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Interview With Congresswoman Renee Ellmers; Pentagon a Loser in Debt Deal?; Slamming President Obama on Debt Deal; Bill Could Trigger Automatic Spending Cuts; House Debate Underway on Compromise Bill; Awaiting Vote on Debt Deal; Interview with Dan Pfeiffer

Aired August 1, 2011 - 17:00   ET


WOLF BLITZER, HOST: Thanks very much, Brooke.

Happening now, we're standing by for a House vote on a deal to raise the nation's debt limit and avoid an historic default on America's bills. A last minute scramble is underway to lock down support just hours before August 2nd, D-Day. That would be tomorrow.

The Obama campaign is trying to put the best spin on the best deal and the president's role in it. I'll ask the White House communications director, Dan Pfeiffer, about red hot anger on the left from Democrats and claims that the president cave.

And will the Tea Party emerge as the big winner after all these weeks of political gambling with the U.S. economy?

A lot is riding right now on the votes coming up.

Stay right here. You're going to see and hear how it all plays out over the next two hours.

I'm Wolf Blitzer.


One of the riskiest political tugs of war in recent years is going down to the wire. We've been expecting the House to vote today on a hard-fought deal to raise the federal debt limit. But it has not happened yet. The Senate has to vote, as well, and tomorrow's deadline is looming larger than ever.

The deal struck late yesterday would raise the debt limit $90 billion in the short-term and green light spending cuts of roughly the same amount over 10 years. The bill envisions another $1.2 to $1.5 trillion increase in the debt ceiling down the road, offset dollar for dollar by more spending cuts.

But there are a lot of huge ifs -- a huge number of ifs involved in making all of that happen.

Let's go to Capitol Hill.

Our Congressional correspondent, Kate Bolduan, is standing by -- Kate, we're waiting for this critical vote in the House of Representatives. What do we know about when it will take place?

KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: We're told that it will take place some point this evening, but the timing is very fluid -- Wolf.

It's been a day of a flurry of activity up here on Capitol Hill, busier than this place even normally is on a regular day.

But I will tell you that all eyes, as you said, are back at the House -- on the House of Representatives.

And the question is, will this compromise bill pass the House?

Speaker John Boehner, in a press conference just a short time ago, he wouldn't answer that question. He actually walked by me just seconds ago. He wouldn't answer the question again when I asked him.

But Paul Ryan, the chair of the House Budget Committee, he seemed pretty confident this afternoon.

Listen here to him.


REP. PAUL RYAN (R-WI), CHAIRMAN, HOUSE BUDGET COMMITTEE: There are some who have just various concerns, whether it didn't go far enough or whether defense was too high. I think that, at the end of the day, this bill is going to prevail and it's going to prevail with a majority of Republicans.


BOLDUAN: Prevail with a majority of Republicans.

And it seems, in this bill, there's something for everyone to dislike, if you will. For some Republicans, they don't think the cuts in this compromise bill go far enough. There's also some concern amongst a group of House Republicans that the cuts to defense spending cut too deep. House Speaker John Boehner actually held a meeting in his office with some of these Republicans to try to win over their support.

At the same time, on the other side, they seem to be be having some problems of their own, if you will. The vice president, Joe Biden, had to come to the Hill to meet with House Democrats today. He also met with Senate Democrats to try to rally support.

But he emerged from that closed door meeting to stand alone at a press conference while Demo -- House Democratic leaders left, still refusing to throw their support behind this bill.

Listen here to Vice President Joe Biden.

(BEGIN VIDEO CLIP) JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: My sense is that they expressed -- they expressed all their frustration, which I'd be frustrated about what's in there, as well, that we're -- that we came -- we were taken down to the wire like this.

And so what they want to know is they asked questions specifically about the proposed legislation. I thought it was a good meeting. And I -- I feel confident that -- that this will pass.


BOLDUAN: Timing for the vote here in the House, as I said at the top, Wolf, is very fluid. I'm told by a top Republican leadership aid, though, that it's not if there will be a vote tonight in the House, it is when there will be a vote tonight in the House.

So we'll keep our eyes on the House floor and, of course, if that bill passes, then all eyes turn to the Senate.

Harry Reid all day today, the top Democrat in the Senate, said it is still a possibility that they could have a vote this evening. He definitely wants to.

But I am getting some strong indications right now and also an e-mail on my BlackBerry right now that seems to indicate that this vote in the Senate could be moving into tomorrow -- Wolf.

BLITZER: But the real cliffhanger will be the House of Representatives.

BOLDUAN: Absolutely.

BLITZER: The Senate looks like they have more than enough votes to get it passed in the Senate.

All right, Kate.

Thanks very much.

Stand by over there. We'll keep checking back with you.

President Obama says the debt deal isn't exactly what he wanted, but he argues it's the best shot right now at preventing a possible financial catastrophe.

And joining us now, the White House communications director, Dan Pfeiffer.

Dan, thanks very much for coming in.


Thank you, Wolf.

