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ANDERSON COOPER 360 DEGREES

House GOP Leaders Cancel Vote on Reopening Government, Raising Debt Ceiling; Fitch Puts U.S. on Ratings Watch Negative; Interview with Rep. Peter King; Interview with Rep. Becerra

Aired October 15, 2013 - 20:00   ET

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


ANDERSON COOPER, CNN ANCHOR: Good evening, everyone. We're live tonight from Washington, D.C., where the people who work in the building behind me are racing against the clock and tonight the clock is winning.

A planned House vote on a deal is dead. Take a look at the clock on the bottom of the screen, there is just about 28 hours to go until the debt ceiling deadline. And tonight, there is breaking news, more evidence that this is not a game. If lawmakers don't want to listen to the polls that show how much you, the American people disapprove of how they are doing their jobs, perhaps they will listen to this.

Tonight, the credit rating agency Fitch put the United States on notice that its rating could be downgraded. It's called a rating watch negative. We'll have more on that in a moment.

In a statement the agency said the political brinksmanship could increase the risk of a default. So where exactly are we on a deal to end that risk or at least delay it? All day today we were expecting a vote on the House floor, tonight on a deal to reopen the government and avert a debt default but lo and behold, House Republican leaders have canceled that vote.

We begin with chief -- congressional correspondent Dana Bash who's been closely watching this ticking time bomb that is the debt ceiling negotiation. Also chief business correspondent Christine Romans is looking at what happens if that bomb explodes.

First we begin with Dana.

Where are we?

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Well, I'm just going to read you from an e-mail I just got from a senior Democratic source saying that in the Senate, which is where the action is right now they are, quote, "very close to a deal and a deal could be actually filed tonight."

So that is news I'm literally just getting and we heard the same optimism from Republican sources in the Senate tonight, as well.

COOPER: When you talk about a deal in the Senate, is that under sort of the same guidelines we were talking about last night? BASH: Yes. That's exactly right. In fact this source is saying, it will look almost exactly like the deal that we had before. The question is going to be, what, if there are any tweaks around the edges and also whether they're going to -- be able to do this in an expedited way because it's not so much necessarily the votes at this point, it's the time that is not on their side?

COOPER: Explain that because they have been wanting, the House, to do something --

BASH: Yes.

COOPER: For procedure reasons.

BASH: Exactly. The reason is because there is a way that they can move a bill if it starts in the House than it can be expedited in the Senate, and actually the news I'm also getting right now is that John Boehner, the House speaker, even though he doesn't have the votes to pass an actual bill there is a way that he can potentially send a shell over to the Senate to allow the Senate to move in an expedited way.

What this means is that it will be easier for them to bring up the bill, it will be harder for people like -- let's say Ted Cruz to try to filibuster, even for them to not even bring the bill up but it still might take a little bit of time -- a little bit of time if any senator so chooses to then get this bill off the floor and then get it over to the House.

COOPER: But is there -- any guarantee that a Senate bill would pass in the House?

BASH: No, in the House there is no guarantee. I mean, at this point, first of all, just assuming that it does pass the Senate it is going to be right back in John Boehner's court, the court that he was unable or that the --

COOPER: Or unwilling to even bring -- bring up something --

BASH: Unwilling to even bring it up from the Senate before, but that was before we were really literally up against the deadline. The assumption from people around John Boehner is that he would allow it to come to the floor. I mean, the fact I'm being told that he's going to send a shell to expedite this process certainly suggests that he will allow it to come but we've assumed that he would sort of say uncle before many times and he's kept the process going.

COOPER: So --

BASH: But this time it seems like he's going to try to push it even with Democratic --

COOPER: So they are still in there working?

BASH: The House is gone. They have adjourned for the night. The Senate is technically there, but the Senate Republican leader Mitch McConnell, he's gone home, he says he's just a phone call away. Harry Reid we believe is still in the building.

COOPER: All right. Dana, appreciate that.

Let's bring in our chief business correspondent and "YOUR MONEY" host Christine Romans with more on what the possible downgrade from the Fitch rating agency means.

Christine, what about this potential downgrade? What kind of consequences could it have?

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Well, today was a warning but a downgrade would be the next step. And, Anderson, that essentially means we're at Def Con II here. This is Fitch, the rating agency, saying the United States doesn't have its act together. It needed to raise the debt ceiling before now. It's simply too late to really send the rest of the world the signal that the U.S. has its -- has its priorities intact here.

Now let me be very clear about this. When you -- when you have a warning of a downgrade, it doesn't change your interest rates, it doesn't change your credit rating but if that were to happen, if you were to have a downgrade, it could make it for expensive for the U.S. and for companies to borrow money. It could make it more difficult and expensive to finance our deficit, which is what this is all about in the first place. Right?

So it just really shows, it really shows what a dangerous moment we're in here right now and that the people from outside these halls, from outside these halls, are watching us saying, you needed to already raise the debt ceiling. This is a serious warning that America's government is doing America's economy and the world economy potential harm.

COOPER: And -- I mean, has the shutdown, the fight over the debt ceiling, has it already hurt the economy?

