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Interview with Sen. Johnny Isakson; U.S. Federal Government Partial Shutdown Continues; Debt Ceiling Deadline Approaches; White House Press Briefing

Aired October 15, 2013 - 12:30   ET

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

SENATOR JOHNNY ISAKSON (R), GEORGIA: Now is the time we shouldn't point fingers. Now is the time we should look for the 80 percent of the areas we agree. Let's make a deal. Let's don't fight over the remaining 20 that still out there.

So hopefully, cooler heads will prevail. Hopefully, politics will not rule the day. Hopefully, the American people's best interests will be what drives us to a decision.

WOLF BLITZER, CNN ANCHOR: I remember when the president was reaching out to the Republican leadership, Republican senators. He asked you to help organize some dinners for him to meet with your Republican colleagues.

Have you been satisfied with the way the president has been dealing with you guys, Republicans, in the Senate over these past several months?

ISAKSON: I was very satisfied with the outcome of the eight or ten meetings we've had with the White House on the big picture items.

I have been less than satisfied with the leadership we've seen on the debt ceiling issue and on the leadership on what final deal we might get to.

But the president did invite us over last Friday. We had a forthright meeting in the White House. A lot of things that are going to be a part of a final deal were discussed that day and that bodes well for us getting a final deal.

BLITZER: One final question before I let you go, the next 48 hours, deal or no deal?

ISAKSON: There will be a deal in my opinion. There's no excuse for there not being one.

BLITZER: Johnny Isakson is the Republican senator from Georgia. Thanks, Senator, very much.

ISAKSON: Thanks, wolf.

BLITZER: Almost 5.2 million, that's how many U.S. veterans may not get benefits checks if the partial government shutdown isn't ended in the coming days. We're going live to a rally over at the World War II Memorial here in Washington. That's next.

(COMMERCIAL BREAK)

BLITZER: Dozens of veterans angry about the partial government shutdown rallied at the national World War II Memorial today here in Washington.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: ... organizations, military and veterans organizations, we represent active duty, retired, veterans, dependents and survivors.

(END VIDEO CLIP)

BLITZER: The group wanted to draw attention to what veterans will face if there's no deal.

The Department of Veterans Affairs says it will not be able to send out more than 5 million veterans' checks starting November 1st. That includes disability and pension pay for vets as well as benefits to families. It adds up to more than $6 billion.

Here's what one veteran who attended the rally thinks about this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It's crazy is what it is.

UNIDENTIFIED MALE: Politics. Absolute politics.

UNIDENTIFIED MALE: All politics.

UNIDENTIFIED MALE: They forgot about the people. We -- I have buddies that are -- I got buddies names on that wall over there. I mean, this is ridiculous.

(END VIDEO CLIP)

BLITZER: Joe Johns is joining us now. He's outside the World War II Memorial here in Washington.

Joe, sounds like a lot of these veterans are pretty angry, and they should be pretty angry.

What's the mood over there? I take it the rally is now over.

JOE JOHNS, CNN CRIME AND JUSTICE CORRESPONDENT: That's right, Wolf. The rally is over.

We're talking about 33 groups that represent the Military Coalition for uniformed services including veterans. Now these are people, as you said, who, essentially 5.2 million or so people, who get $6.2 billion in benefits from the federal government. The V.A. secretary has said that without this shutdown coming to an end, the government will not be able to assure delivery of those benefits.

It's creating a lot of strong reactions here at the World War II Veterans Memorial. Listen.

So we don't have that sound.

BLITZER: You know what? I -- hold on a second, Joe, because I think you were talking about Texas Congresswoman Sheila Jackson Lee. She spoke out on behalf of the veterans at that rally. I think we have a sound bite from her.

(BEGIN VIDEO CLIP)

REPRESENTATIVE SHEILA JACKSON LEE (D), TEXAS: Let us respect veterans whose lives are in cemeteries or whose lives have been recognized by being buried in America's cemeteries.

Let us stop the foolishness and put on the floor of the house the reasonable response to opening the government now so that men who are mourning those who have flags --

UNIDENTIFIED MALE: Gentlewoman's time has expired.

