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JOHN KING, USA

Vote on Boehner's Debt Plan Delayed

Aired July 28, 2011 - 19:00   ET

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


JOHN KING, HOST: Thanks Wolf and good evening everyone.

We're live on Capitol Hill tonight where a dramatic issue is unfolding that affects you (INAUDIBLE) at home, also could affect the global economy. That being the House hoping to go forward today with its plan to give the president the authority to raise the government's credit line, the debt ceiling, but also to enact some spending cuts. That vote was supposed to be a little bit more than an hour ago.

But look at this right now, the House floor not (INAUDIBLE) and there is no vote taking place. Instead the House is in recess. That is because the Speaker of the House, Republican John Boehner, still a few votes short as he tries to muscle his plan through the House of Representatives and send the message to the Democrat-controlled Senate and the Democratic-controlled White House. However, we're in limbo tonight as this drama plays out.

The speaker in his office with his top deputies, we're told pizzas brought in just a short time ago. They are trying desperately to round up the last few votes they need to get this vote through the House tonight. The vote has been delayed, not postponed. The House leadership saying it still plans to have that vote this evening, but the speaker likely to cancel it if he can't get those votes instead of suffering what would be a humiliating debate -- defeat -- excuse me. The speaker started the day upbeat and he had a news conference earlier in the day in which he said his plan was the only plan that would please his conservative majority and he said meet most of the president's standards.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), HOUSE SPEAKER: Throughout this debate we've promised the American people that we'd cut spending more than what we would increase the debt limit. And we also said that we would not entertain any increases in taxes. So, today the House is going to vote on a bill that meets that test. It's been certified by the nonpartisan Congressional Budget Office. There are no gimmicks. There are no smokescreens.

(END VIDEO CLIP)

KING: And it looked like the conservatives were making progress, the speaker making progress. At the White House, though, they decided to send a very clear signal that this plan was not acceptable. Why doesn't the White House like it? Because you would have a temporary increase in the debt ceiling for now, then the president would have to come back several months from now in the middle of his 2012 re- election campaign and ask again for the Congress to increase the debt ceiling, to come forward, again, with a package of spending cuts. From the White House perspective to perhaps again have to make his cases that the taxes on the wealthy Americans should be raised, so the White House saying to Speaker Boehner, that your plan is no good at 1600 Pennsylvania Avenue.

(BEGIN VIDEO CLIP)

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: What we need to do is get beyond you know voting on dead on arrival measures that aren't going to become law when we have so few days left.

(END VIDEO CLIP)

KING: And it looked like the speaker though was making progress. One of the key questions for him, what about the new members elected, the new members that made him the speaker? Gave Republicans the majority, many of them if you remember back to the midterm election this was their defining issue, to come to Washington to put an end to what they viewed as reckless deficit spending that was destroying the country. As the day ticked on the speaker appeared to be picking up some of those votes. Listen here to a freshman from Wisconsin, Sean Duffy.

(BEGIN VIDEO CLIP)

REP. SEAN DUFFY (R), WISCONSIN: Is this as big as we wanted to go? Heck, no. We wanted to go bigger. We ran on going bigger. But this is the only proposal on the table that accomplishes the goals that we set out to do.

(END VIDEO CLIP)

KING: Progress but apparently and this is why we have such a drama unfolding tonight on Capitol Hill, not enough progress. The speaker is still short the votes. He has delayed this key vote, a key vote not only it comes to -- if you are sitting at home, maybe you think the debt ceiling should be increased, maybe you don't. It's a critical policy issue. It is also a fundamentally important political showdown; some believing the speaker's hold on his job could be imperiled if he loses this vote. Let's check in with our congressional correspondent Kate Bolduan. Kate, they're in the speaker's office. Do they believe they can twist enough arms be convincing enough to get enough votes to pass this tonight?

KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: Fabulous question this evening and one that is very hard to answer at this moment. I can tell you, let me just give you the lay of the land what you can probably see a little bit of, John, you were talking about the speaker's office, it's right down this hallway. This is where reporters are gathering and what we're seeing now rank-and-file members going in and out of the House speaker's office. And as we're being told, members coming out, they have told me that the leadership is asking for their vote. Apparent at this point as they've called a recess that the leaders are still working at this late hour, still working to try to secure the votes and that they're not there yet. And they clearly want certainty that they are going to have the votes before they take this back up to the floor. I'll tell you, Congressman Paul Ryan, the chair of the House Budget Committee, he did speak with reporters, my colleague Deidre Walsh (ph), one of them, and he has been helping the leadership in trying to get members on board with their lobbying effort.

And he told -- and he told reporters that things are coming along, but, of course, John, as you know, things are very much in flux at this moment. They are hunkered down trying to secure these votes, trying to twist those arms as we say, and right now it looks that they intend to have the vote, that's what aides tell us, at this moment, but we'll, of course, have to be following that.

KING: Kate Bolduan is going to stay with us throughout the evening as we track this drama. Now two votes the speaker would like to have but he does not have two members of that Republican class, two of the members who campaigned last November in the midterm election saying send me to Washington and I'll try to bring fiscal sanity to the country. They are now facing a key challenge not only in their individual political careers but as the new Republican majority tries to prove it can be part of the governing coalition here in Washington. The Illinois Republican Congressman Joe Walsh, South Carolina, Republican Congressman Trey Gowdy with me this evening. Gentlemen, the speaker does not have your votes -- anything at the last minute he can do to convince you to vote for this plan?

