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THE SITUATION ROOM

Showdown in Wisconsin; Federal Government Shutdown?

Aired February 18, 2011 - 18:00   ET

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


CANDY CROWLEY, CNN ANCHOR: You're in THE SITUATION ROOM.

Happening now: Fiscal crises and budget showdowns, from state capitals to the U.S. capitol, where the likelihood of a federal government shutdown seems to be growing every day.

Also, funerals for protesters become the scene of new killings, as anti-government demonstrations spread across two continents.

Plus, CNN's chief medical correspondent, Sanjay Gupta, shows us the intense and sometimes unusual rehabilitation methods Congresswoman Gabrielle Giffords is undergoing. Plus, we will get an update on her condition from one of her closest congressional friends.

Breaking news and politics headlines are straight ahead. Wolf Blitzer is off today. I'm Candy Crowley and you're in THE SITUATION ROOM.

Tea Party lawmakers came to Washington targeting health care reform, and today they struck a blow. The Republican-led House voted to bar any federal agency from spending money to implement the new health care law. It's just one of several controversial budget votes today, all moving Democrats and Republicans farther apart and increasing the possibility of a government shutdown two weeks from today.

CNN congressional correspondent Brianna Keilar is on Capitol Hill for us.

Brianna, what's going on up there?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Candy, you know, House Republicans said if they couldn't repeal health care reform outright they would find other ways to get rid of it, including defunding health care reform.

Well, this was really their first effort at that today, as they voted to change a bill, a spending bill that would fund the government for the remaining seven months of the budget. This measure passed handily. And as you can imagine, it inspired a lot of partisan rhetoric.

(BEGIN VIDEO CLIP)

REP. DENNY REHBERG (R), MONTANA: We call it what it is. It is Obamacare. It is a travesty. It is big government. It is not controlling health care costs. And it needs to be repealed. And today we're going to try and defund it to the best of our ability. And if we're not successful this time, we're going to try again and again and again.

UNIDENTIFIED MALE: I think what our constituents said was why don't they get to work working together to create jobs in this country? Instead, the Tower of Babble that the House of Representatives has become this week has produced yet another meaningless debate on repeal of the health care law, which followed on the heel of defunding Planned Parenthood last night.

(END VIDEO CLIP)

KEILAR: Now, this was just one in a series of all kinds of votes that we saw on this bill, this effort to defund health care reform.

There was also a vote that succeeded to cut off federal funding of Planned Parenthood, sparked a lot of graphic and really heated debate. Republicans saying the government should not be subsidizing an organization that provides abortions, Democrats saying this is an organization that provides a lot of meaningful services, including family counseling, HIV/AIDS testing.

And then there was also a vote that failed. It would have told the Pentagon that they can't spend money sponsoring NASCAR race teams. That was a Democratic effort and it did fail, Candy. But the big picture here is that the House and the Senate have to come to some sort of agreement on these spending cuts, because the current -- right now the stopgap measure that is currently funding the government, as you mentioned, it expires March 4, just two weeks away, Candy.

CROWLEY: Which is about a nanosecond in congressional time. Thanks so much, Brianna.

We will debate the budget battle and the looming government shutdown in just a few minutes. House members Debbie Wasserman Schultz and Steve King are standing by to make their cases.

Now to Wisconsin, which has become a dramatic microcosm of the budget battle, but with giant protests and AWOL lawmakers.

CNN's Casey Wian is in the state capital, Madison, for us.

Casey, is there any movement there?

CASEY WIAN, CNN CORRESPONDENT: Well, a lot of folks here at the state capitol are waiting for a news conference from Wisconsin Governor Scott Walker. It's his legislation that has drawn people here by the tens of thousands to protest this budget-cutting effort. And it's going to have a big impact on public sector workers in the state if it in fact passes.

Now, what protesters are angry about is a few things. They are angry about the increased contributions that they are being asked to make in terms of health care and pension benefits. But the biggest issue here is clearly what the bill would do to their collective bargaining rights. It would strip away many of those rights. These protesters are saying that they're willing to negotiate on the financial issues, but they don't want to give up those collective bargaining rights.

Let's listen to what some of the folks here at the state capitol have been saying today.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Shame on you for abandoning our children today. At least there's a few teachers out there who have the guts to stand up against you union thugs and actually teach our children. You're AWOL. You're AWOL. You're AWOL.

UNIDENTIFIED MALE: We don't bargain in the news media. This governor has repeatedly gone to the news media and said what kind of concessions he wants. Those need to be done at the bargaining table. And we're more than happy to consider them. And I believe that we could bring to the table proposals that would be acceptable that would fill this $30 million budget hole. But it has to be done through bargaining, not through stripping people of their rights and dictating what the terms and conditions of employment are.

(END VIDEO CLIP)

WIAN: Now, you asked about progress, Candy. The progress has come to an absolute standstill here because several members of the Democratic Party in the state Senate have actually left the state.

And what's that doing is preventing the state legislature from having a quorum and allowing this bill to move forward. They say they want the governor to come to the bargaining table and talk to these unions, not propose this radical change, what they say is a radical change in their collective bargaining rights unilaterally.

