Return to Transcripts main page

The Situation Room

Obama: No Negotiations Until Shutdown Ends; How A Debt Ceiling Crisis Could Affect You; Wall Street Down On Debt Jitters; Tying the Debt Limit to Obamacare

Aired October 08, 2013 - 17:00   ET


WOLF BLITZER, CNN ANCHOR: Jake, thanks very much. Happening now --


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: My suggestion to the speaker has been and will continue to be let's stop the excuses. Let's take a vote in the House. Let's end this shutdown right now.


BLITZER: President Obama says he'll talk about anything with the Republicans, but not until they allow a vote to reopen the government and avert what he calls "catastrophic chaos" by agreeing to raise the debt ceiling.

House Speaker John Boehner just said now is the time to start talking.

But what do Republicans really want to prevent the U.S. debt default?

We'll have a debate between two members of Congress.

And from jobs to mortgages to retirement funds, we're going to show you what a government default could mean for you.

I'm Wolf Blitzer.


President Obama just spent more than an hour slamming Republicans for shutting down the government and putting the economy at risk by not moving to increase the debt limit. But in the end, he left them an opening, suggesting that once they act on those two things, even with short-term fixes, he'll happy to negotiate with them on almost anything.

The House speaker, John Boehner, gave his answer a few minutes ago, saying the time to talk is now, not later.

So where do things actually stand right now?

Let's begin our coverage this hour with our senior White House correspondent, Jim Acosta -- Jim, did we see any opening in what the president had to say?

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: I think we did, Wolf. It started off with that news conference that the president had for well over an hour. It sounded as if the president wasn't really offering any room to negotiate, wasn't really budging at all. But then toward the very end of that news conference, the president said not only is he willing to accept a short-term increase in the nation's debt ceiling -- that would give both sides some rooms to hammer out a future compromise -- but he also said that House Republicans could attach to legislation that reopens the government and raises the nation's debt ceiling some kind of mandatory committee process that would bind Democrats and Republicans together to hammer out some of these big disagreements that exist over the budget and the debt ceiling.

But the president said that that would have to happen after the government is reopened and after the debt ceiling is raised.

I talked to a White House official who said don't over interpret all of this. The president is not offering new concessions in order to get those things passed.

But I want to go back to what the president said earlier today, because it was the smallest of peace offerings to Republicans.


OBAMA: If there's a way to solve this, it has to include reopening the government and saying America is not going to default, it's going to pay our bills. They can attach some process to that that gives them some certainty that, in fact, the things they're concerned about will be topics of negotiation, if my word is not good enough. But I've told them I'm happy to talk about it.


BLITZER: Jim, even before the news conference, the president did reach out directly to the speaker.

ACOSTA: That's right, he did. They had a conversation around 10:45 this morning. It was shortly after the speaker complained that the president was not negotiating. So interesting to see that the president then called the speaker.

And I want to point out, Wolf, something that we heard a few times during this news conference. And that was it seemed as if the president was trying to separate the speaker from his more conservative Tea Party caucus.

Listen to what the president said here.


OBAMA: And if reasonable Republicans want to talk about these things again, I'm ready to head up to the Hill and try. I'll even spring for dinner again. But I'm not going to do it until the more extreme parts of the Republican Party stop forcing John Boehner to issue threats about our economy. We can't make extortion routine as part of our democracy.


ACOSTA: Now the other thing that we want to point out is that the president, during this news conference, for the first time, really started to paint a very dark, doomsday scenario as to what might happen if the nation goes over the debt ceiling and into default. He said that Treasury Secretary Jack Lew would have more to say about that in a Congressional hearing on Thursday.

But, Wolf, this whole idea that there would be this process that the White House and Democrats would enter into after a debt ceiling increase, after a continuing resolution is passed to reopen the government, it is very important to say at this point, Wolf, we don't know how that's going to take shape. The White House is not offering any specifics as to how that would be laid out.

And it is important to note, in just the last several minutes, the White House did issue a veto threat, saying that the super committee idea that came out of the Republicans earlier today up on Capitol Hill, the president would veto that legislation. He is not interested in their idea of a super committee at this point, mainly because, as you heard the president say earlier today, the Republicans have already said any super committee would have to take new revenues off the table. The president said he is not going to do that. White House officials say that is basically a nonstarter at this point.

Some kind of process yet, but not the Republican super committee that was laid out today -- Wolf.

BLITZER: Yes, tiny little progress, if that.

