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Obama Calls in Congressional Leaders; Reid, McConnell Share "Optimism" on Deal; China Wants "De-Americanized" World

Aired October 14, 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: Welcome back. Great to be with you on this Monday. I'm Brooke Baldwin.

It is now a race against the clock. We're watching the seconds ticking down. In just over two days, some time after the clock strikes midnight, the U.S. will run short of money to pay its bills. Huge news here, because in an hour, the president will be meeting with congressional leadership at the White House. So here are the big guns who will be in attendance at the meeting. House Speaker John Boehner will be there, as well as house minority leader, Nancy Pelosi.

Also in attendance today, Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell.

Right now, the Senate convenes, and these two huge players, McConnell and Reid, are expected to speak. We're watching very closely. We've been reporting this meeting, Reid in McConnell's office, the talking that's been taking place, and what these two say could indicate the face of the country, really, at this point in time. Fast-moving story here.

Dana Bash has been all over it. She's our chief congressional correspondent.

And so, Dana, I understand Reid has been back in McConnell's office (inaudible) has to be.

Tell me, is this a good sign heading into this White House meeting in 60 minutes?

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: It sure seems like a good sign, Brooke. I just came to talk to you from standing outside of McConnell's office, which is kind of on the other side of the Capitol from where I am right now, and Harry Reid was still in that office.

We do expect them both to, as you said, leave there soon in order to speak publicly on the Senate floor as the Senate is convening.

But as Reid was walking into McConnell's office, our congressional producer Ted Barrett (ph) saw that he was holding a piece of paper, which is a good sign, and he said we're going over the deal.

And the question was, are you there yet? And he said, "Not yet."

And then we were talking a lot about Harry Reid, but we should also tell you a spokesman for Mitch McConnell also says the two leaders are negotiating in good faith. Good-faith negotiations and talks will continue.

So the sort of parameters of the discussions going into these talks -- and we think this is the second round of negotiations. They might have had more face-to-face talks that they got by those of us following them in the hallway -- but the basis, we think, is at least Harry Reid came to Mitch McConnell this morning with an idea of --

BALDWIN: Let me interrupt you, Dana Bash, because, as you mentioned, here is Harry Reid speaking on the floor of Senate. Here he is.

(BEGIN LIVE SENATE FLOOR COVERAGE)

UNIDENTIFIED MALE: -- a bill to ensure the complete and timely payment of the obligations of the United States government until December 31st, 2014.

SEN. HARRY REID (D-NV), MAJORITY LEADER: Mr. President, at 5 o'clock today, the Senate will proceed to executive session to consider the nomination of Andrea Wood, the United States district judge in Illinois and the nomination of Madeline Haikala to be a United States district judge in Alabama.

At 5:30, there will be a roll call vote on the confirmation of the Haikala nomination. The wood nomination expected to be confirmed in another way.

Mr. President, constructive good faith negotiations continue between the Republican leader and me. I'm very optimistic that we will reach an agreement. It's reasonable in nature this week. To reopen the government, pay the nation's bills and begin long-term negotiations to put our country on sound fiscal footing.

I deeply appreciate my friend, the minority leader, for his diligent efforts to come to an agreement. The Republican leader and I will keep members informed as negotiations continue.

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: Mr. President, Republican leader?

Let me just echo the remarks of my good friend the majority leader. We' we've had an opportunity over the last couple of days to have some very constructive exchanges of views about how to move forward. Those discussions continue, and I share his optimism that we're going to get a result that will be acceptable to both sides.

UNIDENTIFIED MALE: Under the previous order, the leadership time is reserved.

BALDWIN: So first you heard from the majority leader, and then you heard from, as he called it, his friend, the minority leader, both Harry Reid and Mitch McConnell.

Dana Bash, let me just bring you back in because since some language I heard that, again, going back to the potential reading of the tea leaves and the good news that both of these men are confident that there could be results. The optimism seems pretty pervasive on the Senate floor that a deal will be reached this week.

