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Awaiting House Vote on GOP Debt Plan; Whose Winning the Debt Debate?; Interview With White House Chief of Staff William Daley; Assistant Whip of the Republican Party N.Y. Rep. Nan Hayworth Interviewed; House Vote on GOP Debt Plan Postponed; GOP Debt Cutters Under Fire

Aired July 28, 2011 - 17:00   ET


WOLF BLITZER, HOST: Thanks very much, Brooke.

Happening now, breaking news -- all eyes on the House of Representatives, where only moments from now, a critical vote expected to take place on the Republican plan to raise the debt ceiling. We'll have complete analysis on what it all means for you. And when it happens, we'll bring it to you live. Stand by.

Plus, can Republicans actually get the 216 votes needed to pass the proposal?

Ahead, the stunning battle that's emerging right now between the old and the new guard inside the Republican Party.

And with only four days left to solve this dire political crisis, many are asking, where is the president of the United States?

I'll ask his chief of staff, Bill Daley, in an exclusive interview.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

You're looking at live pictures right now on the House floor, where just moments from now, a vote is scheduled on Republican House Speaker John Boehner's plan to avoid unprecedented default. But the bill, which needs 216 votes to pass, is facing fierce new backlash inside the party.

If it does pass, it immediately goes to the Senate for a vote, where the Democratic Senate majority leader, Harry Reid, essentially says it's dead on arrival.

Meanwhile, CEOs at the country's biggest banks have their own warnings for Washington -- fix this now or there will be, in their words, "grave economic consequences for all of us."

Our Congressional correspondent, Kate Bolduan, is standing by live on Capitol Hill with the latest.

That vote getting ready pretty soon, right -- Kate? KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: Pretty soon, Wolf. Debate is still underway. And I'll tell you, the House Republican leaders have been working hard all day long to try to tally up the votes and secure the votes they need to pass. House Speaker John Boehner's debt ceiling bill.

I'll tell you, we're hearing from members they're cautiously optimistic. But no one is definitely come out to say that they have the votes. And a sign of how close this vote might actually be -- House Speaker John Boehner has been holding one-on-one meetings with members on one of his -- one of his offices out -- off of the House floor in this lobbying effort. They are trying very hard to secure these votes, as the debate is ticking down.

At the very same time, I'll tell you, Democrats are trying equally as hard to present a unanimous front of opposition from their party.

Listen here to a little bit of the debate from the House floor.


REP. STENY HOYER (D-MD), HOUSE MAJORITY LEADER: There will, in fact, be bipartisan opposition to this bill. But there, I predict, will be no Democrat for this bill, because bipartisanship was not sought. So I am deeply concerned that the short-term plan offered by Speaker Boehner would put us right back -- right back here on the precipice of imminent default in just a few months, casting a pall of uncertainty. And leading to a job destroying credit downgrade.



REP. DAVID DRIER (R), CALIFORNIA: I urge my colleagues, I urge my colleagues to, in the name of sanity, and in the name of ensuring that we maintain the solvency and the strength of the greatest nation the world has ever known, that we pass this measure and that we send it to our colleagues in the United States Senate.


BOLDUAN: He's a quick reality check, though, Wolf. If this bill passes the House -- and we'll know in a few short hours -- a couple of hours now -- if this bill passes the House, It's going to hit a big, big roadblock in the Senate. Senate Democratic -- the Senate Democratic Caucus, every member of that caucus has signed onto a letter saying that they will oppose House Speaker John Boehner's bill. And Senate Majority Leader Harry Reid announced today that they will quickly take up the Boehner bill in the Senate this evening, but only to table the measure -- a vote to table the measure, effectively just setting it aside.

That doesn't mean they couldn't take it back up if they wanted to. But it's a quick way, legislatively, for Democrats to show that there is not enough support for this bill to pass the -- to pass the Senate. So this brings us back to the same question that we keep returning to, Wolf, what is the way out of this stalemate?

Where is the compromise?

It does not seem like we have found the answer to that question quite yet -- Wolf.

BLITZER: And to table it in the Senate, they just need a simple majority, 51 votes.

BOLDUAN: That's right.

BLITZER: And there's 51 Democrats, two Independents who caucus with the -- with the Democrats. That's 53 right there.

All right, thanks very much, Kate.

Don't go too far away.

With the political tensions spilling over on Capitol Hill in the wake of this upcoming critical vote, many are wondering what's happening inside the White House right now. We just got an exclusive look.


BLITZER: William Daley, thanks very much for joining us.


BLITZER: What is the president doing right now, even as we speak, to get this deal done?

DALEY: The president has been meeting with his advisers and talking to people on the Hill today. He has a lot of other things he does on any given day. He has a security briefing, terrorism briefings, as he does. He'll meet with the secretary of Treasury later on today.

So he's fully engaged and his staff is fully engaged.

But there's -- there's many other things the president has to do every day in addition to trying to make sure that the economy improves and the debate in Washington doesn't dominate and fear the American people.