All right, thanks very much, Jim Acosta.


BLITZER: Let's go up to the Hill right now.

Our chief congressional correspondent, Dana Bash, is standing by.

You're getting reaction to what we heard from the president. The speaker, just moments ago, speaking out himself.

So is there some wiggle room here that's going on?

Am I missing something?

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: If there's wiggle room, it's certainly not being perceived that way so far by Republicans, who certainly perceived the way the president spoke, for over an hour today, as saying a lot of the same as he has said before, that he's not going to negotiate.

And so the House speaker did come out, shortly after watching the president in his office here on Capitol Hill.

Here's part of what the speaker said.


REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: The long and short of it is, there's going to be a negotiation here. We can't raise the debt ceiling without doing something about what's driving us to borrow more money and to live beyond our means. The idea that we should continue to spend money that we don't have and give the bill to our kids and our grandkids would be wrong.

This isn't about me, and, frankly, it's not about Republicans. This is about saving the future for our kids and our grandkids. And the only way this is going to happen is to, in fact, have a conversation.

So it's time to have that conversation -- not next week, not next month. The conversation ought to start today.


BLITZER: And, Dana, we also heard from John McCain. He clearly is fed up with what's going on. And he's been around Capitol Hill for a long time.

BASH: That's right. He is sort of, you know, one of the few veterans of lots of negotiations, of deal making that's left in the Senate, somebody who is willing to work across the aisle, and more importantly, more recently, somebody who has successfully worked with the White House, with Democrats, on several deals on various issues, even over the past few months.

What happened in the Senate, even as the president was speaking today, Wolf, the Senate Democratic leader, Harry Reid, called what is called a quorum call, meaning he forced all senators to come to the Senate floor and discuss the fact that he thinks it's an embarrassment to the country and so forth.

John McCain, who has been relatively quiet on the Senate floor and, really, around these halls on this whole shutdown and the debt ceiling, came out and talked about the fact that there needs to be a negotiation.

Listen to what he said.

SEN. JOHN MCCAIN (R), ARIZONA: How is this going to end?

We know how it's going to end. We know how it's going to end. Sooner or later, the government will resume its functions. Sooner or later, we will raise the debt limit.

The question is, is how do we get there?

If there's anybody who disagrees that we're not going to reach that point, I'd like to hear from them.

So why don't we do this sooner rather than later?


BASH: But, Wolf, this is kind of almost a circular issue, or a circular debate, because what John McCain is asking for sounds reasonable. But when you listen to the president, roll back the tape from today, from yesterday, from the day before, he is insisting, he is not going to talk about those things, not going to negotiate until and unless Republicans agree to reopen the government and raise the debt ceiling. And then they can talk.

So we are still, just to put it bluntly, in a chicken or an egg situation, which is going to come first. And so far, we don't know what the answer is to that.

BLITZER: We certainly don't. It's an awful, awful situation right now. The stalemate continues. Dana, thanks very much.

Let's assess what's going on with our chief political analyst, Gloria Borger, and our chief national correspondent, John King -- Gloria, they seem to be as divided as ever.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Yes, they are. I mean I think the president came out today, and while Jim Acosta said there may be a teensy little crack, this was not an olive branch. This was the president saying, I'm not going to negotiate on this, I want you to fund the government, I want to make sure we don't default on our debt and then we can talk about all of those things that you say you want to talk about.

What was interesting to me was that ObamaCare, the Affordable Care Act, started, as this president spoke about, at the beginning, talking about Republicans' obsession, as he called it, with his health care reform act.

But there was very little talk of it because the conversation has now shifted to the debt ceiling. And I think Republicans understand that the public doesn't want them to attach a health care bill to the debt ceiling. They want to talk about reducing spending.

BLITZER: Gloria makes a good point. I don't think there was one question about the glitches in the rollout --

BORGER: Right.


BLITZER: -- of ObamaCare during a 65 minute appearance that the president had in the briefing room.

KING: A lot of Republican strategists looking at 2014 races bang their head off the wall at that, because they think if Republicans would not have done this, not have brought us to the government shutdown and this debate right now, the political narrative in this country would be about glitches in ObamaCare and the Republicans would be benefiting. Instead, the Republicans are getting more of the blame for the shutdown and more of the blame for the potential government default.

I would disagree, to a tiny degree, on the idea of the president saying you can put the conditions in writing.