BASH: Absolutely. And to hear it from Harry Reid is one thing. To hear it from Mitch McConnell, the Republican leader, is another. Very, very critical moment here for several reasons.

One is because it is the Republicans that are going -- they're the ones who are probably going to have to give, particularly when it comes ultimately to the House of Representatives led by Republicans, who, of course, have been trying to force at the beginning of this, the defunding of Obamacare, delay of Obamacare. Si they're the ones who want to feel comfortable that their brethren in the Senate led by Mitch McConnell are carrying their water at least as much as they can.

So the fact that Mitch McConnell sounded so positive really is indicative they feel good they can get what everybody hopes in the Senate will be a big bipartisan vote in order to maybe -- maybe the Senate would say force House Speaker John Boehner's hand or just even more generally, make it impossible for the conservatives, who are probably going to be opposed to anything that's worked out in the Senate, make it impossible for them to prevent John Boehner from bringing whatever the Senate passes to the House floor as we have seen over the past two weeks.

So that really was key.

The other thing is you heard Harry Reid say that he's optimistic. I once interviewed Harry Reid when he was just becoming the Senate majority leader, and, Brooke, he told me back in his hometown of Searchlight (ph), Nevada, that he's the world's biggest pessimist. He's always pessimistic. He always sees the glass half empty. So for him to say he's optimistic --

BALDWIN: Is a big deal.

BASH: Pretty important, also keep in mind that everybody here is mindful of the markets. The bonds market is closed because of Columbus Day. The stock market is open and nobody wants to rattle the markets, whether you have an R after your name or a D after your name.

BALDWIN: OK. Dana Bash, some optimism on Capitol Hill, we'll take it. We know you're watching very closely. And in just an hour from this meeting of President Obama and Reid and McConnell and Boehner and Pelosi here, this meeting maybe could change everything. The president says there's a good chance the U.S. will default on its debts unless there's a compromise.

(BEGIN VIDEO CLIP)

OBAMA: This is fairly simple, and this whole shutdown has been completely unnecessary. Keep in mind that the problem is not that the U.S. government has run out of money. The problem is not that our deficits are going up. Our deficits have actually been cut in half since I came into office and are continuing to go down.

The problem is not that there's not the opportunity for us to work intelligently to come up with a budget that creates long-term fiscal stability while still investing in growth.

The problem is is that we have seen this brinksmanship as a strategy time and time again to try to extract extreme or partisan concessions.

(END VIDEO CLIP)

BALDWIN: To the White House we go, to our senior correspondent there, Brianna Keilar.

And Brianna, you just heard from your colleague, Dana Bash, who just heard from Harry Reid, Mitch McConnell. You can hear this sort of rare -- you cover Congress -- this rare optimism there.

Is that at all perhaps how the White House is feeling going into this meeting in 50 minutes from now?

BRIANNA KEILAR, CNN SENIOR WHITE HOUSE CORRESPONDENT: Brooke, I think sometimes you see these meetings and a couple years ago during those bruising debt ceiling negotiations, we saw a lot of meetings where congressional leaders were summoned to the White House and it just sort of felt like, oh, there's another one of those meetings.

I guess there's all together in a room and nothing is accomplished.

That's not the case, I'm told, today. Those are the indications we're getting from White House officials we're talking to. We're told that during the meeting we should expect that the parties there will be discussing what is going on in the Senate negotiations in detail, that they will be looking for some sort of convergence to get everyone on the same page.

Of course, a lot of this, Brooke, as well is about ratcheting up the pressure on House Republicans. You heard Dana talk about that. That is no doubt the case.

We saw President Obama really doing that in those comments that he made there at Martha's Table at the food pantry he went to just a short time ago. Really trying to stress that if there isn't a compromise, there could be a default. Really putting the ramifications of a possible default out there as well.

And I will say, Brooke, it's not necessarily an indication that the White House is prepared to really bend in any major way here. But I think it's more of an exertion of pressure on House Republicans that they're saying let's get on the same page.

