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Obama Names Homeland Security Pick; GOP Moves On From Shutdown And Near Default; Former Speaker Tom Foley Died; Assessing Shutdown's Economic Damage; Assessing Shutdown; Dick Cheney Opens up About His Health; Congress on the Spot Back Home

Aired October 18, 2013 - 13:00   ET

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

WOLF BLITZER, CNN ANCHOR: Right now, Obamacare opponents are shifting attention back to the health care law now that the fiscal showdown has ended. Some are calling for a cabinet member to resign because of all the problems with the website.

Right now, Republican members of Congress, they've all left Capitol Hill. They're back in their home districts trying to explain the shutdown to their constituents. But how will that message play in Peoria and in Houston and in Miami?

And right now, the markets are just barely rising. Since the U.S. has averted hitting the debt ceiling for now, investors can now turn their attention to earnings.

Hello. I'm Wolf Blitzer in Washington.

We begin with the fiscal stalemate. It may have ended but the issue that triggered the standoff is now front and center once again. We're talking about Obamacare. Republicans bent on trying to do away with the health care law are calling for hearings next week, and they're calling for Health and Human Services secretary Kathleen Sebelius to step down.

The Web site for people to enroll in health care exchanges has been plagued by major problems. The chairman of the House energy and commerce committee is demanding answers. Representative Fred Upton says the American people deserve to know what caused this mess. Delays in technical failures have reached epidemic proportions.

Our Senior White House Correspondent Brianna Keilar is standing by over at the White House. Brianna, so what is the Obama administration saying about these Republican calls, if you will, for Sebelius to resign, for someone to be held accountable for the Web site problems?

BRIANNA KEILAR, CNN SENIOR WHITE HOUSE CORRESPONDENT: You know, Wolf, so far they're kind of brushing them aside. And it really might be that we wait until this situation is resolved before we get the real answer to that. But they're emphasizing that this is a near-term problem. We heard Jay Carney say this yesterday in the briefing, he said, you know, it's just day 17.

Well, now, we're into 18 of a 182-day process because enrollment does go through March. And he kept saying that the Web site is not Obamacare, that basically Obamacare shouldn't be judged just by this Web site. But no doubt, this is very embarrassing. This is a failure. And you've heard from Robert Gibbs, the former White House Press Secretary, saying as much and saying that someone should be fired. I asked Carney yesterday about whether someone may be held accountable. Here's what he said.

(BEGIN VIDEO CLIP)

KEILAR: He said he wants it at 100 percent. So, when do we see that, and who's held accountable for the failure of it?

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Well, I think that the people who are responsible for making it work are hard at work fixing the problems that need to be fixed. And that is the focus of the president's attention and the attention of those at HHS and CMS who are working on this. And the president wants the work done so that the consumer experience is improved.

(END VIDEO CLIP)

KEILAR: And as you noted, Wolf, Republicans have been seizing on this. They say this is just proof that the individual mandate should be delayed or that Obamacare all together should be scrapped. We're expecting hearings on this. But something else that's interesting is because this shutdown and the debt ceiling threat which was just resolved was such a huge story. A lot of the issues with Obama care that certainly Republicans would have liked to highlight kind of got lost in all of that -- Wolf.

BLITZER: Brianna, on a very different subject, two hours or so from now, the president is going to nominate Jay Johnson, the Pentagon's top lawyer, to be the next Homeland Security secretary, succeeding Janet Napolitano. Is the White House anticipating any confirmation problems for Johnson?

KEILAR: I think ultimately, they don't think there are going to be any problems. But I think we could see certainly some tough questions when he comes before the Senate Judiciary Committee, Wolf. There are already some senior Republicans on that committee who are raising concerns. We've heard from Jeff Sessions, he is the ranking Republican. We've heard from John Cornyn, another senior Republican on the committee who's also the senator of a border state of Texas. And the concerns that they really raised are that Johnson doesn't have real management experience and he doesn't have law enforcement experience.