BLITZER: Eric Cantor, the majority leader in the House, just a little while ago, he said this. (BEGIN VIDEO CLIP)

REP. ERIC CANTOR (R-VA), INCOMING MAJORITY LEADER: From day one, this administration has been insisting that have we raise taxes in order to solve this problem. I think the big win here for us and for the American people is the fact that there are no tax hikes in this package.


BLITZER: He has a point, right, no tax hikes in this package?

PFEIFFER: Well, no, actually, because this -- this proposal has a committee that's going to be set up -- six members of the Republican Party, six members of the Democratic Party, all from Congress, who will engage in a process, by Thanksgiving, to put forward a significant deficit plan. They are going to consider raising revenues from the wealthiest Americans, closing loopholes, as well as looking at entitlement reform. So they're going to do both of those things.

And it's critical we do it, because the only way we're going to get significant deficit reform is if we -- if we are willing to ask the wealthiest Americans to pay their fair share.

BLITZER: But after...

PFEIFFER: And that's going to happen.

BLITZER: But as of right now, at least in the first phase of this deal, there are no tax increases, no tax reform, none of that.

PFEIFFER: Well, there's a -- I think it's important to understand that there are four buckets to deficit reform. There's domestic spending, there's defense spending, there's revenues and then there's entitlement reform. In -- in the package that is being voted on tonight, we have dealt with two of the four. There's cuts in defense spending and there's cuts in domestic spending.

But we have the -- two of the hardest issues are entitlement reform and tax reform. And those are the things that this committee is going to take up. And they -- they have to report something out by Thanksgiving and Congress has to vote on it by Christmas or we're going to -- there is a very stiff enforcement mechanism that goes into place.

So we are very confident this that committee will consider tax reform and that they will put together a package that will include revenues.

BLITZER: But just to be precise, the committee -- the super committee, these 12 members, six Democrats, six Republicans, there's nothing requiring them to raise taxes.

PFEIFFER: If they are going to put forward significant deficit reduction that will meet the threshold set in this deal, they are going to have to include revenues in that. Because let me now -- I'll tell you why. There will be significant incentive for the committee to look at revenues because, at the end of 2012, the Bush tax cuts will expire. And this president has said he will veto any extension of the tax cuts for the wealthiest.

So we can either do this through an orderly process that will reform the tax code in 2011 or it will be forced upon us at the end of 2012.

BLITZER: So what you're saying is one way or another, by the end of 2012, early 2013...


BLITZER: -- there will be increased taxes?

PFEIFFER: At -- on the wealthiest Americans. For the 98 percent of Americans who make less than $250,000, they're going to -- they have gotten tax cuts under this president and we're looking to further cut their taxes.

BLITZER: Because that assumes that the president is reelected, obviously.

PFEIFFER: I -- I do assume that, Wolf.

BLITZER: OK. I know that's an assumption you make.

All right, let's talk a little bit about the grief you're getting, though, from a lot of liberal Democrats, including Paul Krugman, the columnist for "The New York Times," the Nobel Prize winning economist.

He wrote this in a column entitled: "The President Surrenders.": It will damage an already depressed economy. It will probably make America's long run deficit problem worse, not better. And most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to Banana Republic status."

That's from Paul Krugman.

PFEIFFER: Mr. Krugman is a brilliant economist and he's a forceful advocate, but I think he's 100 percent wrong here.

Let's be very clear what we were able to achieve in this deal. As of last week, the House Republicans were insisting -- they had drawn a line in the side that they were only going to approve a deal that would require us to revisit this same debate about raising the debt ceiling just a few months from now, maybe during the holidays. And the reason why the president said he would absolutely not do that is because it is terrible for the economy. It's created this tremendous uncertainty. You saw what happened in the markets last week, as we were -- as we were debating this in the House.

And also, it gave -- the House Republicans wanted to use that second debt limit raise, the threat of default, to push through their agenda, which would have been, you know, upwards of potentially a trillion dollars in cuts in Social Security and Medicare.

This president said no to that and that's not going to happen.

BLITZER: But the country will have another wrenching debate around Thanksgiving, when this committee supposedly is going to come up with its recommendations.

PFEIFFER: Well, yes, but it will be done in an orderly process, because they will have fast track authority to ensure it can be voted on in the House and the Senate. And we have this enforcement mechanism that penalizes items of interest that both parties care about.

BLITZER: What is this agreement, assuming the House and Senate approve it -- as of now they haven't.

But assuming they do, what does this agreement do to actually create jobs?

PFEIFFER: Well, first, it removes the cloud of uncertainty that you have -- you've seen this in -- you've heard this from companies over the last several weeks, you saw it in the Consumer Confidence survey from the University of Michigan. The debt limit -- the fear of default has depressed confidence in the economy. People have held off on making investment decisions because of that. And so it helps there.

And there is no question that dealing with our deficits is good for our economy over the long run.

Now that we have this behind us, it's time for Democrats and Republicans to come together and work together to create jobs and grow the economy, because we both have a responsibility here.

BLITZER: Is the former speaker, the minority leader, Nancy Pelosi on board with you right now as far as you know?

