSKI: Insurance executives have been warning the administration bluntly that this whole system is not ready for prime time. It wasn't going to be ready on October 1 to appropriately enroll people.

TODD: But he says the White House ignored them.

LASZEWSKI: The administration didn't seem to understand the seriousness of it. They were blase about it. They continued to assure the industry that there weren't going to be any problems.

TODD: And Laszewski says that they were not about to delay the rollout. The White House insists it listened to insurers and knew about the problems.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Everyone was aware and we told you that there would be glitches.

TODD: What they're not telling us is exactly how many people have enrolled. They say they don't know the precise numbers. Luke Chung says --

CHUNG: The data exists. This system, I would hope, has a database inside it that would be able to tell you everybody who's enrolled, much less the number of people who are enrolled.

(END VIDEOTAPE)

TODD: White House officials tell us it's a little more complicated than that. They say they have to collect those numbers from several different sources and they have to make sure those numbers are accurate. So they are sticking to a plan to release the number of enrollments and other Web site data to once a month so that they can ensure that accuracy -- Carol.

COSTELLO: OK. So the White House isn't giving us numbers but we've done tallying of our own. What are you finding? What numbers is CNN finding? TODD: We've got some partial numbers from the states, Carol. We found 112,000 people in nine states and the District of Columbia have created accounts on the Obamacare Web site, that means they've at least logged on to try to at least get some information about the plan, if not fully enrolling.

Now the first states reporting actual enrollments in the plan, Kentucky, Maryland and Washington state, just those three, have reported more than 16,700 people have enrolled in Obamacare so far but again you can see just how partial these numbers are. We're kind of digging through state by state.

COSTELLO: Well, keep digging, Brian Todd, reporting live from Washington this morning.

A short-lived kidnapping leaves some startling questions about security in Libya. The country's prime minister is now free after being taken from a Tripoli hotel by armed militia and accused of corruption.

Nic Robertson is in Tripoli this morning to tell us more.

Good morning, Nic.

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Good morning, Carol. While he was taken, held for about eight hours, released, the militia that took him was a government or rather General National Congress, the Libyan's top body of lawmakers here, sanctioned militia, totally highlights here the failure of the government for it to be able to -- effectively -- for it to be effectively enforced across the country and highlights just how powerful the militias have become.

The prime minister appeared to be unharmed when he held a press conference shortly after his release. He thanks most of those involved in the situation in getting him released. He told foreigners not to worry because this was part of -- part of the political changes going on in Libya at the moment.

That's sort of hard to guess/believe, if you will, but that's the way he would represent this after he was kidnapped which was what the government was saying here but it really does just highlight the fragility of the situation here on what -- what government ministers have been telling us is they're concerned that the arrest over the weekend here by U.S. forces of Abu Anas al-Libi, suspected al Qaeda member, suspect of being involved in the 1998 bombings of the U.S. embassies in Kenya and Tanzania.

Government ministers told us they were concerned that there might be repercussion from that and that certainly how the prime minister's kidnapping was being read here -- Carol.

COSTELLO: Nic Robertson reporting live from Tripoli this morning, thank you.

Still ahead in THE NEWSROOM, NYPD's finest? SAMANTHA TURINO, PROSECUTOR: Much of what I have described, your honor, including the assault is captured on video and what can only be described as a brutal and brazen attack on the driver and his family in which this defendant is an active participant. This defendant also did nothing to stop it, including not calling 911.

COSTELLO: An undercover cop accused in this beating and now police are looking into whether another cop was there.

Plus imagine being so preoccupied with your cell phone that you don't notice that guy with the gun?

UNIDENTIFIED MALE: It's really mind-boggling when you see this.

COSTELLO: That's all ahead in the NEWSROOM.

(COMMERCIAL BREAK)

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

Two men are in the hospital with burns after their hot air balloon hit a power line and caught fire. The accident happened during a ballooning festival in New Mexico. Witnesses say the balloon was flying very low just before impact.

(BEGIN VIDEO CLIP)

LARRY WILLOCK, BALLOON CRASH WITNESS: At that point the explosion, the shot flames out, you know, about 20 feet to the side. I saw him slump. I didn't know about the condition at that point, the gondola really started to drop.

(END VIDEO CLIP)

COSTELLO: People who live in the area rescued the pilot and passenger after the crash landing. It was the third time a balloon hit power lines or a power pole during this year's event and the other two cases the balloons managed to land safely.

Authorities shot and killed a gunman who opened fire at a federal building in Wheeling, West Virginia. Police say the shooter was a former police officer. No word on a motive. No one was seriously hurt and of course an investigation is ongoing.

Imagine being stuck on your back 140 feet in the air for more than two hours. That's what happened to about 10 riders on a roller coaster at Universal Orlando Theme Park. Officials say a technical glitch forced the Hollywood Rip Ride Rocket to unexpectedly stop. Most rides were able to get off but it took firefighters about two and a half hours to rescue the rest.

The government shutdown could cost a pair of hikers some big money.

