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THE LEAD WITH JAKE TAPPER

Interview With Pennsylvania Senator Bob Casey; President Obama Speaks Out; Boehner to Give Statement; Dow Closes Nearly 160 Points Down

Aired October 8, 2013 - 16:00   ET

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


JAKE TAPPER, CNN ANCHOR: Sure, lawmakers are still enjoying taxpayer- funded gym time, but it's not clear if they have towel service, because we all have to make sacrifices during the shutdown. I'm Jake Tapper. This is THE LEAD.

The national lead, the president wrapping a news conference this hour after a terse phone call with Speaker Boehner. But did he just open a slight possibility in which to cut a deal?

Meanwhile, members of Congress can work out at their exclusive gyms which remain open, while the shutdown adds insult to injury for the families of our fallen service men and women. Who is looking out for them? We will ask the head of the House Veterans Affairs Committee.

And the pop culture lead. It would be funny if it weren't infuriating. Few people are smiling about what's happening in Washington right now, but Hollywood has squeezed laughs and drama out of this kind of situation before.

Good afternoon, everyone. Welcome to THE LEAD. I'm Jake Tapper.

We will begin, of course, with this national lead. They're talking, but they're mostly just saying the same thing they have been saying for eight days now, with one notable exception. Less than an hour ago, President Obama wrapped a news conference at the White House and he reiterated his position on the partial government shutdown and the debt ceiling.

He is perfectly ready to sit down and talk with Republicans just as soon as they pass a clean temporary spending bill to reopen the government without any strings attached to Obamacare funding, and a clean bill to raise the debt ceiling, which the U.S. will hit next week. If, this is a big if, if Congress were to pass those measures, they could very well be short-term, maybe just a few weeks' long. President Obama was asked about that possibility and here's that exchange.

(BEGIN VIDEO CLIP)

QUESTION: If that happens, does your offer to negotiate with them on issues like health care and spending and deficit reduction still stand in the intervening weeks (OFF-MIKE) perhaps six weeks or two months' long? BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Absolutely. What I have said is that I will talk about anything. The only thing that I will say is that we're not going to pay a ransom for America paying its bills.

(END VIDEO CLIP)

TAPPER: That may not be much, but it's something. The president seems open to signing short-term bills, but a senior Republican source tells Dana Bash that there are no talks at any level currently to resolve this. House Speaker John Boehner will make a statement at 4:30 p.m. Eastern. You will see it here live.

Earlier today, Boehner once again demanded that the president come to the proverbial table.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: All we're asking for is to sit down and have this conversation. There is no reason to make it more difficult to bring people to the table. And so there's no boundaries here. There's nothing on the table. There's nothing off the table. I'm trying to do everything I can to bring people together and to have a conversation.

(END VIDEO CLIP)

TAPPER: Oh, they had a conversation, all right. This morning, President Obama called Speaker Boehner and essentially said the same thing he told him when they met last week and the same thing he said in his news conference, end the shutdown, raise the debt ceiling. Then, and only then, we will talk.

Short of handcuffing President Obama and Speaker Boehner together like "The Defiant Ones" until they work this out, it's hard to envision how these two are going to come together on this, considering how dug in they both seem at this point. The president says he's open to a short-term clean bill to fund the government, but are congressional Democrats with him?

Let's talk to one of them. Democratic Senator Bob Casey of the great state of Pennsylvania.

Good to see you, Senator.

SEN. BOB CASEY (D), PENNSYLVANIA: Good to be with you.

TAPPER: And I should disclose I'm from Pennsylvania.

CASEY: We're glad you are.

TAPPER: So, do you support a potential short-term spending bill, six weeks, maybe, lift the debt ceiling, reopen the government and then maybe have conversations? Was that something you could go along with?

CASEY: Well, Jake, as you know, I'm just holding this document, this is a 16-page bill to pen -- this is the key to opening the government. That's in front of the House. They should pass it.

What this does is keep the government open to the middle of November. Then we could have a lot of discussions. But the key thing right now is the House should vote today to open the government. They should vote to pay our bills, and then we can have lots of negotiations.

I would argue, Jake, that it's not been reported much, but I would argue that we negotiated and compromised weeks ago when we agreed to a $70 billion cut and they didn't agree to -- or they wouldn't go along with their end of the deal, which was to keep the government open.

TAPPER: Well, that's what Senate Democrats say, Harry Reid and others, that they negotiated with John Boehner, he agreed to this, it was actually a big concession by Democrats, according to this account, but then Boehner went back and he couldn't get his caucus to go along with this.

CASEY: Seven billion dollars is a lot of money.