PFEIFFER: Well we -- the president and the vice president were in touch with Speaker Pelosi throughout this process. She's talking to her caucus and she's going to make her decision about how she approaches this bill.

We've heard from many, many Democrats who think this is the right thing to do. They understand it's not the perfect deal. It's not the deal that we would have done if all Democrats had gotten together in a room and written it. But we have divided government. And they understand compromise is necessary.

BLITZER: I -- I think you have the votes in the Senate, more than 60, to get it passed.

Will it pass the House?

PFEIFFER: I saw Speaker Boehner at his press conference before and he was -- he seemed very confident. I've heard from a lot of Democrats. And I believe that the Republicans will be able to deliver the votes that they promised they would be able to deliver.

BLITZER: Dan Pfeiffer, thanks for coming in.

PFEIFFER: Absolutely.

Thank you.


BLITZER: All right. And they have actually started the debate, just a few moments ago, on the House floor. There is one hour scheduled, of debate on raising the nation's debt ceiling. And after that, we expect the roll call to take place. So it could take place in an hour or so, the actual roll call.

I suspect they're not going to have a roll call unless the speaker, John Boehner, is 100 percent convinced he has the 216 votes necessary for passage.

Once it passes the House -- assuming it passes the House -- it will then go to the Senate. We'll see if the Senate is going to vote tonight or wait until tomorrow morning. The White House says the president is anxious -- anxious to sign this legislation into law and move on.

By the way, it's hard for many Americans to wrap their brains around the enormous amounts of money at stake in Congress right now.

Here's a question -- what would $2.1 trillion in derided actually look like?

Our math wizards here at CNN calculate that if you lined up $2.1 trillion in $1 bills, they'd wrap around the Earth's equator more than 8,172 times. That's a lot of cash -- if you were to do that, if you want to.

Even if a debt deal is approved today or tomorrow, the debate over runaway federal spending is only just beginning. We're taking a closer look at the triggers in the bill that will shape the battle ahead and possibly lead to very painful cuts.

And I'll talk to a Republican Congresswoman who's breaking with other Tea Party members on this debt deal.

Should Americans trust any member of Congress after this drawn out game of chicken?

I'll ask her and others.

Stay with us.



BLITZER: Let's get right to Jack for the "Cafferty File." Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, while the U.S. may avert the debt ceiling crisis, and that's still very much an open question at this hour, the president might not be so lucky when it comes to a political crisis all of his own making.

Critics on the left and the right slamming President Obama for how he has handled the debt ceiling crisis. An article in "The Daily Beast" called Obama gives it all away suggests this is the lowest moment of Mr. Obama's presidency. It claims he's, quote, "ushering in a conservative era, " unquote, by simply handing over the keys to the Republicans.

The debt deal has also complicated the president's liberal support. You know, the people he'll be relying on to vote him into office for a second term next year. A lot of people in his own base thinks President Obama has given up on one issue after another and ditched his supposed priorities.

As one Democratic senator told Maureen Dowd yesterday in ""The New York Times," quote, "We are watching Obama turn into Jimmy Carter right before our eyes," unquote.

It doesn't get a lot tougher than that.

Singer and activist Harry Belafonte says President Obama and his mission have, quote, "failed because he lacked a certain kind of moral courage," unquote. And in "The Wall Street Journal," Peggy Noonan writes that President Obama is, quote, "a loser, and this is America where nobody loves a loser," unquote.

Of course, she's right about that. She points out that even at their lowest points, President Clinton and President George W. Bush both had supporters who still loved them, but not so for President Obama.

It's no surprise that the president's poll numbers are headed down. According to a new Gallup daily tracking poll President Obama has hit an all-time low approval rating of just 40 percent.

So here's the question. How's the debt ceiling crisis altered your perception of President Obama? Go to the blog, And unburden yourselves -- Wolf.

BLITZER: Yes. Thanks very much, Jack. We'll get back to you.

We're keeping a very close watch on the U.S. Capitol right now as the House of Representatives nears a vote on the deal to raise the debt limit. They've just started their one-hour debate. There will be a vote afterwards. Stay right here. We'll of course bring you every step of the way.

If the legislation passes it sets the stage for yet another heated debate later this year and the possibility of automatic spending cuts if lawmakers can't see eye to eye.

Let's go to Lisa Sylvester. She's over at the data wall picking up this part of the story -- Lisa.

LISA SYLVESTER, CNN CORRESPONDENT: Hi, there, Wolf. Well, right off the bat, we're talking about $1 trillion in cuts, but then on top of that, there will be a bipartisan committee that will be formed. You could call it a super committee, if you will. It will be six Democrats, six Republicans. And they will be looking at $1.5 trillion in additional cuts.

Some of the things that this committee will be looking, well, they will be looking at tax revenue. That is technically on the table, that means things like subsidies and deductions. Could be taken a look at, although there's some question and debate of how successful they'll be in actually tackling revenue -- the revenue side of it.