CNN affiliate KTNV reports two sisters were ticketed $275 apiece for hiking in Red Rock Canyon in Nevada. It's part of a federal park reserve that was closed down by the shutdown. The women say they plan to fight the fines.

And while there's no end in sight to the partial government shutdown a possible deal to raise the debt ceiling for about six weeks seems to be coming together. The president and Republican House leaders are expected to meet later this afternoon and the president has indicated he would sign a short-term deal if it has no Republican provisions. But some Republicans insist the fears of not raising the debt ceiling are way overblown.

(BEGIN VIDEO CLIP)

REP. STEVE KING (R), IOWA: I think there's not an emergency on the debt ceiling. We are spending less than 10 percent of our revenue to service our debt and this alarm about default is just false.

(END VIDEO CLIP)

COSTELLO: But the Treasury Department says even toying with the idea of default is dangerous. Here's what happened the last time we pushed it to the brink in August of 2011.

The Dow dropped more than 850 points and continued to drop for several weeks. And for the first time in history, Standard & Poor's downgraded the United States AAA credit rating, consumer confidence dropped, hiring among small businesses slowed.

Joining me now from Capitol Hill is Republican Congressman Steve King from Iowa.

Welcome, Congressman.

REP. STEVE KING, (R) IOWA: Thanks for having me on this morning, Carol, I appreciate it.

COSTELLO: Thank you for being on.

Both sides appear ready to negotiate on raising the debt ceiling for at least six weeks. Should there be such a deal?

KING: Well, when I hear the president say he'll sign a debt ceiling increase as long as it doesn't have Republican provisions in it I think he's trying to hold his ego together. And the statement that he made that he would refuse to negotiate with Republicans, he will be sitting down a second time now in the last week or so talking to Republican leadership and a select team of Republican negotiators.

We don't know if they'll negotiate. It might be the president again saying this is the way it shall be but if you have any ideas I'm going to lock them out. I've already told the press that I won't accept a Republican idea. I don't call that negotiating. I call that a very stubborn position on the part of a president who has -- we've never had a president that refused to negotiate with Congress and if we accept the president's dictates to us, then the House of Representatives, first the Article I legislative branch, really becomes meaningless if we just are here to ratify the president's demands. COSTELLO: So I'm assuming you don't think that this deal is going to go through and you don't want it to go through if the president attaches these conditions?

KING: Well, Carol, I want to say that I am serious about getting this resolved and I'm serious about addressing the entitlement spending, if we have a reasonable address -- entitlement spending then I'd take a serious look at it. I would rather have a balanced budget amendment passed out in the House and the Senate as a condition to raise the debt ceiling.

If we could get that done the states would, I believe, ratify and we could fix this problem for all-time. That's what we should be talking about. Being on point about how we solve this problem for the long- term.

COSTELLO: Well, let's talk about the long-term because even this deal that's supposedly on the table later this afternoon only solves the problem for six weeks and then around Thanksgiving time we're going to have the same argument again over this debt ceiling that many economists say, in fact, most economists say, will hurt the economy.

KING: Well, you know, I listened to the economists talk about that and a lot of them are people that are watching Wall Street and Wall Street is always wanted to keep a lot of flowing currency, they're depend upon government spending to some degree. They really aren't looking out for the long-term best term interests of America. They're looking at their next quarterly report and opportunities to make profit in the short term.

COSTELLO: So you, too, think they're not telling the truth?

KING: We need to worry about long-term for our country.

COSTELLO: Do you think they're not telling the truth when they say this will hurt the economy? We're talking about, you know, Goldman Sachs and the CEO of Coke.

KING: You know, I was here in the fall of 2008 when we had this great fear of an economic meltdown and certainly it was a downward spiral. I heard a lot of things that were said then that didn't turn out to be true. I have drilled through this with some of the best economists in the country and in the end I say to them, paint for me the sequential picture on what happens if let's say the government doesn't, if we don't raise the debt ceiling and how do we get to this calamity that you're predicting? They can't give it to me point by point.

COSTELLO: Well, I'm just learning --

KING: I don't think they know.

COSTELLO: Just flirting with the debt ceiling the last time around I just illustrated what happened to the economy, the Dow dropped more than 850 points for the first time in history Standard & Poor's downgraded the U.S. AAA credit rating.

Are we to just to ignore these things?

KING: We raised the debt ceiling and if my memory serves me correctly the downgrade came after that and people still blamed it on the Tea Party. So some of this you just can't win, and -- because right or wrong you can't win.

(CROSSTALK)

COSTELLO: Well, wait a minute. Do we ignore these facts? If we don't -- like we raised the deal -- the debt ceiling the last time and that happened, and it's not like our economy is roaring right now.

KING: Well, let me suggest these simple axiom of economics. If you have a good credit -- if you have good credit, if you spend within your means, if you spend no more than what you bring in, you will have the best credit rating and so if we demonstrate that we are going to be fiscally responsible here in Congress that's going to improve our credit rating. It's not going to diminish it in the long run and we need to look at the long-term. Now the short-term quarterly report.