REP. TREY GOWDY (R), SOUTH CAROLINA: I can't support this plan. I would love to be able to support Speaker Boehner, Leader Cantor. I have to have something that transcends election cycles. I have to have something systemic. I have to have something that guarantees the 75th time we raise the debt ceiling it's the last time we raise the debt ceiling and absent that transformative systemic remedy, I can't support it.

KING: And yet, Congressman, the speaker came into your caucus meeting yesterday, I was told he was quite emotional, forgive me at home for using this language, said you need to get your asses in line behind him, making the case that if you want to have leverage in the negotiations with a Democratic president and a Democratic Senate, that you have to agree on a plan and some also say that his standing as your speaker and as an effective negotiator with the president could be undermined if he loses this vote, and yet that doesn't have enough power to sway you.

REP. JOE WALSH (R), ILLINOIS: No, and look we're all behind our speaker. We're all behind our Leader Eric Cantor. And as Trey said they've done a great job. But I think Trey also nailed it, we want to make sure we never get here again. We -- I want to support something that makes sure we never get here again and last week a lot of us rank-and-file Republicans believed we voted for something that would do that, "Cut, Cap and Balance", and it would be -- is something the American people support, and, you know, that's something that I wish we'd, again, send back to the Senate.

KING: I understand that, and I also respect your campaign promises in the last election. We're now at a point, though, where we're having what is essentially a fifth grade civics lesson. You control the House of Representatives. The Democrats control the other side of Capitol Hill on the Senate side. You have a Democratic president a mile or so down the road. Is your position, no, you won't budge and compromise and go their way, even if -- even if -- we get to August 2nd and the country goes into default?

GOWDY: I would argue to you that many of us have already compromised. Many of us who ran on a no debt ceiling increase have already voted twice to raise it. It was implicit in Paul Ryan's budget. It was explicit in cap -- "Cut, Cap and Balance". So, I've already voted to raise the debt ceiling twice. What I have to have is a guarantee where I can take back to the people I work for that we have done something to bend the spending arc.

Not a plan, not a deal, but a solution that transcends election cycles. I'm not concerned about President Obama's election cycle. I'm not concerned about mine. You can have this job if you'll give me the systemic remedy that means we don't have to have this conversation again. I won't come back if you can give me that remedy.

KING: So, what happens if the Senate defeats -- let's assume the House can get together enough votes and I'm not sure that's a good assumption tonight, but let's assume the speaker wiggles this one out, the Senate votes down his plan, Leader Reid says he's prepared to do that as early as tonight. The question then is what happens and there is someone watching at home, they might be in your district, they might be somewhere else, and if we get to the point of default, people are saying everybody's interest rates would go up. There's a possibility the job market which is already is pretty tough would get even worse, that there would be a domestic economic impact, potentially a huge one and a global economic impact. Are you willing to defend your principles to take that risk?

WALSH: I think we all need to take a breath. I don't think default is an option and Trey and I aren't talking about default. This whole obsession with August 2nd from the beginning I don't think has been helpful. Let's take a few days and get this right. We know in August our government's going to have plenty of revenues to service our debt, take care of our military and take care of our senior citizens. Too often the White House in this debate hasn't been real productive because they've been trying to scare the American people. Let's take a few days and get this right.

KING: But the government is projected to take in about $172 billion next month and if you add up the bills that we know we'll get, they're in excess of $300 billion, so something would have to give. Either somebody wouldn't get food stamps, federal workers wouldn't get paid, some student loans might not go out or payments wouldn't go out, somebody wouldn't get paid. Are you prepared to say, I'm sorry, but we may have to have that conversation. We may have to decide whether you get your food stamps or you get your military check, Captain, because this is an important point? GOWDY: Well, there are five organization bills that are pending in the House right now that would set the priorities and direct Secretary Geithner what to pay. So, I would say this, the dichotomy of default or not default is a false dichotomy. The real dichotomy is default or downgrade. And all the ratings agencies have said, a default is cataclysmic, nobody wants that, but do you want a downgrade, because that's a tax on everyone also. It raises your interest rates and if we don't bend the spending arc we're going to get a downgrade, so the real conundrum is not default or not default. It's default, downgrade, or a systemic fix and I want a systemic fix.

KING: And any concern at all as you defend what is your principle that what might happen in the end is if the House and the Senate can't reconcile and everybody blinks, that the president gets the authority to raise the debt ceiling and you don't get anything, you don't even get a down payment, I know you think the current plan is insufficient, but at least would be a down payment toward what you want. Do you have any concerns that by standing firm and not giving the speaker -- he can use these two votes tonight and he's not going to get them -- if he doesn't get them, what about -- are you concerned that by standing firm you actually could lose more than you gained?

WALSH: Well absolutely. But, again, I think the American people are behind us. Your own station took a poll last week that showed most of the American people supported this notion of "Cut, Cap and Balance". I think it could be terribly productive, again, if we sent that to the Senate and they can amend it and send it back to us. That would be a real systemic reform like Trey's talking about.

KING: Congressman Walsh, Congressman Gowdy, appreciate your time tonight. Someone from the speaker's office is probably waiting to grab you on the way out. They're serving pizza, you know. Are you both hungry --

(CROSSTALK)

UNIDENTIFIED MALE: I'm eating in tonight.

UNIDENTIFIED MALE: It's going to cost more than pizza.