They'll also be looking at defense spending and nondefense spending. Some of the potential cuts really we're talking across the board in terms of the government. Things like transportation, education, and energy. These are just a few of the examples that this bipartisan committee will be taking a look at.

However, if the committee of the six Republicans and six Democrats, if they are not able to reach an agreement, or if their recommendations are not approved by Congress, then we go to something called the trigger. We're going to be hearing a lot about this.

You're talking automatic cuts across the board, 50 percent from defense, 50 percent from nondefense. Now there are some exceptions. Some exceptions, they are -- include things like Social Security, some of the entitlement programs like Medicaid, also low-income spending. Those things would not be touched.

But you're talking about drastic cuts and particularly when you're talking about defense, we are seeing some pushback. There is concern because in the defense budget, the first wave of cuts will cut $350 billion. That's just the first wave. If we get to the trigger, we're talking about an additional $550 billion in defense spending. And there is some concern, Tom Donnelly with the American Enterprise Institute, among them, who said that this will jeopardize the defense budget.


TOM DONNELLY, POLICY ANALYST, AMERICAN ENTERPRISE INSTITUTE: That's about a 15 to 20 percent cut in planned Pentagon spending over the course of that time. And we have to see what the details turn out to be, depends on what is cut. But any way you slice it, it's a pretty big cut and will make it very difficult the job of the American military in protecting our global interests.


SYLVESTER: The White House spokesman Jay Carney says that is why this trigger is the last resort. The way he put it is, he said this is a trigger that no one wants to pull -- Wolf.

BLITZER: Lisa, thank you.

It's been a wild day for the stock market. Prices rallied this morning in anticipation of a debt deal, but a weak manufacturing report threw some cold water on a lot of that initial optimism.

The Dow ending the day down slightly. The markets could take a dramatic turn for the worst, though, if -- and it's still a huge if -- if America's credit rating is eventually downgraded from its current AAA status.

Let's bring in CNN anchor Erin Burnett. She's working this part of the story for us.

This debt deal, assuming it passes, Erin, that doesn't necessarily guarantee that America's AAA credit rating will remain AAA.

ERIN BURNETT, CNN ANCHOR: That's right, Wolf. I mean what's amazing, we were talking about this. These numbers that we're hearing in terms of the deal are not anywhere close to the numbers that S&P and the credit rating agencies said we needed to hit to avoid downgraded.

They said we needed $4 trillion in cuts. And obviously there's room to move around there. But even at the highest level here, the $2.4 trillion on the table won't get us there. So this puts the rating agencies in a very tough spot. We al know over the past few years they've lost a lot of credibility by getting the mortgage mess wrong.

They want to prove themselves. They've said they needed more cuts, they've put us on watch for a downgrade. So it would seem that the right thing for them to do right now, Wolf, would be to go ahead and do that downgrade.

The real question is, have the financial markets already assumed there's going to be a downgrade and what we called priced it in?

BLITZER: They've already factored that into the equation if necessary. But what would it mean practically speaking if the U.S. went from a AAA, let's say, to a AA?

BURNETT: All right. So practically speaking -- and Bill Gross from PIMCO was one of the biggest bond investors in the nation, very influential. Before the Fed does anything, they talk to Bill Gross.

He thinks that over the longer term, the increase in interest rates could be between a quarter of a percent and half a percent. And that is the borrowing cost for the U.S. government and also, Wolf, the borrowing cost for consumers to varying degrees it would affect mortgages, fixed rate mortgages particularly credit cards, auto loans, all of those to varying degrees.

And while a quarter of a percent to a half a percent may not sound like a lot, and it's not -- it's not a huge amount, Wolf -- over time that does ad up. It will cost us more to borrow every time we go to the bank. So that is something that's important to consider.

But I would say this, Wolf. If you look at interest rates, since the late 1970s, and a lot of people remember buying a home in the early '80s when it's 16 percent to borrow money, we're now at 2.75 percent to borrow money over 10 years. So it is incredibly cheap and that's something to keep in mind. Now the U.S. is still the best place to put your money out there in the world compared to anywhere else.

BLITZER: Yes, that's an excellent point. As far as the $2.1 or $2.4 spending cut that's projected as far as this deal over the next 10 years, you know, given the amount of money involved, does it really move the needle all that much?

BURNETT: No, I think that's the scary thing, Wolf. It really doesn't. And it was very interesting when you're just hearing there about having to cut 15, 20 percent from the Department of Defense budget.

I mean the amount -- if you're going to go purely through cutting spending it is going to be draconian to deal with the problem that we have with the debt and deficits in this country. Some combination of an increase in revenue and a cut in spending seems to be the ideal way.

And I know, Wolf, that it's become so political to say the words increase in revenue, that that by definition has to mean an increase in tax rates. But it doesn't have to mean that. If we just get the economy growing again, about half of our deficit will go away just by an increase in tax receipts at the current rate.

And that's something important to keep in mind. We can get revenues to go up just with economic growth, not necessarily with altering tax rates themselves.