KING: You can put the subject of negotiation in writing as a potential olive branch. The problem is, it would have been an olive branch two years ago or four years ago -- BORGER: Right.

KING: -- when maybe they trusted each other. But because of the collapse of the grand bargain in 2011, the speaker and the president don't have a good relationship with trust. And even more importantly, those 25 to 40 Republicans, House Republicans, the Tea Party members, the arch conservatives, they don't trust John Boehner to go into those negotiations.

So they're not going to say we'll open the government, we'll raise the debt ceiling and then we'll talk about the things we care about.

BORGER: You know, the interesting question is -- I think, now, is, if the two sides don't trust each other and Boehner and the president don't trust each other, who could the go-between be?

You saw John McCain there on the floor sort of volunteering, saying, you know, I'll be the go-between.

The problem with John McCain is that I think he can talk to lots of Democrats, but he's the one who called Ted Cruz, what was it, a whacko --

KING: Yes. They don't trust him, either.

BORGER: -- a whack (INAUDIBLE). They don't.

So the Republicans do not trust McCain.

BLITZER: What about Joe Biden?

BORGER: Then you have Joe Biden. Then you have the question of Joe Biden. Joe Biden, you know, did a couple of deals. It's the Senate Democrats, led by Harry Reid, who feel like he sold them up the river on those deals, on the fiscal cliff and the debt ceiling in 2011. So Joe Biden is not the one leading this charge --

BLITZER: Is that relationship between Harry Reid, the Democratic leader, majority leader in the Senate, and Joe Biden, that poisonous right now?

KING: Their personal relationship is OK. This is a -- forgive me, this is a testosterone test, if you will. Harry Reid is the leader of the Senate --

BORGER: I wouldn't know anything about that.

KING: -- and he felt that he was sold out, that Joe Biden came in and did his job. And the administration --

BLITZER: When he negotiated with Mitch McConnell?

KING: Yes. And the administration gave up too much, in the view of some Democrats, in those negotiations.

So Harry Reid's point is I'm the point person in the United States Senate. Respect my job, Mr. President. I've had your back in a lot of fights. Don't go around me and don't go behind me.

The problem is, with no -- with zero trust, the president is betting that John Boehner gets to the point where he sees the Republicans getting most of the blame and perhaps their majority going away and he blinks.

The speaker is betting on the fact that the president sees the prospect of default and even though the Republicans get more of the blame, if the economy tanks, what happens to the president's second term?

BORGER: Well --

KING: And then he'll blink.

The only way to get this done, Wolf, is to put them in a room, and If they don't trust each other, leave them there until they figure it out.

BORGER: Or put other people in the room for them that are representing them --


BORGER: -- but are their surrogates, so that they actually don't have to look like they're caving. I mean this is all -- in the end, you know, this is all going to be about who's behind the curtain?

Who's doing the negotiating here?

What are you calling a negotiation.

What are they willing to decide down the road?

What are they willing to do right now and push off?

I mean it's in everyone's interests right now, I would argue, to get this done.

When you look at the polling, they're angry. Voters -- over 80 percent of voters are angry at everyone.

KING: And it --


KING: -- imagine what happens --

BORGER: -- it doesn't work.

KING: -- imagine what happens to that anger if all those savings that you have finally gotten back to about your pre-financial crisis levels --

BORGER: Right.

KING: -- if the markets tank and those 401(k)s, those college funds collapse, watch out for the anger people will have at this town.


BORGER: You're suddenly not getting your Social Security check.

BLITZER: The Republicans will (INAUDIBLE) the Democrats and the president himself.

KING: Right. And nothing -- nothing else will get done. The state -- even though the president is winning politically right now, the biggest challenge is what happens the next three years if they don't figure this out?


BORGER: They should all worry about it.

BLITZER: John and Gloria, guys, thanks very much.

Just ahead this hour, we're going to debate all of this with two key lawmakers in the House of Representatives. The ranking Democrat on the House Appropriations Committee, Nita Lowey of New York, Republican Congressman Scott Garrett of New Jersey. He serves on the Budget and Financial Services Committee.

What do you want to ask them?

What would you like me to ask them on your behalf?

You can Tweet us. Use the hash tag, sitroom. We'll try to get some of your questions into them, as well.

Up next, from your job to your home to your 401(k), we're going to show you what the real impact of a U.S. debt default could be.

And American soldiers killed in Afghanistan because of the government shutdown. Guess what?

Their families aren't receiving death benefits, as they should right now.

What is going on?

