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Reactions to President, House Speaker

Aired July 25, 2011 - 21:24   ET


PIERS MORGAN, HOST: Thanks, Wolf. You're staying with us along with the chief political analyst Gloria Borger, senior political analyst David Gergen, congressional correspondent Kate Bolduan, and chief White House correspondent Jessica Yellin.

And, Jessica, I'll start with you. A lot of talk of compromise there. It seems to me having heard both those speeches, we're at the economic equivalent of the Bay of Pigs. Who is going to blink first?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: That's right. And the president really doesn't have a say in all this in the end because he doesn't have a vote. For the president, it was a moment the try and isolate the Republican speaker the house and urge him to try to change paths and find a route to compromise.

We did hear him hug Speaker Boehner rather tight and say did that he try work with the president. I'm not sure politically that was the best way to help John Boehner to get more votes to compromise with some of his hard-line members.

I also would point out to you, Piers, that the president did not in this speech repeat his veto threat. We have heard him repeatedly say he would veto a short-term extension of the debt ceiling. He did not do that tonight.

I don't know what we should read into that. I'll find out. But in essence, the president trying to use the bully pulpit to rally the American people to pressure Congress into compromise. So far we've seen that hasn't worked.

MORGAN: Wolf, let me turn to you. I mean, this is pretty unprecedented. No U.S. president in history has ever defaulted. Is it conceivable that we could get to August the 2nd and a default happens?

WOLF BLITZER, CNN ANCHOR: It is definitely conceivable. And I'm very gloomy about the prospects, because there are significant differences. They've tried and tried and tried for weeks now, dare I say, for months, Piers, to get some sort of solution. I always assumed it would happen a few weeks ago. I didn't think it was going to go down to the final week.

In the end they may have a deal but I'm not by any means convinced that it is certain. It is possible that come next Tuesday there won't be a deal. The federal government is going to have to decide which checks to write and which checks not to write. And that will cost serious dislocation.

I assume if that does happen -- I'm not saying it will. I fear it could. But if it does happen, the reaction would be so angry out there. Interest rates would go up. There would be fears of markets collapsing, the value of the dollar going down. Within a few days, cooler heads would prevail.

But it is definitely possible that between now and next Tuesday there won't be a deal. I hope there will be.

MORGAN: Gloria Borger, I mean, Republicans have already been calling today for a possible impeachment of President Obama if we do go into default in America. I mean, these are extraordinary times. Can you envisage that kind of scenario?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: No. I think -- you know, people understand in Washington that this is the moment of truth. I've had people on both sides of the aisle say that to me.

But, Piers, what strike me about tonight is you listen to both these speeches, it is as if we have not made any progress in this heated debate that we've been covering for most of the last month.

It still comes down to the question of tax increases versus spending cuts. And each party is kind of living in a parallel universe here. And while they've been working to get beyond that, I think we heard some very political speeches tonight.

At the end of his speech, the president wanted the country to kind of join together, call Congress, let them know how you feel. John Boehner kind of made a plea that they would all get together. But when you listen to them, they're nowhere near close to a deal, it seems.

MORGAN: Yes, I mean, Kate Bolduan, let me go to you, because while President Obama was putting his arm around John Boehner and saying, hey, we're great pals, John Boehner was pretty quick to say, get your hands off me, buddy, wasn't he?

KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: Yes. You didn't really sense much tone of compromise in House Speaker John Boehner's speech. I mean, you heard some pretty tough talk coming from the house speaker this evening. Him saying the president wants a blank check and we're not going to give it to him.

He is really trying to lay the blame on the president. He even said, "for creating this crisis atmosphere." On one level what you're really seeing is that House Speaker John Boehner is trying to make the case that this is what you elected us to do. This is why you gave us the majority in the House this past election.

You wanted to us get this fiscal house in order. You wanted us to cut government spending, and that's what we're sticking firm to do. You really -- as Gloria very well noted, you don't sense that these two men are any closer to compromise this evening even though they've been talking for weeks now. But I'll tell you, at the same time, Piers, we are hearing from senators that while they're working in divergent paths on two different bills up here on Capitol Hill, there are still people working behind closed doors to try to find a way to compromise, to try to work this out, to try to bridge the divide, because in the end it does not sound at the moment like either bill that has been proposed and unveiled today has a way of passing the opposing chamber of Congress at the moment.