ROMANS: Absolutely. I mean, one estimate today from Mark Zandi, from Moody's Analytics, $20 billion already the damage to the economy but, you know, you talk to families who don't have a disability payment, you talk to people who work with a contract with the government and they haven't been able to get paid or you talk to somebody that's to be licensed and can't do their job because they're tied up in paperwork. They are feeling that at the kitchen table right now.

When you go back to the beginning of the budget battle in 2009, I mean, you're talking about hundreds of thousands of jobs that should have been created that weren't because of the budget battles at a time, at a time when we really need to have some more traction in the economy.

And again, Anderson, from outside these walls, people look in. Wall Street looks in. People like the ratings agencies look in and they say this was another wasted day in Washington and we are too close to the edge.

COOPER: Christine Romans, appreciate the update.

Congressman Peter King, a Republican, joins me now live.

Congressman, thanks for being with us.

REP. PETER KING (R), NEW YORK: Thank you, Anderson.

COOPER: What you have seen today, how do you describe it?

KING: It makes absolutely no sense. I mean, you know, the game is over. We have to get this done. And John Boehner has tried everything he can and there are just some people in our party that no matter what he tries to do they won't go along. So hopefully we'll get some adult supervision from the Senate or something will happen.

But we're talking about a real disaster coming up and Boehner -- John, the speaker has tried everything he can. And no matter what he does, there's a certain group that's not going to go along with him.

COOPER: Well, the speaker could have, I mean, brought up a clean C.R. before. I mean, to say he's done everything, is that really true?

KING: Well, I say he's done everything -- he has two roles. One is to run the House, the other is to try to keep the party united. So he's tried to keep the party united and he's tried to move this forward. And it seems very difficult to keep the party united.

COOPER: What do you make of Dana Bash saying from a source, a Democratic source, that there seems to be perhaps some sort of a deal on the Senate side. Is that something you would support on -- if it came to the House?

KING: I would. Listen. I've said all along this was madness. It was madness to follow Ted Cruz. It was absolute madness to be saying we're going to shut down the government, to defund Obamacare. It never made sense and now we're -- we're down to apparently he's trying to pass a C.R. and take away health insurance from the congressional employees. That's why we shut the government for. It makes no sense.

COOPER: And you said all along that those who were promising their constituents, defunding or delaying Obamacare, that was a fraud.

KING: Yes. Ted Cruz is a total fraud from the start. It never could have succeeded. I can't imagine going into battle knowing you can't win and yet continuing to tell your people you are winning. It's just -- it's like a never, never land. Parallel universes, whatever you want to call it.

COOPER: What do you think would happen with this Senate bill assuming that it's under the same parameters that we've been hearing about since yesterday in terms of continuing the government, ending the shutdown and not really -- it's not defunding, it's not delaying Obamacare? Will -- could that pass in the House? KING: Yes, I'm certain as I can be of anything, I'm certain of that. If it comes to a vote on the House floor, you can probably get all the Democrats and certainly enough Republicans to get it through.

COOPER: And you're confident Speaker Boehner would allow it to come to the House?

KING: I'm -- I don't know what John would do. But I would think, though, if he's going to be involved in expediting the process at all, he probably then would allow it to come to a vote in the House floor. It's getting too close to the wire.

COOPER: Have you ever seen anything like this?

KING: No. Noting this bad. No. Because -- again, I've seen some tough battles. Back in 1995 and '95 you can argue whether or not there should have been a government shutdown. That was over two competing budgets. It was a real philosophical difference and both sides were negotiating throughout.

This is just -- we shut down the government which is really a dramatic thing to do for a goal that we never had a chance of obtaining based on one guy from Texas who somehow convinced 40 House members that this was a crusade they had to carry out.

COOPER: Do you think this has hurt Ted Cruz or do you think this has benefited him among his constituents?

KING: It may have helped him among his constituents but nationally it has to have hurt him. And I just wish that more national leaders in the Republican Party, rather than just criticize Congress generally, which is easy to do, target Ted Cruz. This would not have happened.

(CROSSTALK)

COOPER: Why aren't people naming names? You're one of the few who's -- you know, comes right out --

KING: Just very afraid of primaries or afraid of offending someone or they want to somehow stay above the battle and then come in later on and say it was handled badly. The fact is, we're going to be backed no matter what happens. We're going to be doing this again in three or four moments. He's going to try to rewrite history. He's going to say we were on the verge of winning back in October and Republicans panicked, they quit so soon. We're going to win this time.

That, I can just see that nonsense coming from him that we have to really go out of our way to target him now and show that he's a false prophet and a phony.

COOPER: And to those who say it wouldn't be that bad if the deadline passed, if we didn't raise the debt.

KING: I can't imagine any crazier than that. You know, that's what you expect radical Democrats in the 1960s to say, not conservative Republicans.

COOPER: All right. Appreciate your time. Thank you, Congressman.

KING: Anderson, thank you.

COOPER: Congressman King.

Let us know what you think, follow me on Twitter. Use #ac360. I've been tweeting throughout the hour.