BALDWIN: You will be in the Oval Office. You are the pool reporter, so, Brianna, we will check in with you and get some of the color and the facts and figures from that meeting here coming up next hour. Brianna, thank you very much, for me at the White House. And coming up, we have A.B. Stoddard and Ron Brownstein standing by. We're going to talk to them specifically about what they think as these congressional leaders head in to the White House.

We have also asked them to make up these lists, to rank who or what has the most influence right now as these negotiations are under way. Their answers surprised us. We're going to run through them coming up next.

Plus, where is Vice President Joe Biden here? He's been on the sidelines, but in just about 45 minutes from now, does that all change at this White House meeting? You're watching CNN's special live coverage.

(COMMERCIAL BREAK)

BALDWIN: The Democrat and Republican leaders of the Senate sharing some optimism on the floor of the U.S. Senate moments ago here, which could be a good sign as we enter into -- we being the leaders of both chambers of Congress here on both sides of the aisle -- meet with both the vice president and the president at the White House in just about 45 minutes from now.

So let's have a discussion on what really you should anticipate here in terms of when the government will be back up and running again and what about the potential for default.

A.B. Stoddard is the associate editor of thehill.com, and Ron Brownstein is CNN's senior political analyst and editorial director for the "National Journal."

Welcome to both of you all. You were with me at the top of the hour. I'm sure you were watching, and especially I think to Dana Bash's point, the fact, Ron Brownstein, that we heard Mitch McConnell echoing what Harry Reid said, this optimism, this real possibility of a deal by the end of the week. Is that a good sign as they head to the White House?

RON BROWNSTEIN, EDITORIAL DIRECTOR, "NATIONAL JOURNAL": Absolutely. Usually when the alternative is unthinkable, you would think they would try to find the other route. And that seems to be way our -- where the Senate is going. It will still come up to the critical question of whether anything that is acceptable to the president can get through the House, and that will be the difficult question, but there's no doubt this is a more optimistic turn of event.

BALDWIN: A.B. Stoddard, as we are -- and you cover Capitol Hill, you cover Congress. When we talk about the nuts and bolts of a deal, we really don't know -- Dana Bash was reporting earlier today that specifically Reid's proposal would be funding the government until mid-December and extending the debt ceiling for 6-9 months.

Is that one end potentially of the bargaining table here?

A.B. STODDARD, THEHILL.COM: Well, Republicans are going to ask in return for what? They're going to want to see a continuation of the sequester cuts. They were looking for a concession from the Democrats that has anything to do with Obamacare. They'll look for a repeal of the medical device tax or a delay of that, something, for them to reopen the government and increase the debt ceiling for six to nine months.

They've insisted all along, and I think before -- apart from the shutdown argument, that every time in a $17 trillion debt, you come back to the table to increase the debt ceiling, you have to make adjustments to your fiscal policy. That's actually not unreasonable.

Defunding Obamacare was never going to happen. So I think in the House, you could see some pushback unless there's some kind of give on something else besides just opening the government. Keeping sequester in place until December 15th and then having a debt ceiling increase that lasts up to nine months.

BALDWIN: But on the point of the medical device tax delay, Ron, would that -- we have heard from the president. We heard also from Harry Reid. No negotiating when it comes to Obamacare.

Would that be seen as a concession from Democrats?

BROWNSTEIN: No, I think it is difficult because it does, on the one hand, the medical device tax is not central to the Obama health care law and there are a lot of Democrats who are critical of it largely because they have interests in their own states that are affected by it, but on the other, it does establish the precedent of providing some concession in return for this behavior and for using these tools.

In many ways the White House's highest goal and certainly the Senate Democrats' greatest goal in this entire standoff is to delegitimize the use of a shutdown, much less a threat of default as a means of exacting policy concession. So they will have kicked open the door for what is after all a relatively short extension.