UNIDENTIFIED MALE: I'm eating in tonight.

KING: You're eating in tonight. Gentlemen, I really appreciate --

UNIDENTIFIED MALE: Thanks, John.

(CROSSTALK)

KING: Let's bring into the conversation Erick Erickson, he's the editor-in-chief of the conservative RedState.com. He has been among those urging these freshmen to hold firm, not to support the Boehner plan -- also with us our chief political analyst Gloria Borger. Erick to you first -- you say the Boehner plan is not enough. Are you prepared to have this speaker lose or have to pull from the floor and not have a vote on something that is incredibly consequential to his leadership, never mind the country?

ERICK ERICKSON, CNN CONTRIBUTOR: Oh, you know, I don't think it's that consequential to his leadership. I don't remember this conversation about whether Nancy Pelosi would lose her speakership if Obamacare couldn't pass the House. I think that that's not really true. The speaker will still be the speaker, although if he keeps making people mad, apparently the legislation on Boeing in South Carolina has been delayed.

There's the story about Jim Jordan maybe being (INAUDIBLE). Speaker's office has denied that one. That could hurt, but, no, I think it would be a great night for the country if John Boehner's plan was denied. I mean put this in perspective, John, last week the entire conservative movement was unified behind Republicans and five Democrats in the House, all the Republicans in the Senate on a plan and this week the speaker couldn't make that the foundation for compromise. He said he had to go with the second plan.

KING: Gloria, if the speaker has to pull this vote tonight and he fails, he loses tonight, what happens?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, I disagree with Erick, because I do think it's bad for the speaker. And I think the country is stuck. I mean I think Harry Reid would then proceed, but, of course, his plan would go nowhere. So, I think you'd be sort of back to back channel negotiations which haven't really been able to occur because, of course, the Senate Republican leader, Mitch McConnell, backs John Boehner's plan.

But, you know, in looking at those two congressmen, John, it seems to me what we're watching are congressmen who believe they came to Washington to be transformational, and they don't want anything less than that. And the speaker is trying to twist the arms of members of Congress who don't feel beholden to him, and you know this, John, better than I do, that it always helps when people are elected and they feel that they owe you something. These members of Congress, these freshmen, they don't owe the establishment Republicans anything.

KING: Erick and Gloria are going to stay with us. We'll also keep checking in on Capitol Hill with our sources here. If you're just joining us, the Speaker of the House, John Boehner delaying a vote on his vote to give the president the authority to raise the government's debt ceiling but also to enact some spending cuts. Conservative members of his own caucus say it's not enough. That's the factor in the House right now as we wait to see if the leadership will go forward with its votes. Then of course we'd have to go to the United States Senate where the Democratic leader says he has a plan. When we come back a Democratic senator who says no Mr. Leader, I'm not for that one either.

(COMMERCIAL BREAK)

KING: Live images here of the United States Capitol on the floor of the United States Senate, a night of dramatic breaking news on Capitol Hill, the Senate waiting to see if the House will pass its plan to raise the debt ceiling and to cut some federal spending. That was the House plan tonight, to pass that plan and send it to the Senate. The Republican House speaker, though, has put that all on hold. He's in his office right now because he's short the votes. This is a landmark vote in the speakership of John Boehner tonight. He is short the votes to pass his plan, which would cut about $900 billion in spending and give the administration the authority to borrow more money to keep the government up and running.

In the Senate Democratic Leader Harry Reid has a different plan, his plan would be about $2 trillion in cuts and raise the debt ceiling through the 2012 presidential election. Our next guest says he would vote no on the House Republican plan and on the Democratic Senate plan. He is the Democratic Senator Joe Manchin of West Virginia. Senator thanks for being with us.

I want to ask you, as a new member of the Senate and a former governor, if you're going to vote no, you would vote no on both plans. How does the country avoid default and meet the House Republican test and they do control one side of Capitol Hill to cut spending?

SEN. JOE MANCHIN (D), WEST VIRGINIA: Well John, let me tell you, the purpose for me to go to the floor tonight, today, was to basically apologize to my fellow West Virginians and all Americans for what they've had to endure and witness. With that being said, I believe there is a plan that can be worked. I appreciate all the parties involved, the speaker, of course, my majority leader, Harry Reid, working very hard.

The one I think will work is the parallel. I've got to vote for a long-term fix. I didn't come here to kick the can down the road short. We got two plans, short and shorter. And we've got to fix it for the long term. I think it's been pretty well mapped out. We need a $4 trillion swing in order to get us a downward glide to get this financial house of ours in order. And I want to see a guaranteed vote. So, if we're going to do, raise the debt, let's make sure we have a guaranteed vote to fix the debt.

KING: So, you want a guaranteed vote to have at least $4 trillion in deficit reduction over 10 years, but would you vote on a shorter-term plan that had a smaller target if you were promised that you would get that second installment?

MANCHIN: Oh, I think absolutely. If I was promised -- and I think the promise to the American people is that there's a shorter period of time that we're going to be able to put together a plan that gives us a minimum of a $4 trillion fix, which is what all the ratings agencies and everybody has evaluated and if you have that running parallel and you can get to that point but you can also make sure that we do not default, but the most important thing also is make sure that the credit rating is not downgraded. John, that can be as bad if not worse, because I've seen the state -- my state sometimes we would challenged and it's hard to raise a debt -- raise your credit rating and it takes an awful lot of time to do that. So, you got to be very careful what we're doing here.