Up next, how all of this drum is playing out in that big white building about a mile and a half from here. We're going to get reaction from the White House when we continue.

(COMMERCIAL BREAK)

COOPER: We have breaking news on the government shutdown and a looming debt ceiling deadline. With a House vote canceled, it looks like the hall -- the ball, I should say, is back in the Senate's court. A source telling Dana Bash the Senate is close to a deal, which could be filed tonight. Meanwhile President Obama today again called on Republicans to get moving.

Here's what he said to CNN affiliate WABC.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We don't have a lot of time and so what I'm suggesting to the congressional leaders is let's not do any posturing. Let's not try to save face. Let's not worry about politics. Do what's right, open the government, and make sure we're paying our bills and we could do that today.

(END VIDEO CLIP)

COOPER: Well, the president also said negotiations have been tough because House Speaker John Boehner, quote, "can't control his caucus."

Joining me live CNN senior White House correspondent Brianna Keilar.

So what's the latest you're hearing over there at the White House about House Republicans canceling the vote and about a possible deal in the Senate?

BRIANNA KEILAR, CNN SENIOR WHITE HOUSE CORRESPONDENT: Anderson, the White House is very much mum, and we just learned a short time ago we definitely won't be hearing from President Obama tonight but I'll tell you White House officials aren't particularly surprise that House Speaker John Boehner did not have the votes and to that end they had House Democratic leaders here to the White House today.

They have been pretty unified and the White House wanted to make sure that they remain unified if there was indeed a vote. But really right now the president is focused on the Senate. The White House is certainly working in concert with Senate Majority Leader Harry Reid as he is in negotiations.

COOPER: And focus, as we said, has shifted back to the Senate. How confident are the president and his team that the Senate can get a bill to the House before default? I mean, the clock really is ticking here.

KEILAR: The clock really is ticking and I've been told by a White House official very close to the president that through this whole process he has been concerned and frustrated. But you don't really get the sense that the White House is in sort of a full freak out or anything at this point. There's still time at this point, Anderson.

Certainly Thursday is the deadline where the U.S. is expected to run out of its borrowing authority but that doesn't technically mean that that is when the default happens. What the White House is stressing, though, is that is really the last surefire off ramp to avoid a default. So they really do feel that that is the deadline.

COOPER: And -- I mean, we obviously don't know precisely what a default would look like but for the White House -- I mean, they obviously are extremely nervous about financial markets tomorrow and beyond.

KEILAR: They are certainly very nervous. One, as one White House official put it to me, the markets have been behaving vaguely rational at this point up until now so it will depend tomorrow certainly on whether the markets look at what's going on in the Senate and whether they are reassured.

I think the White House is more reassured that the Senate can maybe come to a compromise but I'll also tell you, Anderson, nothing motivates lawmakers like markets going bonkers. So we will certainly see if that happens tomorrow and if that adds to the pressure to really lock in a compromise and really for the House to essentially be forced to swallow a bitter pill.

COOPER: All right. Brianna Keilar at the White House, thanks.

Congressman Xavier Becerra was in the Oval Office for a meeting between the president and vice president and the House Democratic leadership today. With the Senate bill on hold, Becerra had strong words for his Republican colleagues in the House even before tonight's vote was canceled. Listen.

(BEGIN VIDEO CLIP)

REP. XAVIER BECERRA (D), CALIFORNIA: For the House Republicans to now come out and say they're going to do something contrary to what even their Senate Republican colleagues are discussing seems to be a reckless attempt to try to circumvent what the Senate is doing, which at this late hour, less than two days before we, for the first time, go over the cliff and allow our economy to be put at risk by not paying our bills, or pass bills, that to me seems very irresponsible and it's certainly falls short of being common sense.

(END VIDEO CLIP)

COOPER: And Congressman Becerra joins me now live.

What do you make of what is going on at this late hour? I mean, are you confident that a deal can get done by the deadline?

BECERRA: I'm pretty confident that a deal could get done by the deadline if Republicans don't put up procedural barriers to get it voted on and done -- to the president. So if the Senate Republicans and a bipartisan basis work with Senator Reid and the Democrats, should get done quickly. But --

COOPER: So if they can file something tonight, then tomorrow what would happen?

BECERRA: Well, tomorrow the Senate could try to put it up. So long as there aren't objections by other Republicans, Senator Cruz and others, it could sail through the Senate, bipartisan, could come to the House. If Senator -- if Speaker Boehner doesn't put up barriers here, should be able to sell on a bipartisan basis.

Anderson, remember, we've had the votes to stop the government from shutting down, to keep us from defaulting on payment of our bills from the very beginning.

COOPER: Right. Had it been allowed to come out to a clean C.R.

BECERRA: That's right. That's correct.

COOPER: How confident are you that Speaker Boehner would actually bring it up, would allow it to come to the floor?

BECERRA: Well, I would hope now that he's seen that this effort on the part of Republicans in the House to do an effort that's purely partisan, now that that's collapsed, that he would see that. If he doesn't want to play with other people's money which is what Republicans in the House are doing right now, they're playing with other people's money, when I have a senior back home who worked for 50 years and earned his Social Security, and now he's being told that that may be in jeopardy, Republicans are now playing with other people's money.

