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U.S. Federal Government Partial Shutdown Continues; Debt Ceiling Deadline Approaches; Senate Races to Finalize Deal; Deal to be Announced; Dow Jumps on News of Deal

Aired October 16, 2013 - 12:00   ET


JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: If and when we get out of this mess today, there's nothing -- there's nothing that guarantees that this doesn't happen all over again in January or February.

WOLF BLITZER, CNN ANCHOR: Yes, you're absolutely right.

ACOSTA: The president may have to, once again, hold his ground, as he did in this scenario.

BLITZER: The Senate chaplain is beginning with a prayer. Let's listen in.

UNIDENTIFIED MALE: Or they are Democrat, Republican, or Independent, they are Americans. As they remember their accountability to you and to history, empower them to keep our nation strong, staying true to their oath to defend our Constitution against external and internal foes. Lord, keep them from making any decision that will seem reckless in the sober light of hindsight. We pray in your mighty name, amen.

UNIDENTIFIED MALE: Please join me in the Pledge of Allegiance to the flag.

I pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation, under God, indivisible, with liberty and justice for all.

UNIDENTIFIED MALE: Here, I'll give these back. The majority leader.



UNIDENTIFIED FEMALE: Motion to proceed to counter number 211 as 1569 a bill to ensure the complete and timely payment of the obligations of the United States government until December 31, 2014.

REID: Following the remarks of the Republican leader and me, the Senate will be in a period of morning business where senators will be allowed to speak up to 10 minutes each, or at least be in a situation where people can speak up for 10 minutes each.

Mr. President, I'm going to wait until Senator McConnell gets to the floor. So I'm not going to give any long remarks here. In fact, I'm not going to give any long remarks at any time, but I do have a few things to say.

While we're waiting for Senator McConnell, I haven't had the opportunity to say this. Admiral Black has, for me, during this long period of crisis we've had in the country, been a voice of stability, a voice of inspiration to me and I'm being very selfish in saying me. But it's been for the entire Senate and for the country. His heartfelt prayers are so timely and so sensitive to the needs of our country and the need that we all have to call upon our spirituality to get us through periods of difficulty. I speak for - I can speak for the entire Senate by saying how much we admire and respect this good man, who is a counselor and a leader in the Senate as much as anyone that serves in this body.

I note the office (INAUDIBLE).

UNIDENTIFIED MALE: The clerk will call the role.


BLITZER: The floor of the U.S. Senate. You heard Harry Reid, the majority leader, saying he wanted to wait for the minority leader, Mitch McConnell, to come up. And that's presumably when they will make their announcement about this -- let's call it a tentative deal that appears to be in the works. A deal that would get the government fully operational, at least for a while, until January 15th, and raise the nation's debt ceiling until February 7th.

Gloria Borger is here. Once again, we want to welcome our viewers here in the United States and around the world.

Gloria, what does it say about these two leaders, the majority leader and the minority leader, that apparently they've been able to do what so many other folks couldn't do, especially in the House of Representatives, work out a deal?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Well, it says a couple of things. First of all, as you know, Wolf, they're not close friends.

BLITZER: Harry Reid and Mitch McConnell.

BORGER: I mean Harry Reid and Mitch McConnell have effectively campaigned against each other, not in their states, but raised money for the campaign committees to defeat the other one. McConnell's in a race now for re-election and Harry Reid is helping his opponent. So they're not close.

But what it does say is that each believes that they can deliver their own caucus and that they can speak for their caucus when they cut a deal. Mitch McConnell has someone problematic in Ted Cruz, but I think that he knows that the rest of his caucus wanted to get a deal done, as did Harry Reid.

I think both of them are experienced, wiley (ph), tough negotiators, Wolf, and they let the House -- they watched the antics in the House and when John Boehner couldn't get anything done, I think they were a little surprised at what occurred, but then they decided, OK, we've got to step in now because we're at the precipice of something really catastrophic and we cannot let this happen.

BLITZER: It's interesting, the last time we went through this kind of fiscal crisis, averting the fiscal cliff, Mitch McConnell was very much involved in a last-minute deal.


BLITZER: But that time it was the vice president, Joe Biden, who worked -- represented the Democrats and worked out the deal with him. Harry Reid came on board afterwards. But this time Harry Reid really wanted to take charge.

BORGER: Well, Harry Reid wasn't happy with that deal in 2011. Looking back on it, I don't think the president was very happy with it either. He didn't like the sequesters that came as a result and so I think both the president said I'm not going to do that all over again, which is why he stood firm this time, and Harry Reid said, you know what, let me do the negotiating this time. I don't want Joe Biden to do it. I can get this done.