We're taking a closer look.


BLITZER: There are plenty of dire warnings out there about what could happen to the economy if Congress fails to raise the debt ceiling and the U.S. treasury can't pay its bills. But what would all of that mean for you if there were such a crisis, what would it mean for you, your bottom line?

CNN's Tom Foreman has been looking into this part of the story and I can tell you already, it's not a very pretty picture -- Tom.

TOM FOREMAN, CNN CORRESPONDENT: Yes. Wolf, you know, problems in the housing sector. Well, what started the last recession? So, if there's a default and I know there's a big question about the if, that is where many people might feel it, in their neighborhood. Why would that be? Because there are already indications that if a default comes, there could be a change in interest rates.

They could rise in the interest rates. What that means is that fewer people would be able to afford your home and because they can't afford your home, housing prices which have been rising would start falling again. To say nothing about what it would do to about two million construction jobs in this country which have been slowly trying to rebuild. And it's not just true of homes.

If you were trying to buy a car or open a business and you need a loan, those interest rates will also play a role there. Concern number two, real money, basic money from the government. What if you receive or somebody in your family receives Social Security or Medicare or student loans or anything like that. About 148 million Americans have that right now. That's a little bit less than half the country.

So, what do you do in a practical sense if your father who relies on veterans benefits suddenly finds they're delayed or simply go away all together? Another possible impact if we reach that dire circumstance of a default. Here's another really big one that affects almost everybody. Jobs. In the environment we're describing, the potential for businesses to start shedding more jobs is huge.

And remember, in the last recession, this country lost about eight million jobs and only now is it trying to recover those jobs. So, you have a sense of how tenuous that circumstance would be. And here's one last area to think about in all of this. What about your savings? What about all that money you put aside for your golden years for retirement or maybe for your kids' education or maybe for some special purchase down the line?

That money is locked up, as John King mentioned a little while ago, in 401(k)s and in different mutual funds and in different investments. In the circumstances we're describing here, if that comes to pass, all of those savings could lose substantial value. Wolf, that is why some analysts here who are most concerned about this say this would not be just about D.C. but it could be about you -- Wolf.

BLITZER: Yes. Not a pretty picture, indeed. All right. Tom Foreman, thank you.

Coming up, they hold trillions of dollars in U.S. debt. Now, China and Japan, other countries, they are warning the United States to get its act together and avoid a default. The spillover could be enormous.

And what do republicans really want to prevent a U.S. debt default? We're going to have a debate between two members of Congress, both of whom are standing by live. Stay with us. You're in the SITUATION ROOM.


BLITZER: With the government shutdown dragging on and a debt crisis looming, the Dow and S&P, the indices all fell more than one percent today. The NASDAQ was down two percent. Given the catastrophic warnings coming out about a possible default, why aren't the markets down even more? Lots of investors are asking hat question.

Joining us now, Dianne Swonk, she's the chief economist for Mesirow Financial. Diane, thanks for coming in. The Dow was down, what, 159 points today, closing at 14,776. It was well over 15,000 already. What's your assessment if there's no resolution of this debt ceiling issue in the next few days? Can we anticipate further declines?

DIANNE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: Absolutely. I mean, the problem is the financial market, although, they think the Armageddon scenario where we actually default on our debt and stop government payments is not the most likely outcome, it's possible but not probable, they have to start pricing in the risk. They also have to start dealing with the reality of the actual cost to the economy that compound the longer the government is shut down.

Not only are, you know, government workers furloughed, there's a spillover effects, cab drivers, retail workers, restaurants outside -- there's a place in Kentucky where they have 3,000 IRS workers that are out of work and no one's going to the restaurants in the area, and they're quite concerned about that. I talked to the president of the Chamber of Commerce there. So, there are these spillover effects where you have losses that are real and are going to affect the U.S. economy.

It also creates uncertainty about the future which causes hesitation. We've seen a lot of hesitation already and hesitation is the last thing you need in an economy that's already been hesitant on growth. So, hesitation in hiring, that's a real issue.

BLITZER: It certainly is. And I remember 2011, when there was a debt ceiling crisis, what we lost about 2,000 points in the Dow Jones then, and back in 2008 when there was the recession, the economic collapse, the Dow Jones went from above 14,000, below 7,000 very, very quickly, and people lost a ton of money.

Now, only now, a lot of folks are beginning to catch up to where they were then, but what I hear you saying and a lot of other investors saying, be nervous right now because we don't know what's going to happen over the next ten days or so.