LEE: -- (inaudible) are being respected.

UNIDENTIFIED MALE: Members are reminded to limit their --

LEE: -- (inaudible) in front of the White House. Open the government now.

UNIDENTIFIED MALE: Gentlewoman is not recognized.

(END VIDEO CLIP)

BLITZER: All right, Joe, obviously, this is a very, very passionate subject.

Republicans in the House, they say they're ready to pass separate piecemeal legislation that would make sure the veterans get the benefits.

The Democrats in the House and in the Senate and the president say just reopen the government. Everybody gets what they want.

So these are really sensitive issues right now.

JOHNS: Well, they certainly are sensitive issues and highlighting that point, there were two senators from Missouri over here just a little while ago, Claire McCaskill and Roy Blunt.

They're one Democrat, one Republican, both reasonably optimistic that this problem is going to get fixed sometime soon. If it isn't fixed sometime soon, of course, there is real concern that come November 1st, veterans, some veterans at least in the this country, could have a problem because the government says it can't assure delivery of those benefits, Wolf.

BLITZER: All right, Joe Johns over at the World War II Memorial here in Washington. There's been a lot of focus of attention there over these past 15 days because of this partial government shutdown.

We've just been told that the briefing over at the White House is about to begin, the White House press secretary, Jay Carney, getting ready to walk into the briefing room.

You see the reporters are now getting ready to be seated. Jay Carney presumably will open with some sort of statement or whatever, but we're anxious to get the official White House reaction to these competing bills now in the Senate and the House and see what the White House is ready to do.

How far will the president go in accepting some demands, demands that a bipartisan coalition of senators are making, some demands.

He seems to be ready to go along with what the Senate is inclined to do, but he's clearly not ready to go along with what the White House speaker, John Boehner, laid out earlier today when he came out of his meeting with his Republican conference.

There's a big question mark right now hanging over Washington, when will the government reopen, when will this debt ceiling be extended?

We'll get the official White House reaction when we come back.

(COMMERCIAL BREAK)

BLITZER: All right, so there you see the White House press briefing room. We're told Jay Carney, the White House press secretary, will walk through that door, go up to the podium and start taking reporters' questions. We'll get the White House reaction to what's going on up on Capitol Hill.

These are critical hours right now. We're only, what, 35 hours or so away from this Treasury Department debt ceiling deadline. They want to make sure that the debt ceiling is raised within the next 35 hours.

Here's Jay Carney, getting ready. Let's see if he makes a statement, answers reporters' questions.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: You bet.

Good afternoon, ladies and gentlemen. Thanks for being here.

Before I take your questions, I just wanted to note that, earlier today, the president was briefed by senior staff on the effects of the lapse in appropriations, the so-called "shutdown."

And among the items that he was briefed on was the fact that small businesses are feeling the impact of shutdown as key federal efforts that support small business have been halted.

Due to the shutdown, as you know, now in its 15th day, the SBA cannot approve new guarantees of loans provided by banks to small businesses. In a typical month, the Small Business Administration approves loans to more than 4,000 small businesses, and halting these loans represents over $1 billion in lost loan assistance to small businesses thereby jeopardizing thousands of jobs.

And, you know, again, another consequence of the wholly unnecessary, completely manufactured crisis that is doing harm to our economy, harm to our small businesses and was brought about by, you know, one faction of one party in one house in one branch of government making ideological demands and there be shutting down the government.

With that, I take your questions. Julie?

UNIDENTIFIED FEMALE: Thanks, Jay.

In order to just get a sense of the state of play at this point, is it the White House's understanding that there is a deal in the Senate that's been finalized between Harry Reid and Mitch McConnell that would lift the debt ceiling?

CARNEY: The president is pleased with the progress that we've seen in the Senate.

It is important to note that the process that's been undertaken in the Senate is bipartisan, that Senators Reid and McConnell have been engaging one another. Democrats and Republicans have been engaging on this issue, and it's all built around the fundamental premise that we should not have the shut down the government, that we should reopen the government, and that we must ensure that the United States pays its bills on time as it always had.