MORGAN: David Gergen, cut through all the Washington-speak here for me and analyze these two speeches. What did they really mean?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well, Piers, had these speeches been given three or four weeks ago, I think they would have been welcome as part of the political discourse. You know, let's have some fisticuffs, each side presses its point of view, appeal to the American people.

But to be given on the eve of a possible default -- both individuals gave partisan speeches, both individuals, I think as Gloria said, are giving political speeches, and I think each was intending to rally his own base. President Obama was clearly trying to rally his Democratic base to send an avalanche of calls, e-mails, Twitters, whatever, to the Congress, to back to the Democratic plans and to bash the Republicans.

And John Boehner was trying to do just the opposite. And to have that happen on the eve, you know --



Let me finish the thought. It is good politics in the traditional sense, but in terms of getting a national answer in the next eight days, I think it left us farther away from getting an answer. It is going to further divide the country.

MORGAN: I was going to ask you, David, whether anybody benefited from the speeches tonight. Has anyone come away better than they did half an hour ago?

GERGEN: I think probably each fellow came off better in his base. But I think the country is so tired of the political posturing. And people really want leadership that finds answers and get us off the edge of the cliff.

BORGER: Piers, what was interesting also was the debate we were having in Washington today seems to have moved beyond the tax increases, at least in the short term. Nobody today is talking about tax increases, except Barack Obama, who still talked about that tonight in his speech.

The plan by Harry Reid contains no tax increases in the short term. The plan by John Boehner contains no tax increases. MORGAN: Let me ask you about this, Wolf, about this, because clearly the Tea Party factor here is pretty significant. They have made it absolutely clear. No tax increases. That's it. Can such an intransigent position be helpful to the Republicans right now?

BLITZER: Well, I think there is no doubt that if had just been John Boehner and let's stay the more established Republican leadership, a deal would have been struck. Let's not forget, the irony is that John Boehner was willing, as part of an agreement, to go ahead with 800 billion dollars in tax revenue increases, in various forms of taxes by, eliminating deductions, subsidies, loopholes, 800 billion dollars.

And that deeply angered the Tea Party activists and so many of his Republican base, because, it, in effect, is a tax increase. He was willing to do that and risk the wrath of his base. At the same time, the president of the United States was willing to deal with entitlement cuts, Social Security, Medicare, Medicaid, deeply angering the liberal base of his Democratic party.

He was throwing out ideas about means testing for Medicare recipients. Poorer people would get more benefits than richer retirees, for example, or changing the cost of leaving index, deeply irritating his own base and pulling the rug out from some Democratic politicians who thought Paul Ryan, the chairman of the House Budget Committee's Medicare plan was simply an opening for Democrats to score politically.

So both of these men, the president and Boehner, were willing to anger their respective bases. But tonight, you didn't get any of that sense in the course of these two speeches.

MORGAN: Thank you. We want to bring in now David Plouffe. He's one of President Obama's senior advisers and joins me from the White House. David Plouffe, it seemed to me the president was saying, look, we need compromise. We can make this work, a direct appeal to the people of America.

But Speaker Boehner made it absolutely crystal clear, forget it. As thing stand, we are not budging. That's not compromise. Is it?

DAVID PLOUFFE, SENIOR ADVISER, THE WHITE HOUSE: Well, Piers, no. It's a my way or the highway approach. That is not going to help us solve our deficit problems. And it's certainly not going to allow us to avoid this default crisis.

So in the next few days, we need the Republicans in the House to understand, they are going to get a lot of what they want, a lot of spending cuts. Washington is now committed to reducing the deficit.

But we can't have a my way or the highway approach. So if we'll just be reasonable here and compromise -- and that's how most things in country's history have gotten done -- we will be able to get through this default crisis, make a big down payment on the deficit, and then have the discussion the country needs to have over the next five or six months about balancing our budget and reducing our deficit.