SWONK: It's not only the next ten days. I think the one thing that Wall Street is going to have to come to terms with, and Washington, Wall Street and Main Street often seem to think they're disconnected from each other, but as we learned, as you noted in 2008, we learned we were all intimately connected.

And right now, one of the scariest things I have to deal with this, I really think the recovery and growth potential going forward is in the hands of our elected officials in Washington and I don't like feeling that way as an economist nor as an American. So, that's something that disappoints me right now and also scares me. But there's been cumulative effects.

During that crisis in 2011, a lot of other policies were sidelined. Our status in the globe, in the world was undermined and we didn't go forward with trade talks that have already undermined our competitiveness. Last week, President Obama had to cancel a trade talks which also further are setting us back and critical talks with China that also have a geopolitical implications as well as economic implications.

And so, these things, these kind of costs actually are, you know, starting to seep in and undermine us both as a nation in our geopolitical sense and economically. And I think that's the part that financial markets are fully pricing in right now and are beginning to be forced to deal with it, which is not good news for the rest of us because we do have exposure here no matter who we are.

We know that what happens on Wall Street matters on Main Street and what happens on Capitol Hill matters to all of us around the world.

BLITZER: Now, what about the treasury notes, the T-bills that are out there, the Saudis, the Japanese, the Chinese, a lot of Americans have those treasury notes. What's going to happen? I don't think there's going to be a default, obviously, but if we get close to that, how worried -- what would be the impact on those treasury notes?

SWONK: Well, I think that's an important point you made is I don't think there's going to be a default either and the question is if we do breach the debt ceiling, what laws will jack Lew, our treasury secretary, have to break in order to maintain spending in U.S. economy from the government and servicing the debt.

I do think as we get closer to the 11th hour on the debt ceiling, we actually still have to price in that risk. What's been interesting is even though it's been very small and sort of gone under the radar, we have always seen equity markets, but treasury bond bills, the short- term bills that are expiring right by -- the day after the government closed, the ones that were expiring right around October 17th, and then the ones that were expiring in November 7th, today, they got option. There actually was a risk premium.

They're at their highest rates since 2009. And so, it's, you know, really modest. It doesn't have ripple effects for the economy yet, but the fact that that's already happening, investors are already having to raise rates on those very minute short-term treasuries means that that's a precursor of what could happen, that we could get a spike in rates and if the uncertainty is not resolved, it could linger.

And the global pressure here is real, because the biggest investors of course in the treasury bond market happen to be foreign investors and they are going to pay the greatest price, but it is also global in scope because we are what everybody else prices all their assets off of. The treasury bond is the gold standard or it is considered that still. Not really sure why.

BLITZER: Better still be.

SWONK: Better still be. We need it that way.

BLITZER: Diane Swonk, thanks very much. It's interesting, before the president started his news conference, the Dow Jones was down 123 points. After the news conference, by the end of business, 159 points down. So, there's a lot of nervousness out there. And I suspect that's going to continue until they work out a deal ending the government shutdown and raising the debt ceiling. Diane Swonk, thanks very much.

It's a military benefit no family ever wants to receive. But if the time comes, many families certainly rely on it. We're talking about the military death benefit paid to the families of fallen service men and women. And right now, the U.S. government shutdown means no one is getting it. No one.

Here's our Pentagon correspondent, Barbara Starr. She's got the very latest. Barbara?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Wolf, the speaker of the House, John Boehner, says it's disgraceful, his words, that the administration is not paying the death benefit to military families of the fallen. The Pentagon says fix the law so they can pay.


STARR: For these troops just killed in Afghanistan, their families are being denied government death benefits until the shutdown is over.

SEN. HARRY REID (D-NV), MAJORITY LEADER: That America could fail the families of our fallen heroes, appalling, frightening.

SEN. JOHN MCCAIN (R), ARIZONA: Shouldn't we be embarrassed about this? Shouldn't we be ashamed?

STARR: Marine Lance Corporal Jeremiah Michael Cullen's remains were brought Monday to Dover Air Force base.

UNIDENTIFIED FEMALE: He became a Marine to become somebody. And he became a great Marine.

STARR: But his family and others will not get Pentagon funding to go to Dover to meet their loved ones. The program is frozen until the shutdown is over. Funeral and burial expenses won't be reimbursed. A $100,000 cash payment to survivors, stopped.

Amy Nyberger Miller works with grieving families. There is concern for those that don't have a lot of money.