COSTELLO: Yes. But we -- we've already spent the money and you guys approved spending that money, and now it's time to pay your bills. That would be like me looking at my American Express card and saying, hmm, I really don't want to pay that right now because I think I should demonstrate that I'm fiscally responsible.

KING: The new guys voted to spend that money really isn't true. There have been --

COSTELLO: Well, who did then?

KING: The left in this Congress have put automatic spending in place, $105 billion in automatic spending in Obamacare. I didn't vote for that. We've got a whole transition of people in Congress that were elected to --

COSTELLO: Someone did.

KING: -- to stop Obamacare and they put it in automatic spending. And so what we have is a Constitution that has -- that gives us the initiation of spending and revenue to the House of Representatives. That's so that we can put a check on these things and that's exactly what we're doing directly in line with the Constitution.

COSTELLO: But shouldn't you put a check on those things through a federal budget by passing some sort of budget which has nothing really to do with the debt ceiling, I mean, it does, but they're different issues.

KING: They are different issues and I hear a lot of budget talk but the budget is not going to address the situation we're in right now. Finally the Senate passed a budget after, what, 1100 some days? But Harry Reid has dealt with it this way. The system has gotten dysfunctional because the House has passed appropriation bills consistent with the budget that the House passes. We sent them to the Senate, 12 appropriation bills, that's what it takes for a full year, we're not there yet. Harry Reid puts them in his desk and then that gives them the leverage to try to run the government on the political leverage of a continuing resolution. That's where we are today.

COSTELLO: OK. So don't you think the answer is to take -- for the Republicans to have the majority in the Senate and then you wouldn't have that problem.

Let me just put it to you this way.

KING: It gets so much easier, but a new president would also solve the problem.

COSTELLO: One of the things that would happen, if Congress doesn't vote to raise the debt ceiling is that your constituents might not get their Social Security checks. So what do you tell your constituents about why they're not getting this much needed money in the case of some of those constituents to survive? What do you tell them?

KING: Well, first, you know, I wouldn't accept that prediction. The funds are there.

COSTELLO: Why?

KING: Because the funds are there on our normal cash flow around $240 billion a month, interest is about $18 billion a month. First thing is service the debt, then go down through the priorities. The president has the authority to choose those priorities, that can be and should be pay our military.

COSTELLO: You know that's not going to happen. That's not going to happen.

KING: Because that's he's going to try to punish the American people. This is a spiteful president, Carol, and the American people need to understand that, too. Trying to run a government with a spiteful president that locks our veterans out of their World War II Memorial, when there's never been barricades around there before, borrowing money from the Chinese to rent barricades, to call guards off of furlough to deny access to World War II memorial --

COSTELLO: Borrowing money from the Chinese?

KING: That's -- yes, we're borrowing money from the Chinese.

(CROSSTALK)

COSTELLO: Yes, we're deeply in debt to the Chinese.

KING: We borrow over a trillion dollars from the Chinese.

COSTELLO: And if you don't raise the debt ceiling we'll be even more in debt to the Chinese. KING: I went down and opened it up for the Chinese the other day so they can walk through there, too. The president has no controlling legal authority to lock people out but we know that he's spiteful. He's trying to teach America a lesson. This is -- this is a president that is not trying to do with the tools he's got the best that can be done for the American people and that's becoming ever more evident when you see his numbers, Carol.

COSTELLO: Well, I will only say, what did you expect would happen with a partial government shutdown? That nothing would be closed down? That everything that Americans like would remain up and running? Is that what you expected?

KING: Whatever I expected there's a right and there's a wrong, and for a president to use sequestration to lock kids out of the White House and for a president to use --

COSTELLO: Congress agreed with sequestration.

KING: -- a shutdown to lock veterans out of the memorials -- sure, and the president isn't bound by that. He told us the Secret Service made the decision to keep people out of the White House. He said -- he looked at us with a straight face and said that. Do you think that the president could maybe cut back on his golf game and let some kids in the White House? He's doing this for spite. And I think the American people are understanding that more clearly every day.

COSTELLO: Republican Congressman Steve King of Iowa, thanks so much for joining me this morning.

KING: Thank you, Carol.

COSTELLO: We're back in a minute.

(COMMERCIAL BREAK)

COSTELLO: Good morning, I'm Carol Costello. Thank you so much for joining me.

Seven motorcyclists now facing charges in the bikers swarm case including a New York City undercover detective. That detective who was off duty and riding with his motorcycle club appeared in court wearing a black hooded sweatshirt. Prosecutors say the cop terrorized the family of that SUV driver, kicked in the door and shattered a window.

CNN's Susan Candiotti has more for you.

(BEGIN VIDEOTAPE)

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT (voice-over): Here's the undercover off-duty veteran New York detective now standing accused of assault. Prosecutors described him in detail, including what he was wearing. As matching this video of the defendant next to the SUV as it momentarily stops after running over bikers, critically injuring one. He's seen again just before the SUV's driver is dragged out of his vehicle and beaten.

Yet to hear some tell it, these videos of SUV driver Alexian Lien under attack aren't all they seem.

JOHN ARLIA, DETECTIVE BRASZCZOK'S ATTORNEY: The video will exonerate our client.