And, look, we're not asking for something that's unreasonable. We're saying open the government up and then you -- and make sure we don't default. And once you do those two things, then there's lots to negotiate, but this idea that somehow we're going to have some kind of a meeting to talk about how the government opens, when all they can do is pass this bill -- it's 16 pages. They could read it in short order, vote on it this afternoon. The government could open before -- before tomorrow morning.

TAPPER: The shutdown obviously started because Republicans insisted on tying defunding Obamacare to spending in the government. That's just a fact.

But now we're all in this place. And while it's true that House Republicans are taking a beating in public opinion polls, although Democrats aren't doing much better, but House Republicans are getting the brunt of it, according to a new CBS News poll, 76 percent of the American people think the president and Democrats should compromise in order to come to an agreement.

Do the Democrats bear any responsibility now? I will posit that this is -- for the purpose of this question, that this is all the Republicans' fault that we're here, but, even with that in mind, do Democrats have any responsibility for offering some more concessions or anything to help get us out?

CASEY: There's a bill sitting there that they can vote on today.

TAPPER: You're saying that is the concession?

CASEY: I mean, 16 pages, they can keep the government open.

But, look, I think that there are lots of Republicans and certainly lots of Democrats and independents who want to move forward. The problem we have is, this is the Tea Party shutdown. The Tea Party is preventing the opening up of the government. Why else would Speaker Boehner months ago say to Harry Reid and in essence say to his whole caucus, we're going to agree to keep the government open if you agree to have that $70 billion cut?

He went to -- back to the Tea Party and they vetoed that, and they have been vetoing ever since the opening of the government.

TAPPER: One of the things that Republicans have asked for and attached to some of their spending bills, their government spending bills, is a repeal of the medical device tax, which is part of Obamacare. You have been very critical of that tax. Why not just...

CASEY: I have supported a repeal, but the idea that when you want something done on your list of priorities, that you're going to threaten the full faith and credit of the United States and potentially default -- or I should say by way of a default -- and that you're going to shut the government down -- Harry Reid gave an example today where he was unalterably opposed to the war in Iraq and contemplated or at least thought about the idea of trying to move in the direction of a shutdown.

He abandoned that idea because he said, I can't shut the government down because I disagree with a policy, one particular policy, even something as grave as a question of war. So if that's the approach that Democrats have taken when their core issue, in that case the war in Iraq, was at stake, I don't see how Tea Party Republicans can say that, unless they get their way on defunding or substantially changing Obamacare, that we should shut the government down.

TAPPER: We all know now that we're just -- we're looking for a way out. In the past, negotiations between Vice President Biden and the Senate minority leader, Mitch McConnell, have actually helped. There have been two impasses, I think, the last one of these debt ceiling debates, and then also the midnight thing on New Year's about the Bush tax cuts.

There's a Politico story out today saying that Harry Reid insisted to the White House Biden can't be doing that this time. Don't you think that maybe, at this late hour, so close to the debt ceiling, we would benefit from Biden trying to help?

CASEY: Jake, I don't think you necessarily need a new player in this debate.

I think it's very clear -- you know Eastern Pennsylvania. You have in our congressional delegation several Republicans, four, almost -- as many as five in the last couple weeks have said they will vote for a clean funding bill to keep the government operating. That's not agreeing to much, by the way, because we're still -- it's going to be short-term.

TAPPER: Just until November.

CASEY: Because you have got a -- so you have got a bipartisan agreement in Pennsylvania, in our delegation, which is very diverse, to vote for a clean funding bill to keep the government open, and, therefore, to negotiate after we get it opened.

TAPPER: All right. Senator Casey from the great state of Pennsylvania, thank you for coming in. It's great to see you.

CASEY: Thank you very much. Good to be with you.

TAPPER: Really appreciate it.

Up next: Is the president helping his cause with these now daily on- camera barbs at Republicans or is he just reinforcing their line about him refusing to open a dialogue? Our panel will break it down in the politics lead.

And in the pop culture lead, this month's shutdown could be next month's plotline. Shows like "The Veep" manage to spin creative gold out of government shutdowns. That's ahead.

(COMMERCIAL BREAK)

TAPPER: Welcome back to THE LEAD.

Now it's the politics lead. It's a war of words. We're waiting for the speaker of the House, John Boehner, to speak live this hour, responding to President Obama, who, of course, just moments ago tried to call Boehner's bluff in the debt debate.

(BEGIN VIDEO CLIP)

OBAMA: Speaker Boehner keeps on saying he doesn't have the votes for it, and what I have said is, put it on the floor, see what happens.

