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Government Showdown; Boehner's Latest Statement; Wall Street Reaction; Libya Angry Over U.S. Raid; Protests Turn Violent in Rio; Cairo Still Tense; Pope Calls Meeting of Bishops

Aired October 8, 2013 - 12:00   ET


HALA GORANI, CNN ANCHOR: Hello, I'm Hala Gorani, in for Suzanne Malveaux.

MICHAEL HOLMES: Welcome, I'm Michael Holmes.

We do have some breaking news for you. We start with a phone call between the president and the speaker of the House.

GORANI: Welcome to day eight of the government shutdown. Even a phone call is a big deal as the shutdown drags on and the debt ceiling deadline is a few days away.

MICHAEL HOLMES, CNN ANCHOR: Indeed. Jim Acosta is at the White House.

A few things breaking in the last few minutes. Tell us about the phone calls, first of all.

JIM ACOSTA, CNN POLITICAL CORRESPONDENT: The phone call happened around 10:45 this morning on the east coast on in the United States. The president called House Speaker John Boehner. It was a fairly one- sided call if you listen to the various accounts. According to White House officials, the president said what he has been saying all along he is not going to negotiate on a debt ceiling or continuing resolution to reopen the federal government with strings attached.

And so he urged the speaker to get something passed out of the House that would reopen the government and raise the nation's debt ceiling. But the memo from White House officials about this call goes on to say that the president is willing to talk about some of these priorities that Republicans have. He's willing to talk about the budget. He's willing to talk about health care reform, but he wants to do it outside of this threat of a government shutdown and of a debt default.

Now, one thing that we do want to pass on, I should just mention, the president is holding a news conference at 2:00 in the afternoon here on the East Coast here at the White House and that he will be taking some questions and so we'll have to see what he has to say. I'm sure he'll get lots of questions from reporters about what has been a pretty consistent Republican talking point in the last several days, and that is that the president is not willing to negotiate. Interesting to point out that he made this phone call to House Speaker John Boehner in the hours before this news conference and so the speaker has been saying let's talk, let's have a conversation. Well, they did have a brief one earlier this morning.

HALA GORANI, CNN ANCHOR: All right, Jim Acosta at the White House, thanks very much, with the very latest, and we'll stay in touch, of course, with Jim.

MICHAEL HOLMES, CNN ANCHOR: Now, again, President Obama going to release that statement, take questions, 2:00 p.m. Eastern. You'll see it right here on CNN. So, don't miss that. That's sure to be a rather interesting conversation (INAUDIBLE).

GORANI: And it's interesting what he's going to try to get out of it politically, but publicly at least it seems we're still very much at an impasse. However, if you want to look at the positive side of things, right, at least the president and the House speaker are talking.

HOLMES: Are they having the conversation? Are they having a conversation?

GORANI: On the negative side - yes, having the same old conversation -

HOLMES: It is.

GORANI: That's the negative side.


GORANI: And, meanwhile, we're looking at the new reality of the House of Representatives.

HOLMES: Yes, we have been tallying the votes there and, guess what, there are enough, according to our count, to pass a bill that would reopen the government. Now here is how it all adds up. As you know, there is a total of 432 members. Three House seats are vacant.

GORANI: So, if you divide that in half, you get 216. Two hundred Democrats in the House support the bill, plus 17 Republicans. So, you have just enough votes to pass at 217.

HOLMES: Yes, but not enough House members are willing to force House Speaker John Boehner to bring it to a vote. He's the one who's got to do it. He says he's not drawing a line in the sand on the shutdown, but, guess what, he's also not budging from his position that the shutdown, it's not his fault.


REP. JOHN BOEHNER, HOUSE SPEAKER: Americans expect us to work out our differences. But refusing to negotiate is an untenable position. And, frankly, by refusing to negotiate, Harry Reid and the president are putting our country on a pretty dangerous path. Listen, there's never been a president in our history that did not negotiate over the debt limit. Never.

(END VIDEO CLIP) GORANI: All right. We're also hearing from House Democrats. You heard from the speaker there. No big shock. They had some harsh words for Speaker Boehner.