You look down the road, you could be doing something like this again in December or the middle of next year, which is probably a pretty frightening concept to most Americans.

BALDWIN: That's the thing, that's my next question. And I'll go to A.B. for that. If this thing gets kicked down the road, forgive the cliche, I'm sick of it myself, if this thing gets kicked down the road a couple of months, what happens in those several months, A.B.? What is the negotiation, how does that work?

STODDARD: That's what's so tough because we can see why with the clock ticking on default, we know Mitch McConnell and John Boehner, the Republican leaders, have no interest in defaulting. They would work with Democrats in the final hour to push this off, but it is another punt, and the super committee failed when we last were at this point at August 2nd of 2011.

And that was the Band-Aid, that was the solution to get through that deadline.

This will be a punt. It brings everything to a boil very quickly before the holidays. And you are going to see a push from the grassroots to continue the fight, to keep up the attack on Obamacare. They're not going to give up.

And so it's not like John Boehner can avert default and then lance the boil. He'll be under the exact same pressure he's been under all along. And it's really going to take some serious negotiation from the Democrats, I think, on some kind of debt -- either debt reduction or debt control, some kind of entitlement reform to get Republicans off of a drive to defund Obamacare. Otherwise, this is just going to continue as we have seen.

BALDWIN: Do me a favor, you two, A.B. and Ron, stand by because I want to continue the conversation, because we asked you and I think this is fascinating. We asked you both to rank who or even in some cases what has the most influence right now as we're watching these negotiations pan out here on the Hill. And your answers surprised us. We'll walk through them and we'll explain some of them next.

(COMMERCIAL BREAK)

BALDWIN: All right, welcome back, 40 minutes away from this big meeting at the White House. A.B. Stoddard, associate editor of thehill.com and Ron Brownstein, CNN senior political analyst and editorial director for the "National Journal."

So, A.B. Stoddard, I'm going to begin with you here because we asked both of you to list your five key players in the talks as they stand right now.

So, Ron, we'll get to your list in a moment, but A.B., let me run through yours.

At the top of your list, you say the most important player here is the president. And you know that unlike the others, he doesn't have the burden of having to run for re-election.

Number two, House Speaker John Boehner. You say Harry Reid refused to negotiate early and now needs to work with your number four player, the top Senate Republican, Mitch McConnell.

And how is this for your wild card? Your number five is the vice president, is Joe Biden, who has been conspicuous by his absence. So A.B., do you see -- I want to home in on the Joe Biden factor. Do you see the vice president swooping in at the last minute here to see that a deal gets done?

STODDARD: Yes, this is the first appearance by Joe Biden since this began. Everyone has been wondering on the Republican side, and I like to note, they often criticize and make fun of Joe Biden, but in a crisis, they're wondering where he is.

One of the things that Harry Reid worked out months ago with the president months was when they got down to the debt ceiling negotiation, he didn't want Vice President Biden to be a part of the talks because Vice President Biden has long-standing relationships with Republicans and has at the last minute, in the last critical fiscal fights, worked out a deal with Senator Mitch McConnell, the Republican leader in the Senate, over and over again. And so the belief was that he would give in too soon.

Now we're at the 11th hour. Joe Biden, as we know, will be at that meeting today. I think it's up to the president, as I noted, who doesn't have any re-election, start saying yes. He knows what can get the votes. John Boehner has told him, McConnell has told him, Reid, he knows what deal will end up getting enough heads counted to a deal on his desk.

And so it's time for him to say yes and it's time to work with him -- to work with John Boehner if he wants his -- the rest of his presidency to be relevant because it's unlikely Democrats take the House back in the campaign for the midterm election next year and it's time for him to give Boehner something that he can call a win so they can move onto other things.

BALDWIN: OK. So those are your influencers.

Ron Brownstein, now to you, these are your top five. You start with the one-two duo, Senators Reid and McConnell, that is your number one, followed by the Speaker of the House, John Boehner. After Boehner, you have that vanishing species known as the moderate House Republicans. You toss in President Obama. Here he is.