He does, as the former top lawyer for the Pentagon, Wolf, have some management experience. There are 10,000 military and civilian attorneys beneath him, but he really had a lot more to do with terrorism, identifying certain Al Qaeda targets and if it was OK for the U.S. to pursue them to kill them. So, he really has a lot of experience with terrorism. And I think since you're seeing immigration reform going to be something President Obama is pushing, we expect that to be a bit of a partisan fight that you're hearing from Republicans who are sort of honing in on really the issue of border enforcement and when it comes to things like immigration enforcement.

BLITZER: We expect the announcement at the top of the next hour, right -- isn't that right, Brianna?

KEILAR: Yes, that's right, Wolf.

BLITZER: 2:00 p.m. Eastern, we'll have live coverage here on CNN.

KEILAR: Yes.

BLITZER: Brianna Keilar, thanks very much.

The shutdown and near default put the spotlight on divisions inside the Republican Party. The American people have are taken notice and that accounts for some pretty low poll numbers. So, let's take a closer look at what the lies ahead. We've got some midterm elections seemingly right around the corner, and then, of course, a presidential contest in 2016.

Let's bring in our Chief National Correspondent John King at the magic wall for us. Break it down to us. What are we looking at over the next two election cycles presumably for the GOP right now?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Wolf, that's what makes it so exciting. You have the internal fight in the Republican Party and then you have what I'll call the parallel universe between the president of the United States and his Republican critics, especially the most conservative Tea Party members of the House. Let's start with that one. We watched this play out both sides, the president and those House Republicans saying, we are representing the American people here.

Here's what the president thinks. This is a little more than a year ago. When the president won re-election, he was a constitutional law professor, so let's use legal terms. He thinks the question of Obamacare is asked and answered, as they would say in a courtroom, because Mitt Romney promised to repeal it. And, look, the president won big, all those electoral votes. So, the president says, I won this debate. It should have been over. We shouldn't have shut down the government over Obamacare. But House Republicans, especially the most conservative House Republicans, look where they live. They live in red America. This is county by county across the United States in the presidential level. You will see Mitt Romney won more counties than President Obama.

Now, I'm going to switch this to the House races in 2012. This is the Republican House majority. Even as the president won re-election pretty big, the Republicans kept their majority in the House. So, part of the driving force in this debate, Wolf, has been that a lot of these members think they speak for the people, at least in their district back home. And that those people do want them to fight the president.

Let's deal with the shutdown question. Remember, the shutdown question happened because Republicans did not want to fund Obamacare. Let me show you this. It started 80 Republicans. And, look, they live all across the country. but mostly again if you look in red America. They wrote a letter to the speaker saying, we will not support that continuing resolution, the funding to keep the government open unless it strips all the money for Obamacare. Eighty signatures on that letter, despite all the public opinion polling showing the Republican brand taking a beating, look, in the end, when they voted on the compromise, only nine of them decided to switch and vote yes even though that C.R., the continuing resolution, did not defund Obamacare. So, among those, 71 most conservatives, that's the base of the Republican Party, Wolf. They give the president headaches. They give Speaker Boehner headaches. They still voted no.

BLITZER: Yes, they still are popular back in their districts presumably as well. All right, John. Thank you very much.

CNN has learned the former House speaker, Tom Foley, has died. Foley served 15 terms as a Democratic Congressman from eastern Washington State from 1965 to 1995. He was House speaker during the presidencies of presidents George H. W. Bush and Bill Clinton. Foley lost his re- election bid during the Republican revolution, as it was called, back in 1994 becoming the first sitting House speaker to lose since the civil war. The current House speaker, John Boehner, released this statement, quote, "forthright and warmhearted. Tom Foley endeared himself not only to the wheat farmers back home but also colleagues on both sides of the aisle. That had a lot to do with his solid sense of fairness which remains a model for any speaker or representative. With his passing, the House loses one of its most devoted servants and the country loses a great statesman." Tom Foley was 84 years old.

The government shutdown is over but President Obama says the economic effects could linger for a while. We'll talk with a former top economist to the president about the costs of the shutdown.