BLITZER: Is -- when you say the president speaking to people on the Hill, is he speaking to the speaker of the House?

DALEY: He has not spoken to the speaker in a few days. The truth is that it looks as though the speaker is rather engaged in -- in putting together his bill and getting the votes for his bill. So when that's put aside this evening, after it's, I assume, passed in the House, and then defeated in the Senate, then I think there will be a whole new stage of the Senate and House having to come together to avoid August 2nd as being a day that has never happened in the U.S. And that is a day where we wouldn't back up the full faith and credit of the United States.

BLITZER: So after the -- the House does its thing today and the Senate does its thing today and tomorrow, at that point, the president then brings everyone together --


BLITZER: Again? DALEY: -- I think we're -- we're -- we will consult with the leaders at that point as to what their plans are and how they -- they plan. And remember, it is Congress' obligation, under the statutes, to extend the debt ceiling if we're in this situation. So they have to put together, in a bipartisan way, bicameral, not one house can jam the other house. That's the beauty of our system. Unless there's a desire for compromise and bipartisanship, then Congress will not act. And that would be the first time in the history of the United States.

BLITZER: Because everybody seems to be -- a lot of people are looking to the president to get this done. Let me read to you a line that jumped out at me from "The New York Times" today from a story they wrote: "Having already deployed the heavy weapons from the presidential arsenal, including a national address on Monday night and a veto threat, Mr. Obama is in danger of seeming a spectator at one of the most critical moments of his presidency."

DALEY: I -- I think that's totally unwarranted. The fact is, the president has been not only fully engaged for months on the issue of the need to lower the debt, the debt ceiling is -- is a vote that happens periodically. And all of the leadership of both Houses have passed -- voted for this under Republican presidents and Democratic presidents.

The president has put a plan out there. He's tried twice with Speaker Boehner, who is the leader of the House and the leader of the Republican Caucus, to get a deal. That didn't work.

He's met with all the leaders repeatedly, discussions. Senator Reid has a plan that the president has endorsed. It's a plan that meets the obligations that Congress has.

So to -- to say that is just not accurate. And it's unfortunate that whoever the writer was felt that way.

BLITZER: And so we -- you would expect, between now and next Tuesday, we will see the president --

DALEY: Right.

BLITZER: -- more actively involved in this?

DALEY: Well, I don't know how you could get more actively involved. The president spoke to the nation to get the American people to understand exactly what's at stake. He called on the American people to reach out to the members of Congress and say, in a bipartisanship, compromising way, solve the problem. Again, it is the Congress' obligation to do this. It is not the president's. Obviously, the president can encourage and if a bill comes through -- to him, then he has to act. But the fact is this is about the Congress. And we see an inability right now of one of the houses of the two to move to the center and present something that's going to be accepted.

Already -- already, 53 Democrats, 51 Democrats, two Independents and five Republicans, have said they will not vote for the plan that the House is going to pass tonight.

BLITZER: Well, I want to get to that, because usually when the House passes something, the Senate passes something, they then get together in a conference and they -- they come up with some sort of compromise.

But I want to get -- I'll get to that in a moment.

But what are you, the chief of staff, what are you doing directly to try to get this crisis resolved?

DALEY: Well, we're -- we're in -- I'm in constant conversation, as -- as are many of our staff, with people on the Hill.

BLITZER: Republicans?

DALEY: Senators, Republican and Democrats --

BLITZER: Because you have --

DALEY: -- Republicans --

BLITZER: -- a good relationship with a lot of those Republicans.

DALEY: And so do many of the people on our staff, our legislative staff --

BLITZER: So what are doing --

DALEY: -- our economic staff.

BLITZER: -- talking (INAUDIBLE)?

DALEY: I'm not going to go through who I'm talking to and what we're saying. But there does seem to be a growing awareness, obviously, and fear that unless there is a compromise -- and that has become a dirty word in this town over the last couple of years -- then we could face something that the American people will suffer as a cause of Congress' inability to -- to deal with a problem that we've all known has been coming for a very long time.

BLITZER: You say the president has put forward a plan.

DALEY: Um-hmm.

BLITZER: But the Congressional Budget Office says there is no plan that they can score because it's just a framework, it's just a speech. They haven't seen a document (INAUDIBLE) --

DALEY: Well, Speaker Boehner knows -- and Congressman Cantor knows the plan that they both worked on to bring the debt down and get past this debt ceiling. He does not have a legislative fix right now to this, because there's a bill in the House and there's a bill in the Senate and they will deal with those two bills. He's endorsed Senator Reid's bill. He feels very strongly that the bill that the House may pass tonight does not help the economy.

And what all of this should be about is trying to not only lower the debt, but at the same time, get this cloud of uncertainty off our economy. And the thought we'd be right back in the -- this same thing in four-and-a-half months, with an economy that's in a difficult shape, with or without Washington's craziness that goes on, is just unfathomable.