They say they're not going to come back and let this bill move forward until that happens. We will see if the governor agrees to that. So far, he said this is what the voters want in the state of Wisconsin. This is the platform I ran on.

And that's where we are right now, Candy.

CROWLEY: And here is Governor Scott Walker.

(JOINED IN PROGRESS)

GOV. SCOTT WALKER (R), WISCONSIN: ... not going on in the state capitol.

First off, I want to begin certainly acknowledging the thousands of people who are outside protesting, many of whom are from the state of Wisconsin. Many more lately have been coming in across from other parts of the country. Certainly acknowledge their right to be heard.

But I particular want to thank the 300,000-plus state and local workers from across Wisconsin who, unlike those here today, didn't skip out on work, showed up for their jobs, did their jobs the way that they have done in the past and I believe will do the future.

And that's the good, professional public servants and we appreciate the work that they continue to do. Certainly, again, as I mentioned, the folks outside have every right to be heard, but there's 5.5 million people in this state. And certainly the taxpayers of this state have every right to be heard.

We're not going to allow for one minute the protesters to feel like they can drown out the voices of those millions of taxpayers all across the state of Wisconsin.

What we're asking for today and what we continue to be pushing for in this capitol is bold when it comes to politics. It's a bold political move. But any time you challenge the status quo, it's going to be bold.

But it's a very modest request of our government workers all across the state. Now, when I was traveling around the state -- it's something worth repeating, because we have been hearing it time and time again from people contacted us -- when I was out at manufacturing plants talking to blue-collar workers across the state earlier this week, it reinforced to me that in many of those cases they're paying anywhere from 25 to 50 percent of their health care costs.

Most of them don't have pensions and those who have 401(k)s, many of them have seen that the contributions from their employer has been suspended in the last two -- in the last year or two, I should say, as the economy has made it difficult, in order to preserve jobs.

That's in contrast to the very modest request we're asking for, which is a 5.8 percent contribution to the pension system, and a 12.6 percent contribution from state workers for their health care premium. That's half the national average.

To the workers I talked to around the state and continue to hear from even today, they think that's a deal they would love to have. I know when I talk to others in my family, they point out -- my brother, who's in many ways a typical middle-class family. He and his wife both work. They have two kids. And for them, they're paying $700, almost $800 a month for their health care and for the money they set aside in their 401(k).

With what we're asking for a reasonable piece of balancing this budget. Wisconsin has a $3.6 billion -- billion with a B -- billion- dollar that we face going into the next biennium. We're broke. Like nearly every state across the country, we don't have any more money. We have been broke for years.

And, in fact, two years ago, they kind of delayed the pain by taking $2.2 billion of stimulus money and instead of using that for one-time costs like infrastructure, the previous governor and legislature used that to plug a $2.2 billion hole in terms of their Medicaid and school aid deficit. And that's part of the reason why we're here today. They failed to make the tough decisions two years ago. We're making the tough decisions now, not only to balance our budget and to help our local governments balance their budgets, but to make sure two, four, six, eight years down the road, our kids and our kids' kids aren't having to deal with these same crises.

So, we're here today because we were elected to make tough decisions. Now, I was elected. I interviewed for this job over the last two years and told the voters what I would do to get Wisconsin working again, to show that Wisconsin was open for business. We made bold changes in the first month in terms of turning the business climate around to make it easier for private sector employers to put more people to work by easing the burden on taxes, litigation, regulation, and the cost of health care.

Now the next great quest for us to get Wisconsin working again is to balance our budget and to do it in a way that's prudent for the future, not only for the state, but ultimately so that local governments can have those same tools. And that's really what's at the heart of what we're talking about today.

I have heard -- and I want to clarify some facts -- I have now heard after several days in, that some union leaders at the state level, the same unions who have tried to cram through a series of employee contracts in December, who had -- after the election, before I was sworn in, who had no interest in talking to us then about negotiating, but wanted to get that pushed through while they still had the previous majorities in place,

And, fortunately, for the taxpayers of this state, they failed to do so -- now suddenly are talking about being interested in negotiating. Again, we don't have any money. We can't make a good faith effort to negotiate when we don't have any money.

But more important than the fact that at a state level, in the past decade, the average amount of time for a contract negotiation has taken 15 months. The reality here beyond that is for our local governments. And I used to be a local county executive. For our local governments, I know this well firsthand. We can't expect for our 72 counties, for our 424 school districts and for more than 1,000 municipal governments across the state of Wisconsin that somehow, magically, because a few people are suggesting they might be willing to come to the table now, that we can ensure that every district and every jurisdiction is able to achieve these savings just because a few people are now at the 11th hour claiming they want to negotiate.

The bottom line is to ensure what's going to happen in a week, when we introduce our budget, and there are going to be reductions of significant size when it comes to aid to local government from the state, just like nearly every other state across the country.

But unlike New York and California, where, example, where they cut billions of dollars in their proposals from their schools and their university system and ultimately from their local governments without getting any tools to balance it off, in this bill, we're giving them the tools to ensure that they don't have to incur massive layoffs and they don't have to cut core programs at the state and school district level.

That's what this is all about, to protect our schools, to protect our local governments, and we need to give them the tools that they have been asking for, not just for years, but for decades, in this capital. And once and for all, when this measure passes, that's exactly what they are going to get.

