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Gun Divide Deepens; Next Cliff: The Debt Ceiling

Aired January 12, 2013 - 09:30   ET

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


CHRISTINE ROMANS, HOST: Thanks, Randi and Victor. See you at the top of the hour.

Now, suddenly, and maybe only for a moment, Washington has found a focus. It has gun rights advocates and gun company investors truly worried.

Good morning. I'm Christine Romans.

After policy paralysis in 2012, a year marked by Washington with obsession of budgets and elections, 2013 is shaping up a little different. Our leaders might actually do something to rein in gun violence. We don't know if this momentum will last, we don't know if Congress will actually act. There's been a lot of talk of an executive order.

But what we do know, this time at least feels different.

This week, Vice President Biden held a series of task force meetings with various stakeholders in the gun debate. He'll be delivering a set of recommendations to the president based on that input as soon as Tuesday.

(BEGIN VIDEO CLIP)

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: There's got to be some common ground here to not solve every problem, but diminish the probability that what we've seen in these mass shootings would occur and diminish the probability that children are at risk in their schools.

(END VIDEO CLIP)

ROMANS: These meetings weren't just some photo-op. Even the NRA attended. Although after the meetings, it trashed the agenda as an attack on the Second Amendment. Walmart, probably the biggest gun seller, was shamed, I guess, into showing up. The retailer originally said executives couldn't attend. They had scheduling difficulty difficulties.

But after a course of criticism, Walmart changed its mind and did send someone to Washington for these meetings with, as it turns out, the attorney general, not the vice president in the end.

Well, this new tone, though, isn't going a notice on Wall Street. After gaining background earlier this month, gun stocks were under pressure again this week. That's right. Investors are worried Washington is actually going to do something, because let's not forget that at its core, selling guns in America is about making money.

Richard Feldman is president of the Independent Firearm owners association, a former NRA lobbyist.

Will Cain is a CNN contributor.

Richard, you were at one of the vice president's task force meetings. You know, tell us a little bit about it. Do you think it will be concrete action? I know no one's mind was changed there. But is it the beginning of something different this time?

RICHARD FELDMAN, PRES., INDEPENDENT FIREARM OWNERS ASSOCIATION: Well, clearly, the horrific events in Newtown were a game changer. What concrete changes in the law are going to be really remains to be seen.

As to the firearm industry, which I represented during the 1990s, regardless of anything that occurs in legislation, certainly the companies on the big boards, Smith & Wesson and Sturm, Ruger, they're going to be manufacturing firearms way into the future. Their orders are back ordered for probably a year or more.

And even if a couple of guns ended up being on a ban list, that's not going to have any impact on the bottom line of those companies.

ROMANS: You know, Will, Americans support some kind of action on gun violence. According to CNN/ORC poll, 47 percent favor major restrictions on owning guns, 33 percent favor minor restrictions. Gallup finds strong support for banning the sale of high capacity ammunition magazines, requiring background checks at gun shows.

How can we talk about this, though? It nearly goes back to they're trying to take away our guns. It veers from the patriotism of the Second Amendment, to this paranoia that liberal fascists are coming to disarm you. I'm reading directly from the kind of stuff that's going out.

WILL CAIN, CNN CONTRIBUTOR: Logic leads you there. So --

ROMANS: Wait, logic leads you there?

CAIN: Yes. I'm going to tell you why. Your guest just said it, banning certain weapons would have very little impact on the bottom line of those manufacturers. And I'm pessimistic, at the very least skeptical, that any of these bans would have an impact on what you said several times, Christine, and that is impacting gun violence.

And that is because most of the bans we talk about really serve no functional purpose. They don't designate some guns that are more lethal than others. The bottom line is what we're talking about most of the time, what we termed as assault weapons are semiautomatics, as are your guest probably knows, Richard knows more than I do, I would guess 60 percent, 70 percent of guns in this country are semiautomatic. So, if you want to make a real dent in the problem, you're talking about banning and confiscating --

ROMANS: It will never happen. It will never happen.