As the president said tonight, in a balanced way, not asking everything of college students or middle class families or senior citizens, but also asking something of the wealthiest, big corporations who are enjoying special tax treatment.

MORGAN: Let me ask you, you were with the president as you watched Speaker Boehner's speech. What did he make of his golfing partner's comments?

PLOUFFE: Well, I actually -- we were walking out of the room. So we did not get to watch Speaker Boehner's speech. I read the transcript. The point is this -- and the president said Speaker Boehner and he had a great discussion.

I think as Wolf Blitzer said before I came on, Speaker Boehner was willing to do some things that many in his party would have found objectionable. And the president was willing to do some things on issues like Medicare and Social Security that some in his party had trouble with.

But I think enough Democrats would have supported that that we could have done a huge deficit reduction package for the American people. So the question is, clearly, this my way or the highway approach, digging in, not willing to compromise, that's not going to get the job done.

As the president said tonight, in eight days, if we don't solve this, the country is going to default. So if the House Republicans will just compromise a little bit and do what's right for the country, we'll be able to get through this period. But most importantly, we will then get to continue to work on growing the economy, creating jobs, and reducing the deficit, because any of the short term solutions on the table right now to get us through the problem at the moment is not going to finish the job.

We're going to have to do tax reform, entitlement reform, things the president is really looking forward to working with the Congress on.

MORGAN: Let's assume worst-case scenario, no compromise comes. We get to August 1st. Is the president prepared to invoke the 14th Amendment and unilaterally raise the debt and simply overrule everyone and go alone?

PLOUFFE: Listen, there are no off-ramps here. There are no exits. Congress has to do its job. And so it is unfathomable that over the next five, six days, maybe sooner, if sanity prevails, there will be a compromise struck that allows, again, to make sure the country understands America will pay its obligations.

Again, this isn't about paying for future spending. We've put on the credit card -- Congress has put on the credit card spending. They have to pay for it. Now, in this effort to reduce the deficit, what we're saying is let's stop putting so much on the credit card. The great thing, if you want to be an optimist, is there is huge consensus in Washington in each party that we need to reduce the deficit.

And actually, we all generally agree by how much to reduce it. So we're just debating about how to do it. I think most sensible people and most deficit reduction plans, whether they be Republican or Democrat, have a balanced approach. That's what the country needs to make sure we go down the right fiscal path.

MORGAN: We are watching the ultimate game of political brinkmanship here. What happens tomorrow if the message from the Republicans is, no, we're not compromising. Take it or leave it. What does the president do?

PLOUFFE: Well, listen, we're going to keep making the case, privately and publicly, that compromise is the only option here. The speaker put forward a plan today. I guess he is going to vote it on Wednesday. From what I've seen, it is pretty clear it is not going to pass the United States Senate. We have a stalemate situation here.

So what we're going to have to do is have a compromise here. Again, the notion that we're going to go through -- you've been covering this a lot on your program. You're covering it tonight. Do we really want the country to go through this again in five or six months? It is irresponsible.

Let's do the responsible thing here. Let's make sure that we don't default. But also, let's commit ourselves to deficit reduction. If we do that, we can have a stronger economy.

MORGAN: David Plouffe, thank you very much.

PLOUFFE: Thanks, Piers.

MORGAN: Taking a break now. When we come back, Congress in a stalemate with competing Republican and Democratic plans on Capitol Hill. We'll come back and ask senators on the left and right can they make a deal in time?


MORGAN: Breaking news, tonight the financial future of this country may rest on something that's just about impossible to achieve in Washington these days, compromise, the words the president repeated tonight. With the debt deadline looming, can the right and left actually make a deal?

Joining me now is New York Democratic Senator Chuck Schumer. Senator Schumer, what did you make of both speeches tonight and particularly the emphasis on this word compromise. It didn't sound to me like the Republicans are prepared to compromise very much.

SEN. CHARLES SCHUMER (D), NEW YORK: Well, they haven't been at all. Wove been willing to entertain large spending cuts. Lots of Democrats don't like that. They haven't moved one dime off their stand of no revenues whatsoever.