KING: I spent a lot of time in your state over the years, especially in recent years, and it's having a tough time like many places in America. (INAUDIBLE) family in West Virginia right now that are saying you know good for you, Senator Manchin, but, but you have your views, and you're pretty firm on them. You just heard these two new Tea Party members of Congress --

(CROSSTALK)

KING: -- I had with me -- hang on one second Senator -- excuse me -- who said they have their plans. Everybody has their non- negotiables and we are days away from a potential default of the United States government that if someone in your state is applying for a mortgage they're told well next week the interest rates could go up, might -- your credit card rates might go up, might be even harder to get a job in this economy. As a former governor who's had to do things and figure out compromises, how do we get something done in the next 72 hours when everybody says, well, I want to be for this, but I'm non-negotiable on this?

MANCHIN: Well John first of all it's a shame that we're down to 72 hours, and next of all when I became governor in 2004 and took over in 2005, we set our course on getting our financial house in order. We had surpluses for six years in a row. The last three years we've increased our credit rating. Not by expanding government and raising taxes, living within our means, picking our priorities. We didn't cut any programs whatsoever.

It's time for a correction. I understand that. But you have to have a balance of revenue through waste, fraud, and abuse, making sure everybody's paying their fair share, and also to make sure that we're living within our means. We haven't made that commitment yet and it has to be done. The $4 trillion downward glide has to be accomplished, and everybody has said that.

And I think it's imperative that -- for us to do it now. The time is right to do it now. And just saying, well, we have two trillion or we have 900 billion and that gets us down to next year or right after 2012, what about 2013 and beyond? I'm worried about the next generation, not the next election.

KING: Well take me behind the curtain. We have the Republicans saying our plan. They're having trouble getting the votes tonight, but they say their plan is the best plan. Leader Reid says his plan is the best plan. The White House hasn't put anything on paper, but they say their approach is the best approach. Take us behind the curtain.

Are there conversations that convince you after what I'll call a little political posturing or at least a little political plant flagging, is the president working the phones? Should the president be working the phones? Is there something be done that after we go through planting the flags on the Republican House and the Democratic Senate that we actually get this done before the deadline?

MANCHIN: Well, I can only tell you what -- as a governor, I was definitely on the phones. I was in their face on the phones, setting down continuously with the front row and the back row.

KING: Should the president be doing more of that?

MANCHIN: Well everybody has their style. I am not going to tell him what he should and shouldn't do. I respect you know the president and he'll do what he thinks is right for him and how he best feels comfortable. Everybody has a different style, but this is the time when it's crunch time, you've got to put the full-court press on, and that takes all of us. But we got to make sure that we step forward for this country and right now people are disgusted and that's why I apologized. And I really mean it. I'm sorry to have to endure it or have to watch people that have to set back and be part of this process.

It's just not right. It's not who we are as Americans. We can do better. We've got to do better, John. And I think a parallel plan if they come out and say, well, fine, we're going to get this and get our debt ceiling taken care of to make sure we don't default, we're also going to take care of our credit rating, our long-term responsibilities. You can do all of that, and basically start moving this country in a path of fiscal responsibility. I think it has to be done. You have the Bowles and Simpson plan that was put out there, the Debt Commission, it came out over nine months ago. You have the "Gang of Six".

We had 50 senators, 25 Democrats and 25 Republicans that were very enthused. It's the only bipartisan effort that we've got. And, you know, I'm sure there's going to be some tweaking. They have a commission they want to put together, that would be fine. Just make sure you have a trigger that there's a guaranteed vote before the end of this year.

KING: Joe Manchin is the Democratic senator from West Virginia, making clear tonight he will not support the House Republican plan, nor will he support his Democratic leader's plan. Senator, we'll see how this one plays out in the days ahead. Appreciate your time tonight.

MANCHIN: Thank you, John.

KING: When we come back another new member of the Senate who has also planted a flag saying he wants to see a bigger deficit reduction plan, he wants to see a constitutional amendment requiring Washington every year to balance the books -- Senator Rand Paul of Kentucky with us in just a moment, after this quick break.

(COMMERCIAL BREAK)

KING: Live pictures of the Capitol there, and that other picture you see it might not look dramatic, but the message it's sending is quite dramatic tonight. The breaking news on Capitol Hill, the House in recess tonight. The House leadership had planned to pass its plan to (INAUDIBLE) the government's borrowing limit, raise the debt ceiling is the official way to call that, and to cut some spending.

The House speaker, John Boehner, his deputy, the majority leader, Eric Cantor, unable as yet to come up with the votes tonight. We are told just a short time ago they walked together, Speaker Boehner, Leader Cantor to the office of the Republican Whip, Congressman Kevin McCarthy. The whip is the man who counts the votes. Tonight they are a few votes shy of a majority, so they have delayed a vote that was supposed to take place in the early evening hours here.

Let's go quickly show you what the Boehner plan would do. They still plan a vote tonight. It would raise the debt ceiling by a total of $2.5 trillion. It would cut spending immediately by about 900 million. Then it would appoint a commission that would be charged with cutting spending by an additional $1.6 trillion. A committee would come up with that. Congress would have to vote on those cuts.