CAIN: That makes people very, very nervous. ROMANS: That won't happen. What can you do, anything?

CAIN: I think when you talk about a measure that might -- might carries a lot of weight here, have some positive impact and doesn't burden the Second Amendment right too strenuously, you're talking about possibly limiting background checks.

ROMANS: Do you support that?

CAIN: I'd be open to those. I think you have to prove that evidence that it would have a positive impact. I think you have to prove that evidence.

ROMANS: Richard, the NRA has deep pockets and doesn't even want to try to do the research to prove any of this evidence. It spent millions in the 2012 election cycle.

Does this all come down to money? You were the lobbyist for the NRA, right? I mean, it is really -- when I talk about patriotism to paranoia, I mean, when you hear people talk about taking these guns away, there's a real -- a real deep, deep issue in America that the NRA is playing right into.

FELDMAN: Well, I think it was your governor in New York that played into it when he talked about the possible confiscation of firearms.

ROMANS: Yes.

FELDMAN: So, when the governor of the state of New York talks about, to say people are being paranoid I think isn't dealing of what legitimate elected officials are actually discussing.

ROMANS: You think Democrats, or some Democrats are stirring the worst fears among gun owners?

FELDMAN: Well, it will be very interesting if Governor Cuomo decides to run for president how that's perceived in Iowa and New Hampshire.

ROMANS: What about, Richard, the universal background checks? Do you think that's something that NRA could behind?

FELDMAN: Yesterday, yes, earlier this week, really, at the White House. We support the independent firearm owners mandatory background checks at gun shows. Because gun shows are very different. At a gun show, you're selling to the public. Just like a retail dealer.

But any other firearm transaction is really a sale to someone you know, a friend, a relative, a co-worker or a neighbor. Up until last month, no one has even alleged that there's a problem with that kind of sale. It's all been limited at the show. And let's always remember the big picture. There are 500,000 guns stolen in this country every year. That's the problem.

CAIN: That's --

FELDMAN: And what we need to do is keep our eyes on the ball, which is ask in whose hands are the guns?

CAIN: That's the key, Richard, is pointing out here. I would probably support as well requiring background checks at gun shows. But, look, criminals that commit acts with guns, only 1 percent of those buy those at gun shows. And what more, that doesn't do anything for like me and Richard selling a gun to each other.

Should we have a background check required in that kind of private sale? All of it might have some small positive impact. But it completely overlooks the fact that criminals do not care about rules. And criminals will break rules to get the weapons that they need.

ROMANS: I'll make one point about the gun shows. Imagine it was a car and you two were selling each other a car, transaction between two people. Fine. Imagine you're selling, Richard, oh, 200 cars.

That's not -- that's not a private sale anymore. That has become something that, you know, maybe needs a background check. That's what they'll be talking about.

FELDMAN: Well, again, at a gun show and you're selling to the public, I think it makes perfect sense to put civilians in the same sense that are selling a gun collection as dealers at that show. It makes sense to me. I think it makes sense to most gun owners.

ROMANS: All right. Richard Feldman, we're going to have you back. You have such deep insight into the gun lobby, how it's changed from a sporting organization to a Second Amendment organization over the years. There's so many great ways to look at all of this. And, of course, Will Cain, we always love your insight.

If you're happy with what's going on in Washington, you must not watch this program each week, or any news for that matter.

Up next, I'll tell you just how low the congressional approval rating is right now.

And I'll tell you the correct answer to this question: when was the last federal budget signed into law? A, 1994. B, 2001. C, 2009. D, last year.

(COMMERCIAL BREAK)

ROMANS: Your Congress is no longer working for you. Wake up, Washington!

A budget would address a lot of those problems. Last time Congress passed one of those, April 29th, 2009. Are you running out of patience? (BEGIN VIDEOTAPE)

ROMANS (voice-over): Three and a half years and still no budget. Imagine America as the world's largest corporation. This is no way to run it. You, the shareholders, have lost faith. Congressional approval stands at a measly 18 percent.