BLITZER: Unfortunately it doesn't look like that economic growth --


BLITZER: -- is anywhere near in the next, at least in the short term.

Erin, thanks very much.

BURNETT: Thanks, Wolf.

BLITZER: Let's go back to Capitol Hill right now. Kate Bolduan, our congressional correspondent is standing by.

What's going on, Kate?


A couple of updates to answer some of that outstanding questions that we've had about how the House and Senate are going to beat this debt deadline, the debt ceiling deadline. We're now told by a top Republican leadership aide that the House will vote this evening before 7:00 tonight.

So this is moving -- this is moving right along, which they seem pretty confident that they wouldn't put this bill on the floor if they didn't think they were pretty close to having the votes, Wolf. So we will be seeing a vote, according to a top Republican leadership in the House, before 7:00 there.

And another note, something you and I were just talking about, Wolf, the issue of where Nancy Pelosi, the top Democrat in the House, where she has stood in all this. Until this point, she's refused to take a position on this debt deal since it was announced. And I've just confirmed with the top Democratic -- with a top Democratic aide that she is now going to support the bill. She will vote yes. So that is also a very significant move on that side -- Wolf.

BLITZER: Significant, indeed. All right. Thanks very much. We'll stay on top of this story. We're not going to go too far away. You'll see the vote in the House of Representatives. It's going to be close. You'll see it live here in THE SITUATION ROOM.

Breaking ranks with the Tea Party, Congresswoman Renee Ellmers is here to explain why she's falling in line with Speaker John Boehner on the debt ceiling compromise.

And CNN's Richard Quest, he'll show us how the world sees America's debt debacle.


BLITZER: On Capitol Hill right now, the House is nearing a vote on the deal to raise the federal debt limit before tomorrow's deadline. We're keeping a very close watch on what's going on on the floor right now. We expect a vote within an hour or so. The debate has just started.

Aides say a Senate vote is likely to happen tomorrow. Many Republican lawmakers have been facing enormous pressure to hold the line on spending and taxes especially from the Tea Party movement.

Let's go to Republican Congresswoman Renee Ellmers of North Carolina. She's joining us live right now.

Congresswoman, thanks very much for coming in.

REP. RENEE ELLMERS (R), NORTH CAROLINA: Well, thank you. Good to be with you, Wolf.

BLITZER: How are you going to vote on this legislation?

ELLMERS: I am in favor of this bill. You know none of us wants to raise the debt ceiling, but this bill comes with spending cuts and no tax increases and the chance for a balanced budget amendment. It is a foundation that we'll be able to put in place. It doesn't answer every question. I wish it were more cuts. But you know what, we're going to be able to put this in place for a foundation for a future.

BLITZER: Do you see yourself as a member of the Tea Party?

ELLMERS: You know I have had Tea Party support. Certainly I wouldn't be here right now if not for the Tea Party. And my principles go right in line with the Tea Party.

BLITZER: Well, Michele Bachmann is a member of the Tea Party, and she's a leader of the Tea Party Caucus in the House.


BLITZER: I don't know if you're a member of the Tea Party Caucus.


BLITZER: You are. All right. She says this -- and I'll read it and put it up on the screen -- "Throughout this process, the president has failed to lead and failed to provide a plan. The deal, he announced spends too much and doesn't cut enough."

"This isn't the deal the American people preferred either, Mr. President. Someone has to say no. I will."

Why is she wrong?

ELLMERS: Well, the thing of it is, is she's not wrong. She's pointed out many of the same principles that we also believe in, but this is not the end game. This bill does not stop what we're doing.

We are going to continue to cut spending. We re going to move forward.

This is actually a beginning. So many of us have had to make that compromise and say OK, if we raise that debt ceiling to pay for all that spending that's already taken place -- this isn't an increase in the debt ceiling for more spending, this is to take care of the bills that have already been spent.

So this is why it is so important, because the consequences of a financial disaster are just too great and we have to be responsible. And the president hasn't led.

BLITZER: Well, you just made the case why she's wrong, the financial consequences are enormous and we can't afford that. So, clearly, Michele Bachmann is wrong.

ELLMERS: Well, she's voting no, I'm voting yes. We have got to vote our conscience, we've got to do what we believe is right for the American people.

You know, the American people sent us here because they want accountability in Washington. And sometimes that comes with very difficult decisions. I understand where she's coming from and I respect her vote. I hope she respects mine as well.

BLITZER: I'm sure she does, but maybe she doesn't. I haven't asked her. But you acknowledge she's wrong. You're willing -- because a second ago, you said you didn't think she was wrong, but now you're saying she is wrong.

ELLMERS: Well, what I'm saying is that I understand where she's coming from with all the things that's she's outlined. She's coming at it from a different approach, as I am, too. In comparison, I hate to look at one person or another. I believe in Ronald Reagan's 11th commandment, thou shall not speak unfavorably of another Republican.

You know, she's going to take her approach and I'm going to take mine. And we're going to go back to our constituents and we're explain what they've done so that they understand as well, because we know how important it is. We get it, it's just a different perspective.