(COMMERCIAL BREAK)

BLITZER: The country certainly dodged an economic bullet by raising the debt ceiling, avoiding a default. But the partial government shutdown that lasted for 16 days did take a toll. Standard & Poor's estimates it took a $24 billion bite out of the U.S. economy. President Obama talked about the economic damage and the ripple effect.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We know that families have gone without paychecks or services they depend on. We know that potential home buyers have gotten fewer mortgages and small business loans have been put on hold. We know that consumers have cut back on spending and that half of all CEOs say that the shutdown and the threat of shutdown set back their plans to hire over the next six months.

(END VIDEO CLIP)

BLITZER: Austan Goolsbee is a former chief economist for president -- for the president of the United States. He's joining us right now. He formerly worked at the White House. He's an economics professor at the University of Chicago right now. Austin, thanks for coming in.

AUSTAN GOOLSBEE, PROFESSOR, UNIVERSITY OF CHICAGO: Great to see you again, Wolf.

BLITZER: You know, that $24 billion estimate that S&P put out on how much it already cost the U.S. economy in only 16 days. That's only part of the downside. The other part of the downside is that they are lowering their estimate of fourth quarter growth. They thought it was going to be closer to three percent. Now, it'll two percent, maybe even some suggesting under two percent. Explain to our viewers potentially what a half a percent lower growth means in terms of job creation.

GOOLSBEE: Right. You hear half a percent, that doesn't say -- you say, well, it's not even a full percent. But, look, remember, if the economy's growing 2 percent, that's kind of the threshold that if you're growing faster than 2 percent, unemployment's coming down. If you're growing slower than 2 percent, unemployment's likely going back up. We've been hovering right around 2 percent. So, the -- what they're talking about, this downgrade for the second half of the year when you combine it with what a measly first half of the year we had, that could really mean the difference between unemployment starting to inch back up again. And so, that would -- that would not be fun.

BLITZER: And a lot of economists and CEO types that I've spoken with over the past few days, they're worried that we've only kicked the can down the road until January or February. You could have another debt ceiling crisis in February. You could you have another government shutdown crisis in January. And that deters folks from going out there, investing money, creating new jobs, promoting the economy, if you will. Do you buy that?

GOOLSBEE: Yes, look, they should be worried about that. I mean, take the debt ceiling fight of 2011. In 2011, the two months surrounding that fight, we had the biggest drop in consumer confidence, the second biggest drop ever on record after only the collapse of Lehman, bigger than Iranian hostage crisis, bigger than 911, bigger than a whole lot of major events. And it took almost five months for consumer confidence levels to go back to even the kind of measly levels they were before the crisis began. So, this time, you again saw a big drop in confidence. And if it's going to take four or five months to come back, there's every chance that we're back in the middle of another one of these fights before that even happens. So, I am a little nervous and I hear the same thing from business leaders. They say, whoa, what are you doing to us? We were -- we almost were back.

BLITZER: What does it mean, Austan, if some of the credit rating agencies, whether Fitch, S&P, any of them downgrade the U.S. -- basically go ahead and downgrade the United States from its current AAA status to AA status. What would that mean in terms of the average American watching right now as far as interest rates are concerned and their 401Ks?

GOOLSBEE: Realistically, I don't think that can downgrading would have much more than a symbolic impact. You might (INAUDIBLE) China in objection to the fact that the ratings in the U.S. has their own rating agency. The Chinese rating agency is going to downgrade us. I think those are more symbolic because this is such a huge market. I don't think it would have -- that itself would have an impact on interest rates. The thing that would have the impact on everyday people if you go tried to get a mortgage, you want to buy a car is the closer they get and the more shenanigans they play with that debt ceiling, you will see the interest rates start going up as people who are buying bonds say, wait a minute, we thought that was the safest asset in the world; maybe it's not. And that spills over into everybody else's interest rates because a lot of the banks hold those Treasury bonds.

BLITZER: You served in the White House when Obamacare was actually being created in the first term. Did you ever imagine that the first hi-tech president, if you will, very savvy as far as technology is concerned, that there would be these enormous problems with the rollout of the Obamacare website the first three weeks?