AMY NYBERGER MILLER: The benefits are especially critical because they do provide them with the ability to make decisions quickly.

STARR: Her 22-year-old brother, Christopher, was killed in Iraq in 2007.

MILLER: There were a number of unexpected expenses that we had not anticipated in our lives because we certainly had never thought my brother would die.

STARR: Some Republicans say the Pentagon already has the authority to pay the benefits, but promise a quick piece of legislation to make sure that happens.


STARR: And again, the Pentagon is adamant it needs that legislative fix, and they say they are right. And the proof is that Congress is going to fix the law so it must need a fix. But in the meantime, Wolf, a number of private corporations and groups that support military families are very quietly behind the scenes stepping forward and offering financial assistance to these families in their time of grief. Wolf?

BLITZER: A heartbreaking story indeed all around. Barbara Starr, thanks very much.

Much more coming up on the government shutdown, including a major debate here. A liberal Democratic member of Congress versus a Republican conservative member of Congress. They're both getting ready to make their positions. Our debate when we come back.


BLITZER: New information coming in about Tom Hanks and his health. He shares details of his diagnosis of diabetes. Stay with us.


BLITZER: Take a quick look at some of the other top stories in THE SITUATION ROOM right now. State Department sources tell CNN the U.S. ambassador to Libya has been questioned by the country's justice minister over the capture of the alleged al Qaeda operative, Abu Anas al-Libi. He was apprehended by American forces over the weekend in Tripoli, angering many Libyans. The United States is putting Marines on standby in Italy in case the U.S. embassy in Tripoli is attacked.

An advance team is now on the ground in Syria, overseeing destruction of the country's chemical weapons stockpile. It's all part of a joint mission between the Organization for the Prohibition of Chemical Weapons and the United Nations. The team will eventually number about 100 people and will have a support base in Cyprus. New details emerging right now about that nine-year-old boy who boarded a flight from Minneapolis to Las Vegas without a ticket after he slipped past security guards and a distracted gate agent. The Minneapolis Star-Tribune reports he's also been caught sneaking into a water park and was recently arrested for allegedly stealing a car. We have learned the boy's mother, by the way, works at the Minneapolis airport. Officials in Las Vegas say he will be returned to Minnesota.

And a new $100 bill is out with features that make it easier to authenticate and harder to counterfeit. The bill contains a blue 3-D security ribbon and color-shifting ink that changes from copper to green when tilted. The image of Benjamin Franklin is still there but it's no longer surrounded by a dark oval.

The actor Tom Hanks says he's been diagnosed with Type 2 diabetes. He says he's known for years that he was -- had a pre-diabetic condition marked by high blood sugar levels. Listen to what he told David Letterman.


TOM HANKS, ACTOR: I went to the doctor and he said you know those high blood sugar numbers you've been dealing with since you were 36? Well, you've graduated!


HANKS: You've got Type 2 diabetes, young man.


BLITZER: Hanks says he will be able to manage his condition through diet, as millions of other people do. The actor also sat down with CNN's Christiane Amanpour, by the way. You will be able to see that interview on

Just ahead, a looming crisis. Two lawmakers, they are here to debate who needs to do what to keep the government from defaulting on its debt.

Plus, President Obama says Newt Gingrich learned shutdowns are no way to do business. Newt is here. He will respond to the shout-out he received from the president. My interview with the CROSSFIRE co-host. That's coming up in our next hour.


BLITZER: Conservative Republican Scott Garrett, liberal Democrat Nita Lowey are standing by. A major debate on the U.S. government shutdown and the debt ceiling. That's next.


BLITZER: President Obama says he'll be happy to negotiate with the Republicans, but only after they allow a vote to reopen the government and agree to raise the nation's debt ceiling. Right now, neither side seems to be budging.

Joining us now, two members of the House of Representatives. Congresswoman Nina Lowey of New York, she's the ranking Democrat on the Appropriations Committee, and Republican Congressman Scott Garrett of New Jersey. He serves on the Budget and Financial Services Committee.

To both of you, thanks very much for coming in.

I'll start with you, Representative Garrett. Here's what you were quoted October 7th in "National Review Online" as saying, referring to the debt ceiling. "If it doesn't have a full delay or defund of Obamacare, I know I and many others will not be able to support whatever the leadership proposes. If it's just a repeal of the medical device tax or chained CPI, that won't be enough."