Harry Reid is tough. He's very tough, Wolf. He's very wiley. He figured out a way to get this done. And if you look at the deal that Dana Bash has been reporting, that we've been talking about since yesterday, it is essentially a white flag. The only thing that's in it is an anti-fraud measure on Obamacare, which basically everybody can agree to.

BLITZER: Who can oppose that?

BORGER: Who can oppose that? The Republicans in the House have marched themselves right over to the point of irrelevancy, where effectively after two weeks of this, Wolf, it didn't matter what they did. We wound up with a deal that they could have had on day one. And they've lost 20 points in the opinion polls, as well.

BLITZER: Yes. All right, we'll see what happens. It's not a deal until there's a deal.

BORGER: That's right. That's right.

BLITZER: Until the president signs it into law.

BORGER: That's - and we don't know what Ted Cruz is going to do.

BLITZER: We don't know what - you know, there's a lot of questions and we're awaiting the majority leader and the minority leader, Harry Reid, Mitch McConnell, they're going to be making what amounts to a joint statement on the floor of the U.S. Senate. As soon as they have that, we'll have live coverage of that.

Also this hour, we're waiting for Jay Carney, the White House press secretary. He's going to be briefing reporters. I suspect that could be delayed a little bit. They want to hear what the Senate leaders have to say, what the House leaders have to say. At some point, the White House will weigh in. We'll see exactly when that happens.

We do know that the markets are weighing in. Zain Asher is joining us from the New York Stock Exchange.

Pretty upbeat about what's happening here in Washington today, Zain.

ZAIN ASHER, CNN CORRESPONDENT: Yes, Wolf, certainly there is a strong feeling of optimism. You know, I've been talking to traders all morning. Here's what they're telling me. Number one, obviously they're hopeful about a deal. But aside from that, traders don't necessarily think that tonight means Armageddon. They know that the Treasury still has a little bit of money in its pocket to pay our bills, plus it's getting tax revenue as well.

Second of all, even the rating agencies, including Fitch, by the way, who put us on notice yesterday, they've emphasized several times - when you go through Fitch's statement, they've emphasized several times that they do not expect the U.S. to default. So no one here is questioning our ability to pay our bills. They're questioning governance. And the idea on the trading floor is that the U.S. will do the right thing, at least at the 11th hour.

A couple of red flags I do want to point out quickly, though, Wolf, because even though you look - I'm just checking right now, the Dow is up 198 points, volume is still low. So you don't have a lot of people really participating in this market. So there's some fear in that sense. But, secondly, a lot of -- what a lot of traders are talking about is this market hasn't really reacted strong enough to force Washington to act. So it may mean that the next time you come up against a deadline, you might see the same political brinksmanship all over again.


BLITZER: Zain, stand by. Our chief business correspondent Christine Romans is here in Washington watching what's going on.

Christine, just curious, that announcement from Fitch, the credit rating agency, last night to effectively put the U.S. on a watch list, not degrading the AAA rating of the United States but issuing a negative warning in effect, do you think that really propelled cooler heads here in Washington to say, you know what, we're dealing with fire right now and we've got to cool it, we've got to get this temporary deal through and worry about some other issues down the road?

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: I think there were a lot of things coming together at the same time. And certainly that Fitch warning, Wolf, is just sort of like a reminder that, look, Washington was not taking care of business. It was not running the country the way it should have been. And that was a warning to investors around the world.

Now, remember, in that Fitch - that Fitch warning it did say that it thought a deal would get done, but it should have been done by now. So that warning clearly heed. I mean we'll see how this plays out over the next hours, of course, but Wall Street certainly enthusiastic.

I'll tell you, I'm here at Fortune Most Powerful Women Conference and I'm talking to women CEOs and business executives and leaders and all of them saying that they wanted a deal to get done, a deal should have been done by now. They thought a deal would get done, but that this is no way to run the country. Many of them telling me, Wolf, they're very, very concerned about what comes again in the next few months if this is a short-term deal, a short-term solution, that we're back here again in the beginning of next year. That's not good for consumer sentiment. Still not good for business sentiment. So not all of them saying, oh, our long national nightmare is not over. That's what they're saying, Wolf.

BLITZER: Well, if they can reach a deal on some of the entitlement issues, Social Security and Medicare, tax reform by this other deadline, December 13th, House/Senate conferees supposed to talk about budget long-term, that clearly would be a major step in the right direction. Christine Romans, stand by. Zain Asher, stand by. Everyone, stand by. We're waiting for the Senate majority leader, the Senate minority leader to go to the Senate floor, announce the outlines of this tentative deal. We'll get the latest. We'll have live coverage of that.