The president put the blame squarely on the shoulders of where it belongs, a bloc of extreme right House Republican who just refuse to compromise at all. And it is leading to disaster.

Standard & Poor's, it is reported tonight, said that if we did the Boehner plan, there is a too strong a likelihood of a downgrade. They said the Reid plan wouldn't produce that.

That would be terrible for American families and for the American government. So what we're really asking, I think, is for Speaker Boehner not to follow this extreme group, but to lead a little bit.

This group, the 80 to 100 House Republicans, many of them newly elected, who are at the extremes, shouldn't be able to say to the entire country, it is our way or no way. They don't represent the thinking of most of the country.

MORGAN: We are facing a financial doomsday here if a deal can't be done. The American public are watching you guys all squabbling around and thinking, what the hell is going on? Just get this done. These are our livelihoods at stake, when nearly 10 percent of us are out of work anyway.

SCHUMER: Well, if one side is willing to reach out and compromise all the time, and the other side says no, it is awfully hard to get it done. And to do what they want, which is a short term renewal of the debt ceiling -- raising of the debt ceiling, we'll be back where we started in a couple months. And Standard & Poor's is likely to downgrade us, much more likely than under our plan.

So we're asking -- Senate Republicans, many have shown a degree of compromise. Sixteen or 17 of them signed a statement that would entertain revenues as part of the group of six. It is the House Republicans holding this up.

But what we're hopeful is, now that the president has gone on national television, and put the blame where it belongs, squarely on their shoulders, that one of two things will happen. Either they will yield, although I doubt it, because they're ideologues. But maybe the mainstream of the Republican party will say, look, for the good of country, we can't just follow these people. They don't represent a majority.

MORGAN: I mean, there is an option. It has not been tested properly legally. No one seems quite sure if it is a legal option for the president. Under the 14th Amendment, he basically goes alone, if it comes to it, rather than default. No default has ever happened before. Would you encourage the president to take that option, if all else failed?

SCHUMER: Well, I think we ought to avoid that option if we could. It is unclear how the courts would determine it. It is unclear how the credit markets would regard it. It is something that should be explored down the road, perhaps. but not for this scenario. A much better way to go is the Reid compromise. It gives the Republican what they've asked for. It has no revenues, even though most Democrats and the president want revenues. It says the amount of cuts shall be equal to the amount we raise the debt ceiling, their other large criteria. So it is sort of an offer they can't refuse.

And they won't take yes for an answer. It leads to you wonder what is going on here? You know, when 50 or 60 House Republicans say they think it is probably a good idea not to pay the debt ceiling and default, I think that says it all.

The Reid compromise answers every objection they have had. No revenues, an amount of cuts, again, equal or -- to the amount we raise the debt ceiling. And every one of though cuts was approved by the bipartisan negotiations led by Joe Biden. What more do they want?

MORGAN: Senator Schumer, thank you. With the clock ticking down to next weeks' deadline, Americans are running out of patience. When it come to the blame game, the GOP might have the most to lose. In a CNN/ORC poll, 51 percent of Americans said they would blame the Republican if there is no deal to raise the debt ceiling. Far fewer, just three in 10, said they would blame the president.

Joining me now from the Republican side of the aisle is Senator Rob Portman, from Ohio. Senator Portman, they've got a point, the Democrats, haven't the they? You're being pretty intransigent. You won't countenance any tax increases. How is the president supposed to balance his books?

We've got a slight technical fault there with Senator Portman. We'll have a short break and come back to him in a moment.


MORGAN: We're back now with Senator Rob Portman from Ohio. Senator, thank you for joining me. You ran budgets for President George W. Bush. A lot of people blame the financial crisis on Bush tax cuts and expensive--e wars. Isn't it time you guys took one for the team, the team being America?

SEN. ROB PORTMAN (R), OHIO: Well, if the team is America, the issue is how to get this economy moving again. And I think that's what Republicans have been focused on. If you take the president's own words of about eight months ago where he said we shouldn't be increasing taxes on a weak economy, that's basically what Republicans are saying today.