If the speaker doesn't want to play with other people's money, he'll now put a bill up that will get a bipartisan vote and pass quickly.

COOPER: What did the president say today at the White House when you were there? But I mean, he said he would not vote for a House bill when that was -- when that was being discussed.

BECERRA: Right. He made it very clear that the shenanigans that House Republicans were playing, wasn't going to do it. That he was supportive of the process at work in the Senate bipartisanly, that he was hoping that we could move quickly. He -- I think he used the words modestly confident that we can get this done on time, and I think once again, it's the Senate that has the adults and if they come forward with the bill and the Republicans don't play shenanigans here in the House, we should be able to get this done.

COOPER: Is it depressing to be part of a legislative body that you have to look to another legislative body to -- in your words, to be adult?

BECERRA: No one runs for office to watch this unfold. As I said before, the House of Representatives is not a sandbox. We've got work to do. We're adults. And the consequences are real. We're not talking about some game playing here. If we don't do something about paying our bills, interest rates could easily rise quickly.

COOPER: Critics of this are saying well, look, it's still kicking the can down for later negotiation. What -- as a Democrat, what are you willing to give on -- if there are discussions and negotiations, conversations, whatever you want to call them, what are you willing to give on? Is there something in Obamacare that you would be willing to --

BECERRA: Anderson, one of the things that we want to do is make sure we have a budget for the year, not for six weeks or two months. For a year. But we compromised because Republicans weren't willing to do a budget for a full year. We compromised on passing the debt limit vote to let our bills be paid because we didn't think that you should do it for six weeks or two months but for a full year. So we compromised to something less.

We compromised on the number for the budget itself. Republicans wanted a lower number. We believe that we need to make those investments in our schools, in our military, and we wanted a higher number. We compromised to the Republican number. So we've made a number of compromises. What we're willing to do is move forward. We don't want to shut the government down.

COOPER: Are you saying no more compromises? Or are you --

BECERRA: No, no, no. And we could have those conversations once we get the government up and running again, put Americans back to work, and we don't have this default looming over our heads, we can talk about anything and everything.

COOPER: There's a lot of Republicans who say look, that doesn't -- that's not the way it works. That unless there is this threat of a default, Democrats aren't willing to come to the table.

BECERRA: The way it works is people elects -- elect us into our job and our job is to put a budget in place and to not default on the payment of our past debts. So if Republicans are asking us to make concessions to do our job, that's a political game, and people should not be playing a political game with other people's money.

COOPER: Congressman Becerra, appreciate your time.

BECERRA: Thanks, Anderson. COOPER: Thank you. I know it's been a long day.

Up next, we're going to have more on the possible credit downgrade with no deal yet on Capitol Hill. A debt ceiling deadline less than 28 hours away. I'll talk with former labor secretary, Robert Reich.

(COMMERCIAL BREAK)

COOPER: Welcome back. More on our breaking news. The source telling our Dana Bash the Senate is close to a deal and it could be filed tonight. All this with less than 28 hours to go before the U.S. hits the debt ceiling.

And as we've reported earlier, the credit rating agency Fitch has put the United States on notice that its rating could be downgraded if the ceiling isn't lifted in time. Warren Buffett is comparing playing politics with the debt ceiling to using a nuclear bomb, while Tea Party Republicans have downplayed the impact of a potential default.

Joining me now, Robert Reich, former labor secretary and now professor of public policy at the University of California-Berkeley. He's in a new documentary, "Inequality for All," in theaters now, where he described the impact of the widening income gap in the United States.

So, Mr. Secretary, this announcement from Fitch today, putting the U.S. on notice for a potential downgrade, how serious a warning is that?

ROBERT REICH, FILMMAKER, "INEQUALITY FOR ALL": It's a very serious warning, Anderson, because it indicates that there -- the danger of a default is growing. Now this is something that investors already know. Now the reason that short-term interest rates are spiking on Treasury bills already is because investors are essentially saying look, the risk is growing. Even if the risk is still less than 50/50 it is growing and we demand more interest to bear that risk. So Fitch's warning is simply reflecting the skittishness of investors already.

COOPER: Does it have more to do with governance and the U.S.' willingness to pay than it does about the U.S.' ability to pay?

REICH: It has nothing to do with the U.S. ability to pay. I mean -- we are the richest nation in the world. We can obviously pay our debts. This -- this has to do entirely with the government -- the governing ability of the United States to actually fulfill its commitments, to pay what it owes, to pay what it owes its creditors and ultimately to pay its bills overall.

And what Fitch is basically saying is, here's a warning, here's a yellow warning light that is flashing, it's like Standard & Poor's did in 2011. A warning light that investors, you may not be paid. There is a possibility you're not going to be paid and again investors already, the sophisticated investors already know that there is a Sword of Damocles hanging over the American economy. COOPER: So if Congress isn't able to act on time by tomorrow night at midnight the nation will then technically default. Realistically, what does that mean?