We're also waiting for White House reaction. We're going to hear what the speaker has to say. How's the House Republican caucus going to respond to all of this? Lots of questions. We'll get answers. Stay with us.


BLITZER: All right, let me set the scene for our viewers here in the United States and around the world. I'm Wolf Blitzer, reporting from Washington.

You're looking at the House of Representatives, the floor on the right part of your screen, the Senate chamber on the left part of your screen. We're awaiting the majority leader in the Senate, Harry Reid, and the minority leader, Mitch McConnell. They're going to be both on the Senate floor making their respective statements. We believe a statement on this tentative deal to resolve this issue, get the government fully operational, end the government shutdown and raise the nation's debt ceiling.

We'll see what happens in the House of Representatives at the same time. At some point, we'll have live coverage of the White House press secretary, Jay Carney, reacting to all of these developments.

As we await Mitch McConnell, the Republican leader in the Senate, and Harry Reid, the majority leader, the Democratic leader, let's bring in a Republican congressman from Louisiana. John Fleming is joining us right now.

Congressman, thanks very much for coming in.

REPRESENTATIVE JOHN FLEMING (R), LOUISIANA: Hi, Wolf, thank you. BLITZER: So what is your understanding? You're pretty plugged in over there. What is your understanding that the Senate is about to announce and then the House would obviously react, as well?

The state of play, if you will, on these issues of ending the government shutdown and raising the nation's debt ceiling?

FLEMING: Wolf, my understanding is that the Senate has cut a deal that would basically provide for a short-term C.R. and a short-term debt ceiling increase, and then it would go to conference on the budget. The only amendment I'm aware of, and it is relative to Obamacare, would be to have income verification for the exchanges.

We know that's going to be a disaster, people signing up, claiming all sorts of income levels that aren't true, and taking the subsidies. So that appears to be the only thing, but remember, that was in the law the president had decided to forego that at least for a year, I guess for technical reasons.

BLITZER: So are you inclined, assuming the speaker of the House, John Boehner, lets this Senate compromise, this Senate language, go through, come up for a vote on the floor of the House of Representatives, can are you inclined to vote yea or nay?

FLEMING: Wolf, I'm going to vote against this measure. It's not strident enough. It doesn't do enough to protect the people from a terrible law, as you and I have discussed before.

Obamacare, the first two weeks have been a disastrous roll-out, sticker shock among those who actually go on the exchanges and see what it really costs and I pledged to my constituents that I'm going to do everything I can to protect them from the damage, the injury, coming from Obamacare.

BLITZER: But you know, Congressman, that if this doesn't pass, your constituents will suffer enormously if interest rates go up, if major corporations have to lay off people, if they can't hire people, if Social Security checks don't go out, if veterans, military benefits don't go out.

In other words, if the U.S. can't pay its debt, can't pay all of its financial obligations domestically and internationally, your constituents will suffer a whole lot more.

FLEMING: That's why the president for the first time needs to take leadership and do the right thing and call off the implementation of Obamacare least for a year to get all of these problems fixed.

BLITZER: You know he's not going to do -- Congressman, hold on one second.

Harry Reid is speaking on the Senate floor. Stand by. We'll continue this conversation.

SENATOR HARRY REID (D), MAJORITY LEADER: ... compromise we reached will provide our economy with the stability it desperately needs. It's never easy for two sides to reach consensus. It's really hard, sometimes harder than others. This time was really hard.

But after weeks spent facing off across partisan divide that often seemed too wide to cross, our country came to the brink of disaster. But in the end, political adversaries set aside their differences and disagreements to prevent that disaster. I thank the Republican leader for his diligent efforts to reach this important agreement.

The Republican leader's cooperation was essential to reach an accord that are core pass both chambers of Congress and also be signed by President Obama.

As part of our agreement, in order to assure Congress continues the work of setting this country on a an path of fiscal sustainability, this legislation names conferees to a budget conference committee that will set our country on a long-term path to fiscal sustainability.

Madame President, I know some say that's going to be hard, but what we do is hard here, and this is really hard, but I think we can get it done.

The committee members selected must have open minds, be willing to exert every option no matter how painful to their own political ideas and even their own political parties.

This conference committee, led by Chairman Murray and Chairman Ryan, which will produce its negotiated budget resolution in December, is an appropriate place to discuss our differing views of the best way to chart a course for economic growth.

This legislation also funds the government through January 15th and averts default through February 7th, during which time we can work toward a long-term budget you the agreement that prevents these frequent crises.

And perhaps most importantly, this legislation ends a standoff that ground the work of Washington to a halt this fall.