And we should do that. Congress should take those actions in a way that does not have partisan strings attached and that insures the kind of stability for our economy and for our middle class that they need.

So we're pleased with the progress. I would refer you to Senate leaders for the status of those discussions. But we certainly believe that there's a potential there for a resolution to this unnecessary manufactured crisis that can allow us to get back to the important business of helping grow the economy and create jobs and taking action to improve the lives of middle class Americans that elected officials were sent here to do.

UNIDENTIFIED FEMALE: Is the White House confident that that resolution could pass both the Senate and the House ahead of the Thursday deadline for the debt ceiling?

CARNEY: For congressional timing and how --

UNIDENTIFIED FEMALE: For -- you guys know the state of (INAUDIBLE) --

CARNEY: There's no question that we are very close to a very important deadline. And time is of the essence. So I think that is why you see some very serious-minded efforts being undertaken in the Senate and we would hope that the House would also approach this important deadline with the same understanding of just how serious it is.

UNIDENTIFIED FEMALE: And in 2011, the U.S. credit rating was downgraded just because the government got so close to a default. Is the White House or Treasury hearing from any of the rating agencies now that we are, again, very close to that deadline without a resolution?

CARNEY: I would refer you to the Treasury Department for those kinds of conversations, if they're taking place. That wouldn't be something I would brief on from here. We know from past experience the difficult lessons learned from 2011, that the serious flirtation with default that House Republicans engaged in two years ago led to some pretty negative consequences for our economy, including, as you noted, the United States being downgraded for the first time. So --

UNIDENTIFIED FEMALE: Is the president -- in these briefings that you say he's getting every day, is he getting anything from any of these officials about how the rating agencies are --

CARNEY: You know, that would not be something that I would brief on from here because the -- obviously issues that have to do with market sensitivities are not - are not ones that I would address here.

(INAUDIBLE).

UNIDENTIFIED FEMALE: Last week the president said, in a worst case scenario, there are things that we'll do. And what if Thursday comes and there's no deal? Have you -- has the White House started implementing any of those contingency plans already ahead of - because (ph) we're so close (ph)?

CARNEY: Well, I would not go further than what the president or the Treasury secretary have said about that. And I would refer you to Treasury. He testified -- the Treasury secretary, Jack Lew, testified, as you know, last week, where broadly this issue was discussed. But we are obviously focused on working with members of Congress, leaders in Congress, on an effort to do what we said was essential all along, which was open the government and make sure that the United States pays its bills by extending the debt ceiling and doing that in a way that we don't simply put us on a trajectory to re-create this crisis again in a few weeks. So we're encouraged by the progress that we've seen in the Senate, but we're far from a deal at this point. And so we hope that -- we hope that progress continues.

UNIDENTIFIED FEMALE: What is there about the Senate deal, though, that doesn't re-create the crisis in a few months down the road? What is there in it that doesn't mean we're going to be doing this all over again in the new year?

CARNEY: You know, there's not a -- there's not a bill for me to analyze for you right now. What I would --

UNIDENTIFIED FEMALE: Well, for the pending - let's say for the pending (INAUDIBLE). CARNEY: Well, I think that every participant in this exercise would hopefully understand that it should not be repeated. Not in a few weeks. Not in a few months. And when it comes to the fundamental responsibility of Congress to ensure that the United States does not default, not ever. That's certainly the president's view. That is why he has been so insistent that we cannot engage in a process here that then becomes normalized where a minority in Congress, a faction of one party in one House, can threaten the full faith and credit of the United States if it does not get what it could not get through the normal legislative process or through elections. So, you know, that's -- those are the stakes when it comes to the essential responsibility of Congress to ensure that the Department of Treasury can pay our bills.

UNIDENTIFIED FEMALE: There do seem to be those strings attached in the deal as it appears to be sort of coalescing or developing. What does the White House make of those strings?

CARNEY: Again, I'm not going to analyze details of a bill that we haven't seen yet and that has not emerged yet.

Brianna.