HOLMES: Surprise, surprise. Listen to what the chairman of the House Democratic Caucus said just a short time ago.


REP. XAVIER BECERRA, DEMOCRATIC CAUCUS CHAIRMAN: I have just been informed that earlier this morning Speaker Boehner respond to a reporter's question about the fact that the votes exist to pass a clean budget and we could reopen the doors to government and put Americans back to work. And my understanding is his eloquent response was, doo doo (ph).


GORANI: Doo doo.

Our Athena Jones is in Washington.

And, Athena, you're the reporter who asked that question of the House speaker. Tell me what you heard.


Well, I didn't hear doo doo. I heard Speaker Boehner humming something. It might have been dah, dah, dah or dom, dom, dom. I didn't here doo doo. But the bottom line, he just didn't want to answer the question. In fact, the speaker just walked by here just a few minutes ago. I asked him again, I said, no chance on a vote on this clean spending bill? And he just ignored me. He looked at me and kept going. But we've heard from other House Republicans that in their conference meeting this morning, the speaker made clear there's not going to be a vote on this. And so his point of not answering is for us to move on to something else.

I can tell you what the House is doing today. They're looking at some measure or talking about proposals that would pass a bill that would put together some sort of committee of House - of Democrats and senator -- House Republicans and Senate Democrats, people from both parties, to talk about some of these budget issues, and also a proposal that would make sure that those working right now, people like the Capitol Police and other essential employees, actually get their paychecks on time. So those are some of the proposals being discussed right now, but neither one of those, of course, goes directly to ending this shutdown right now.


HOLMES: And, you know, I suppose we got - we got to ask you this, though. I mean he says he's not going to put it to the vote. Well, what are his reasons, when there seems to be growing evidence that a clean CR would pass? JONES: Well, for one thing, Speaker Boehner insisted there are not enough votes and won't ask - won't answer our questions about our tally and other outlet's tallies saying that there are. But really their main point here has been their point for the last couple of - last week and certainly even longer than that. They want the president and Senate Democrats to sit down and negotiate before passing a bill that would reopen the government or raise the debt ceiling, which is, of course, the very big deadline around the corner.

So that's where they stand. They want talks. They want conversations and they want them before they do either of these things.

Hala. Michael.

HOLMES: OK. Athena Jones in Washington, thanks so much.

GORANI: All right, now to the Senate, where we're a day closer to even a scarier economic catastrophe, and that would be defaulting on the debts of the United States when the government effectively reaches its borrowing limit, it can't borrow anymore, that's what's called the debt ceiling, on October 17th.

HOLMES: That's the big one everyone around the world is watching.

Now, since nobody seems willing to budget on the shutdown, Senate Democrats are now taking action on the debt ceiling. They are introducing a bill that would increase it for more than a year.

GORANI: All right. It will be a clean bill with no changes to Obamacare or any other tweaks that Republicans are demanding in order to pass a bill. Now, if the Senate passes it, it will ramp up the pressure on the Republican-controlled House of Representatives to do the same thing.

HOLMES: Yes. Now the partial government shutdown, the debt ceiling as well, these threats obviously not helping the markets right now. The Dow is down 87 points or so. That's over half a percentage point. It has fallen more than 200 points since the shutdown began eight days ago.

GORANI: OK. But, here, let's put things in perspective.


GORANI: We're at 14,800 and change for the Dow.


GORANI: This isn't - this is not panic.

HOLMES: This is not a collapse.

GORANI: Nobody - no, this is not a collapse.


GORANI: We're still at high levels. If you invested in stocks in January, you'd be in good shape still today.

HOLMES: Uh-huh.

GORANI: In other words, nobody is panicking on Wall Street, even though we're down. Christine Romans is in New York with an answer to that question.

So what's going on as far as investors in the stock market are concerned? Why aren't they much more concerned with the possibility of a default?