REICH: Well, it's not clear that the nation will default on its debts -- on its debts by midnight tomorrow. Jack Lew says tomorrow there will be a -- there'll be about $30 billion left. There will still be some tax receipts coming in so the doomsday, the actual hour or the day when we don't pay our creditors what's due them, may be a few days after tomorrow, may be next week, we don't know.

But certainly beginning Thursday, if nothing is done we are in deep trouble and creditors are going to be demanding even more of an interest payment against the risk that they're bearing.

Ultimately, this is crazy. I mean, we're talking about a lunacy here, because we are -- we are playing with the full faith and credit of the United States, which is the building block of not only the United States economy, Anderson, it's the building block of the global economy. This is where savers around the world put their money into treasury bills in terms of safekeeping.

If it's no longer a safekeeping device, if it's no longer a foundation stone of the global economy, then everybody is in trouble around the world.

COOPER: Robert Reich, appreciate your time tonight. Thank you.

I want to bring in our political panel, chief national correspondent John King, chief political analyst Gloria Borger and senior political analyst and former presidential adviser David Gergen.

John, what do you make of what you have seen here today and what's going on right now?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: I just want to tell you right now we're getting some mixed information on this because it is so fluid. But from a leading Senate Republican source, I'm just told this, and I want to read it to get out the words exactly right. Quote, "We're nearing a solution but nothing will be filed tonight."

COOPER: OK.

KING: Which means you start the clock tomorrow, if they have a deal, which is still an if, they are talking optimistically, but they've been talking optimistically on the Senate side, then they took that pause to see if the House could bail into the rescue.

So let's assume the Senate deal is done tomorrow and filed, then the question is, we assume, because he's on notice, saying he's likely to object, Ted Cruz and a couple of his Tea Party allies in the Senate, do they find a way around that or do we have a two- or three- day period in the Senate where we debate this. Then it goes over to the House, which is we've learned again today is the land of quick sand and never, never.

COOPER: So --

KING: You don't know what's going to happen.

COOPER: If that is the case then there is no way the deadline can be meet -- can be met?

KING: It is -- I think it is almost impossible to see a scenario under which they make the deadline. That doesn't mean they don't have a deal that they're working on --

COOPER: Right.

KING: And maybe that gives some comfort to the markets and as former secretary of labor just noted, Jack Lew does have some, you know, a little bit of wiggle room.

COOPER: But you're talking about two, three more days.

KING: Unless somebody finds a way to pull a rabbit out of a hat, it looks like we're going to go for the weekend.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: And you never know what they can do procedurally, right?

KING: Right.

BORGER: And you -- and you don't know officially what Ted Cruz is going to decide to do, whether he's going to decide to hold this up in anyway. But essentially what you're saying is that they would fiddle while Rome burns, and I think -- I think that's really what it is and it's what we've been watching. The Senate stepped aside and said OK, let the House go first. The House speaker thought he had the votes, clearly didn't.

Now this could land right back in his lap and he's going to have to decide and I -- you know, this is going to be a very tough decision for this House speaker, monumental, whether he values his speakership potentially more than -- than this, you know, than this cataclysm. I mean at some point, he's going to have to decide whether he brings that to the floor of House or he doesn't. Because if he brings it to the floor of the House, I would assume, that it would pass.

COOPER: But you're saying, before it even gets there, it could be bogged down in the Senate --

BORGER: Right. Yes.

COOPER: -- with some procedural motions of Ted Cruz and others --

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Right, and it does appear. I think they're moving toward a deal. I think we'll probably have a resolution this week. It may well go past Thursday. We run out of borrowing authority on Thursday. We don't go into technical default but we do run out of borrowing authority. That's never happened. I think one thing is it has -- we do know tonight, Anderson, for sure, is all these people are saying it doesn't make any difference if we default. We don't have to worry about it. It won't cause any damage.

The Fitch report tonight makes it clear that we're likely now having a downgrade in our credit rating. That's going to hurt a lot of people. It's going to send interest rates up. It's going to hurt the home buyers. It's going to hurt consumers. It's going to hurt our economy.

COOPER: No doubt about it. That will happen.

GERGEN: These people are wrong --

BORGER: Of course.

GERGEN: It was an extreme whacko kind of view. It's just saying climate -- you know, denying climate change.

KING: But they don't --

GERGEN: And we -- I think it's now clear.

KING: But there are a descent number, not a majority by any means, but you have whether it's Ted Cruz, Mike Lee, Rand Paul to a lesser degree on the Senate side, a group of 25 to 35, sometimes 40 on the House side, who don't believe what Fitch says, who don't believe what you say, who don't believe what I say, don't believe what economists say even if they worked in Republican administrations or Republican campaigns. That may be the way to get the message. This if happens and go home and the local truck dealer or local family whose 401k went off the cliff, that maybe the only way to get through to them that this does matter.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: You know, I think what we're watching here is not so much politics as it is a matter of theology for some of these members of Congress. You talk to them, these folks who came here to defund Obamacare which, by the way, is not what they would wind up doing. They said that was their job.