BLITZER: So what you're saying is the president did present a plan to the speaker, John Boehner?


BLITZER: But -- but he didn't --

DALEY: Right.

BLITZER: -- make it public.

DALEY: No, because there's --

BLITZER: He's -- there's no documents to go over.

DALEY: -- both the speaker and -- and the president had agreed and -- that these sort of negotiations do not happen in public. There's not a plan out there in the public realm, whether it's the fiscal commission, whether it's the Gang of Six, whether it's Congressman Ryan's plan -- Congressman Ryan's plan lost in the Senate overwhelmingly.

So there's no plan that's out there, by any of these people who are saying this, that has any sort of chance of passing both Houses and getting signed by the president.

BLITZER: If it were -- it seems that the biggest difference between the Reid plan, that's going to come in -- in the Senate -- and the Boehner plan, that's in the House, is this vote, another vote coming up in six months or whatever.

DALEY: Right.

BLITZER: As opposed to after the 2012 elections, going into 2013.

Is that the biggest difference you see right now --


BLITZER: -- just one vote?

DALEY: I would say right now, the time of -- of action is the most important. That is the length of action, as you've said it. There's a -- there's a -- there's a strong sense from the business community, that I've spoken to, that one of the things that's holding back -- I talked to a CEO last night who said he really believes that his business is being hurt just by this uncertainty. To keep this going and have to deal with this again in four-and-a-half months, before the -- the end of the year and possibly even before this committee acts that's going to try to make it in a bipartisan commission, going to try to make a serious dent in the deficit, is just crazy.

BLITZER: So what formula do they have to avoid that?

How do you -- how do you overcome (INAUDIBLE) --

DALEY: Well, I think Senator Reid --

BLITZER: -- because that sounds like the most significant difference.

DALEY: I think Senator Reid's plan, which would allow the Senate to -- to vote on this again, but not have a debt ceiling vote, but have a vote of -- of disapproval -- that was Senator McConnell's, pardon me, plan, that was a reasonable plan that Senator McConnell, the Republican leader of the United States Senate, put out.

BLITZER: Do you have any reason to believe that the Republicans in the House will accept --

DALEY: Well --

BLITZER: -- that proposal?

DALEY: I -- it seems to me that after their plan gets voted down by the Senate tonight, in a bipartisan way, then I think, at that point, everybody has got to take a step back in the Congress and look at where is a point of compromise. There are some things in -- in Speaker Boehner's plan and Senator Reid's plan that are similar. And -- and because of that similarity and some of that, that may be the grounds for a -- a deal that, hopefully, both parties will pass.

BLITZER: Well, if it comes down -- and I don't know if it will -- but if it comes down to this one issue, another vote in four to six or eight months or default, you would obviously go with another vote.

DALEY: It -- it -- it depends how that is framed. As I said, Senator McConnell's plan, which is not part of either legislation right now, gives the Congress the ability -- the Senate -- the -- the Congress the ability to vote on a plan that the president would put out. But it would not hold over the nation the debt ceiling vote once again.

BLITZER: The president would then veto that --


BLITZER: -- assuming it would pass.

DALEY: He would veto it --

BLITZER: And then they would have to have a --

DALEY: It would be a vote of disapproval.

BLITZER: Is that --

DALEY: Assuming the -- the Congress would disapprove his plan, he would veto it and then there would be no override of his veto and the debt ceiling would be extended.

BLITZER: What --

DALEY: Again, taking the cloud off of the economy.


BLITZER: All right. There's much more ahead on my exclusive interview with the White House chief of staff, Bill Daley, including why he fears the prized U.S. credit rating could still be at risk even if -- even if there's a deal within the next four days.

Plus, the raging war of words going on inside the Republican Party right before a critical vote in the House. We're standing by.

And just ahead, also, why it's John McCain versus the Tea Party.

And a new alleged attack on Fort Hood thwarted. We'll have the latest on the American Muslim Army private who is now in custody.


BLITZER: Jack Cafferty is here with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN CONTRIBUTOR: Wolf, it's pretty clear now who's losing in the whole debt ceiling stalemate in Washington -- the American people, big time.

They have a right to expect so much more from the folks they voted into office. What a shame they're not getting it.

The losers include people whose lives could be affected if a deal isn't reached in the next few days and their checks don't go out in the mail. And let's not forget the country's reputation as a whole. That's taking a hell of a beating around the world. Even if a deal is passed at the last minute, the U.S. credit rating could still be downgraded, leaving investors around the world wondering if this is still a good place to put their money.

The folks on Capitol Hill don't seem to care much about who's losing.

So let's take a look at who might be winning here.

The House is expected to vote anytime now on Speaker Boehner's plan. Boehner told reporters today the measure will pass. Tea Party conservatives have been whining and stomping their feet for days, saying the Boehner bill doesn't do enough. But some last minute wrangling could scrape up enough votes to get it through the House.