GOOLSBEE: You know, it's a fair point. I wasn't that centrally involved in the health care. I think everybody anticipated, if you look at previous big expansions of Medicare or other health things like the Medicare Part D prescription drugs, that there would be glitches. What we're going to have to see is, is this more than just an I.T. problem of the first couple of weeks that will be sorted out? If it's sorted out within the coming -- near future, I don't think that people will remember this as anything other than an early glitch. If it's going to last longer than that or be more pervasive than that, I think that would definitely be a problem.

BLITZER: Yes, definitely would be a problem. Austan Goolsbee, as usual, thanks for coming in.

GOOLSBEE: Yes, great to see you.

BLITZER: Austan Goolsbee of the University of Chicago Business School.

Unprecedented action by a vice president. The former vice president, Dick Cheney, opening up about why he had a letter of resignation drawn up just days - days after he took the oath of office. Our own Dr. Sanjay Gupta spent some time with Dick Cheney. That's coming up.

(COMMERCIAL BREAK)

BLITZER: After decades in public office, the very private Dick Cheney is opening up about his health. At one point, he thought he was so close to death, he said good-bye to his family members. The former vice president sat down with our own Dr. Sanjay Gupta to talk about his revelations in his new book entitled "Heart: An American Medical Odyssey."

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: You know, most people have a pretty strong opinion about Dick Cheney. But whatever you think of him, you may be surprised to know that over the past 35 years, he's had five heart attacks, open heart surgery, a heart pump and even a heart transplant at age 71. He revealed all of this in his new book called "Heart" that he's written with his cardiologist Jonathan Reiner. But I will tell you, when I sat down with him, he was so concerned about his health at one point, that just two months after taking the oath as vice president, he took this unprecedented action.

(BEGIN VIDEO CLIP)

DICK CHENEY, FORMER U.S. VICE PRESIDENT: Basically, what I did was I resigned the vice presidency effective March 28th of 2001.

GUPTA: So nearly for your entire time as vice president, there was a letter of resignation sitting there.

CHENEY: Pending

GUPTA: Pending.

GUPTA (voice-over): Cheney discovered there was no provision in the Constitution to replace a vice president who was alive but incapacitated. So he drew up a letter of resignation to give to the president.

CHENEY: It says, "in accordance with Section 20 of Title 3 of the United States code, I, Richard B. Cheney, hereby resign the office of vice president of the United States.

GUPTA (on camera): How did President Bush react when you told him about this?

CHENEY: He was a little surprised. But he thought it was a good idea.

(END VIDEO CLIP)

GUPTA: We also spent a lot of time talking about the impact that such a significant disease had on his job, not only as vice president, but also as secretary of defense and as a congressman. And keep in mind, Dick Cheney had his first attack when he was just 37 years old.

Back to you.

BLITZER: All right, Dr. Sanjay Gupta, thanks so much for that report. It's not every day, on another story, you hear about a vice president who actually got drunk one night in 2009 trying to buy Twitter, but a new book entitled "Hatching Twitter," the author, Nick Bilton, describes this scene. It happened at the St. Regis Hotel in San Francisco when Al Gore met with Twitter co-founder Evan Williams and Biz Stone, pouring, quote, "copious amounts of wine and Patron tequila.

(BEGIN VIDEO CLIP)

AL GORE, FORMER U.S. VICE PRESIDENT: My partner, Joel Hyatt and I, back when I was with Current TV, when -- which we founded, tried to buy Twitter. And they built that business into a fantastic success. I'm very bullish on Twitter. It's become a global utility. It's a great business.

(END VIDEO CLIP)

BLITZER: And as we know, they didn't sell the company. Instead, Twitter filed initial public stock offering earlier this year.

Heading back home after a tough fight on Capitol Hill. So what's the message for constituents? We're going to ask Congresswoman Sheila Jackson Lee. We're going to find out what's next for Democrats. She's standing by live.

(COMMERCIAL BREAK)

BLITZER: They're lowering the flags - they've just lowered the flag on Capitol Hill to half-staff. Tom Foley, the former speaker of the House, has passed away.