Let's deal with the underlying problem, which is the debt and the deficit. We can do so -- the president's speech tonight was interesting, Piers. He seemed to be talking kind of past the Congress, because, as Senator Schumer just said a moment ago, there are now two proposals in Congress, both of which deal with the spending side.

And the president, instead tonight, chose to rehash and relitigate the old arguments about tax increases. So I think we're focused on the right thing, which is not hurting the economy by increasing the burden of taxation, moving immediately with cuts, moving to tax reform, which is needed, getting rid of those loopholes, the deductions, the credits and so on the president talks about, over the next six months, and then making progress.

I think the situation is a lot more hopeful than the president described tonight. Frankly, he was talking about something that's already been decided up on the Hill, which is we're going to focus on spending cuts.

MORGAN: It was interesting to me that the president quoted Ronald Reagan. I'll repeat the quote: "would you rather reduce deficits and interest rates by raisin raising revenue from those who are not now paying their fair share, or would you rather accept larger budget deficits, higher interest rates and higher unemployment?"

I think you know the answer. Reagan was the great Republican hero. He had a point, didn't he, the president, raising that quote?

PORTMAN: He did. His point was we need to reform a broken tax system. Interestingly, there have been thousands of changes to the tax system since 1986, when Ronald Reagan worked with Tip O'Neill and others to reform it.

We're back where we should do it again. Economists across the board agree with this, Piers. They think we could have a much more efficient tax system that would encourage investment, growth and jobs, and therefore economic activity and revenue.

But let's do it through tax reform. Let's not, at this time, as our economy is trying -- struggling to get out of this recession, weaken it further by increasing the burden of taxation. That's the issue here.

Again, what the president said tonight was appropriate, perhaps, a week ago. But tonight on Capitol Hill, you have two proposals. One Senator Schumer just talked about from the Democrat's side. That's to reduce spending immediately, over a longer term give an extension to the debt limit. And then you have a Republican proposal, which has more cuts immediately, cuts like the ones the Democrats are proposing, and then a six-month process for deeper cuts.

So really, we're not focusing on the Hill on raising taxes. We're focusing on doing what the markets have said we must do, including these credit agencies you talked about earlier, which is to get the underlying problem settled, which is the growing spending and the deficits and the debts.

MORGAN: There are millions of Americans who are steaming with anger tonight, saying, who are these politicians to put this country in this precarious position. The markets are already reacting very adversely to this. The rest of the world is watching aghast at the world's number one economy in this meltdown, as you guys all argue with each other.

They just want skulls cracked and a deal done. Are you guys prepared to compromise, as the president asked, and get the deal done?

PORTMAN: Again, I think it's happening. Frankly, it's not happening with the president as much as it's happening with Harry Reid, who is the leader of the Senate, Democrat, and John Boehner, as the speaker of the House. They're actually much closer, again, than the president would indicate in his remarks.

And I do think it's incredibly important that we extend the debt limit. It's absolutely necessary. It's also not sufficient. We have to deal with the underlying spending problem while we do it, or else, Piers, we won't have addressed the very concern that Standard and Poor's, which was mentioned earlier tonight, and the other credit agencies are talking about.

They will downgrade the debt unless we deal with the debt and deficit issue by controlling the spending.

So I think we're lurching -- sometimes in a democracy it's a little messy, much lurching toward the right result, which is to actually extend, but do so with real spending cuts that are in place, and then setting up a real process to deal with tax reform and the entitlement -- the structural changes in our important entitlement programs that are necessary, because those programs are not currently sustainable.

MORGAN: Senator Portman, thank you very much. Some say that Grover Norquist is a man of the middle of this debt crisis. He's the president of Americans for Tax Reform and more than 250 members of Congress, nearly all of them Republicans, have signed his anti-tax pledge. Grover Norquist joins me now.

Grover, you're the eye of the tiger in all of this. People take their lead from you on the Republican side. You've been intransigent, there will be no tax increases. Most impartial observers outside of America say that is crazy. And you have got to change your attitude to this and allow some tax increases.

GROVER NORQUIST, AMERICANS FOR TAX REFORM: Well, since the problem that America faces is our government is spending too much money, over the last ten years -- certainly it's sped up over the last two to three years -- the only way to solve overspending problem is to spend less.