Also on the table on the Senate side of the Capitol, the Democratic leader there says he has a plan. Harry Reid's plan would raise the debt ceiling just once -- just once by $2.4 trillion and it would cut $2.2 trillion in spending over the next decade including some savings account for scaling back the wars in Afghanistan and Iraq. Let's talk now to a new member of the Senate who opposes both of these plans.

He says they don't do enough to bring fiscal sanity to Washington; Senator Rand Paul Republican of Kentucky is with us this evening. Senator Paul, the conservatives in the House can't round up the votes to pass their plan. Speaker (sic) Reid probably has 52 or 53 for his, but he doesn't have the 60 votes he would need to get it through the Senate. We are days away from a potential default. Would you prefer default to either of these two plans?

SEN. RAND PAUL (R), KENTUCKY: No. But the interesting thing is the conservatives did round up the votes, the conservatives in the Senate and the House. We got 234 votes in the House last week for "Cut, Cap and Balance" to balance the budget and to raise the debt ceiling the full two trillion, exactly what the president wants. So it's interesting the dynamic here because some are saying we're unwilling to compromise. We already offer the president $2 trillion increase in the debt ceiling. All we want in exchange is a balanced budget amendment to the Constitution.

KING: You have made that point, and the Republicans have been very clear that you also won't accept tax increases, some of the tax increases the president would want -- he would call them revenue increases. As it plays out, as you know, we've seen a generational split in the Republican Party, some of what I'll call the old guard, folks who have been here a while, say do you know what, we need to get this done. We can't let the United States default for the first time in its history.

Does part of this debate -- Senator John McCain who 2 1/2 years ago was the Republican nominee for the president was on the floor of the Senate yesterday. He was saying that, look, you don't have the votes to get a balanced budget amendment to the Constitution, so new members should put it aside and be willing to move on.

I want you to listen to Senator McCain as he read from an editorial here in making his case from the "Wall Street Journal."

(BEGIN VIDEO CLIP) SEN. JOHN MCCAIN (R), ARIZONA: Democrats would have no choice but to pass a balanced budget amendment and reform entitlements and the Tea Party hobbits could return to middle earth having defeated Mordor.

This is the kind of crack political thinking that turned Sharron Angle and Christine O'Donnell into GOP Senate nominees.

(END VIDEO CLIP)

KING: You were a member of the new Tea Party class, Christine O'Donnell and Sharron Angle, didn't make it, you did.

What's your message to Senator McCain?

PAUL: Well, not directly to him but those who love "Lords of the Ring." I would say, you know, I'd rather be a hobbit than a troll. And the hobbits were the good guys. They were the heroes in the battle for middle earth between good and evil.

And there's a certain amount of good and evil up here in the sense that I think it is evil to put these bills on to the next generation and not pay them now. The reason I'm against the Boehner plan and against the Reid plan is both of them will add $7 trillion to $8 trillion of debt over the next 10 years. I don't think we have 10 years to add trillions more debt to the country.

KING: And so help us understand. You're not going to get -- you made the case for cut, cap and balance. The president said he won't sign it. Leader Reid won't bring to the floor of the Senate. He has the power and authority, and the president has the veto pen.

So, to somebody in your home state of Kentucky, or anybody else watching, no matter their political persuasion, who if we default might see higher interest rates, might see a hit to an already struggling job market, what is Senator Paul's message for them about how would you get us out of this?

PAUL: I'm still willing to negotiate. Ours is the only plan that's passed any House. So, give us some credit of actually getting together a coalition of Republicans and Democrats and we passed the House.

I'm willing to talk to the president. I sent a letter to the president today. I'm willing to accept most of what he wants, cuts, the caps he wants, and I'm willing to give him beyond -- I know he's concerned about having time to fund raise, I'm willing to let him get out on the campaign and fund raise and not have to worry about this. We'll give him $2 trillion, all we want is a promise that we'll balance the budget, and it would be over a seven- to eight-year period, is that too much to ask?

KING: Senator Rand Paul of Kentucky -- appreciate your time tonight. You raise the question at the end.

Let's put it right now to Gene Sperling at the White House. He's the president's director of the National Economic Council.

Gene Sperling, is that too much to ask? Is it too much for the president to support a balanced budget amendment if he had a seven, or eight or 10-year path to get there?

GENE SPERLING, NATIONAL ECONOMIC COUNCIL DIRECTOR: Well, first of all, John, I won't be nearly as good at my "Lord of the Ring" analogies as Senator Paul was.

But what we've been pushing here is compromise. What you heard was Senator Paul giving his heartfelt views of what is a very, very conservative perspective and I know he believes it sincerely.

The president has put forward his plan, too, which we would like to get letter for letter. But that's not how we're going to break this logjam and break the stalemate. We're going to do that by compromise. And I think everyone has seen that President Obama has been willing to compromise on -- in a variety of ways.

And if we can just get a good down payment on deficit reduction -- you know, right now we're willing to do quite a lot in spending cuts on the down payment. Come back and do entitlement reform and tax reform that will help bring down the deficit in the more significant way that President Obama wants to and make sure we're not allowing the cloud of default to hang over our economy at this critical time, push it out of the way for the next year and a half or two, we can -- we can reach a compromise.

And the president has asked repeatedly, all the fascination today on the House vote is nice, but it's really irrelevant. It's dead on arrival in the Senate. So, we really need the leaders on all sides to get together and say, what now. And what now is an honorable compromise where we do what's best for the country and get this debt limit passed, debt a deficit reduction down payment and take the specter and cloud of default off our economy.