Little surprise considering the lack of big ideas coming from Washington. Missing are solutions to create jobs, produce clean energy and educate our children. Instead, we're left with one mini-crisis after another. It's your political leaders playing chicken with your well-being.

Government's inaction is threatening an economy, desperate to recover. Lawmakers avoided the fiscal cliff at the eleventh hour but there are three more cliffs and more answers.

The debt ceiling: will America pay its bill? The sequester: can government finally agree on sensible spending cuts? And the budget, will America, the largest business in the world, be forced to shut down due to Washington's dysfunction?

(END VIDEOTAPE)

ROMANS: All right. Let me show you what our budget disaster looks like. Here's a chart from the Bipartisan Policy Center.

This projects what will happen on February 15th. That's the day the U.S. runs out of borrowing space and has to pay a boatload of bills with much less coming in, about $9 billion -- on the left your screen -- $9 billion will come in the Treasury's coffers that day, $52 billion in bills come due.

If Congress doesn't raise the debt ceiling, Congress has to decide which of these bills to pay. Interest on the debt we already owe, that's $30 billion. IRS refunds, that's about $7 billion.

We've got to pay federal salaries, active duty military paychecks, Medicare, Medicaid bills, defense spenders need to be paid. Unemployment checks need to get cut. Food stamp debit cards need to be refilled.

Bottom: we're spending more than we're taking in every day. That's called running a deficit. And that deficit piles up into national debt.

I'm joined by CNN contributor, John Avlon, senior political columnist of "The Daily Beast".

And Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

Now, the fight of the debt ceiling likely to embody every bitter, ideological divide in this very divided Congress.

Maya, should the debt ceiling be the place to argue about spending cuts?

MAYA MACGUINEAS, PRES., CMTE. FOR A RESPONSIBLE FEDERAL BUDGET: In the past, the debt controlling has been used responsibly, to help us push for making changes to the budget when we're on an unsustainable course. You can kind of think of it as, it was a speed bump. We'd hit the debt ceiling, we'd be reminded that we were borrowing too much. And we would make some changes, hopefully. They'd about fight about raising it and then they would raise it.

What happened last time, I think, was throwing cold water on to the system of how close we got to truly defaulting and the fact that that will lead to economic problems in the country and around the world.

ROMANS: John, Republicans almost gleeful that the debt ceiling is going to give them leverage to extract spending cuts. Is this good policy or is it revenge? Is it a speed bump, or is this somehow -- is it political?

JOHN AVLON, CNN CONTRIBUTOR: Oh, it's deeply political. It's a cycle of revenge and recrimination. It's the definition of insanity, doing something over again and expecting a different result.

Last time we've played chicken with the debt ceiling, it was enormously damaging. Of course, we got our AAA rating downgraded. An actually, in retrospect, Republicans that grand bargain that they pressure Boehner to walk away from might have been the best plan we've seen to date in terms of dealing with spending cuts, revenue increases and entitlement reform.

The idea every time Congress has set itself this artificial deadline, whatever it may beady debt ceiling, a super committee crisis, or an end-of-the-year fiscal cliff, they somehow failed, they weaseled out of it. So, we still have this looming, looming problem. It's deeply political.

And the idea, by the way, just reality check for folks at home, refusing to raise the debt ceiling is about as fiscally responsible as refusing to pay a credit card bill when it comes in, and saying that you're doing in the name of fiscal responsibility. You don't make any sense, you're holding the nation hostage, and you hear some conservative commentator saying, you know, when you hold it hostage, you got to be willing to kill it. That is dangerous, idiotic rhetoric.

ROMANS: So, Maya, you know, you are a budget expect. You are a deficit hawk. You don't want to be spending so dramatically beyond our means forever, operating frankly, without a budget, a blueprint, for so long. So, let's give them a little bit of help, right? What should this Congress do?