That what was they were elected to do. They hadn't done it after 40 something votes so now they decided, OK, let's attach it to a must pass piece of legislation. By the way, what they end up with is nothing like that and the government goes into default and people are backing away from them and allowing this to occur. That's what is difficult to kind of understand.

GERGEN: I was -- one other thing, Anderson, on this downgrade, I think one thing is clear that we've been downgraded in the eyes of the world. This has not just happens once. It's now happened twice and people look at this and say you know, this was a country we followed their leadership because we respected them. We not only love America, but respect the way they do business and here we're failing ourselves and we're failing the world. KING: There is a year between now and the next election and we know anything can change between now and the next minute. The great irony at the moment is what do these Republicans want? They wanted to defund Obamacare. How do you do that? You win elections. The Republicans six weeks ago thought they could gain seats in the House and maybe get control of the Senate. That would give them the votes they need. It would give them the votes they need to make significant changes. As we speak tonight, Republicans that look at House seats think that prospect has now gone in reverse because of this --

COOPER: For all these congressmen and congresswomen who ran and continue to send out newsletters and fundraising letters, send us money, we're on the fight to defund Obamacare. That just wasn't true. They knew that was not true.

BORGER: That's what is the kind of most startling thing to me about all this, when you talk to some conservative Republicans who are not a member, but just conservative Republicans, what they say it was unfair to promise something you knew at the beginning of this fight, you could never deliver. And it was scenical because they knew they were never able to do it so you raise money off of it. Ted Cruz gets a great national prominence and clearly running for the presidency, but ask most Republicans, they say this was never going to happen and we promised something that --

GERGEN: Don't you think, Gloria, when this is all over, we have a deal but no deadlines out there. Those same people are going to crank up new letters --

BORGER: Of course.

KING: When are these deadlines? January, February in the election year. There are some raising hundred off this and you hear from others that the Tea Party is giving up on the House and will start to build their list for the primary challenge. Look, part of this is lack of leadership by everybody, but part of this is we're watching this Republican circling firing squad play out and we don't know how it will end.

BORGER: It's really mean and nasty because it's Republican against Republican. I mean, this is the family broken apart, right?

COOPER: So much for Reagan --

BORGER: Not anymore.

COOPER: Gloria, David, John, thank you very much. A lot more to talk about. For more on the story, go to cnn.com.

Just ahead, Capitol Hill is looking like a ping-pong table. One thing is moving forward and then nothing is moving forward. I'm going to talk strategist for both Democrats and Republicans of how to end this political whiplash.

(COMMERCIAL BREAK) COOPER: Well, for the past 15 days especially for the last 48 hours if you've been following the bouncing ball and the struggle to get a deal in Congress, you probably have whiplash right now. First there is hope then there is still far apart then there's a productive meeting then the meeting that gets cancelled and tomorrow is going to be a bright day and progress is torpedoed. This is let's make a deal, what's behind door number one. It's hope for an end to this, a hope that's constantly changing.

(BEGIN VIDEOTAPE)

SENATOR MARK PRYOR (D), ARKANSAS: I think we'll get an agreement today.

REPRESENTATIVE STEVE SCALISE (R), LOUISIANA: We're not there yet.

SENATOR HEIDI HEITKAMP (D), NORTH DAKOTA: I think it's going pretty well if the adults have taken over.

REPRESENTATIVE JOHN BOEHNER (R), HOUSE SPEAKER: There had been no decisions about what exactly we will do.

SENATOR JOHN MCCAIN (R), ARIZONA: A tentative agreement has been reached.

REPRESENTATIVE CHARLIE RANGEL (D), NEW YORK: This is not a compromise.

REPRESENTATIVE NANCY PELOSI (D), MINORITY LEADER: Why are they doing this to the American people?

SENATOR JOHNNY ISAKSON (R), GEORGIA: There will be a deal in my opinion.

REPRESENTATIVE JOE BARTON (R), TEXAS: There will not be a vote.

REPRESENTATIVE STEVE ISRAEL (D), NEW YORK: We are agreeing.

SENATOR HARRY REID (D), MAJORITY LEADER: This bill they are saying over here is doom to failure.

(END VIDEOTAPE)

COOPER: Joining me live CNN political commentators on both sides of the aisle, Republican consultant, Alex Castellanos and Democratic strategist Paul Begala. Paul, I can barely keep up with all the zigs and zags, what do you make -- I mean, to you what is the story right now?

PAUL BEGALA, CNN POLITICAL COMMENTATORS: The story right now is that the House Republican Party is a failed state in the same way that Somalia or Libya is a failed state. There is no centralized leadership. There are vengeance seeking groups. That's where all the news is. Right now, very question quietly, Harry Reid, the Democratic leader of the Senate and the counterpart are cutting a deal and I'm told they are likely to have it done maybe tomorrow morning and that is I think the last best hope to avoid default, but can John Boehner take this completely fractious conference of his and get an honest up or down vote on what should be a pretty good deal.

COOPER: That's essentially what President Obama said today it's hard to make a deal with Boehner because he's in the in control of the caucus. Do you believe that?