(END VIDEO CLIP)

TAPPER: By CNN's count, the votes may indeed be there; 200 Democrats and 18 Republicans tell CNN they would vote for a clean continuing resolution to fund the government.

And while the president was speaking, Senator Reid called his colleagues to the chamber of the Senate to talk about the crisis. There, Republican senators took to the floor and said it's time for the higher chamber to lead the compromise.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: There's a number of issues that we could sit down and negotiate within an hour, if we will stop, stop attacking each other and impugning people's integrity and honor.

(END VIDEO CLIP)

TAPPER: Good luck with that.

So what card will the speaker play now?

Let's bring in our panel, senior writer for "The Washington Examiner" Philip Klein, CNN contributor and Democratic strategist Hilary Rosen, and national political correspondent for "The New York Times" Jonathan Martin.

Still feels good to say that. I'm so used to saying Politico.

Jon, I want to play some more sound from the president and get your reaction.

(BEGIN VIDEO CLIP)

OBAMA: Whenever I see John Boehner to this day, I still say, you should have taken the deal that I offered you back then.

(END VIDEO CLIP)

TAPPER: Talking about their discussions about the grand bargain back in 2011. They have been down this road before. How much does what happened in 2011 play into what is happening today?

JONATHAN MARTIN, "THE NEW YORK TIMES": Oh, I think it's huge.

The past is prologue. I think President Obama felt like he was out there on a limb, and it was sawed off. And I think that Speaker Boehner and his folks feel like they were willing to deal and President Obama moved the goalposts on them. A lot of bad blood, lot of bitterness still from that summer of 2011 episode.

Jake, as you recall, that really triggered the start of the '12 campaign. After that deal went south the summer of '11, President Obama started his reelection and that really is where we are now.

TAPPER: And I think -- go ahead.

(CROSSTALK)

HILARY ROSEN, CNN POLITICAL CONTRIBUTOR: I was going to say, at that moment, President Obama was a little farther out than the congressional Democrats in terms of the cuts he was willing to...

TAPPER: Entitlements, yes.

ROSEN: And the cuts he was willing to take and entitlements and things like that.

Democrats said, we're going to stick with you because this is going to mean something over the long term. Then -- now, over this last year, as we heard from Senator Casey just now, Democrats again went to the mat, got more budget cuts. And so I think, particularly now, congressional Democrats are lockstep with the president to say we have given. Concessions now only mean that we lose more in exchange for you doing your job and keeping the government open.

So Democrats don't see negotiating as a real negotiation. They just see it as more concession.

TAPPER: To be fair, it's not unprecedented for government spending bills and the debt limit increase to be accompanied by things that Congress wants from the president. It's happened. ROSEN: But it's, what does the president and what do Democrats get? We have been on their budgets playbook for several years. They have gotten a lot of cuts, as we have been listening to. Are they going to put immigration on the table? Are they going to put a climate change bill on the table?

No. What they want to do is find little ways to whittle away at health insurance. That's not a good starter.

TAPPER: At Obamacare.

ROSEN: Yes.

TAPPER: Philip, how long can Boehner hold this position?

PHILIP KLEIN, SENIOR WRITER, THE WASHINGTON EXAMINER: Well, you know, we'll see how long. I mean, I think once you push up against the debt limit it becomes more problematic.

TAPPER: October 17th. Next week.

KLEIN: I think that's when you're going to see more, you know, more pressure on him to do something. But I think that one of the issues, you go back to 2011, is that what happened there was that we ended up with the sequester, which right now is what Democrats are arguing is a concession that they're giving to Republicans and saying just pass the C.R. at the sequester levels.

So I think one of the problems is that Democrats are making two arguments that are cutting against each other. On the one hand, they're saying just pass a clean C.R. and we'll negotiate with you when the reason that they have the C.R. at that level in the first place is that they held out and took things to the brink on the debt limit in 2011. That's the only way that Republicans have gotten concessions and have gotten compromise from Obama is by taking things to the brink.

TAPPER: Go ahead. You want to say something?

JONATHAN MARTIN, THE NEW YORK TIMES: Yes. I think President Obama has clearly had enough of that. I think he realizes that that kind of negotiating has given them more than he's gotten in exchange. I think that's why he's now taking a hard line. ROSEN: And, you know, I think also, the president is doing something else. He's not up for re-election. He's not playing politics. What he's saying is that we are not going to keep being held hostage here and in essence, he's doing finally some favors I think for congressional Democrats who are tired of budget cuts and want some of their priorities, like immigration or like climate change. The president saying you know what, I got your back this time. That's being very well received by Senate Democrats and House Democrats.