That has House Republicans feeling pretty good about themselves. House Minority Leader Eric Cantor told the Senate today to either accept the Boehner bill or the is the "Cut, Cap and Balance" bill that previously passed in the House or suffer the consequences of default.

But Senate Majority Leader Harry Reid doesn't seem to care about any of that. He's already said the Boehner bill is dead on arrival when it reaches the Senate. And the clock keeps ticking.

And where is President Obama in all of this?

Who knows?

For the last several days, he's had no public schedule. He remains behind closed doors, inside the White House.

So inquiring minds want to know, who is winning the debt ceiling battle?

Go to and post a comment on my blog -- Wolf.

BLITZER: Jack, thank you.

The battle over the debt crisis isn't just between Republicans and Democrats. There's now a serious one emerging between Republicans and Republicans.

Let's bring in CNN's Jim Acosta.

He's got the details of the internal fight going on.

JIM ACOSTA, CNN CORRESPONDENT: This fight has been going on. But now this fight has gone Hollywood, Wolf. And the good guys and bad guys, or the hobbits and orcs, might depend on which side of the Tea Party you're on.


SEN. JOHN MCCAIN (R), ARIZONA: And it's bizarro.

ACOSTA (voice-over): Frustrated with the progress in the debt talks, Senator John McCain borrowed a page from this editorial in "The Wall Street Journal".


UNIDENTIFIED MALE: The rings be cast back into the fires of Mount Dune (ph).


ACOSTA: Which borrowed a page from JRR Tolkien to accuse Tea Party members of Congress of engaging in a fantasy that they will somehow come out winners if the nation goes into default.



MCCAIN: A Republican House that failed to raise the debt ceiling would somehow escape all the blame. Then 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.

ACOSTA: Returning to his role as Republican maverick, McCain read on.

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

ACOSTA: "The Ring's" zinger, aimed at Sharron Angle and Christine O'Donnell, two Tea Party favorites who were nominated in Senate races and lost, were held up as an example of conservative overreach.

But Angle fired back on Twitter, calling McCain "The Lord of the TARP," as in the bailout, and pointed out the Arizona senator once cozied up to the Tea Party when he chose running mate, Sarah Palin.

UNIDENTIFIED MALE: And you haven't seen any hobbits roaming around?

SEN. JOHN THUNE (R), SOUTH DAKOTA: No. No hobbits that I've seen.

ACOSTA: But South Dakota Senator John Thune said McCain was trying to make a point, that fiscal conservatives have already won a major battle.

THUNE: I think that the -- the Tea Party and any conservative who wants to see this debate move forward and advance ought to look at where we've come from. We have made enormous stride. We are now reducing spending. It's not a question of if, it's a question of by how much.


UNIDENTIFIED MALE: I need your help. I can't tell you what it is. You can never ask me about it later. And we're going to hurt some people.


ACOSTA: And there are signs that message is getting through. After GOP leaders in the House played their own movie clip from "The Town" to rally their forces, some House Tea Party backed freshmen are starting to get in line.

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.

ACOSTA: That's because there is one line from "Lord of the Rings" Republicans don't want to here.


UNIDENTIFIED MALE: You cannot pass.


ACOSTA: Sorry. I couldn't resist.

Sarah Palin did not respond to McCain's comments, but she did post a message on her Facebook page warning freshmen Republicans: "Everyone I talk to still believes in contested primaries."

And, Wolf, we could not track down Senator McCain. Perhaps he's back in the shier (ph).

BLITZER: So she's basically threatening some of these freshmen Republicans --

ACOSTA: That's right.

BLITZER: -- if you don't do what she likes, there could be another Republican that would challenge --

ACOSTA: Exactly.

BLITZER: -- them for the nomination.

ACOSTA: Just as Speaker Boehner is trying to get all of those House Republicans in line.

BLITZER: Lots of threats going on.

ACOSTA: That's true.

BLITZER: Lots of fighting.

A good piece.

Thank you.

ACOSTA: Thank you.

BLITZER: All eyes right now on the House of Representatives. We're standing by for a critical vote on the Republican plan to raise the debt ceiling. It's expected to begin any minute. You'll see it, you'll hear it live right here in THE SITUATION ROOM.

Plus, part two of my exclusive interview with the White House chief of staff, Bill Daley. You'll hear his take on the Republican approach to cutting spending.


ANNOUNCER: This is CNN breaking news. BLITZER: All right. There are dramatic developments happening on the House floor right now. We're getting indications from Democratic House sources that the speaker still does not have enough votes -- 216 votes in the House of Representatives -- to guarantee passage of his proposal to raise the debt ceiling. And as a result, these Democratic sources are saying the speaker has postponed the vote a little bit. He's trying to rally some of that support, some of those reluctant House Republicans, to vote in favor of this legislation.

The vote was supposed to take place a little while ago. It still hasn't taken place. They're still talking on the House floor. That -- that information coming from Democratic sources.