CHRISTINE ROMANS, CNN BUSINESS ANCHOR: Because, you know, Wall Street is assuming that these two houses of Congress will not have mutually assured destruction. They are assuming that this will have to get fixed. That there simply is no other choice. They can't quite imagine -- I won't say the risk of default or not raising the debt ceiling is zero. That's certainly not what the Dow is telling you right now. The stocks are down only 3 percent since all of this nonsense began a few weeks ago. And for the year, you're so right, Hala, you have had a fantastic year. Look at those numbers, especially in tech stocks. There's a lot of room for Congress to really mess up your nest egg here.

GORANI: Uh-uh.

HOLMES: OK. So the next big crisis is the debt ceiling. I mean it could happen. You know, it could happen. And were it to happen, could the government pay some of those debts? And, you know, one of the thing that's key here that, you know, the U.S. debt and paying its debt is key not just for the reputation of the U.S. here, in the markets, it's the world, it's the backbone.

ROMANS: I think no matter what you're going to have a Treasury Department that's going to do everything in its power to pay its investors first, to pay its bondholders first, right? And you're going to have a lot of those payments coming up.

But I want you just to look at kind of the challenge here. On November -- just on November 1st, these are the bills that come from. The Treasury secretary said after months of extraordinary measures that the money runs out on October 17th. There's $30 billion in the bank on the 17th. You've got Medicare payments. Look at that huge Medicare payment. Social Security checks go out. Military pay. SSI, that's supplemental income, Social Security supplemental income. Those checks go out. And then just in a few more days, there are even more checks and then another big multibillion dollar interest payment.

If the Treasury is paying interest payments first, do you pay seniors? Give you give them IOUs? Do you pay them but then you don't pay military or active due, you know, federal workers? Do you not pay IRS refunds? It gets to be really -- in the months after we hit that October 17th deadline, we're $107 billion short on our obligation. Without borrowing more money, you're going to have - you're going to - you're putting the brakes on the economy.

GORANI: Right. And the question being, and we've heard -- by the way, we're going to answer that question a little bit later with more on this, but who owns most of the debt of the U.S., of the United States, right now? And starting with the largest creditor.

ROMANS: Let's - well, the largest creditor is us, first of all, but let's look at our largest foreign creditors, right? So you've got China and Japan and you've got entities in the Cayman Islands. They're the largest foreign creditors of the United States. And altogether those foreign creditors account for about a third of all the Treasury bonds.

When you look at the two-thirds of the Treasury bonds that are held by municipal funds, by municipal governments, by the Social Security trust fund, by domestic investors, you can see that not only do we want to pay our bills to make our foreign creditors happy -

GORANI: Right.

ROMANS: But paying our bills makes us happy too. America always pays its bills.


GORANI: And Wall Street is essentially saying we don't think this is going to end in, you know, total disaster, economic meltdown?

ROMANS: Every - they're hoping. Every day they're saying -

HOLMES: Fingers crossed, yes.

ROMANS: They're saying, they couldn't be that crazy. They couldn't be that crazy.

HOLMES: Yes. No one can believe it could happen. I'll tell you what, though, and as you know too, at the APEC (ph) summit in Indonesia, China was making comments about this -


HOLMES: And saying, hey, guys, come on, sort this out. So they're probably a bit worried too.

Christine Romans, awesome to see you. Thank you so much.

GORANI: And coming up, Pope -

ROMANS: Awesome to see you.

GORANI: Awesome.

Pope Francis - thanks, Christine -- has come out saying the Catholic Church needs to shake off its obsession with abortion and gay relationships. Now he's calling for all bishops to meet at the Vatican to discuss this and how to view the modern family. Could this mean formal changes?

HOLMES: And then, was it a raid to catch a terrorist or an abduction? Libyan authorities summon the U.S. ambassador to get some answers. They're not happy about this. We're going to have new details about the mission in Libya straight ahead. You're watching AROUND THE WORLD.


HOLMES: Welcome back, everyone.

New details emerging on the commando raids in Africa. The first, in southern Somalia, where the Navy SEAL Team Six tried to capture a top operative of al Shabaab, the Somali al Qaeda affiliate, of course.

GORANI: Right. Well, a top Pentagon official insists that SEALs were not, in fact, run off by al Shabaab fighters during a shoot-out. Instead, he says military personnel reached the doorstep of the target, but then, at that point, discovered there were civilians in the surrounding area and children at the compound.