ALEX CASTELLANOS, CNN POLITICAL COMMENTATORS: Well, the Republican Party is divided no question about that and they won't compromise, but the Democratic Party is in worse shape I think they are united and they are unwilling to change. Paul, I think --

COOPER: Do you think the Democratic Party is in worse shape than the Republicans right now?

CASTELLANOS: Long term I do. I would rather be a Republican today and the reason is that this Democratic Party -- let's remember how this got started. Everything was going well before Republicans started talking about the debt limit. We're $17 trillion in debt and social security and Medicare headed into bankruptcy. Our economy was stagnant because Washington sucking so much money out of it and then we have this wonderful Obamacare rollout. My point, Anderson, is that Republicans are trying to change Washington.

COOPER: So you see long term people will remember Republicans trying to change Washington?

CASTELLANOS: If Republicans learn principles are good for more than saying no. Right now this is the worse face of the Republican Party. They are doing something necessary and important. Look, if I have a toothache and a choice between going to a dentist, even a bad dentist or a theater critic, I'll probably go to the dentist --

COOPER: Isn't it important to focus on Obamacare in this way?

CASTELLANOS: I wouldn't have chosen the particular path Ted Cruz has chosen. I think Senator Cruz can't tell the difference between standing for principle and charging a machine gun. It turns out there is a difference. Math is math. Republicans only control one body of the House. We have a president. We have a Senate. Math is math. This is exactly where it was when all of this started. It was a poor strategy.

COOPER: Paul --

CASTELLANOS: Let's remember who shares in the blame and that's a Democratic Party that is bankrupting the country and refuses to change.

BEGALA: Democratic Party, by the way, balanced the budget and allowed Republicans to squander --

CASTELLANOS: Not this president, right, Paul?

BEGALA: The problem here is math. The number is 217 which is the number of votes you need in the House of Representatives. CNN's own count and many other independent media verified says there is over 217, maybe 220 for a vote to extend the nation's credit and to pay the nation's bill and keep the government running and then we can negotiate all this.

You don't like Obamacare, I want a gun safety bill, there is a million things for this building to work on but first, but first they have to actually keep the government open and pay our bills. There is a majority to do that. Speaker Boehner will not let the housework its will. That's what frustrates me. He's the speaker of the whole House and a constitutional officer and he has a higher duty than just to try to pass things with only Republicans.

COOPER: And you say that's what he's within doing is holding onto the speakership and benefit the Republican Party.

BEGALA: I don't think he's benefiting the party. I think he's being honest saying if I can't get 217 Republicans only, I won't even bring it to the floor. Well, that's not the way the House is supposed to work. It's supposed to be a simple majority and get that together from two parties. Wouldn't it be better to have a bipartisan majority to keep the country running?

CASTELLANOS: It's not the way the Senate or the president is supposed to work. He is supposed to be the president of the Republicans and Democrats, but this president seems very happy demonizing Republicans, not negotiating. Politics is broken out in Washington. Who knew? That's -- I think there is enough blame to go around on both sides. I think Speaker Boehner is going to open the floor up. There is no way this thing gets through in the near future --

COOPER: Do you believe --

CASTELLANOS: John Boehner opens up the House.

COOPER: Do you believe Democrats when they say look, we'll pass this, get past this -- open up the government, get past the debt showdown and then everything -- we'll talk? Do you believe that?

CASTELLANOS: That's been the story for the past decade in Washington and got us $17 trillion in debt. Once there was a young senator named Barack Obama who voted against the debt ceiling and the argument he made is we got to stop passing the buck and debt on to our children. It's the argument Republicans are making now. What's the difference, Paul?

BEGALA: He was wrong then. He should have voted to extend it. He lied to the country, shut down the government and keep veterans from getting benefits and social security recipients --

COOPER: He voted that knowing he -- it was a political --

BEGALA: I didn't defend that vote.

CASTELLANOS: It doesn't count -- COOPER: I'm not saying that. I think it is what it is.

BEGALA: He didn't shutdown the government.

COOPER: Alex Castellanos, Paul Begala, gentlemen, thank you.

Coming up, just ahead, millions of veterans may face hardships if the shutdown continues. Tonight announcement about a new help that is coming their way, it's a 360 exclusive next.

(COMMERCIAL BREAK)

COOPER: We have breaking news tonight on the government shutdown and looming debt ceiling deadline with the House vote for tonight cancelled, the Senate deal says to be closed, but sources are saying different things frankly about whether there will be anything actually filed tonight.

Here in Washington today nearly 100 veterans gathered at the National World War II Memorial to protest the partial shutdown. They said more than 5 million vets may not receive benefits next month if gridlock continues. They could be left without money for rent, education and other critical expenses.

Private groups though had been stepping in to help. The Fisher House has offered to pay death benefits to families of slain troops during the shutdown and tonight another private organization is offering help to veterans. Steve Nardizzi, the executive director of the Wounded Warrior Project joins me with this 360 exclusive.

Steve, thanks very much for joining us. Compensation checks to 5.1 million veterans won't be issued November 1st if the shutdown doesn't end soon. You're here to make an announcement that might provide relief to some of those vets, what is it?