We're going to check with Republican sources right now to see if that is 100 percent accurate, that the speaker has asked for a delight delay because he doesn't believe he necessarily has the -- those 216 votes ready to go.

But we did get a statement from the Democrat whip saying that there has been a postponement of the GOP leadership vote.

We'll see what's happening, but this could be a dramatic, dramatic development if, when all is said and done, if the speaker fails to get this legislation passed, if he fails to bring aboard enough of his Republican members to pass, it would be a huge, huge embarrassment for the speaker, a huge embarrassment for his leadership.

So we're watching this closely.

So we're at least minutes, probably a lot more, away from the critical vote on this Republican plan in the House of Representatives.

In the meantime, as we await clarification of what's going on, here's part two of my interview that I taped at the White House earlier today with the chief of staff, Bill Daley.


BLITZER: What's wrong with a balanced budget amendment?

DALEY: Well, I think the balanced budget amendment that the Congress passed -- the House of Representatives passed and failed in the Senate -- would be Draconian cuts in a very short period that -- that would be imposed without any revenue piece to it, that would cause enormous harm, short-term, not only to the economy, it would be fundamentally changing the contract with many of the seniors in this nation. And if that's going to happen, the Congress ought to do that. That's what they get elected to do. They ought to make those steps. They could do that now. They don't need the balanced budget. But the -- but the Cut, Balance and -- and whatever it was that's in the --

BLITZER: "Cut, Cap and Balance."

DALEY: -- that was in the House -- Cut -- "Cut, Cap and Balance," pardon me -- would cause such a -- a level of cuts to the -- to the -- that would be very damaging to the economy now.

BLITZER: Has the Treasury Department already started contingency planning to write checks after August 2nd?

Who would get a check, who wouldn't get a check?

DALEY: The Treasury Department is in the process of finalizing their plans as to what would happen after Tuesday. And the Treasury Department will release that at a point that they think is appropriate.

BLITZER: When will that happen?

DALEY: I will leave that to be answered by the secretary of the Treasury.

BLITZER: Well, assuming there's no deal by Tuesday --

DALEY: Obviously, it will be before Tuesday.

BLITZER: But then they've got 40 percent of the checks that are supposed to go out won't go out.

DALEY: Well, that -- that will be the -- the Treasury Department will lay out exactly how that would work after -- at a certain point between now and Tuesday, obviously.

But we are optimistic. The four leaders of the Congress have said that the debt ceiling will be extended. We are confident that they will come together. The -- the sense -- look at the stock market. The market's dropped over the last four days like 3 percent.

Real people are losing money -- pensioners, people who depend on their 401(k)s and the value of the stocks in those. They're losing money right now while Congress and Washington is kind of just dallying here.

BLITZER: But even if you just do a Band-Aid and get through this immediate crisis, the -- the American AAA credit rating, that could still be reduced. And that would have severe ramifications.

DALEY: That would have serious ramifications.

BLITZER: What would be the repercussions of that?

You're a -- DALEY: You would have higher interest rates --

BLITZER: You used to work for a bank.

DALEY: Right. You'd have higher interest rates. You'd have a -- you'd have a -- a -- an action that happened that's never happened in the history of the country. So when investors around the world are looking at U.S. Securities, they'd have a much more serious question about their confidence in the U.S. Political system.

Every one of the agencies that have looked at this talked about our political system as the problem right now. And -- and I think it's unfortunate that we don't seem to be able to understand that the whole world is watching, not just watching whether this vote -- what happens with the vote. The whole world is watching to see whether or not this political system of ours can begin to get back to the heart of it, and that is to try to compromise for the good of the American people.

BLITZER: So, bottom line, you think there will be a deal between now and Tuesday somehow crafted, but you're not convinced necessarily that the AAA credit rating that the United States government has will remain AAA?

DALEY: Well, no one can guarantee that, obviously. The rating agencies which make that judgment will look at this and will look at what comes out of the this effort, and to see whether or not -- two things -- whether or not we have a serious attempt that's going to affect the deficit and reduce the deficit, and get this cloud of another vote of another debt ceiling of uncertainty off of the table for at least 18 months until -- it's not about the election, it's trying to give the general economy a chance to get healthier over the next 18 months.

BLITZER: One final question. Was it a blunder last December for the president not to accept the Simpson-Bowles $4 trillion recommendations that came forward in that presidential --


DALEY: No, not at all. If you remember, all the Republican members of it walked off the commission and wouldn't even vote on it. They didn't vote to pass it.

BLITZER: Not the senators. Not the Republican senators.

DALEY: The Republican House members.

BLITZER: The Republican House members.

DALEY: But the reality is --

BLITZER: Some of the Democratic House members didn't support it either for other reasons.

DALEY: Right. The reality is one of the reasons the president had great problems with that, the level of defense cuts in a short period he thought were not appropriate for the obligations which we have around the world. Short-term cuts in defense would have been, in his mind, just not justified.