MACGUINEAS: First, we're going to have to focus on the area that has been ignored for the longest amount of time and we know needs to be addressed. We have to reform our health care systems and our retirement systems. Our nation's entitlement programs are unsustainable. We are truly jeopardizing people who depend on them by being unwilling to make the necessary changes in a gradual and thoughtful way and they threaten the debt going forward. We need to get on top of those as quickly as possible as part of an overall comprehensive deal. More spending cuts are going to have to be put in place. Tax reform that raises revenue still needs to happen, something that will grow the can economy and increase our competitiveness, which the last round of revenue raising didn't do because we didn't reform the tax code.

We need to make the hard choices, which any expert would tell you need to be addressed but politicians just seem unwilling to work together in a bipartisan way, which is how this has to happen, to own up to those political choices. And there's so much finger pointing. There's so much blame.

ROMANS: John and Maya, stay where you are.

Washington's inaction may be slowing economic growth but your personal economy is also being deprived. I'll tell you what you're losing and how to get it back, next.

(COMMERCIAL BREAK)

ROMANS: These mini cliffs are crises of Congress' own making. While lawmakers are arguing, they're doing so without a vision, we just discussed the debt ceiling. That's first.

Next is the sequester. That deadline is March 1st. And, finally, for now, we must fix the budget by March 27th. Meantime, the country is losing -- losing jobs, struggling for economic growth, lagging in education.

And we're also losing the ability to have civil conversation. It's either one extreme or the other. A decade of war overseas is giving way to budget wars at home.

Where is the vision for America amidst all this arguing? Where is the purpose in our Congress? The single-minded focus that America comes first, prosperity's important and has to include everyone.

John Avlon and Maya MacGuineas are back with me.

Now, John, two dirty words to some in Washington: consensus and bipartisanship.

I want to show you something. These are laws passed by previous Congresses, right? Only 220 laws passed by the 112th Congress from 2011 through 2012 -- 220 laws, the smallest number of new laws in decades.

You might look at that and say, hey, Congress is failing, it's not governing. It can't pass half the laws that were passed by the Congress before it.

But there are others who look at that number, John, and they say, hey, we're not going to pass laws, run up debts and deficits and operate business as usual. They see that as a victory.

What do you think?

AVLON: That number says to me we've got a divide, dysfunctional Congress. That's not a libertarian idea of not doing anything in the national interest. We have urgent challenges that we're not facing as a country. It is a direct result of the polarization of two parties and a decline of swing districts, which makes consensus and compromise more difficult to achieve than ever.

If people are angry at Washington, D.C., the division and dysfunction, it's the polarization of Congress and politics just created it.

ROMANS: Maya, political goals have a real short-term focus, you know, our debt needs a long-term focus. And they have not been able to do that.

Can you look at the short term and the long term? Should they be -- can they really look at both at the same time?

MACGUINEAS: Well, that's absolutely right, that the focus is always on the next political cycle and not the next generational cycle. And as we were talking about before with entitlements, you know, where seniors will say you're trying to take away our benefits instead of recognizing we need to strengthen these programs so that seniors who depend on them have them, but what are we also ignoring? We're ignoring the next generation in this country, right?

And I know that part of what I care about for all this is my kids and the kids in this country, and the fact that we don't have a vision that's keeping the economy strong and preserving it and not handing them a set of unpaid bills for the next generation of workers and children in this country. So, I hope that that's the kind of thing that can help bring the country together.

When it comes to tough choices, that's the easiest time for the two parties to break apart and it's the easiest time for them to blame each other. And it's the most important time for them to work together, to give them some political cover as they make hard choices that if we don't make them we'll sacrifice the country for our being irresponsible.

AVLON: You know, Maya's right. I mean, the problem with debt is that it's generational theft. That's one way to think about the moral underpinnings of the argument.