KING: Gene Sperling, you said any House vote is irrelevant because it's dead on arrival. By that standard, I could make that case that any vote on the Senate plan is irrelevant because it's dead on arrival because the House speaker says it won't pass here.

So, the question is, in this time of divided government, who is going to help negotiate a deal? You served in the Clinton administration when he had a Republican house under the speakership of Newt Gingrich and there were many times when you made the case in those days I was covering the White House, President Clinton made the case on those that whatever Newt Gingrich and the House was doing was irrelevant. But, of course, it wasn't -- in the end, they had to figure something out.

Why hasn't the president called the speaker today? Why hasn't the president called Leader McConnell on the Senate side today to try to get Republicans? Really try this, but why not?

SPERLING: John, John, you know as well as anyone that this was the president who brought together a bipartisan process that Joe Biden, our vice president, led, that Eric Cantor was at every meeting, that he went through two serious negotiations with the speaker of the House.

I promise you, this president wants nothing more than to get negotiations with Speaker Boehner and the Republicans and Democratic leaders. That's what we're calling for. That's why he went on national TV and called for bipartisan compromise.

So, there's no one in this town who wants to bring everybody together and get a compromise right now more than this president. And I think everyone back home who is just wondering why we can't like other people just compromise and do something that takes a little bit from everyone and does what's best for the country.

KING: Now, you say everyone back home, everybody watching at home. Here's something everyone back home watching is hearing. I know when the president was negotiating with Speaker Boehner that they were discussing things and some of them ended up on paper, but nothing has come out officially from the White House saying this is the president's plan.

And so, you have people like Congresswoman Michele Bachmann who would like to be the president's opponent in 2012 going around the country saying this --

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE: The federal deficit and the federal debt both are in shambles. At least that's the way the American people see it. And still, the president has no plan. It's unthinkable but he still has no plan.

(END VIDEO CLIP)

KING: Gene Sperling, now that we are at this moment where the House leadership is trying to round up the votes, we'll see if they get tonight. Leader Reid says he has a majority for his plan, but there's no indication that he has anywhere near the 60 votes he would need in the Senate.

The House says it won't take the Senate plan. The Senate says it won't take the House plan. Should the president maybe say go to the American people, not just with a speech but a plan on paper -- look at this, it's reasonable, why can't we do this?

SPERLING: John, as you know, the president put out a detailed framework of $4 trillion over 12 years and we do have a plan. But we all know what you're seeing right now is everybody with their preferred ideal plan. It's not the lack of people putting out their preferred, ideal plan that has put our country on the cusp of default for the first time in our history.

The reason we're having difficulty is that people are not getting together and taking a piece from each of their plans and doing something that extends the debt limit into 2013, that has the compromise on the type of deficit reduction we need, and brings us back to do a more serious second round of deficit reduction through a tax reform and entitlement reform.

We're so close to compromise. There's so many people in this town that want to do it.

So, with all due respect, you know, the president can put out his ideal plan tomorrow, but that's not the leadership we need. We need the leaders of each party, in the House and Senate, to be willing to compromise. No one's been more willing to do that than this president.

He's been willing to do very deep spending cuts, some very controversial with our party, with our supporters. But he's done that as part of trying to be for an honorable compromise for deficit reduction, even if it's not exactly the composition we'd like because we have divided government -- and divided government in a time of economic turmoil requires compromise.

So, we're divided, but not dysfunctional.

KING: Let me ask you lastly, Gene Sperling, we'll see what happens, we'll see if the House can get the votes tonight. We'll see what happens in the Senate. Most people at home are probably rooting that they come up with some sort of a compromise by the August 2nd deadline. But if not, we're told the Treasury is working on plans, continuously plan, if we get to August 3rd and the government has bills that are a lot higher that the amount money coming in, help somebody in there-- maybe there's somebody who wears the uniform of this country watching tonight, I'm sure there are people who get Social Security checks watching tonight, people who get food stamps watching tonight -- explain how the administration will decide who gets a check and who doesn't?

SPERLING: Well, what I would explain is that, obviously, our Treasury Department is doing contingency planning. But the reality is, there are no good options if we do not reach an agreement that prevents us from going into default. There are no good options, all of it is unthinkable.

And what everyone's focus should be on right now and all of the pressure should be is for our leaders to be responsible and find that compromise. What we don't want is just a plan that will have us debating whether we're going to default at Christmastime. That is not going to be good for our economy.

We need something that pushes things down the road -- just like in 2003. Many of the Republicans agreed to extend the debt limit for over 17 months when President Bush was president.

So, you know, it's nonpartisan. It is not political. It's just the right thing to do for our economy right now.

KING: Gene Sperling, making those points. My friend, I'll tell you, there's nothing that's not partisan and not political in Washington right now, for better or worse. But we appreciate your perspective tonight. Gene Sperling who is the chairman of the National Economic -- the director of the National Economic Council at the White House, one of the president's top advisers, on this crisis -- Gene, thanks for your time tonight.

SPERLING: Thanks, John.

KING: When we come back, we'll check back in with our reporters here, again. The House Republican leadership delaying a planned vote tonight on its plan to raise the debt ceiling and cut spending, the August 2nd deadline fast approaching. When we come back, we'll check in with our reporters on this breaking news.

Also, again, exclusive insight from James Carville and Mary Matalin, both of whom not only have played big roles in campaigns, but also big roles with presidents who have governed at a time of divided government.