BLITZER: So I assume you believe your constituents want you to vote in favor of this deal, even though part two of the deal would call for very significant defense cuts, cuts in U.S. military spending if there's no agreement on this so-called super committee, these 12 members that are supposed to come up with long-term entitlement reform, tax reform, and all of that? There's going to be across-the- board defense cuts if there's no deal, something you're voting in favor of right now.

ELLMERS: Well, let me just say this: we've been listening to constituents all day. What the constituents want is for us to act, for us to take responsibility for all of the spending that's taking place here in Washington. We have a spending problem, we don't have a revenue problem.

And you're right. If the committee cannot come up with an answer, if the House and the Senate cannot agree on something, there will be across-the-board cuts that are put in place. But that's not the end game. There are other things that could be put in place.

Defense is part of that, but it is more national security and many programs that the Democrats favor. And that's why we feel that this is more of a mechanism to hold the feet to the fire so that we do do our job.

BLITZER: Does this legislation you're voting for right now create any jobs?

ELLMERS: I believe it will, because, again, we're laying a foundation for the future. We have got to put certainty back in the private sector. That's where the answer and solution is.

You know, we're not going to come up with a solution here in Washington. The solution lies in the private sector with putting certainty back in the market. And I do believe that this will start that process in place.

BLITZER: All right. Go to the floor. You're going to be voting very, very soon, Congresswoman.


BLITZER: Thanks very much for coming in.

ELLMERS: Thank you for having me.

BLITZER: Renee Ellmers is a Republican of North Carolina.

One Democratic member of Congress is calling the debt deal -- I'm quoting him now -- "a sugarcoated Satan sandwich." I'll ask Congressman Emanuel Cleaver about that and whether he feels betrayed by President Obama.


BLITZER: All right. We're keeping an eye on the House floor. There you see David Dreier, one of the Republican leaders, speaking right now. They should be voting within an hour or so on raising the nation's debt ceiling. We'll see how that vote comes out.

It will be close. They need 216 votes for a passage. We'll watch it closely.

Other news we're watching as well, including a new look for a world leader.

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

What have you got, Lisa?

SYLVESTER: Hi there, Wolf.

Well, take a look at the Hugo Chavez. The Venezuelan president went on state television today, showing off his shaved head, saying it's a sign his cancer treatment is working. In fact, he called it his new look. Chavez underwent chemotherapy last month in Cuba after having a tumor removed in June, although he hasn't revealed the type of cancer that he is fighting.

Delta says it will give refunds to passengers who paid certain taxes on their tickets and flew during the partial FAA shutdown. The refunds apply to people who bought tickets before July 23rd, when Congress failed to approve a temporary extension of FAA funding while working on a larger spending plan. Now, since then, the airlines have stopped collecting the taxes, but instead they raised fares.

iPhone and iPad users will face a growing likelihood that their device was made by a robot. Taiwanese company Foxconn, which makes the iPhone and iPad for Apple, says it plans to increase its use of assembly robots dramatically from the current 10,000 to one million in just three years. The company is grappling with labor problems including a spate of worker suicide.

And the FBI says it's working a promising new lead in the decades-old case of hijacker D. B. Cooper. A spokeswoman says forensic experts are working on fingerprints from a new suspect. It was 40 years ago, this November, Cooper commandeered a Northwest Airlines flight, and after receiving $200,000, he parachuted out of the back of the plane somewhere over the Pacific Northwest, and he has not been seen since -- Wolf.

BLITZER: He's been running around ever since then.

All right. Thanks very much, Lisa, for that.

Significant Pentagon cuts in the debt ceiling compromise now before Congress, but the cuts may not be as deep as they appear. And Republican presidential front-runner Mitt Romney, was he AWOL in the debt debate as critics claim?

That and more coming up in our "Strategy Session."


BLITZER: We're awaiting the vote on the House floor. They've started the debate. We think the final vote in the House of Representatives on raising the nation's debt ceiling will happen within the hour. Stand by for that.

At first glance, it appears the Pentagon may be one of the big losers in the debt ceiling compromise that's been worked out, but there's more to it than meets the eye, which is usually the case.

Let's go to Barbara Starr over at the Pentagon, working this story for us.

What are they saying over at the Pentagon as far as these proposed cuts in military spending?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, look, Wolf, they know that their $700 billion a year in military spending has been front and center in this deficit debate. It's a real target out there. There will be deep cuts, but the Pentagon, the reality check is, had been expecting most of this already.


STARR (voice-over): It all sounds like budget shock and awe is about to rain down on the Pentagon. The deal calls for $330 billion in a first round of military spending cuts. And if lawmakers can't agree on long-term deficit reduction, another half-trillion-dollar cut over the next 10 years.

Speaker of the House John Boehner, still looking for agreement right up until the end.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: I just met with all the members of our Armed Services Committee. They clearly have some concerns about the defense numbers in this bill. But as I told them, this is the best defense number we're going to get.

REP. PAUL RYAN (R), BUDGET CHAIRMAN: There are some who have just various concerns, whether it didn't go far enough or whether defense was too high.