Now, one other thing that is interesting, and it seems as more national political figures come into this capital, the facts seem to be straying further and further away from the truth, because we have heard some pretty big doozies today.

The reality is that we do have a financial crisis in this state. We do even in this current year. The reality is because of the way the previous governor and legislature budgeted, we have a shortfall when it comes to Medicaid, we have a gap when it comes to the correction system. We have a gap when it comes to the public defender.

In addition, we owe nearly $60 million to the state of Minnesota because of a failed payment from the previous governor for tax reciprocity. We have bill collectors waiting for us to collect bills. And it's time we step up and take care of the bills that we owe, and the fact that the bills will be forthcoming even more so in the future.

We're going to do what it takes to get this budget on track. And, equally if not of greater importance, we're going to make sure that we're set up come July 1, when the next biennial budget begins, that we have the tools not only to balance the state budget, but to ensure that all of our local governments have the tools they need to balance their budgets with these very modest proposals to allow all of us, myself included, my cabinet, the legislature, to help make more in terms of pension and premium, health care premium contributions.

So that's kind of where we're at. I know there's a bunch of questions. We will take a few before you go on.

QUESTION: I'm curious why removing the ability to have collective bargaining over benefits closes the budget gap. They keep saying this is about collective bargaining. How do you respond to that?

WALKER: Yes, the bottom line is -- and, again, as a local government official, I can tell you, if you're going to see major cuts in aid to local governments, which is exactly what's going to come and what I have said is going to come for some time and what nearly every other governor across the country is doing, the only way I can ensure to the public in this state that those cuts aren't going to be lead to massive layoffs of teachers, city, county, local government workers, major cuts in core services at the local level, is if those local governments have the authority to set their pension and benefit levels the way we're outlining in this bill.

If you have collective bargaining agreement in place, there's no guarantee that any of those savings will be materialized.

QUESTION: But you remove future collective bargaining altogether. You give the government the absolute upper hand over that, don't you?

WALKER: You ultimately allow local and state government to determine what the pension and health care benefits are in the future, absolutely. That's what local governments have been asking for, for years. They don't have that right now. I didn't have that when I was the county executive. That's why time and time again, I would come back to the unions in Milwaukee County and ask for simple changes in terms of pension or health care contributions.

I even asked for a while for a 35-hour work week. Their response to me was, we don't want it. You can go do something else. Go lay off 400 or 500 employees. We don't care.

The reality is, I think the people of this state care, both because it will affect services negatively and because, in this environment, in this economy, I don't think many of us, if other than a few of the union leaders, want anybody -- anybody laid off at a time when the economy is so tough.

QUESTION: The president has called your bill an assault on unions. Now, there (OFF-MIKE) reports (OFF-MIKE) What's your response to (OFF-MIKE) issue here in Wisconsin (OFF-MIKE) the president?

WALKER: I think the president of the United States has his hands full balancing the federal budget deficit. They have big problems there. He should stick to balancing the federal budget.

QUESTION: Governor, yesterday you said that (OFF-MIKE)

WALKER: Simply put, because of what's happened with the 14 members of the state Senate Democratic Caucus, we're not certain exactly when the Senate is going to be able to come back in and take the vote. There's a majority of members who are ready to vote and to vote for that measure, just as there is in the Assembly.

Unfortunately, the members of the state Senate, who out of those 14, let me remind everybody, 13 of them two years ago voted for the budget adjustment bill that raised taxes by $1 billion in this capitol -- that bill was introduced on Wednesday. It was voted on Thursday.

So, apparently, two years ago, 24 hours was time enough to raise taxes on the taxpayers of Wisconsin by a billion dollars. Now, a week and an unprecedented amount of 17 hours of public hearing testimony by the Joint Finance Committee is not long enough.

And the reality is, they're not doing their job. They belong back here, just like all the state workers and county workers and local government workers across the state who I appreciate went to work today to do their job. The state Senate needs to do their job.

And until they do, we're going to wait, because it is imperative we get this done first. QUESTION: Governor, even if it is absolutely essential for you to take away the collective bargaining rights of every public employee in the state, how exactly is that a modest request (OFF-MIKE) a very modest request?

WALKER: It's modest in terms of what we're asking for.

If you ask the people who are paying 25 percent or more for their health care...

QUESTION: But (OFF-MIKE) benefits question (OFF-MIKE) not (OFF- MIKE) collective bargaining rights.

WALKER: Well, right.

In this state, we have the strongest civil service system in the country. Our rights for our workers are not guaranteed by collective bargaining. They're guaranteed by something that passed more than a century ago. And that is the civil service system in this state that is the strongest in the country.

Civil service protections for state employees include merit hiring and just cause when it comes to discipline and termination. Those rights don't expire when collective bargaining is adjusted, as we propose in this measure. So, those rights -- and, unfortunately, I think a lot of folks outside who are being motivated by their union leadership don't fully recognize those rights are not because of collective bargaining. They're because of the civil service system in this state. And it continues.

The difference is, for those outside of government who overwhelmingly, overwhelmingly are paying more than double what we're asking for in this measure, they look at this and say, where do I sign up for this?