STEVE NARDIZZI, EXECUTIVE DIRECTOR, WOUNDED WARRIOR PROJECT: We are announcing, actually, today we established a $20 million fund to provide emergency financial relief to wounded warriors and families, if the government shutdown continues at November 1st deadline comes and they don't get the benefits they have earned.

COOPER: That's an awesome thing, $20 million fund. How would that actually work?

NARDIZZI: Well, what we're planning on doing here is we work with over 40,000 wounded warriors and family members from the conflicts, warriors that have severe injuries, burns, amputations, traumatic brain injury who rely on disability benefits and while we can't replace disability benefits, we can at least provide some means of support to pay bills, feed their family until this government shutdown ends. We'll be cutting checks, if they don't get their check November 1, checks of $500 will go out to each of the families that we've been working with.

COOPER: It's crazy to think of our veterans, the people that served this country and sacrificed limbs and lost friends and loved ones and many cases lost lives and their families need these benefits, they are the ones that will start suffering on this particularly come November 1st. There was a rally today as I said at the memorial and said the unity is a unity we do not see here in Washington. Do you agree with that?

NARDIZZI: Well, what I would say is yes, I think, you know, luckily the American public stayed behind the veterans. Our veterans stay behind each other. That's what we're trying to do with this financial commitment with the 20 programs that we provide them services with to empower them and certainly think we would like to see all elected officials see that unity and fulfill that, give them benefits they earned with service and sacrifice.

COOPER: So $20 million in aid, how many wounded warriors, veterans, families can you actually reach with that?

NARDIZZI: We're going to reach almost 40,000 warriors and families. We would love to be able to reach all 3.8 million veterans that might not receive their disability checks on November 1 and we'll continue to advocate for the federal government to do their part and come together and ensure they receive benefits, but we can reach those 40,000 families that we've been working with and supporting in their transition home.

COOPER: Steve Nardizzi, appreciate you being on tonight. It's an awesome thing you're doing. Appreciate you making that announcement tonight. Thank you.

There is a lot more happening tonight. Stephanie Elam has a 360 news and business bulletin, Stephanie?

STEPHANIE ELAM, CNN CORRESPONDENT: Anderson, the alleged al Qaeda soldier pleaded not guilty today to terrorism charges in federal court in New York. He's accused in bombings in the U.S. bombings in 1998. He was seized by U.S. forces in Libya two weeks ago.

London police received nearly 1,000 responses for after appealing for new information in the disappearance of Madeleine McCann. She vanished in Portugal in 2007. The BBC broadcast sketches of a man seen the night Madeleine disappeared.

President Obama awards the Medal of Honor to retired Army Captain William Swenson. He received the nation's highest military citation for extraordinary service in Afghanistan in 2009 when he braved enemy fire to retrieve the bodies of fallen comrades.

Six months ago today two bombs exploded at the Boston marathon killing three and injuring hundreds, including Adrianne Davis, a professional dancer who lost her left leg below the knee and vows to dance again. Her husband Adam was injured as well, though, not as severely. Tonight they are documenting Adrianne's road to recovery for 360 recording her life on video diaries, allowing us to watch as he takes her first steps on her prosthetic leg.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Very, very good. Take your time.

ADRIANNE HASLET-DAVIS, LOST PART OF LEFT LEG IN BOSTON MARATHON BOMBINGS: It feels really good just to stand upright now. I haven't stood up in a really long time. I almost forgot what it felt like. It reminds me of dancing and I so desperately want that again, and I'm so close. It feels really good.

(END VIDEO CLIP)

ELAM: Later this week on 360, we'll have a full report on Adrianne's journey to recovery over the last six months and Anderson, I know you spent time with her but amazing how she keeps her optimism despite all she's going through.

COOPER: It's great to see her up and walking and she wants to start dancing again and I promised I would take dancing lessons with her because she's an instructor. I'm regretting that because I'm a terrible dancer.

ELAM: For the right cause.

COOPER: The very latest on the debt ceiling negotiations. Live report from chief congressional correspondent Dana Bash next.

(COMMERCIAL BREAK)

COOPER: Earlier we showed a montage showing how much they said there was and wasn't a deal. Let's check in with Dana Bash. What is new since we last spoke at the top of the hour?

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: What is new is we do not expect the Senate leaders to announce a deal tonight, but not because a deal isn't done. In fact, a senior Democratic source says to get it done they will give in on an issue they are hoping for, the constituents wanted to delay an employee fee, with regard to members of the unions. Democrats are ready to back off on that to get the deal with the Republican leader.

We expect it to be announced as early as tomorrow morning, formally. Probably pretty early just to make as you were that the markets are not rattled because they do think that it could take potentially up until Saturday to get this through the Senate. That would officially blow through the deadline, which is Thursday.

COOPER: All right, Dana, appreciate the update. That does it for this edition of 360. We'll see you again an hour from now, 10:00 p.m. Eastern for AC 360 LATER. We will be live from Capitol Hill. "PIERS MORGAN LIVE" starts right now.