HOLMES: Yes, those factors, they say, contributed to the decision to call off the raid.

While in Libya, we're getting a clearer picture of the mission in Tripoli to capture Abu Anas al Libi, a senior al Qaeda operative. His son showed us around the car. You see it there with our Jamana Karache (ph), the car that Army Delta Force commanders surrounded with four vehicles.

GORANI: Now, eyewitnesses say al Libi, which means "the Libyan," by the way, in Arabic, was taken into custody peacefully. And Libya's government now is unhappy, even though initially we had word that they were looped in in all of this. But after the raid, they called the U.S. military's capture of al Libi an abduction.

HOLMES: Yes, and demanding answers from Deborah Jones, who is the U.S. ambassador to Libya. She met with Libya's justice minister after being formally summoned.

Then in the last few minutes, we are hearing that the general national congress has also called for the return of al Libi.

These are rising tensions, prompting the move of some U.S. Marines for security reasons.

GORANI: Some 200 heavily armed troops are being shuttled from Spain to Italy in case the U.S. embassy or Americans become threatened in Libya.

Nic Robertson is in Tripoli. And, Nic, you've managed to talk to a Libyan government official about the capture of al Libi. There's a nice sunset there in Tripoli.

Why are they so upset about this? Are they saying they weren't made aware of the raid before it happened?

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: What they are saying, what I was told by the minister I talked with, that it shouldn't have happened this way, that here was a better way to deal with it, that this is destabilizing for the government, which is perhaps why we're getting these reports from some agencies that the general national congress has called this a flagrant violation of national sovereignty and calls for the immediate return of al Libi.

What the minister told me was that there will be people who will try to use this to destabilize the government, particularly on this sovereignty issue.

And remember, this is a weak government. The general national congress made up of -- the vast majority of delegates there are independents, not in the two major political parties here.

What we understand now is that Deborah Jones was actually called in. The U.S. ambassador was called in not today but yesterday. We're hearing about it today.

What two State Department officials who have been briefed on this say this was not a summons, per se, but a conversation that was quite ride ranging (AUDIO BREAK) and understanding on law enforcement issues.

But the Libyans apparently did ask when they can get access to al Libi who they say is on board a U.S. ship right now, bound for the United States.

HOLMES: All right, Nic Robertson in Tripoli, Nic, thanks so much.

And I suppose it speaks to the stability or otherwise of the Libyan government, its ability to govern that they weren't brought on in this, apparently.

GORANI: Right, and how little control they have of some giants sections of Libya.

By the way, the adjective used to describe the conversation between the U.S. ambassador and the Libyan official was "cordial."

HOLMES: Cordial? Diplo-speak.

GORANI: Diplo-speak for "a bit tense." It wasn't exactly as friendly as could have been.

Now we are supposed to learn more about the raid in Libya that resulted in al Libi's capture later this hour.

HOLMES: We do. Senators Ayotte and Graham will speak on Capitol Hill. We'll be listening as well.

Also, the pope calling bishops from around the world to the Vatican.

GORANI: He has a few things to say about how the Catholic Church treats the modern family.


HOLMES: All right, we're going to take you now to South America where a peaceful march to support teachers in Rio de Janeiro turned violate when that march was hijacked by masked anarchists, who then went on a rampage.

They set fires. They broke into buildings, including banks, and smashed a gate at city hall. At those banks, some ATM machines were set on fire.

Authorities eventually used tear gas to get the crowd under control.

All right, now, taking you AROUND THE WORLD to one of the hot spots, and we are talking about Syria, experts say destroying Syria's chemical arsenal is under way and now a second team is being sent to Syria, according to the U.N. chemical weapons watchdog agency.

Syria began dismantling its chemical weapons program on Sunday, or it was being done for them.

While the operation is being praised, the United Nations says inspectors still face what they call a dangerous and volatile environment.

The streets of Cairo remain tense today. Now this follows two days, of course, of clashes between the military and Muslim Brotherhood supporters.

The death toll from the fighting stands at 55. More than 250 people have been injured. Six Egyptian soldiers have also died since Sunday.