This is remarkable. What you're basically for is, every guy, every factory worker I talked to this last week, who is paying 25 to 50 percent for their health care premiums, who doesn't have a pension, who has got to pay into a 401(k), who in some cases had that suspended, every one of them looks at that and says, you know what? Not only do I not get that. That guy has to pay for it.

(CROSSTALK)

WALKER: That guy has to pay the difference on the fact that while he's not even getting a fraction of what our state and local government employees are getting, he has to pay the bill to foot for everybody else.

To me, it's a basic issue.

(CROSSTALK)

WALKER: I'm going to let other people ask.

Go ahead. UNIDENTIFIED MALE: ... time for one more question, Governor?

WALKER: What is that?

QUESTION: Governor (OFF-MIKE) What is the exit strategy here?

WALKER: The exit -- I think, ultimately, the exit strategy is for the people of this state, particularly in those 14 state Senate districts, who regardless of how they feel about the bill, I think had an expectation, whether their senator was elected last November or two years prior, have a very sincere expectation that the people they sent to serve in the state capitol are people who ultimately will show up and do their job.

People talk about democracy. You can't participate in democracy if you're not in the arena. The arena is not in Rockford, Illinois. The arena is in Madison, Wisconsin. And it's time for those state senators to come home.

Now, if they want to debate, if they want to discuss this, if they want to make the -- argue the merits of their position, come offer amendments, come offer discussion.

But hiding out in another state is not a way for democracy to operate. A handful of people in the minority don't get to drive the majority here. They should have every right to be heard, and they would be afforded that opportunity if they showed up for work.

QUESTION: What about those constituents (OFF-MIKE)

WALKER: What's that?

QUESTION: What about those constituents (OFF-MIKE)

WALKER: Well, again, I hope the majority of the people in this state, no matter what they think about this bill, ultimately believe that members of the state legislature should be working.

I think it's a core belief. You can't operate in a democracy if people don't show up. Nobody is ramming this through. This is a much longer debate than what we had two years ago in the budget adjustment bill. We have afforded unprecedented -- I served in the legislature. I don't ever remember a 17-hour hearing.

People have heard their testimony. In fact, one of the most remarkable things is, since midnight last night, we have gotten nearly 19,000 e-mails to this office alone. The majority of those have been people in favor of what we're proposing.

So, we're certainly bolstered by the fact that while people -- and you hear them outside -- they have every right to be heard. But we're not going to let for one minute these voices overshadow and overpower the voices of the taxpayers across this state who elected us to do the job, and that meant balancing this budget. And that's exactly what we're doing.

Thanks for your time.

CROWLEY: Once again, that is Governor Scott Walker of Wisconsin, a Republican, giving his first extended reaction to what has been four days of protests by public unions, including the teachers union, which has been very strong in this.

You're now looking at some of that that has been taking place frankly in massive amounts outside the capitol in Madison, where is also where we have Casey Wian at this point.

One of the things I noticed, Casey, while we were listening to him is, I could hear the crowd roaring over him. Was there a loudspeaker? Could they hear what he was saying?

WIAN: Not from my position. I'm not sure if they could hear what he was saying from another part of the capitol, but not from where I am. I heard it the same way you did.

It's clear, though, that Governor Walker has put the ball back in the court of those 14 Democratic lawmakers who have held up this proposed legislation. He is clearly not backing down. They're trying to pressure him to go back to the bargaining table, if you will, and negotiate these reductions in collective bargaining powers before this bill moves forward.

And what he said that really stuck out to me is that we can't make a good-faith effort to negotiate when we don't have any money. He's trying to frame this as a serious budget crisis and one that's going to result in the layoff of 6,000 state workers if these measures don't go through.

So, it seems like these protests are going to continue as the governor continues to dig in his heels -- Candy..

CROWLEY: So, at the moment, certainly, the governor, Lisa Sylvester, bringing you in on this, didn't provide any way out on this. He is holding firm. We didn't hear him give an inch, basically said, well, we had elections, basically said, look, these folks out here, they can -- this is what America is about. We can have protests, but don't confuse this for what all of Wisconsin is thinking at this point.

LISA SYLVESTER, CNN CORRESPONDENT: Exactly. And that's one of the things that he's saying, is that you have to look. They had an election. They now have a Republican. They now have a Republican- controlled state legislature.

And the Republican state legislature has said, we're not going to do this, we're not going to close this budget gap by raising taxes. What we're going to do is, we're going to go to the union and we're going to ask for these concessions.

And then, in addition to that, though, he not only wants them to contribute more to their pension and to the health care fund. He also wants this whole issue of collective bargaining. And everyone asks the question, well, why not just deal with the pension issue, deal with the health care issue, close the budget gap? Why do you have to take that extra step of actually ending collective bargaining by the rights of the state workers?

And the answer that he's saying is because if you go back, if they are able to institute these changes, what's going to happen is, the unions will come back in a year from now, six months or so, and they will be able to bargain back right up to the levels that they were before.

And he said, unless you really want to tackle the issue in the long term, you have to deal with the collective bargaining rights.

CROWLEY: And, Casey, can you tell us -- because he also made some snide references, I think, but certainly very pointed references, let's call them that, saying, we welcome these protests, including those who came from out of state.

Do you see a sign of out-of-state involvement by big unions from outside Wisconsin?