BLITZER: Good luck. We're counting on you.

DALEY: Yes. Counting on all of us to pull together and make sure this system gets back to what the American people believe in, and that is a system that will respond to their needs, not the needs of Washington.

BLITZER: We hope you make it.

DALEY: Thanks, Wolf. Take care.


BLITZER: All right. So we just heard from the White House chief of staff, Bill Daley. In the next hour we'll get a different perspective, the Republican perspective, from Senator John Barrasso of Wyoming. Stand by for that.

Also, some of the most outspoken anti-debt lawmakers have plenty of their own personal debt. We've been doing some digging, and we're going to tell you what we're finding.

And we're monitoring events on the floor of the House of Representatives right now. We're expecting a key vote on the Republican plan to raise the debt ceiling. Nancy Pelosi, the Democratic leader, the minority leader in the House, speaking right now.


BLITZER: We'll get back to the House floor in a few moments, but there's other important news we're watching right now, including authorities in Texas. They've arrested an American-Muslim American soldier who they say was planning to attack soldiers outside Fort Hood.

Lisa Sylvester is monitoring that and some of the other top stories in THE SITUATION ROOM right now.

What's going on here, Lisa?

SYLVESTER: Hi there, Wolf.

Well, police say Nasser Jason Abdo is admitting he wanted to attack fellow soldiers outside Fort Hood. They say they found potential bomb-making material in his hotel room. Abdo had gone AWOL this year after facing a possible court-martial for allegedly possessing child pornography, and earlier he refused to deploy to Afghanistan on religious grounds and requested to be discharged as a conscientious objector.

In Afghanistan, at least 19 people have been killed in an intense battle after militants armed with guns and explosives stormed a government office compound, a police base, and a television station. Ten children are said to be among the dead and 37 people were reportedly wounded.

At last report, NATO and Afghan forces had driven the militants back, although sporadic fighting continues. The Taliban are claiming responsibility for this attack.

And New Jersey Governor Chris Christie is expected to head home this evening after being hospitalized today. Christie was reportedly experiencing shortness of breath. According to a statement from his office, the government went to the hospital out of "an abundance of caution." A top aide says he's in good spirits after undergoing a series of tests and that he will be back at work at the state House tomorrow.

A new government report projects the government will pay for half of all health care costs by 2020. That's up from 44 percent two years ago.

The shift is attributed to rising health care costs and last year's health care reform that will give millions of more Americans access to health care. Health care costs are projected to reach $4.3 trillion annually by 2020, or almost $14,000 per person. That's what it works out to -- Wolf.

BLITZER: Thanks very much, Lisa. Thanks for that.

Republican hard-liners telling Washington it doesn't know how to manage the country's money. Now they're being forced to answer questions about their own financial troubles. Stand by for that report.

And potential Republican presidential candidate Rick Perry amending some controversial comments on gay marriage. Did he do it to satisfy his political base?


BLITZER: All right. I want to go right to Capitol Hill. Our correspondent Kate Bolduan is standing by.

Kate, we've now been reporting, according to Democratic sources, a statement put out by the Democratic whip, that members have been advised that the House Republican leadership has postponed this critical vote on extending and raising the debt ceiling.

What are you hearing on the Hill? What's going on?

KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: Here's what we're hearing, Wolf. And we'll explain it to our viewers.

It does appear that they are delaying the vote, but we do not know yet how long they are delaying the vote on this bill. Several Republican aides assure us that they are still going to be voting on Boehner's bill -- on House Speaker John Boehner's bill this evening. But what we do know is that the original schedule included, after this general debate that we have been watching on the House floor, after that wrapped up, they would be moving to vote on this bill.

Well, they have stopped that debate and they began to debate a separate, unrelated bill at this moment. And what that is an indication of, Wolf, is that they appear to be having problems, and that they are still working to rally the votes and to get people on board to support this piece of legislation.

We've been outside the Speaker's office, we've been seeing members going in and out. We even saw the whip, the man in charge of counting the votes and making sure they've got the votes when they've got them. He was walking into the Speaker's office saying that of course they have work to do.

So this is an indication right now, since they have delayed this vote, that they appear to be having problems in getting enough votes in their Party in line, Wolf, to support this legislation, this bill to raise the debt ceiling put forth by House Speaker John Boehner. But we are assured again, I should say, by several Republican aides that they are still going to have the vote this evening. It just seems that they're still working on getting the support at this time -- Wolf.

BLITZER: All right. Well, it sounds like it's already at least a modest embarrassment to the Speaker if he's got to even postpone it a little bit in order to work the room, if you will, make sure they have the 216 votes, enough Republicans to pass it, because, as you say, usually the House is very disciplined, unlike the Senate. When they say there's two hours of debate, followed by a vote, the Speaker, whether it's a Democrat or a Republican, they know for sure they have enough votes to pass it.

And here, apparently, the Speaker is not confident, at least 100 percent confident, that this measure would have 216 votes. That's what I'm hearing. Is that right?