Now supporters of the ousted President Mohamed Morsy say they're going to keep on protesting, despite the pressure from the military.


GORANI: All right, now, from the start, Michael, Pope Francis showed himself to be a different kind of pontiff, a pope for the common man, or woman, someone who is shedding the papal trappings, living in a simple, for instance, or driving his own second-hand car.

Now many Catholics also see hope for change in some areas of Catholic doctrine, relaxing, for instance, long-held stands on things like homosexuality.

So how does the pope, this pope, view the modern family? He's called a meeting of bishops in Rome.

Let's go live to Rome and CNN's senior Vatican analyst, John Allen.

Now is this going to be a change, do you think? And this meeting is one of many things that is going to happen to determine that, but a chance in substance rather than just style coming from Pope Francis?

JOHN ALLEN, CNN SENIOR VATICAN ANALYST: Michael and Hala, the one thing we have learned under Pope Francis is there is never a dull day on the Vatican beat, and that was certainly true today with this news that the pope is summoning a senate of bishops. That's a gathering of bishops and other church leaders around the world for next October.

The senate is going to deal with marriage, and you asked if there was going to be a substantive change that might come out of it. I think the answer is, quite likely, yes.

We expect this senate to take up the very thorny question of the situation of divorced and remarried Catholics. These are Catholics who have been through a divorce, who have gotten remarried without an annulment. That is an official church declaration, that their first marriage was dissolved.

Under the current rules, they are supposed to be excluded from the sacraments, including, of course, the central sacrament of communion at Sunday Mass.

The pope has already hinted that he's open to some change there. He brought that up during that now famous press conference on the papal flight from Brazil to Rome last July.

So the suspicion here is that he's going to use this senate, this meeting of bishops, to roll out that change and, if he does. it would be a concrete and fairly dramatic change in the circumstances of tens, maybe hundreds, maybe even millions of divorced and remarried Catholics all over the world.

A lot of people would see that as a pretty significant step towards reform, Michael and Hala.

GORANI: Well, especially with the divorce rate these days.

What about American Catholics? Do they see in this country, in the United States, Pope Francis as being a renewed hope for perhaps, you know, becoming practicing Catholics in the way that they might not be any more?

And he is tailoring his message to them as well?

ALLEN: Well, look, my basic read about the grassroots reaction to Francis in the United States is that he's worked what is basically a miracle which is that he's made it cool to be Catholic again.

I mean, there are people who will tell you, and I run into this all the time, when I walk into restaurants or airports or I get in a cab and somebody asks me what I do for a living, and I tell them I cover the Vatican, they say, I've been Catholic, but I haven't been to church for 20 or 30 years, but something about this guy speaks to me, and I feel like I want to come back.

I think that is the grassroots take on this pope. Now, look, I mean, how long that is going to last and whether he is really going to be able to deliver on the expectations that various constituencies have is another question.

But I think the immediate takeaway right now is that he has completely changed the conversation about the Catholic Church and sort of given this institution a new lease on life.

GORANI: Right. I've heard the same thing too coming from Catholics and non-Catholics, John Allen.

People who are not practicing at all Catholic say, I like this pope, this pope is different.

ALLEN: Yeah. Absolutely. I mean, look, the truth of it is that before March 13th when he was elected to the papacy -- and, listen, Mike and Hala, we all know this.

The basic stories we were doing about the Catholic Church were sex abuse scandals and financial meltdowns in the Vatican and bruising political fights.

And, look, those stories have not gone away, but that's not the basic story about the Catholic Church anymore.

The basic story today is sort of rock star pope takes the world by storm, and from the point of view of the Catholic Church and its prospect in the post-modern world, I would say most people look at that as a significant step forward in terms of the kind of attention the Catholic Church is getting.

GORANI: John Allen, thanks very much.

And coming up this weekend, CNN will take a look at Pope Francis, a man of many firsts.


HOLMES: All right, coming up on AROUND THE WORKD, China sending a message to the United States saying, get your financial house in order.

This as the U.S. tries to make a decision over raising the debt ceiling.

We're going to have that when we come back.