WIAN: You know, I don't see any evidence of that. I can't say it's not here.

Most of the folks who I have seen have been dressed in Wisconsin Badger red, at least a lot of them have been. There's probably some out-of-state involvement at some level, but I can't judge what that is. I think one of the references that perhaps the governor was making was the fact that President Obama has commented on this situation and said that he understands the right of states and the necessity for states to balance their budget, but he also made comments that he doesn't want to see those collective bargaining rights eroded.

And some folks here are upset that the president is weighing in on what they believe is a local issue, Candy.

CROWLEY: And, Lisa, when we talked to people over the course of the last couple of days, they have said, this really isn't about money and our pensions. This is about the governor's desire to bust the unions. And this is not just a fear in Wisconsin.

SYLVESTER: Yes, I want to go back to the question that you asked Casey Wian. We know that Richard Trumka, the head of the AFL-CIO, he flew in this morning. He was in Wisconsin. He took part in a rally.

And that's what the unions are very concerned about. They're concerned that this is not going to just happen in Wisconsin, but this model of ending collective bargaining for public union workers, that this is something that could spread to other states, presumably.

CROWLEY: And what other states are we talking about here?

SYLVESTER: Well, Tennessee is right at the forefront. There's Tennessee. There's Ohio. There's Indiana. All of these states -- New Jersey is another one. All of these states have at some degree or another either asked for the unions, the public unions to increase their contributions or in the case of Tennessee trying to do something very, very similar -- trying to do something very similar to what Wisconsin is doing.

And we actually can take a look back and see what some of these other states are doing, Candy. We have got a piece that we can run right now.

(BEGIN VIDEOTAPE)

(BEGIN VIDEO CLIP, AD)

NARRATOR: After 50 years of managers and workers solving problems together, there's now a move under way in Madison to take away the rights of thousands of teachers.

(END VIDEO CLIP)

SYLVESTER (voice-over): The Wisconsin AFL-CIO is running TV and radio ads to try to keep the collective bargaining rights intact for public workers. State Governor Scott Walker wants to end those rights as a fix to a $137 million budget deficit.

Once considered politically untouchable, more states, including Tennessee, New Jersey, Florida, and Ohio, are aiming at public unions to try to eke out concessions and close budget gaps.

Jane Sherk is with the conservative Heritage Foundation.

JAMES SHERK, HERITAGE FOUNDATION: With the budget crisis that many states are facing now, with much more conservative legislatures and given the choice between, say, cutting children from the health care rolls or going after the unions, I think a lot more governors are going to be taking them on.

SYLVESTER: Unions still have a lot of political clout, deep pockets and a wide membership base. In the last year's federal elections, three of the top 10 biggest campaign donors were unions, which gave more than $15 million to candidates.

Still, Republicans came out of the November elections controlling 21 governor's mansions and 19 state legislatures. In Wisconsin, union strength was on display. The Wisconsin AFL-CIO says this is about more than state politics, but a fight for the middle class.

STEPHANIE BLOOMINGDALE, WISCONSIN AFL-CIO: We are making a stand here. And what has happened here in Wisconsin is historic. This kind of outcry about the need for a healthy middle class is happening right now here in Madison. And it's happening actually, Lisa, all across the country.

SYLVESTER: All eyes are on Wisconsin awaiting the outcome.

(END VIDEOTAPE)

SYLVESTER: And Wisconsin was the first state in the nation actually to implement collective bargaining for public workers back in 1959. And, Candy, it may actually be the first state now to roll that back.

CROWLEY: Lisa Sylvester, thanks so much for sticking around while we watched this unfolding story.

Casey Wian, just a final question before we let you go out there as our guy on the scene. Do we have any clue what happens next?

WIAN: Well, we do know that there are protests scheduled throughout the weekend by people on both sides of this issue. Apparently some members of the Tea Party are going to be in town tomorrow afternoon to support to Governor Walker. In terms of what happens with the schoolchildren and whether they are going to go back to school next week, we have no idea.

School districts are looking at that on a day-by-day basis. We will have to see what happens over the weekend and whether these teachers continue to come to the state capitol to protest this proposed legislation, Candy.

CROWLEY: Thanks so much, Casey Wian, on the scene for us in Madison, Wisconsin. We will get back to you.

And, again, thanks to Lisa Sylvester.

There is growing concern over a U.S. government shutdown. What would it look like and how would it impact all of us? We will have a look at what could be in store.

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN breaking news.

CROWLEY: And that news is out of Madison, Wisconsin, where the standoff continues. We have just within the last ten minutes heard from Governor Scott Walker, the Republican governor of Wisconsin, who came out after four days of protests. He is missing a half of his state Senate legislature. The Democrats have fled to keep from having to vote on a bill that they say will gut the unions.

Governor Walker came out and said, "Hey, listen, you can protest all you want. But the fact of the matter is we can't negotiate any of this, because we don't have any money. There was no breathing room in here at all." Governor Walker saying, "We have to do this because the state is in debt, and we need to pay our bill collectors."

So ongoing there is, again, nobody has found any common ground here. We, of course, have Casey Wian on the ground for us in Madison, Wisconsin. We will be following that story for you, because it is not just about Wisconsin. It is also about the federal government also in debt.