What would be enough for you to vote in favor of raising the nation's debt ceiling?

REP. SCOTT GARRETT (R), NEW JERSEY: So I voted many times in the past to raise the debt ceiling in this country and I'm ready and willing to again, so we can get that fiscal house in order in this country. And so what we would like to do is to try to put us on a path to fiscal sanity and one away you do that is to begin to address our entitlement problems and this is something that we've talked about for years.

But we actually have to get to the point of negotiating it and talking about it and getting all parties to the table. And that's what we would like to see.

BLITZER: Does it have to have, as you said earlier, a full delay or defund of Obamacare as well?

GARRETT: So part of entitlement, you know, we've created a brand new entitlement with the Affordable Care Act, also known as Obamacare. We've -- that's a brand new entitlement to the tune of over -- $2 trillion. So all those things I think have to be on the table. There can't be any, you know, preconditions, as I just heard your lead-in here saying the president says he'll do this if, and set preconditions to any negotiations.

When you go into negotiations you need to have people on both sides of the table. We're here, he's not. And no really preconditions going into the discussions. Everything on the table.

BLITZER: All right. Go ahead, Congresswoman, Lowey. That sounds reasonable, right?

REP. NITA LOWEY (D), NEW YORK: Republicans recklessly shut down the government. Now they're threatening to default instead of raising the debt ceiling, and this is the way they are avoiding the regular legislative process and trying to extort commitments without even a negotiation.

Let's remember that in the continuing resolution, the spending bill, the Democrats accepted the Republican number, in both the House and the Senate, and when it comes to defaulting on the debt, that is outrageous.

Let's go through the regular legislative process. The president had agreed to have discussions, we can talk, we can negotiate, but not hold up the default -- not hold up the debt ceiling. We cannot default.

BLITZER: That sounds reasonable, Congressman Garrett.

GARRETT: It all sounds reasonable, and I think we're on the same page. We don't want the country to default by any stretch of the imagination. That's why we went through the regular process. You know, we sent bills over to the Senate, we sent about, let's see, four regular appropriation bills over there, and unfortunately, the Senate did absolutely nothing with them.

That's what really brought us to this point with the Senate inaction. Now we're going through another version, if you will, of regular order. We're sending more bills over to the Senate, you know, to open up the parks, to make sure the vets are paid, make sure the troops are paid, make sure the Head Start is up and running.

You can run down the list of all the appropriation bills that we've sent over to the Senate. And as I always say, the Senate is where all good bills go to die.

LOWEY: Well, you have to --

GARRETT: They won't -- they won't take up any of these bills. We need to have these bills considered by the Senate.

BLITZER: All right.

GARRETT: And then we can go to conference and come up to a reasonable end result.

LOWEY: You have -- you have another version of reality. You're forgetting that the Senate accepted your number and the House passed a bill with your number. The extraneous pieces of legislation attached such as Affordable Care Act was affirmed by the House, affirmed by the Senate, affirmed by the Supreme Court, and the president has agreed to negotiate with you. Don't default on the debt. This would be outrageous.

GARRETT: Well, no. No, no. No, the president has said -- let's get the facts clear. The president has said over and over and over again. He just called Speaker Boehner just the other day and said I will not negotiate. And he has said that repeatedly. Now --

LOWEY: The president will not negotiate on your decision to default on the debt.

GARRETT: Wait. Just a minute ago you said he will negotiate, now he won't. Well, we're not -- we don't want to default on the debt either. We have -- we have already passed a piece of legislation.

LOWEY: Then stop threatening to do so. GARRETT: No. I have never, ever -- have you ever heard me threaten to default on the debt?

BLITZER: Hold on for a second, guys. Because I want to be precise on this point.


BLITZER: Congressman, you said if it doesn't have a full delay or defund of Obamacare you wouldn't vote to raise the nation's debt ceiling, meaning the U.S. will default on its debt. So are you saying --

GARRETT: Wait. Well, actually, no. The nation will not default on its debt. We've also sent legislation over already the Senate would not take up that would allow the government to continue functioning. And we support the idea of the administration doing what's within its authority to actually pay the debt.

You know, the debt is around what? Debt payments are around $20 billion up -- up and down a month. Income coming in -- so the revenue coming in is around what, $230, $240 billion a month? We want to make sure that that is always paid. There's not a single Republican who does not want the debt payment of this country unpaid. So let's make sure --


BLITZER: So -- so if they don't raise it -- hold on second. If they don't raise the debt ceiling, you think the U.S. can still go ahead and pay all of its responsibilities, including making sure Social Security checks go out on time and all of the domestic and national security bills that -- that come up?