TAPPER: Philip, we talked about this before, but if it weren't for this government shutdown, Obama care and the problems with it would be getting a lot more attention. In fact, the Health and Human Services Secretary Kathleen Sebelius went on "The Daily Show" last night. He started off by saying he was going to download every movie ever made and she could try to get Obama --

ROSEN: Which would have been illegal.

TAPPER: We'll see which one succeeds first. And then, there was also this exchange about how many people have enrolled in Obamacare.

(BEGIN VIDEO CLIP)

JON STEWART, COMEDY CENTRAL: How many have signed up thus far?

KATHLEEN SEBELIUS, HHS SECRETARY: Fully enrolled? I can't tell you. Because I don't know. We are taking applications on the web, on the phone, we will be giving monthly reports.

(END VIDEO CLIP)

MARTIN: What's striking to me is that this is a politician, President Obama, who has run two historic campaigns using the most sophisticated technology that is out there to outpace significantly his two competitors, yet when it comes to governing, for some reason, he cannot apply the same kind of technology and same kind of sophistication to his actual policy making.

KLEIN: The problem is that the law was poorly designed. We're seeing a lot of that now.

TAPPER: The law was poorly designed?

KLEIN: The law was poorly designed. We're seeing now a lot of the fruits of that. I mean, IT professionals for months and years have been talking about how the exchanges weren't going to be ready. We had government reports, oversight reports, months ago saying the exchanges wouldn't be ready.

And the Democratic line and Obama administration kept saying on October 1st, everything will be ready. And nothing's ready. I mean, last time, I was here before the exchange opened, we talked about how the exchanges might not be able to calculate prices well. Well, now you can't even log in to get to the point where you try to calculate the price. That's how poorly managed it is.

TAPPER: Hilary, I know the Democratic line on this is it's good to have this problem, it's so many people trying to sign up, I understand that. But this is a serious problem. This is really bad. If it weren't for the Republicans and the government shutdown right now, this would be getting a lot of attention. And it's not -- it can't be helping the president's cause.

ROSEN: Yes, you know, it's also complicated by the fact that many of the problems are also in the state exchanges, not the federal exchanges. So the ones that the federal government, that Kathleen Sebelius doesn't have enough control over because those states that have opted in have created their own technology and --

TAPPER: Well, the big success, of course, is Kentucky, which has its own exchange. ROSEN: Right. So, there's no question there are problems here, but, you know, it's not a rationale for taking away the health care option for 30 million people.

TAPPER: All right. Hilary Rosen, Philip Klein, Jonathan Martin, thank you so much.

Coming up, you have probably heard it described like an excerpt from a Cormac McCarthy novel, "The Road," an apocalyptic novel. But what would a default really look like? We'll ask some experts.

TAPPER: And what's in a name? A whole lot of controversy if you're the Washington Redskins. Now, the tide maybe turning in this debate.

(COMMERCIAL BREAK)

TAPPER: Welcome back to THE LEAD. I'm Jake Tapper.

We are awaiting remarks from House Speaker John Boehner in just a few minutes.

Meanwhile, in our money lead, a dismal day for the stock market. The Dow did a swan dive amid this partial government shutdown in fears of hitting the debt ceiling next week, October 17th to be precise.

I want to get to Alison Kosik at the New York Stock Exchange.

Alison, I almost hesitate to ask. How low did it go today?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: It went low again today. The Dow falling 159 point, this is on top of falling 136 points yesterday.

You know what this is? This is Wall Street yet again firing another warning shot to Washington saying you know what, you're going to get more of this if you don't get your act together, if you don't come up with a solution, not just on the shutdown but the debt ceiling. And the debt ceiling is what's worrying Wall Street the most.

So, as far as stocks go, down seems like the path of least resistance. You look at the past, what, 11 sessions, it's been down -- the Dow has actually been down 11 times in the past 14 sessions. Many analysts say expect stocks to stay under pressure until a deal is done.

Now, on the other side of this, many really believe that a default is unlikely, that they don't think that congress is going to be that foolish and is going to take it that far. But listen to this, Jake -- if a default happens, there's one analyst who says the S&P 500 could drop 45 percent. That's astounding. And, remember, many of our investment funds, many of our 401(k)s, they track the S&P 500. That could be disastrous -- Jake.

TAPPER: All right. Alison Kosik with some grim news -- thank you so much.

The president in his news conference today made a point to say the private sector agrees with him when it comes to the dangers of hitting the debt ceiling deadline next week.