STARR: But the reality? Despite the big number, defense spending won't suffer a death blow. Defense Secretary Leon Panetta, once the chairman of the powerful House Budget Committee, thinks cuts and national security can both take place.

LEON PANETTA, DEFENSE SECRETARY: I don't deny that there are going to be tough decisions that have to be made and tough choices that have to be made. But we owe it to our citizens to provide both strong fiscal discipline and a strong national defense.

STARR: Indeed, the initial $330 billion cut over 10 years had already been largely ordered up by the Obama White House earlier this year. The real problem, if Congress has to enact that second phase, $500 billion in military cuts across the board, that means no adjustment for new threats or realities, just the budget knife.

WILLIAM COHEN, FMR. DEFENSE SECRETARY: To simply pick out one aircraft or one ship or one base doesn't make a good deal of sense. I think it's really irresponsible to do it only in that fashion.


STARR: And look, Wolf, again, there will be deep cuts, there will be programs being trimmed out of the Pentagon budget. But already there are internal budget protections that some of these budget cuts, these decreases that Congress is talking about may be little more than slower or smaller increases in the years ahead. That's budget math in Washington, that's budget math here at the Pentagon -- Wolf.

BLITZER: Yes. Spending cuts very often aren't even cuts. They're just decreases and projected increases in spending. But only people in Washington love that kind of talk.

Thanks very much, Barbara, for that report.

Missing leadership, that's what critics say about Mitt Romney regarding the debt ceiling debate, even going so far as to show him on a milk carton. We're going to discuss in our "Strategy Session."

Plus, we'll meet the lawmaker who described the debt ceiling compromise as "a sugarcoated Satan sandwich."


BLITZER: Let's get to our "Strategy Session." Joining us, the Democratic strategist and CNN political contributor, Paul Begala. He's a senior strategist for the Democratic fundraising groups Priorities USA and Priorities USA Action. And Republican strategist Rich Galen, who's joining us, of

Guys, thanks very much for coming in.

Mitt Romney, he's the front-runner for the Republican presidential nomination, I think it's fair to say. He's been criticized for sort of being missing in action on this whole debate over these past several weeks as far as the debt ceiling is going. "The Daily Caller" had a cartoon of him sort of missing on a milk carton.

But he put out a statement today saying he's opposed to this deal. I'll read it to you, Paul.

"As president, my plan would have produced a budget that was Cut, Cap and Balance, not one that opens the door to higher taxes and puts defense cuts on the table. President Obama's leadership failure has pushed the economy to the brink at the 11th hour and 59th minute. While I appreciate the extraordinary difficult situation President Obama's lack of leadership has placed Republican members of Congress in, I personally cannot support this deal."

Only Huntsman, I think, among the major Republican candidates, Jon Huntsman, says he could live with this deal. Were you surprised that Romney came out against the Speaker of the House, the president of the United States, the Senate minority leader, Mitch McConnell and all those guys who crafted this deal?

PAUL BEGALA, CNN CONTRIBUTOR: Well, if he had waited one more hour, it would have been after the vote. I mean, this guy is -- he's a person of I'm told terrific personal character, but in terms of political character, public character, taking positions on issues, he does look awfully weak here.

I mean, this debate has been going on, as you've covered it, for weeks and weeks and weeks. Michele Bachmann, who I don't particularly agree with, the congresswoman from Minnesota, another front-runner for the Republican nomination, she's had a position from day one and it's been clear. I may not agree with it, but I respect that she takes a strong position. Romney, I think he has vacillated and waited for so long, that he just comes out looking weak.

RICH GALEN, REPUBLICAN STRATEGIST: I'm not so sure I would agree with that. I think if I were advising, I would have said, let's get a position here and kind of find our way through this. But remember that, first of all, he doesn't have to vote, Michele Bachmann did, so that is a difference.

BEGALA: Right.

GALEN: Secondly, what do we know about presidential candidates? It's a lot easier to be a candidate than it is to be the president, as your guy Mr. Obama has found out all too many times. So I think that what Romney is saying is that -- I don't think he's saying that he's taking a position in opposition to the leadership in the House and Senate. I think he's pointing out that the president hasn't ineffectively led through this process, and I think if you read --

BLITZER: Well, no. He's says, "I cannot support this deal."

GALEN: Well, that's because -- and he's saying that -- but read on -- that the president showed no leadership, and I think that's it.

BEGALA: I know. News flash, Mitt Romney doesn't support Barack Obama. He's running against him.

What's interesting is Mitt Romney, once again, doesn't support Mitt Romney. When Mitt Romney was governor of Massachusetts, he did help to balance that budget, but he did it in part with fees and closing loopholes that critics said were tax increases.

GALEN: Well, he's not running for governor of Massachusetts.

BEGALA: And so he raised taxes in Massachusetts. But it's the same guy. So he passed Romneycare in Massachusetts, now he attacks Obamacare, which is the same blueprint. He raised taxes in Massachusetts, now he opposes a deal that doesn't even raise taxes.