BOLDUAN: Well, this is what we know. All along, as this bill has been moving towards reaching a point to getting to the floor, we have been hearing that it was not a surefire -- that they had had the votes all along. We knew that they were working hard and have been working hard for days to get their Party in line, to get people to line up behind this vote.

We know conservatives have had issues with this saying that this bill did not go far enough, that it did not include dramatic enough deficit reduction measures for them to support. But, still, this is at least an indication of just how close they already indicated this vote would be, but just how close this could be, and just how serious people are taking -- how serious of a vote this is in terms of the end game, in terms of the path forward.

As I said, to remind our viewers, they are still working to get the votes, it appears, this evening, as they have delayed moving towards this legislation. They stopped debate on this bill, Wolf, and they have now begun debate on a separate, unrelated bill. And that's an indication that they are not moving forward, at least at the moment, until they can work this out and figure out where they stand -- Wolf.

BLITZER: And I think it's fair to say based on legislative history that there will not be a vote unless the Speaker is 100 percent sure he has the 216 votes needed to pass, that he's not going to allow a roll call, if you will, unless he has enough votes to pass it, because if it didn't pass, that would be a huge, huge embarrassment for him.

All right. Stand by. We're going to take a quick break. Much of our breaking news coverage coming up, right after this.


BLITZER: All right. We've got breaking news we're following on the floor of the House of Representatives. Apparently, the Republicans don't have enough votes yet to ensure the 216 needed to pass Speaker John Boehner's proposal to raise the debt ceiling, so they postponed, at least for now, the vote.

We're watching it very, very closely. Stand by, as we go back to the House floor.

With only four days left to solve the mounting debt crisis, some in Washington are beginning to feel the pain knowing what's going on.

Let's bring in CNN's Brian Todd. He's working this part of the story for us.

Brian, what is going on?

BRIAN TODD, CNN CORRESPONDENT: Wolf, the debate has only got hotter, as you know, toward the end of this week, and the hard-line Republicans railing against compromise have been very vocal. But there are questions now about whether those who want to hold the line hold themselves to the same standard.


TODD (voice-over): They're the firebrand class: deficit hawks in Congress taking a hard line on the debt ceiling talks. Some are Tea Party favorites who rail at Congress for past spending like Republican Senator Mike Lee of Utah.

SEN. MIKE LEE (R), UTAH: Congress, for decades, has been burying our children and our grandchildren, both born and unborn, under a mountain of debt.

TODD: But according to recent disclosure forms, Senator Lee has racked up significant personal debt of his own, at least $65,000 worth from a credit card and a line of credit. The forms released last month show there are a few Republicans who are demanding a hard line on cutting the nation's debt, but have plenty of debt on their own.

Nonpartisan Taxpayers for Common Sense.

RYAN ALEXANDER, TAXPAYERS FOR COMMON SENSE: I think this raises questions about, are you walking the walk while you're talking the talk about getting the debt down?

TODD: Senator Lee's argument? You have to put this in context.

(on camera): An aide to Senator Lee said the senator couldn't do an interview with us on this, but the aide did push back hard, saying the scrutiny is "crackpot." The aide says the senator has his finances in order, is managing his debt responsibly, and that if he's doing that, who are the critics to question his role in the budget debate?

Tea Party-supported Republican Congressman Joe Walsh has played a prominent role in that debate.

REP. JOE WALSH (R), ILLINOIS: Thank God congressmen like me were here. Imagine -- step back and imagine if the Republicans hadn't taken over Congress. This city would have raised the debt limit who knows how much?

TODD: But Walsh's ex-wife says he needs to pay up on a big date, more than $117,000 in child support, according to a lawsuit. We couldn't reach Walsh's attorney for comment, but he told "The Chicago Sun-Times" Walsh doesn't owe that amount.

Walsh says the attacks against him in this case are false, but also says this --

WALSH: I'm the most openly vetted candidate in the world. I have had financial troubles and I talked about them throughout the campaign.

TODD (on camera): And there's no evidence that there is any financial impropriety. What is wrong with him incurring debt that millions of others do?

ALEXANDER: They are allowed to incur debt just like millions of other Americans do, but we are also allowed to push back and ask questions about, if you choose to incur personal debt, if that's how you choose to manage your finances, how can you tell the country that we can't manage our own debt?


TODD: The documents say two other Republican congressmen, Tim Griffin of Arkansas, who recently said America has got a spending addiction, and Kevin Yoder of Kansas, who said Washington needs to cut up the credit cards, each had credit card debt of at least $15,000 as of late last year. We contacted the offices of both congressmen. They didn't respond -- Wolf.