BRIANNA KEILAR, CNN SENIOR WHITE HOUSE CORRESPONDENT: Jay, some of the -- it seems like the key parts, at least of the Senate bill, the reinsurance, the income verification, President Obama said, quote, "nobody gets to threaten the full faith and credit of the United States just to extract political concessions." But if you're open to that, as presumably the White House is because they're talking to Senate Democrats, isn't that - isn't that concessions?

CARNEY: Again, I think - I think what we have seen -

KEILAR: (INAUDIBLE) that he won't.

CARNEY: What we have seen in the process thus far that Senator Reid has engaged in is a proposal that would reopen the government and remove the threat of a first ever U.S. default by raising the debt ceiling.

You know, we don't need any more self-inflicted wounds from Congress. The economy is already paying a price as outside analysts have noted. There is already a cost to the economy, and therefore to growth and jobs from this behavior. And it's important, as I think so many Americans believe, that it stop. That Congress simply fulfill its basic responsibilities to open the government, to fund it at, again, levels that were set by Republicans so that we can get about the business of negotiating in good faith over longer term budget proposals. I'm not going to - I --

KEILAR: But there are - but there are provisions on -- you are talking about the short-term increase in the debt ceiling in the CR if you're not going to talk about the Obamacare provisions, which are always on - which are also on the table. I mean you're talking about the short- term debt ceiling and CR provisions. I mean even if these are sort of small fry gives on Obamacare, doesn't it violate the principle that the president set out there that he will not negotiate on Obamacare?

CARNEY: Again, until we have a proposal that has emerged from negotiations in the Senate, I'm not going to, you know, analyze it with you piece by piece. What I can say is we've been encouraged by the progress and, you know, we believe, and the president believes, it's very important that when it comes to the debt ceiling that we not do what a previous effort in the House would have done, which is try to create a scenario where budget negotiations and the renewal of government funding are once again tied directly to the essential responsibility of Congress to pay our bills, and right before the holidays, which would have been -- would be a terrible outcome to this process as every business owner will tell you. And I think many of them have told you and many of them have told their representatives in Congress.

KEILAR: So does he hold firm to that assertion that he will not negotiate when it comes to Obamacare on the full faith and credit of the U.S. or on the government being shut down?

CARNEY: Yes, he has made clear that - he's made clear two things, Brianna, as you know. He is willing, within the context of broader budget negotiations, within the context of serious-minded and earnest discussions about how to improve the Affordable Care Act, to look at any proposal that might do that going to Obamacare. And that's true on broader budget issues. But, with -- you know, with -- as some of the ideas that we've seen this morning, when it comes to sort of demanding ransom to try to, you know, rally Tea Party members in exchange for opening the government or raising the debt ceiling, that's not acceptable and it has not been through this whole process.

KEILAR: Speaker Boehner, real quickly, is there nothing in the Boehner proposal that's acceptable to you?

CARNEY: Reopening the government and extending the debt ceiling, that's acceptable.

KEILAR: The Obamacare provisions included in the Senate deal?

CARNEY: Again, I think two things. One, as I understand it, there's not a - there's not a proposal in the House to talk about now based on the press conference given by House Republican leaders and based on some of the reporting I've seen since then, that's because they're now going back to try to add some sweeteners for Tea Party members. And the better course of action is the one being undertaken by Democrats and Republicans in the Senate. Instead of trying to, once again, craft a measure to ensure full Republican support in the House, why not work on a measure that could get bipartisan support in the House the way that Republicans and Democrats are trying to do in the Senate? That's certainly what I think is best for the American people. It's what -- it's the kind of process that the president supports. So with regards to, you know, proposals that we haven't seen, it's hard to --

KEILAR: But aren't you cherry picking which parts you'll talk about? Because you're talking about the short term funding and debt ceiling increase -

CARNEY: Brianna, I think I -

KEILAR: But you won't talk about the other items?

CARNEY: Talking about the shutdown and the need to raise the debt ceiling, yes, that's - that's what we've been talking about for weeks.

KEILAR: (INAUDIBLE).