(COMMERCIAL BREAK)

KING: Live images of the White House and the Capitol tonight -- it's fair to make the statement that on this evening at least Washington is broken, the House Republican leadership delaying a planned vote on its plan to raise the debt ceiling, to let the government borrow more money in exchange for some spending cuts. House Republicans now trying to muster votes to pass the plan.

Waiting, of course, and watching anxiously is the president of the United States.

Let's check in our chief White House correspondent Jessica Yellin.

Jess, you have a house plan in trouble. You have a Senate Democratic plan that perhaps has a majority, but is unlikely be able to pass there.

What does the president of the United States do to avoid default and get these two, shall we say, the little family feud ended here?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Well, all we can do at this moment is wait, John. And there's no love lost at this very moment for Speaker Boehner and his bill right now.

The problem for the White House is this is all more delay. They have been waiting for Speaker Boehner to have this vote, get it over with, so they can get over to the Senate where the Democrats have a little bit more control. And this vote is just dragging things on, dragging this out, and causing only more frustration and delay.

The one thing they don't have is time.

KING: They don't have time. With the deadline looming, any indication the president's going to -- in the past when things have broken down, he's called everybody to the White House. That hasn't worked in the past.

Any thoughts that he might do it again?

YELLIN: There's no indication that he will. We've asked if they've been talking, they have not been talking. Again, the focus is on the Senate and getting Harry Reid -- Senator Reid and Senator McConnell, the Democratic and the Republican, who are leaders there to talk to each other and cut their own deal. Whether the president will get in the mix there, I don't know.

But the focus is for them to do their own negotiating over the weekend and take action themselves to get it back to the House by Sunday, John.

And whether the president will get involved we'll have to see in the coming days.

KING: A complicated process. Jessica Yellin working her sources at the White House.

I did speak to someone on Capitol Hill that said the vice president called Senator McConnell earlier this week, but it was not to negotiate, just to check in and say how things are going.

Let's talk to two veterans who have advised presidents in tense moments in the Oval Office and also know a lot, quite a bit a lot about political campaigns in the Congress, James Carville, the Democrat, Mary Matalin, the Republican, joining us from their home in New Orleans.

Mary, I want to go to you first, because it's the speaker of the House whose credibility is on the line tonight. If John Boehner who scheduled this vote can't get a majority, what happens?

MARY MATALIN, CNN POLITICAL CONTRIBUTOR: Well, John Boehner has already moved mountains. It's a Herculean task. The House is the only body that has passed a real budget. The Senate hasn't passed a budget. The president doesn't have a budget.

John Boehner's leadership, the House passed a real compromise here in the spending bill that they sent over before that was roundly rejected.

So, it's to the Senate. If there's any recalcitrance, if there's any juvenile behavior going on here, it's the Senates side.

John Boehner has moved this lot.

And put in mind of what President Obama famously said to Eric Cantor who went earnestly at the beginning of the president's tenure, to say - he believing that the president did want to work with -- with the Republicans. And Obama said, "We won."

Well, I think the Republicans are treating this president far more respectfully and offering far more compromises than Obama ever offered to them.

And I don't think it's John Boehner's credibility -- those members were elected as were governors across the country, as were state legislators across the country, to get government spending under control -- and that's what they're going to do and they're going to go down fighting to get it done.

KING: James, Mary says they'll go down fighting to get it done. This is without a doubt -- it is fascinating and sometimes fun political theater. The problem is it has enormous policy consequences.

I just want to show our viewers. If the government were it to get to the point where it went into default, here's would happen: it would be more expensive for the government to borrow money. So, if you are concerned about the deficit, guess what? It would cost more.

There could be loss of jobs. It would cost more for credit cards. Some think it would lower home values and perhaps lower people's retirement savings if you have trouble in the stock market and all that.

Mr. Carville, you worked with Mr. Clinton closely in a time of divided government, where is the fix here?

JAMES CARVILLE, CNN POLITICAL CONTRIBUTOR: You know, I'll be honest with you, right now, they can't get the votes, they can't get 25 Republicans to deal with the Boehner plan, so it's not very likely that they'll come back and be able to get something out of conference committee and get that -- assuming they get this out tonight. Obviously, from where I sitting, I'm sure you draw the same conclusion, too. You've been around Washington for a long time. They don't have the votes right now.

I suspect that they'll get them later on tonight. But I suspect that they'll have them by 5:30 this afternoon.

It's evident to me that they're not going to pass any compromise out of the House of Representatives. If they're going to fix this, they're going to have to go back and try to draw up some grand bargain, which is going to get some Republican votes and some Democratic votes. They're not going to be able to -- nothing will pass the Senate and come to the House and get all Republican votes that I see.

I may be wrong, but I don't see it, because right now, if they get this Boehner plan out, it's going to need about two or three (ph) votes.

MATALIN: John, the biggest hold -- go ahead.

KING: No, you go ahead. The biggest holdup here and you hit the nail on nail on the head asking our mutual friend, Gene Sperling, you made the right point. Everything is partisan. Everything is political.

What's holding this up is the president's desire to not have the debate before his election. Why? Today, we have polls out today. It's his lowest. He cannot afford to continue having this conversation, where people are reminded at the massive debt he's run up and his policies that aren't working. That's what's holding this thing up. If we could extend this for short term -- 34 of the 44 debt ceiling increases have been for under a year. If the president would budge on that, we could be done by the end of the week.