BLITZER: Several of those hard-line Republicans, they also have student loans, but that's quite different. TODD: It is different, and a lot of them do have it. For instance, Marco Rubio, the Tea Party senator from Florida, he's racked up more than $100,000 in student loan debt. But has his spokesman points out, that's a mechanism that millions of Americans use to pay for steep college expenses, Americans who can't afford them. He says, actually, Rubio is the son of two working class parent who couldn't afford it, that he has actually been very responsible, that he's paid off at least $80,000 of debt and that he never misses a payment. The spokesman says it's absurd to criticize him for that, and I think you've got to agree with him on that front.

BLITZER: Thanks very much, Brian Todd, for that report.

We're watching the breaking news on the floor of the House of Representatives. Much more on that coming up.

Apparently, the vote has been delayed because the Republican leaders don't have the guaranteed 216 needed to pass Speaker Boehner's proposal to raise the debt ceiling. They are now on to other business as they try to round up that support.

We're all over that story.

Meanwhile, Wall Street is warning Washington to get its act together now. We're taking a closer look at big businesses' concerns about the debt crisis.

And what are the president's options for acting on his own if there is no deal on raising the debt ceiling?

Stay with us. Dramatic developments unfolding in Washington.


BLITZER: All right. There's breaking news on the floor of the House of the Representatives, a postponement, a delay -- we don't know for how long -- of the legislation that the Speaker, John Boehner, wants to put forward that would raise the nation's debt ceiling.

Let's bring in the assistant whip of the Republican Party, Nan Hayworth, Republican of New York.

You're a freshman. Tell us what's going on right now. Is it accurate to say, Congresswoman, that the Speaker is not guaranteed yet that he has the 216 votes needed to ensure passage?

REP. NAN HAYWORTH (R), NEW YORK: Well, Wolf, my correct title is probably "freshman whip." It has certainly been my impression through these past 24 hours or so that we have been building to the number of votes that we need to pass the Budget Control Act in the House.

BLITZER: But you're not guaranteed yet that's why there's been this delay? Is that accurate?

HAYWORTH: There is a delay. The reason has not been stated. BLITZER: Because normally under these circumstances -- and I've covered the House of Representatives for a long time -- whether there's a Democratic Speaker or a Republican Speaker, they don't have a vote unless they are ensured that their party will win. And if they are not guaranteed that, the Speaker is not going to be humiliated and embarrassed by defeat. So that would be the logical explanation based on the years that I have covered Washington. But go ahead and tell us what other explanation there could be for this delay.

HAYWORTH: Well, Wolf, this is the sort of day in which an hour can seem like five. So I imagine that's not the only potential explanation, but it's certainly true that we have had a certain number of members who have had a lot of deep thinking to do about their "yes" votes. So it could be that we are confirming the last few, and it wouldn't sound to me as though, given what we've been doing and hearing among each other for the last day or so, that it would be more than that. And I certainly know that whatever happens, the Speaker will be conducting himself with -- not only honorably, but with integrity and the knowledge that our conference does have great confidence in him.

BLITZER: Nan Hayworth, we'll stay in close touch with you. You'll update us when we get more information on what's going on. Appreciate it very much. Thanks for coming in.

HAYWORTH: You bet.

BLITZER: All right. Let's go back to Jack for "The Cafferty File."

A lot of drama in Washington right now, Jack.

CAFFERTY: It's just pathetic.

The question this hour is: Who is winning the debt ceiling battle? The answer is we're losing.

Rory, " Republicans are winning due to their theatrics. They've managed to use it as a partisan bargaining chip when it would be proactive to raise it first and bargain later. Republicans blame Obama for the inaction, making it appear as if they are waiting on him. Treating him like a fellow congressman instead of the president, they've made it seem like raising the debt ceiling is something only a Democrat would do. They've won the debt ceiling battle, but might ultimately lose the political war in 2012."

Kim writes, "Clearly, there is no winner here. What nerve to scream 'cut spending' when the Republican Party was handed the baton, a balanced budget and a surplus the day they proudly handed 'W' the keys to the Oval Office. I wouldn't have dreamed it possible to drive this country into such a humiliating pit of greed and recession in such a short period of time."

Bob in Florida, "Winners in the debt ceiling battle? Big oil and fat-cat CEOs. Big losers? Average American middle class citizens." Bill in Illinois, "Obama is winning. The Tea Party, with its all-or-nothing idealism, is a medicine that is worse than the disease. They do deserve nearly total credit for causing sharper focus on runaway spending, but they must be thrown out in 2012 if they don't back off a little. We have so many other priorities that require our attention."

Paul writes, "Tough to find a winner here, but if I had to choose, I would say the Senate is coming out looking the best, as they have, as a whole, shown to be the most willing to work together while staying above the childish fray, a little better than the other two have."

And David in Mississippi, "I only know who is losing -- America. I love this country and understand the situation we're in. I make well, well below the $250,000 for a tax increase, but even if my taxes need to be raised to get us out of this mess, then do it and be done with it. Raise all taxes. Put the money toward the debt only. Politicians, hands off."

If you want to read more, it's on my blog, -- Wolf.

BLITZER: Thanks, Jack.