CARNEY: No, we've -- look, we've said all along that we want a debt ceiling increase for as long as possible because of the need to remove uncertainty from this process. I mean the very - you know, the very uncertainty that has been created by this manufactured crisis is what we need to avoid as an economy going forward and that - you know, what Washington needs to avoid because it is already causing harm to the economy. It is already causing uncertainty among Americans, which in turn has them making decisions about how they spend their money, which has a negative impact on potentially on the economy, and that creates a cascading effect that can only be bad, which is why we need to, here in Washington, why Congress needs to fulfill its basic responsibilities, reopen the government and make sure that the full faith and credit of the United States is upheld, as it has been in the past.

Jon.

JONATHAN KARL, ABC NEWS: Hey, Jay, what exactly is the deadline?

CARNEY: For?

KARL: Raising the debt ceiling for default?

CARNEY: Well, those are two different things, as we've been explicitly clear about. On October 17th, as the Treasury secretary has noted many times, the United States runs out of borrowing authority. And beyond that point, we only have cash on hand available to pay our bills. The Treasury secretary has testified to this on Capitol Hill and is obviously far more an expert than I. So I would point you to his testimony and public statements about that fact.

But as everyone knows, in order to meet all of our obligations, as a country, the United States needs borrowing authority in order to make sure that all of our bills are paid. All of the obligations that Congress has made, all of the bills that Congress has incurred will come due. And if we can only pay those bills with cash on hand, that is a problem. And that is what --

KARL: (INAUDIBLE) everybody has their countdown clocks and everything going on. They seem to be counting down do midnight tomorrow. But is it midnight tomorrow when the calendar strikes the 17th?

CARNEY: I'd refer you - I'd refer you to -

KARL: Is it (INAUDIBLE)?

CARNEY: I don't - I don't -- as much as I'd like to improve the quality of the countdown clocks, I would have to refer you to Treasury on the - on the minute and the hour.

KARL: OK. Well, more important than countdown clocks -

CARNEY: Yes.

KARL: When does Congress need to act by? Do they need to pass something by tomorrow? Can something pass on Thursday? Will the sky fall if it doesn't pass on Friday? When is the deadline that they have got to produce something? Is it tomorrow?

CARNEY: Well, Jon, the deadline for avoiding uncertainty has passed. The deadline for not shutting the government down has long since passed. So Congress has already failed to act in a timely fashion. But we hope that Congress will act quickly to resolve these issues now.

KARL: I guess what I'm asking is, when is it too late, Jay? I'm just trying to figure out, you know, when -

CARNEY: I'm not sure what that means. I mean we -- they need to act as soon as possible because what is absolutely true is that every day we're in shutdown, there's harm done to hundreds of thousands of Americans, and indirectly to many, many more and there's direct harm done to our economy. And every day that we get closer to the point beyond which we've never been, which is where the United States does not have borrowing authority, creates more trouble for our economy and uncertainty globally, which has a negative impact on our economy.

KARL: Obviously there's a lot of anxiety in the bond market because of this. Can bondholders be reassured they will still receive their interest after tomorrow, after Thursday?

CARNEY: Jon, I -- those are the kind of questions that I think are best directed to the Treasury Department. What is unquestionably the case is that when people talk about prioritization, they are talking about default by another name. When people talk about paying some bills but not others, they are talking about entering a realm that this country and this government has never been in, which is picking and choosing who gets paid, and when they get paid, and that has tremendous negative consequences for our economy, not all of which are noble beyond the fact that we know they're bad.

KARL: No question, but do you have a game plan? I mean obviously this is no longer hypothetical. There's a real possibility Congress doesn't act by whatever the deadline exactly is. Do you have a game plan of what to do?

CARNEY: Well, this is obviously something that the Treasury Department would have jurisdiction over, so I would refer you to Treasury.

KARL: One specific question. This idea of suspending the medical device tax. I believe it's been referred to as a ransom payment and part of this deal. The speaker's office is saying that this idea was actually proposed by White House staff in negotiations last week. Is that true or not?

CARNEY: That is not true. What we have always said is that discussions of the medical device tax or other elements within the Affordable Care Act that lawmakers want to talk about in an effort to improve the Affordable Care Act we are willing to have. But not as in the context of or as ransom for opening the government.