But to get anything done, Christine, you know, we need to find, both parties need to take on their own base. I think first of all President Obama needs to play Nixon in China on the issue of debt and specifically on entitlement reform. He has to take on activist groups in his own base to really get something done in the national interest.

Likewise, Republicans need to reconnect the idea of fiscal conservatism with fiscal responsibility again. They've totally forgotten that revenues are any part of the equation. It's disingenuous and doesn't work as math.

ROMANS: Can we talk about vision for a second, because I started the segment talking about how, there's indecision. Where's the real discussion about education reform? Where is the real discussion about global competition? Where's the real discussion about energy and our energy future? Instead it's these budget wars. Now, you will hear from some people, Maya, who will say, look, the budget wars embody our big visions and how they aren't unified.

But -- are we sacrificing sort of our direction and our standing in the world? Maybe this sounds overly dramatic. Are we sacrificing that by focusing -- but not even operating with a budget?

AVLON: Yes.

MACGUINEAS: Right. I mean, it does feel like an incredibly important moment and not dramatic to put it that way. When you think about what we need to do in this country, what we should be doing is thinking with how you put in place a big, comprehensive and gradual debt deal that will get control of all sides of budget and use this opportunity to rethink our priorities. We spend so much money from the federal government on consumption instead of investment, or seniors instead of children, just as examples.

We should be going through the budget as we make changes and really think through that and think how do we raise revenues in a global environment that allows us to be competitive. I fear we're not going to do that. We'll be -- just getting a budget deal in place would be a good first step. And until we do, I think it's kind of the sand and the wheels of really tackling some of these other issues -- energy, immigration, education, competiveness -- all of these are sort of frozen out because we're paralyzed because of our fiscal situation right now.

ROMANS: And there are those who say the discussion about gun violence, there are groups who think the discussion about gun violence they wary is taking some of the momentum away from the other conversations. There's not enough oxygen in Washington to handle it at the same time.

John Avlon, Maya MacGuineas, nice to see both of you. You have a great weekend.

MACGUINEAS: Thank you.

ROMANS: All right. Coming up, Congress has ignored, ignored the housing market. It may be the best thing that ever happened to buyers and sellers.

(COMMERCIAL BREAK)

ROMANS: Your Congress is so preoccupied with the budget crises of its own making, no one here has probably noticed that the housing market is slowly recovering.

New foreclosure filings, the lowest level since December of 2006. Existing home sales are at their highest level in three years. New home sales the strongest in two. And prices are coming back. The S&P Case Shiller index rising five months in a row.

What's happening? Super low mortgage rates, courtesy of the Federal Reserve, not Congress. They're luring buyers back.

And buying looks more attractive when rental prices have climbed 12 quarters in a row. If you got the money, it's time to buy.

(BEGIN VIDEO CLIP)

JIMMY MCMILLAN, FORMER NEW YORK GOV. CANDIDATE: Rent. It's too daman high!

(END VIDEO CLIP)

ROMANS: It will keep rising this year. Make no mistake. This is a great time to buy.

But too many of you are still waiting or shut out. Maybe you can't cobble together a down payment. You need 20 percent in most cases. Your credit isn't spotless, you need 720, or you're out of a job.

The truth is, not everyone is participating in this housing recovery. Rich people -- well, they've done very well. A third of home sales are all cash. Imagine -- imagine not needing a mortgage for the biggest purchase most of us will ever make.

One thing you can credit Congress with, luxury home sales soared at the end of the year. Super rich rush to beat this year's higher tax rates, 51 percent jump in sales of homes valued at a million dollars or more in November. So rich people are enjoying a housing recovery. The rest of you, it may be you're waiting for a jobs recovery. And Congress' drama threatens to undo any recovery.

Let's hope this doesn't undo this. Is the housing market working for you?

Find us on Facebook and Twitter, @CNNbottomline. I'm @ChristineRomans.

"CNN SATURDAY MORNING" continues right now.