GALEN: But then you have to say the same thing about the president. This is this Obama, and two years ago he was a different Obama.

I mean, these guys, you have to change depending on what these circumstances are. You can't say because you had a position five years ago you must never change.

BEGALA: But every position -- gay rights, abortion rights, everything this guy flip-flops on. I think it's a big problem. It's your party, not mine.


GALEN: Practice saying these words: "President Romney."


BEGALA: I'll choke on those words.

BLITZER: Nancy Pelosi, we're now hearing she's going to vote in favor, probably vote in favor of this legislation. She was coy ever since the deal was announced last night. Earlier in the day -- I'll play a clip -- she said this --


REP. NANCY PELOSI (D-CA), MINORITY LEADER: We had problems with no revenue in the bill when we were asked of having severe cuts -- and we need to make some cuts -- severe cuts and initiatives that impede the education of our children, our clean air, clean water, food safety, you name it, from not one red cent from the wealthiest people in our country.


GALEN: Well, she would know. She's one of the wealthiest people in the country. So she speaks from experience.

BLITZER: She's wealthy, but she's not one of the wealthiest.

GALEN: Well, certainly one of the wealthiest people in the Congress.

BLITZER: A lot of other people are richer than her.

BEGALA: And yet she thinks wealthy people should pay more. That shows I think a lot of character. And I think she's --

BLITZER: So she agrees with Warren Buffett, who is one of the wealthiest men in the country, that he thinks that wealthy people should be paying more income tax.

BEGALA: Absolutely. And I think it is a travesty that this deal -- it doesn't matter what I think. I think a lot of voters will think it's a travesty that this deal does -- I mean, former Speaker and I think future Speaker Pelosi is right when she says -- that's just a matter of fact.

BLITZER: Did the president cave? He had no choice, right?

BEGALA: Well, he had no choice.


BEGALA: This is Obama who is negotiating with people who are willing to drive the economy off a cliff, who would rather damage the heretofore sacred full faith and credit of our debt. So he had no choice.

GALEN: These guys -- we're in a cycle, and it's Republicans and Democrats -- in a cycle where until the brick wall is right here, they can't get anything done. We'll have to get past that and act better, but it's on both sides of the aisle.

BLITZER: All right.

Rich Galen, Paul Begala.

Guys, thanks very much.

It looks like the adults have won. We'll see what the vote is. We're waiting for the vote. It should be coming up very, very soon.

You'll see live coverage here in THE SITUATION ROOM.

The House -- they are debating it right now on the House floor. You're looking at live pictures. A vote expected within an hour or so, maybe less. You'll see it live right here in THE SITUATION ROOM.


BLITZER: Let's get right back to Jack for "The Cafferty File" -- Jack.

CAFFERTY: The question this hour, Wolf, is: How has the debt ceiling crisis altered your perception of President Obama? He's taken some lumps from various quarters today.

M. writes, "The mismanagement of the debt ceiling crisis has left me with absolutely zero confidence in Mr. Obama. This is not the change that I believed in or voted for. I feel my vote was swindled from me in return for false promises and a leader with no backbone."

Dave in Arizona writes, "This man stood there and promised us big things, yet he seems to disappear when things are most important. I wish we had better leadership, but we are stuck with him for five more years because I don't think Republicans will ever win another White House after what they have done this year."

Donna writes, "It hasn't altered my perception of him at all. He's still the same level-headed man that people voted for in 2008. I think people are forgetting that never has a president been faced with so many challenges." Jeff in Hawaii writes, "I voted for President Obama. I won't be voting for him again. He sold out the American middle class to big business and the wealthy. He's shown why so many of us Democrats are looking for a leader with a backbone."

Rachelle writes, "I can't even express my disappointment in the president and the Democrats. The nerve of them trying to get us to swallow this lousy pot of tea. What a bunch of wimps."

"They folded like a rusty lawn chair. They let a bunch of Tea Party freshmen dictate the whole agreement. A sad day for the middle class. I'll miss us when we're gone."

Calvin writes, "My perception of President Obama hasn't changed. He cut the best deal he could. If the country defaulted, he gets blamed. He was the adult in the room. That either party was willing to go over a cliff is scary."

And Sean in Michigan writes, "Not really. He's always reminded me of Jimmy Carter."

If you want to read more on this, go to my blog, -- Wolf.

BLITZER: A lot of e-mail on this question, Jack?

CAFFERTY: A lot on this one. But we've got quite a bit more on the 6:00 question, which is posted on, which is whether or not the public buys this whole dog and pony show they are putting on for us in Washington, D.C. I mean, this is a charade, top-down. I'll explain in the next hour.

BLITZER: All right. We'll stand by with you. Jack, thank you.

And to our viewers, you're in THE SITUATION ROOM.

Happening now, as the hours slip away before America faces potential default, congressional leaders are scrambling to shore up support for a last-minute bipartisan deal to raise the nation's debt ceiling.

We're awaiting a critical vote in the House of Representatives within the hour.