(BEGIN VIDEO CLIP)

BRIAN MOYNIHAN, CEO, BANK OF AMERICA: It makes absolutely no sense to let it be used as a lever for other things. If you want to change laws on abortion or immigration or you name it, tax laws, whatever, let that be a piece of legislation that people hammer out. But to tie it to something about whether you break the promises of the United States government to people all over the world, as well as its own citizens, just makes no sense.

So, it ought to be banned as a weapon. It should be like -- it should be like nuclear bombs. I mean, basically, too horrible to use.

(END VIDEO CLIP)

TAPPER: Let's bring in matt miller, senior adviser in the Office of Management and Budget during the Clinton administration. He's now a senior fellow at the Center for American Progress.

And here in Washington, Doug Holtz-Eakin, former director of the Congressional Budget Office. He's now president of right leaning policy group, the American Action Forum.

Doug, I want to start with you. Some Republicans are out there arguing that the October 17th deadline is being exaggerated. Take a listen.

(BEGIN VIDEO CLIP)

SEN. TOM COBURN (R), OKLAHOMA: I would dispel the rumor that is going around that you hear on every newscast that if we don't raise the debt ceiling, we will default on our debt. We won't.

SEN. RAND PAUL (R), KENTUCKY: I think it's irresponsible of the president and his men to even talk about default. There's no reason for us to default. We bring in $250 billion in taxes every month. Our interest payment is $20 billion. Tell me why we would ever default.

(END VIDEO CLIP)

TAPPER: Doug, what's your take on that? Knowing you a little, I find it hard to believe you would agree with that.

DOUGLAS HOLTZ-EAKIN, FORMER DIRECTOR, CONGRESSIONAL BUDGET OFFICE: And I don't. The bottom line is semantics aside, failure to raise the debt ceiling leads to very bad economic outcomes and chaos in the financial markets. The Treasury may or may not be able to prioritize interest payments, pay them first. Most people say they can't. You can't put the software in place in time.

But past that, the politics are ugly. We'll pay the Chinese but we won't pay our senior citizens Social Security, and the confidence effects are horrible. I mean, if an international lender looks at a country and says you know, you can make interest payments but you're not paying for your highway bills, you're not paying for Social Security, you're paying for your Medicare -- they're not going to lend you more money. Interest rates are going to go up. We're going to have trouble.

TAPPER: This is a major talking point in the Republican Party now, that it's not that big a deal.

HOLTZ-EAKIN: We don't know and we shouldn't want to find out. This is something that I think is extremely dangerous. Shutdown never historically has been a big deal. Messing with the debt limit is something I don't want to try.

TAPPER: Matt, I want to get your response to this talk from Republicans. You just heard Senator Coburn and Senator Rand Paul talking about not that big a deal to default or hit that ceiling.

MATT MILLER, OPINION WRITER, WASHINGTON POST: I think that's crazy. I think Doug and I agree, even if the Treasury were able to prioritize payments, which it's not clear they can do, it would mean a dramatic cut in the rest of the government which would throw us into a major recession or worse. And so, the idea that we would even be talking about this is nuts.

However, I do think we're here because the Republicans learned from 2011 that Obama, when he caved in 2011, could be pushed to the edge and would cut a deal, and that's why I'm worried that we're really going to be in real peril in the next 10 days or so because Obama rightly realizes he cannot allow this again. That's why he calls it extortion.

But the Republican rump group, Tea Party caucus, thinks that's what he said last time and we got exactly what we wanted, a big deal on spending cuts over 10 years. I think that's a formula for potential unintended, awful consequences.

TAPPER: Doug?

HOLTZ-EAKIN: I think it's very important to recognize the economic consequences are severe and that's why these initial negotiating positions, that's what they are on both sides, really don't mean that much. What matters is getting a deal done, getting it done before the 17th, before drop-dead date, and the sooner the president, Senator Reid and the leader, Speaker Boehner, get together on a deal, the better for the economy.

MILLER: But the other --

TAPPER: Go ahead, Matt.

MILLER: The other problem is, there's a good chance that we'll end up with a series of stopgap measures, so we'll end up in this kind of endless fiscal cliff where the Congress says all right, you know, we're up against October 17th, let's buy another month. Then let's buy another six weeks.

And I think in the eyes of the world, we will look like a totally ungovernable democracy again because both sides have reached a point where because of 2011, because Obama caved, he can't do it again and the GOP wants to call that bluff. It's a dangerous moment.

HOLTZ-EAKIN: This kind of speculation, I don't think, helps. We don't know the end game. What we do know is the president showed some flexibility today, said he might be open to a short-term deal. He's negotiating.

TAPPER: We're going to go to House speaker John Boehner. I'm sorry.

HOLTZ-EAKIN: And let's see how it goes.