KING: James and Mary are going to stay with us. We are going to take a quick break.

CARVILLE: OK.

KING: When we come back, again, we're approaching the top of the hour, the House speaker meeting with his top deputies trying to see if he can pull off a vote tonight to pass his plan to raise the debt ceiling and cut spending. But the Republican majority, the new Republican majority, short of votes at the moment.

When we come back, we'll check in on our reporters, James and Mary are with us. Gloria Borger and more.

Stay with us.

(COMMERCIAL BREAK)

KING: The biggest question in Washington tonight is this: can he get the votes? He is the speaker of the House, John Boehner, what he wants the votes for is his plan to raise the debt ceiling and cut spending.

Let's go quickly to our congressional correspondent, Kate Bolduan.

Kate, this vote was supposed to be a few hours ago but the speaker is shy. What is he doing to trying to get to the magic number?

KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: They are working very hard. We know right now that they're in the in the whip's office, in Congressman McCarthy's office, talking to members still this evening.

But I'll tell you, while it has been a little while, of course since they were supposed to have the vote and it's been delayed, still this evening, a spokesman for Majority Leader Eric Cantor told my colleague, Deirdre Walsh, that the vote will be tonight. So, they still seem confident that at some point this evening, they will have the votes.

And I tell you, John, I doubt they are going to take to the floor until they are sure they have enough votes to pass this.

KING: OK. Brew the coffee at home. Kate Bolduan, we'll keep tracking those negotiations. Brew the coffee because it looks like we're going into the night.

Our chief political analyst Gloria Borger is with us.

Gloria, very hard for the speaker to pull this out from the floor. His credibility, perhaps his job would be at steak.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Yes. I think in many ways, you can look at this as a referendum on John Boehner. This is somebody who sounded last night and this morning like perhaps he had the votes. And I think what we are learning is how difficult it is for a House speaker to twist arms of people who were elected outside the establishment and people who really don't care, in many ways, if they are not re-elected.

You know, you can't say to them, I'm going to punish you. I'm not going to get you campaign funds. These are people who believe that they came here to do one thing and these budget cuts are not large enough for them. That they wanted something more transformational and that, you know, this is small potatoes.

You might ask the question, why didn't they take the president's grand bargain that he was working on with the speaker. But that's another story.

KING: That is another story.

James Carville is still with us.

James, in the Bill Clinton days, he sparred quite mightily with Newt Gingrich and the Republican majority. But in the end, they had a plan that led to, at least briefly, a balanced budget. They agree in negotiations for dramatic welfare reforms.

What's different now? Why is it so hard for this Democratic president to work things out with this Republican majority?

CARVILLE: The first thing is we are in very difficult economic times. It started in December of 2007 and they continue today. So, there's less money to go around. It was easier back then to be for things because we were in prosperous times. People's nerves are frayed right now.

And the other thing is, you got 25 -- a certain element of the Republican Party that has come to Washington and Gloria is right, they're not beholden to anybody and they're going with anything.

And the larger story here is, even if he gets the votes for his plan, it's almost impossible that anything else can pass the House -- anything that the Senate does, that they will kill it anyway. And there's a significant number of House Republicans and a significant number of people in the Republican Party that say it wouldn't be that big of a deal if we default. We have enough money to pay things and they're just ginning this up.

I suspect they are wrong, but it's what they believe.

So, this is going to be a very -- even if he passes it tonight, this is -- you know, as Churchill would say, the beginning of the end or the end of the beginning or beginning of something. We still have a long way to go. KING: The beginning of something, we all assume, by the way, Washington works, Mary, is that the Republicans pass their plan, and the Democrats would defeat it in the Senate. Reid would bring his plan to the floor, realize he doesn't have 60 votes, and then they would actually have to negotiate once both sides planted their flag and made their political statement they've have to negotiate.

Where is this heading with August 2nd looming right around the corner?

MATALIN: Well, that is an artificial deadline. And we all keep saying default. But only the president can default.

We have revenues coming in sufficient to service our debt. So, then the president would have to prioritize. Let's just say only the president by willfully failing to pay bondholders, they default. So, that's the argument that some are making that this is artificial.

The reason our credit rating is in jeopardy is not because of this vote on the debt ceiling. When we have this and we will have it, and we will lift the ceiling and nobody is going to be happy with it, that doesn't eradicate the larger problem that these really stalwart conservatives, constitutional conservatives came to Washington.

Gloria is right, they got elected because they don't care about getting re-elected. They care about doing what they came to do, which is to get this government under control.

It's far different from '94. The debt of this president has run up to no good consequences, there's no jobs. The stimulus didn't work. We have quadrupled our debt and no to affect.

People want that stopped.

BORGER: Mary --

MATALIN: That argument goes on.

BORGER: You know, Mary, that's why in the end, if there's going to be a deal cut, I think both of these plans are so poisoned and partisan, that you're going to have to come up with some kind of a hybrid. And in the end, you're going to lose the freshmen Republicans and you're going to end up depending on votes of moderate Democrats in the House and moderate Republicans in the Senate.

KING: All right, Gloria, James, Mary, appreciate your time.

We're out of time on this hour tonight. But stay with us, throughout the night, brew the coffee. We are tracking this key vote on Capitol Hill. Republicans say they will bring their plan to a vote tonight.

That's all for us. We'll see you her tomorrow. "IN THE ARENA" starts right now.