And what we are looking at now is a possible federal government shutdown. When Washington reaches the ultimate stalemate, it has very real implications for millions of Americans. Our CNN's Tom Foreman is here with more.

Tom, how much of this -- there's going to be a government shutdown -- is being fueled by echoes of the global economic crisis?

TOM FOREMAN, CNN CORRESPONDENT: A lot of it, Candy, in the sense of the actual money that's involved here. We have real money problems all over this country. Federal government, state governments. But what's happening right now when we talk about the deadline two weeks from now is also a political problem. Disagreements on what to do with the money we have.

Let's look back to what happened when there was a shutdown back in 1996. Federal government, they're about 800,000 workers affected by this. Department by department here, if you look up, here's the Centers for Disease Control. What happened over there? Disease surveillance laid off. There was a toxic waste site cleanup that stopped. The hotline they had for people calling about disease outbreaks, that was unmanned. Those are some of the problems there.

The national parks, this is something a lot of people would see. Three hundred and sixty-eight park services were shut down. There was a loss of about 7 million visitors to the national parks. National museums and monuments closed.

The State Department, look at this: more than 200,000 passports were unprocessed during the shutdown; 30,000 foreign visas were unprocessed. Millions of dollars lost in airline and the tourist industry because of that. And over here, ATF, Alcohol, Tobacco and Firearms. Delinquent child support case not followed up on. Firearms explosives applications delayed. Border Patrol agents not hired.

But I want you to think about one thing. We mentioned over here the millions of dollars lost to the airline and tourist industry, Candy. That's really the issue here. If this goes to a point where the government has shut down, a lot of people who may not really care a whole lot about what the government is doing at any moment, may not be going to a park or a museum, may see a ripple effect because there are so many businesses that rely on business with the government.

And if the government is not operating, you know living here in Washington, Candy, all over the place when there are the federal holiday, there are lots and lots of businesses not doing anything because the government is not doing anything.

In this fragile economy, that's one of the reasons a lot of people may care about this, who may not care so much about the government and the politics here to begin with -- Candy.

CROWLEY: Well, it just seemed that Democrats, and that has been one of their talking points, which is listen, the economy is too fragile to be doing this. And certainly, the budget cutting now necessary, there are a lot of reasons for it. A very weak economy for the past couple of years is part of it.

But this threat for a government shutdown isn't all about the economy, is it? What other factors are at play?

FOREMAN: Well, among other factors that you have to bear in mind is really the notion that on one side you have the Republicans, who are pushing right now to say they really want to cut the funding for the health-care reform bill. And they're basically saying we want to tie that to this. Because they say that's all part and parcel, the same thing. And they were going after the health-care law to begin with.

On the other side, you have the Democrats who say, no, no, no. This is purely about the budget. That's a different matter. You can't use this as a back door to attack it. But both sides have committed people who feel that this really is one of those -- one of those trench that they have to dig and fight over because they care about these issues -- Candy.

CROWLEY: Tom Foreman, thanks so much.

We want to figure out just how likely a government shutdown is. We want to ask Democratic Congresswoman Debbie Wasserman Schultz of Florida, Republican Congressman Steve King of Iowa.

I have to tell, I did a number of radio interviews this morning, and they all said to me, "So, really? Are they going to shut down the government?"

I said, "I have no idea." Because in Washington you can't tell the difference between hard-core bargaining tactics and a real threat. So which is it, Congresswoman Wasserman Schultz? As you look at this, give us the odds that there's going to be a government shutdown.

REP. DEBBIE WASSERMAN SCHULTZ (D), FLORIDA: Well, I mean, I think I can only really go by what Speaker Boehner said. And that was that he was not going to agree under any circumstances to a short-term extension of this year's budget without insisting on budget cuts.

And, I mean, Democrats aren't drawing any lines in the sand. Brinkmanship is not the answer to working out compromise. We need to come to the table and work things out together. And so the brinkmanship that Speaker Boehner suggested is really disturbing. And we need to make sure that we can take a step back, sit down at the table when the current budget resolution runs out on March 4.

And we need to make sure that we work diligently in the next two weeks to reach a compromise so that we don't have the devastating consequences that a government shutdown would be to the economy.

CROWLEY: Congressman King, are there discussions going on somewhere to keep this from happening? Are there serious adult conversations, as we keep talking about, going on somewhere? Because it didn't appear that there was much going on in the little bits that we heard.

REP. STEVE KING (R), IOWA: Well, Debbie and I have adult conversations. We just got accused of that a few moments ago. But there are conversations going on.

And I would say that you know, even though the term brinkmanship would cause some people to think that we're running on a dangerous course. If there is no brink, there will be no agreement. And that brink is at midnight, March 4, when funding runs out. If nobody does anything, the government will shut down, and it will be a lot of people's fault for not getting that done. We're committed to providing a responsible budget. We're going to do these cuts. We have to move into this era of austerity, or this economy is going to forever downwardly spiral.

But in a broader sense, though, we'll be able to provide the appropriations to keep this government functioning in a legitimate fashion. And if there's another issue out there, I hear Harry Reid talking abut government shutdown. But I don't hear our people talking about it. We want this government to run, but we want to run it in a responsible fashion. If we're not willing to face that prospect, then the president and Harry Reid will get everything they want.