Many members of Congress have gone back home for the weekend. They're talking with their constituents about the government shutdown, their role in the near default and what comes next. One of those - one of those members of Congress is the Texas Democrat Sheila Jackson Lee. She's joining us from her home district in Houston.

Congresswoman, thanks very much for coming in.

REP. SHEILA JACKSON LEE (D), TEXAS: Wolf, it's a pleasure to be with you. And if I might offer my sympathy to the family of Tom Foley. He was a great American. We thank him for the service he gave to this nation and we thank his family.

BLITZER: Yes. Like you, I knew him and our deepest, deepest condolences to his family. He was a wonderful, wonderful man.

LEE: Absolutely.

BLITZER: All right, congresswoman, let's talk a little bit about this budget agreement. That House and Senate budget conferees, as they're called, they're trying to come up with by mid-December. They haven't done it in for or five years. How likely is it that they'll be able to reach a deal? We're talking about Paul Ryan, the chairman of the House Budget Committee, Patty Murray, the chair of the Senate Budget Committee, and all their House and Senate conferees. Is that doable?

LEE: You know, Wolf, the Congress just experienced a self-inflicted wound. And as I'm in the district, I intend to not only tell the truth to my constituents, but also give them hope. The budget conference committee's report is due December 13th has to be hopeful and they have to realize that we put the nation and veterans and military personnel, active duty, and women and infant children and seniors and contractors and public employees, federal employees that are needed on the job through a manmade crisis, if you will. And with that as a backdrop and the loss of $24 billion to our economy, I hope they are serious.

And the Democrats have been serious. As you well know, we took the 986 poison pill for many of us in terms of the funding of this government. But I think that there will be several issues that we have to confront. The sequester is not hurting Democrats, it's hurting the nation. It's hurting growth. And that really has to be addressed because it's - it's like a hatchet, it just cuts straight across. BLITZER: But quick - let me -- I'm sorry for interrupting, congresswoman, but given the well-known differences let's say between someone like Paul Ryan, who you know well in the House of Representatives -

LEE: Very well.

BLITZER: And Democrats like yourself or Patty Murray, are those differences on entitlement reform, tax reform, Social Security spending, Medicare spending, stuff that is really, really important, are they bridgeable?

LEE: Well, I will tell you that it is painful for me to even think about cuts to the most needy and Social Security and Medicare. However, what I think is important is for them to be talking and present a proposal because our constituents want to see that. They want to see us fighting for high moral causes. Obviously the one that we just came out of was not. It was a political grandstanding that had no value. But if we have a moral fight, they understand it.

But let's put a proposal forward because what Americans most want to see is this great nation operating. And I will say that Democrats wants to see that and Sheila Jackson Lee wants to see that on behalf of her constituents. I have hospitals that need dollars. I have researchers that are involved in research. I've got public employees at NASA Johnson and many others that need the federal government to operate.

So here's my point, Wolf, give us a proposal. Talk about it. Put it in writing. Don't do what the super committee did, which really ended all opportunity and it put us in the most jeopardizing position, which is across the board cuts, which is mindless because it does not invest in growth. We need a transportation bill.

BLITZER: All right.

LEE: We need to rebuild infrastructure. And so what I say, give us a proposal.

BLITZER: Here's what - here's what worries me, and I assume probably worries you and a lot of other folks, as well, they failed to come up with this so-called grand bargain by December 13th.

LEE: Yes.

BLITZER: And you know by mid-January, there could be another government shutdown. By early February, another debt ceiling crisis could emerge. The last thing we need is another battle over that. So the pressure is really enormous to come up with this deal. But I've studied Paul Ryan's views. I've studied Patty Murray's views. I've studied the president's views. It doesn't look like they're relatively even close on these matters.

LEE: I think the overriding cloud in the sky or the overriding roof that's over everybody's head, and it's a leaky roof, is this miserable experience that we put the American people through for the last 17 days. If anyone wants to go through that again, I want to see their hand being raised and I know there are some voices that have said it, but I think the leadership and people of good conscience, people who are concerned about the greater good and really are patriots and who have said over and over again as I've said as a progressive, I love this country. It is the greatest nation in the world with all of the mountains and valleys.