Raising taxes is what politicians do rather than reduce spending. So taxes should be off the table for two reasons. One, it distracts from cutting spending. It gets the in the way of reducing spending. But also because tax reform is something that we need to do, put some time and effort into it, think it through.

Over the next couple of years, we should radically reform the tax code and have lower rates, as Reagan moved to do in '86, not a tax increase, the '86 tax reform bill, eliminated deductions and credits, reduced rate. We ought to move toward what Reagan was proposing.

But we shouldn't raise taxes to pay for bigger government. We should shrink bigger government. MORGAN: It's not really to pay for bigger government, isn't it. It's a situation that has been pretty well unprecedented. We've had this enormous global financial crisis hit America and Americans incredibly hard. And they're now watching a bunch of politicians squabbling down in Washington as their livelihoods are going down the drain.

And what they want is people in your position to start thinking the unthinkable, and as long as you refuse to do that, as long as you say, no, it's our way or the highway, the chances of a deal are dramatically reduced, and America could, within a week, go into default with all of the carnage that would cause.

NORQUIST: Well, we heard President Obama call for tax increases to pay for the size government that he wants. But you also heard Republicans and Democrats -- Harry Reid's proposal does not raise taxes. You might -- I hope the newspapers tomorrow will write down the budget cuts he's talking about. He saves a trillion dollars by winding down wars that are winding down overseas. So those spending reductions may not be real.

But at least he's beginning to put a list together. We still haven't seen a budget or a proposal from Obama for six, seven months now. If he would put something in writing, it would be easier for the American people to look at it and see if it's real.

The House has passed both the six trillion dollar spending restraint in Paul Ryan's budget, 2.5 trillion dollar spending restraint in cut -- cut, cap and balance. And again, we're still waiting for Obama to put anything down in writing.

He gave a political speech tonight. It was in essay form. What we really need is some arithmetic, with some numbers written down. Obama still hasn't done that for us.

MORGAN: I mean, it's a very high stakes game this, isn't it, Grover Norquist, because the American public, according to the polls tonight, have made it pretty clear they blame the Republicans more than the president at the moment. Should America go into default, which would be completely unprecedented, never happened before - if that was to happen, the political fallout could be leveled at your party and not the Democrats.

So the notion -- the quaint notion that many Republicans seem to have, that this might be bad for President Obama, it could be the complete opposite. Everyone may turn into fury on the Republicans. You don't want that, do you?

NORQUIST: Well, I'm opposed to the idea of going bankrupt or hitting the debt ceiling. I believe that we should come up with something as senator -- as Congressman Boehner put forward, Speaker Boehner, to reduce spending dollar for dollar with the debt ceiling increase.

But you're quite correct that over the last several months, President Obama has focused on the politics of this rather than the economics. The Republicans in the House have written out budgets and written out proposals. And the president hasn't written anything down, because he's writing speeches and reading from teleprompters.

Tonight, you got rhetoric, not a single number, not a single real proposal. A conversation about all of the sacrifice he was willing to make. Really? Give us some numbers. Write it down, so the American people can judge the Republican House proposal, Senator Reid's proposal.

The Democrats in the Senate haven't passed a budget in three years. They haven't passed a budget in three years. What do they do with their time? How does the president fill his days when he's not willing to put forward in writing something that you and I and the American people could look at judge.

So you're quite right, he's playing -- he's giving political speeches and evidently that works a little bit. But the election's a year plus away. People have an opportunity to see that Obama's not taking this seriously. The Republicans in the House keep putting proposals, written down proposals, in legislative language, that actually matter.

And the president gives a speech with the teleprompters and no actual written proposal that we could even look at.

MORGAN: Finally -- finally, Grover Norquist, at some stage, somebody has to hand the baby to the enemy. Who is it going to be?

NORQUIST: Well, look, the Republicans would like six trillion dollars in spending restraint over the next ten years.

MORGAN: Answer very quickly, Grover. We've got to go.


MORGAN: OK. Grover Norquist, thank you very much.