CROWLEY: I'm sorry. Didn't Speaker Boehner talk about a government shutdown? I mean, you are talking about it.

KING: Well, he has consistently spoken, though, about avoiding such a scenario as well. So I think there is an example that Debbie's mentioned. But most of that talk has been keep this government running.

WASSERMAN SCHULTZ: When a speaker of the House, Candy, suggests that we are going to draw a line in the sand past which we're going to allow the government to shut down unless they get -- they get their way, then that's a serious problem. That's just not a casual reference. That is the speaker of the House, you know, third in line to the presidency, the person who decides whether we can reach a compromise or not.

This is serious business.

And in terms of the proposed cuts that we're talking about, the Republicans want to cut 218,000 kids off of Head Start. They want to reduce the amount of the average Pell Grant by $845 per student. So we're talking about real severe impacts to real people. We need cuts. We have to strike the right balance between smart cuts that we don't short-circuit the economy and sound investments so we can continue the recovery.

CROWLEY: Sure. But as I read the speaker, Congresswoman, he's saying that -- he's not saying, "I won't agree to a temporary spending bill at all." He's just saying inside that temporary spending bill we need to have some cuts. So can't you find something in that temporary spending bill that you could possibly agree on, that will then move us forward while you disagree on the larger matters for this budget that, let's just add, should have been passed last October.

WASSERMAN SCHULTZ: I'm sure that we can. I'm sure that we can sit down around the table and come to an agreement. However, so far the Republicans have insisted, if you watch the debate over the last three days, on draconian severe cuts that are going to cause severe harm to our economic recovery. And they're not willing to sit down and approach this in a more reasonable way.

CROWLEY: But Congressman, you say they are talking? KING: Well, we're so radical that we want to just take the spending back to 2008 levels, and, I guess, maybe I should be embarrassed about that audacious approach that we have.

But the president in his audacity presented a budget that should produce a $1.65 trillion deficit. And I look back through those years, and that was total outlays in 1997, 1.6 trillion. And the total on-budget items of 2002 were 1.6 trillion. So his deficit just in his proposed budget is greater than the overall outlays, the overall budget in 2002.

I think there's a long ways to go to get together. But I think we should be able to agree, if we can't get this CR done and over to Harry Reid's desk, and if he can't process it by midnight, March 4. Then we can come back and just go to those 2008 levels for a couple of weeks while he thinks it over.

CROWLEY: Congressman...

WASSERMAN SCHULTZ: And no, we should not do that. It's not that -- certainly not that simple. And not a "no big deal" situation.

CROWLEY: It isn't, but I mean, there's a lot of politics at play here. I don't think it is a understatement to say that there are some Democrats kind of eager to see the Republicans shut down the government, because they think it's kind of a loser political bid. But let me -- let me kind of...

WASSERMAN SCHULTZ: That's in the Republican's court, Candy.

CROWLEY: Yes. The Republicans think that they're -- I understand, but they have been sort of egging on. I just want to ask, quick, Congressman King. And then I have a question on a different subject for you, Congresswoman.

Congressman King, you all voted to cut off spending -- funding for Planned Parenthood as part of some of these votes you're taking. Now Planned Parenthood has services like HIV testing, prenatal care. You know, there's that term "penny wise and pound foolish."

Would you worry that, by cutting off those services, people have -- there are certain people that would have sicker babies or certain people that wouldn't have HIV testing and then pass it along to something else. And that would just cost us more.

KING: Well, I think of it in terms of Planned Parenthood has conducted the majority. The largest abortion provider -- not the majority of abortions but the largest abortion provider in the country.

And some of the things that we've seen in the videotapes, the inside the Planned Parenthood offices are just appalling, and they are revolting, and they are repulsive. And the culture inside the Planned Parenthood office, I think, is reflected in those videos, just like the culture of the ACORN offices was reflected in the videos that we saw then. I've long been opposed to providing taxpayer dollars to organizations that do abortions or provide pro-abortion counseling.

CROWLEY: Let me...

KING: I think that's a good plan.

CROWLEY: I'm sorry to interrupt you on this. But I need to get to you, Congresswoman. Because could you give us an update on the condition of Gabbi Giffords? I know you're very close to her. Tell us how she's doing.

WASSERMAN SCHULTZ: She's doing really well. In the last week or ten days, Candy, she's actually progressed and been able to speak more words and interact more with her parents and Mark, her husband, and her nurses. And it's just really heartening. I'm going to get a chance to go see her in a couple weeks again, and I'm really excited about that, seeing all the progress that she's making.

CROWLEY: That is terrific news on a bipartisan basis. I think we can agree on that. Thank you. Thank you both so much, Congresswoman Debbie Wasserman Schultz, Congressman Steve King. We really appreciate your time.

KING: Thank you.

WASSERMAN SCHULTZ: Thanks, Candy.

CROWLEY: Libya, Bahrain and Yemen. It seems every day a new tinderbox is set to ignite in the Middle East and North Africa. We have the latest details here in THE SITUATION ROOM.

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CROWLEY: Cries of outrage against government oppression could be heard across North Africa and the Middle East, with widespread protests inspired by successful revolutions in Egypt and Tunisia.