GARRETT: Yes, actually --

LOWEY: It seems to me, Scott --

GARRETT: Actually to answer your question, yes. If you look at the revenue flow coming in, we've prioritized this before. This has been looked at for years now. In fact, during the Bush administration, there was a legal opinion by -- council saying does the executive have the discretionary authority to pay those responsibilities first.

BLITZER: All right.

GARRETT: So this has been looked at before.

BLITZER: All right. Go ahead, Nita Lowey. Go ahead.


LOWEY: It seems to me that you have a distorted view of reality when it comes to the debt. Jack Lew, our treasurer, made it very clear that somewhere around the date October 17th, that would be the day by which we must, must take action on raising the debt ceiling. So if you're saying you're not going to negotiate on the debt ceiling, then let's get it done --

GARRETT: No, I never said that.

LOWEY: -- and let's have negotiations and we can talk about anything you want.

BLITZER: He says he's willing to negotiate on the debt ceiling, Congresswoman, but he wants --


BLITZER: He wants concessions from the president on Obamacare.

GARRETT: Right. And the --

LOWEY: Look. Obamacare is off the table. The House voted for it, the Senate voted for it. Affirmed by the Supreme Court. There are many issues. And let's remember, there was a negotiation with Republicans and Democrats in December 2012 and August 2011, and it was Speaker Boehner who walked out of the negotiation, even though they were this close.

BLITZER: All right.

LOWEY: And that included mandatory spending, a whole range of issues.

Look, we should not be holding the debt ceiling --


LOWEY: -- and the continuing resolution, funding the government hostage. So let's pass it and we can have all the negotiations we want.

BLITZER: Very quickly. Scott Garrett, go ahead.

GARRETT: So we -- let's be clear. Let's not look backwards, let's look where we are right now. We are and willing, ready to negotiate. Republicans in the House have already appointed negotiators. The president has said that he does not want to negotiate. If he wants -- if Harry Reid wants to send people over to start negotiating this evening, we're ready and willing to do it.

I'm willing to be there. And so that's where we stand and that's -- and at the same time, if we could get the Senate to do what we've done in a bipartisan manner this week, we have passed bills in a bipartisan manner to open up much of the government.

If the Senate would just pick up those bills, you would see a lot of these issues just be swept away.

LOWEY: Look --

GARRETT: We just can't get Harry Reid to move those bills. And that's -- really what the facts are.

LOWEY: Let -- let me make it clear, there's a process in place.


LOWEY: You may want to go around it. We have a continuing resolution, a standing bill.

GARRETT: Yes, continuing --

LOWEY: Fund it at your number, bring it to the floor of the House.

GARRETT: Nita, Nita, can I ask you something?

LOWEY: And let's see --

BLITZER: Go ahead.

GARRETT: Can I ask you something? Is it the regular way that we should be passing spending for this country in just one solid bill or is the normal way that you pass multiple appropriations bills? Isn't that the way that you're set up to do things here?

LOWEY: Chairman Rogers and I are ready to do a complete bill as is the Senate. You want to hand pick here, hand pick there.

GARRETT: No, we --

LOWEY: Maybe by December we get the process done.

BLITZER: All right.

GARRETT: No, we sent -- I'm sorry.

BLITZER: All right, guys.

GARRETT: We've already sent four -- we've already four of those bills over to the Senate. They have not taken up. They went through the process. You probably voted on some of them and in favor as well.

LOWEY: You know, you are deciding what you want to send over. There's a process in place.

GARRETT: Well, yes, that's right. There is a process and the House decides --

LOWEY: Chairman Rogers and I could have the whole thing done.

BLITZER: All right. We've got to wrap it up, unfortunately, guys. But a good solid debate.

GARRETT: Thank you.

BLITZER: Obviously two very different positions on both sides.

GARRETT: Yes, absolutely.

BLITZER: They've got to reach common ground at some point. Hopefully it'll be sooner rather than later. So much at stake.

GARRETT: And it indeed it.

BLITZER: Nita Lowey, thanks very much. Scott Garrett, thanks to you as well.

LOWEY: Thank you.

GARRETT: Thanks. OK.

BLITZER: Coming up, a salmonella outbreak sickens hundreds of people. Is it a result of the government shutdown, furloughed scientists? Stay with us.