And then you have the American public.

What role, Ron? How do you see the American public playing in all of this?

BROWNSTEIN: I think it was the -- it is the enormous backlash against these tactics that has really encouraged the Senate Republicans to increase their efforts to find a solution.

Reid and McConnell is where it all starts. They seem to be like an old married couple that can't get along but can't afford to break up. Nothing can happen unless they move it forward and I think all indications are that they will. And then Boehner, John Boehner really, to me, has been always throughout the critical factor here because, you know, any deal that is going to pass the Senate that would be acceptable to the president, it's very unlikely that deal could get a majority of House Republicans.

So he really faces the choice, is he willing to bring a bill to the floor that a majority of House Republicans oppose and potentially risk his speakership or does he want to risk going into history as the Speaker who triggered an economic kind of potential catastrophe, not only in the U.S. but around the globe? That's ultimately his choice. He's going to have to make that decision, and the House moderates, I think, are going to Republicans, there aren't that many, but they all have to decide how far down the road they're willing to go in the next few hours, toward potentially risking default with the conservatives who have pushed this position.

And I think, like I said, public opinion, the Republicans are caught between a base that genuinely wants them to resist by any means necessary the Obama health care plan and his broader agenda and overwhelming indications in public opinion that the country simply rejects this level of confrontation as the price of mediating our differences as a society.

BALDWIN: OK, but your weight and the septuagenarians, I guess, of the bunch are watching those two, many people writing a lot about this relationship between Reid and McConnell.

A.B. Stoddard and Ron Brownstein, thank you both very much. Once again, that White House meeting happening in half an hour from now.

BALDWIN: Coming up next, the country we owe more to than any other is now blasting the United States over this whole mess in Washington. Why China says the world needs to become -- this is their word, de- Americanized. This is CNN's special live coverage of the deadline in Washington.

But first, shutdown or no shutdown, one of the busiest tourist sites in America is open for business today. Take a look. Tourists are lined up to see Lady Liberty. New York State is putting up more than $60,000 a day to keep it open. The site brings in about $200 million a year.

Also other states including Arizona, Colorado, South Dakota, and Utah are also paying to reopen our national parks.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

BALDWIN: Ah, yes, the world is watching the political drama in Washington very, very closely. China today let loose with some pretty tough comments about the current crisis. Let me read you a key line in this commentary published by China's state-run news agency.

Quote, "It is perhaps a good time for the befuddled world to start considering building a de-Americanized world."

CNN's Richard Quest is the best man to talk to about this.

Dare I ask, de-Americanized?

First of all, what exactly does that mean, and why are we hearing from China right now?

RICHARD QUEST, CNN HOST: Yes, before they start using such language, maybe they should have actually gotten a dictionary to see if there was even such a word. They're using such language because they're taking the advantage of putting the boot in while America is obviously in some difficult conditions.

Finance ministers and central bankers are not backward at telling you the U.S. needs to do something about this immediate crisis and the longer term fiscal problems, but they don't go as far -- I mean, that article also talked about the United States as being a hypocritical nation, it talked about self-serving Washington.

And it said that the debt crisis was a pernicious event on the rest of the world. Nothing new, by the way, from the Xinhua news agency. I looked back at 2011, at the last time we had this problem, and on that occasion, they said the United States had kidnapped the global economy.

BALDWIN: OK. We know that China owns a lot of the U.S. debt. How would, heaven forbid this happens, we are hoping for this compromise still to be worked out this week, but if a default were to happen, how does that affect China?

QUEST: Well, that's the interesting and rather sardonic part about this because, yes, they have got $1.2 trillion worth of U.S. government securities, so they are to some extent in the same leaky boat as everybody else.

And to mix my metaphors beautifully, I'm not sure why if you're in a leaky boat, it behooves you to start throwing bricks if you're living in a glass house since they would be affected. I mean, they are principal people who will be affected by any doubt in this.