Sandwiched between the two, Libya. For tens of thousands of people protested against dictator Moammar Gadhafi. Libyan medical sources tell CNN at least 20 people were killed in the country's second largest city, Benghazi.

In Yemen, pro- and anti-government protesters clashed, and at least one person was killed by a grenade. There were also protests in Jordan, Kuwait and, for the first time, Djibouti, home to the only U.S. military base in Africa.

In country after country, people are breaking decades of silence and speaking out, sometimes paying with their lives. Take a look.

(BEGIN VIDEOTAPE)

BEN WEDEMAN, CNN CORRESPONDENT: This is Tahrir Square at its most crowded yet. There are hundreds of thousands of people here. It's really impossible to calculate how many. They've come to celebrate the revolution. ARWA DAMON, CNN CORRESPONDENT (via phone): It certainly does appear as if the military is not going to be standing for any sort of breach, any sort of movement on the part of the demonstrators. The demonstrators, although dispersed do appear, based on everything they have been saying to us, equally determined.

UNIDENTIFIED MALE: Now we are just asking for the same right which we asked before. A peaceful demonstration, asking for our peaceful and basic rights. We need this government to come down.

SUZANNE MALVEAUX, CNN CORRESPONDENT: We have breaking news. In neighboring Libya we are just getting word now from a medical source that 20 people were killed and 200 wounded when anti-government protesters came under attack by security forces in the city of Benghazi.

(GUNFIRE)

MOHAMMED JAMJOOM, CNN CORRESPONDENT: This is the biggest crowd we've seen of anti-government demonstrators so far this week. As of now about 1,500 demonstrators marching through the streets of Bahna (ph), demanding regime change, saying they want this government out, chanting, "First Mubarak; now Ali."

(END VIDEOTAPE)

CROWLEY: A veteran Democratic senator announces he won't run for re-election, and that's got Republicans eyeing a Senate take back.

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CROWLEY: The earth has been shaking relentlessly in, of all places, Arkansas. Lisa Sylvester is monitoring that and some of the other top stories in THE SITUATION ROOM.

LISA SYLVESTER, CNN CORRESPONDENT: Yes, Candy. That's a who knew? Well, nearly two dozen earthquakes have struck Arkansas since Wednesday. They have all been centered near the town of Greenbrier. The largest one, reaching a magnitude of 4.3, hit before dawn today. Incredibly, though, no damage has been reported.

The U.S. today vetoed a U.N. Security Council resolution declaring Israeli settlements in the West Bank illegal. It is the first such veto by the Obama administration. U.S. ambassador to the U.N. Susan Rice says it's unwise for the Security Council to try to resolve core issues dividing Israel and the Palestinians.

And the list of retiring Democratic senators, well, it just got a little bit longer. Four-term Senator Jeff Bingaman of New Mexico announced today he is not running for reelection next year. Democratic Senators Jim Webb, Kent Conrad and Independent Joe Lieberman, who caucuses with the Democrats, are also retiring, Candy.

CROWLEY: Thanks so much, Lisa Sylvester. Appreciate it.

As tensions boil over in the Middle East, North and South Korea are keeping a close watch on each other. Wolf Blitzer got an up-close look next.

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CROWLEY: U.S. ally South Korea is keeping wary watch on Kim Jong-Il's North. Seoul is considering a nationwide civil defense drill in case South Koreans have to flee a sudden attack like the one in November on the island of Yeonpyeong. Wolf Blitzer was in North Korea on an unprecedented visit to the reclusive nation in December, when tensions ratcheted up again. Take a look.

(BEGIN VIDEOTAPE)

WOLF BLITZER, CNN ANCHOR (voice-over): The entire world is watching the Korean Peninsula. As the South Koreans begin their promised live-fire military drills on Yeonpyeong island, involving ships, fighter bombers and shelling in the disputed waters. The shelling continues for 94 minutes. To our horror we can actually hear some of those explosions in Pyongyang.

(on camera) It wasn't that far away from -- that island -- where we were. And all of a sudden, boom, boom, boom. We start hearing some actual -- in the distance, not loud -- some shells.

(voice-over) In the South they're bracing for retaliation.

UNIDENTIFIED FEMALE: The government issued a take cover order for five border islands, affecting some 8,000 civilians on those islands, telling them to get into bunkers. Bunkers that could withstand any sort of missile attack from the North.

BLITZER (on camera): What was going through my mind were all the kids. The North Korean children, the South Korean children, the civilians. I really feared that tens of thousands of people were potentially going to be killed.

(voice-over) We're sure the north is about to respond to South Korea's military drills with firing of its own. The North Koreans are crafting their next move, and it's a stunning surprise.

(END VIDEOTAPE)

CROWLEY: Find out what happened next when Wolf Blitzer takes you back inside North Korea tomorrow. Be sure to tune in at 6 p.m. Eastern tomorrow for Wolf's full documentary, "Six Days in North Korea."

That does it for me. I'm Candy Crowley in THE SITUATION ROOM. Join me at 9 a.m. on Sunday and noon Eastern Time for "STATE OF THE UNION." I'll talk to former defense secretary Donald Rumsfeld.

"JOHN KING USA" starts right now.