Madame President, this is not a time for pointing fingers of blame. This is a time of reconciliation.

I look forward to working with my colleagues on both sides of this great capitol to pass this remarkable agreement which will protect the long-term health of our economy and avert -- I'm sorry -- and avert a default of our nation's debt and allow us to set up a foundation for economic expansion.

What we've done is sent a message to Americans from every one of our 50 states, but in addition to that, to the citizens of every country in the world that the United States lives up to its obligations.

Now, Congress must return to its most important job, fostering economic growth and protecting middle class families.

I appreciate through all of this, the steady hand of President Obama who helped guide us to this conclusion. I'm optimistic that the spirit of compromise that has taken root in the Senate over the last two days will the endure.

I do know this. Senator McConnell and I have sat in very, very serious discussions the last few days. We're going to do everything we can to change the atmosphere in the Senate and accomplish things that need to be done for our country.


UNIDENTIFIED FEMALE: The Republican leader.

MCCONNELL: This has been a long challenging few weeks for Congress and for the country. It's my hope that today, we can put some of the --

UNIDENTIFIED FEMALE: Would that be OK with everybody?



UNIDENTIFIED MALE: Senator is, can you tell us, do you plan to delay the vote in the Senate and how will you.

SENATOR TED CRUZ (R), TEXAS: Hold on. Let me wait till everyone is situated.

Unfortunately, once again, it appears the Washington establishment is refusing to listen to the American people. The deal that has been cut provides no relief to the millions of Americans who are hurting because of Obamacare.

The deal provides no relief to all the young people coming out of school who can't find a job because of Obamacare. It provides no relief to all the single parents who have been forced into part-time work struggling to feed their kids on 29 hours a week.

It provides no relief to all the hard-working families facing skyrocketing health insurance premiums and it provides no relief to all the seniors, to all the people with disabilities who are right now -

BLITZER: Why did we leave -

CRUZ: -- getting in the mail notifications from their health insurance companies that they're losing health insurance because of Obamacare.

BLITZER: All right, let's leave Ted Cruz. He's obviously opposed to this deal.

Let's go back be to Mitch McConnell on the Senate floor. He supports it.

MCCONNELL: I'm not going back on this agreement. There's a lot more we need to do to get our nation's fiscal house in order. Hopefully, once we've gotten past the drama of the moment, we can get to work on it.

But for now, let's not understate the importance of the Budget Control Act or the importance of the fight to preserve it. This legislation is the largest spending reduction bill of the last quarter century and the largest deficit reduction bill since 1981 that didn't include a tax hike.

Preserving this law is critically important to the future of our country. Throughout this debate, the public has rightly focused on Obamacare for good reason. This law is savaging our economy, killing jobs, driving up premiums, and driving people off the health care plans they have and like in droves.

Its disastrous roll-out is a sign of even worse things to come and the refusal to delay it reflects a kind of stubborn ideological obsession that will do untold damage to our country. Republicans remain determined to repeal this terrible law.

But for today, for today, the relief we hope for is to reopen the government, avoid default, and protect the historic cuts we achieved under the budget control act. This is far less than many of us had hoped for, frankly, but it's far better than what some had sought. Now it's time for Republicans to unite behind other crucial goals.

Madame President, I yield the floor.

UNIDENTIFIED FEMALE: Under the previous order, the leadership time is reserved.

Under the previous order, senators are permitted to speak for up to 10 minutes each.

UNIDENTIFIED MALE: Madame President?

UNIDENTIFIED FEMALE: Senator from Arkansas.

BLITZER: All right, so there you heard it, historic words from both Mitch McConnell and Harry Reid, the Republican and Democratic leaders, the minority leader, Mitch McConnell, the majority leader, Harry Reid, announcing they have reached an agreement to end the government shutdown.

They have reached an agreement to raise the nation's debt ceiling, the government shutdown, the government will be fully operational at least until January 15th. The debt ceiling will be raised at least until February 7th.

In the meantime, House and Senate budget conferees, representatives of the House of Representatives, representatives of the Senate, they will work on long-term budget-related issues to try to come up with some long-term agreements to deal with these issues, both Harry Reid and Mitch McConnell putting their respective best faces forward on what they have reached agreement on.

We also heard from Senator Ted Cruz, the tea party favorite from Texas. He is railing against this. He clearly is opposed.

At the same time, he told reporters he would not block -- try to block a vote on the floor of the Senate because he understands that presumably it's going to go through with or without Ted Cruz's support and a few other very, very conservative senators in the Senate. Ted Cruz, you see him right there.

Gloria Borger was watching all of this with us. Now we have to figure out, does the vote come up in the Senate right away --


BLITZER: Now that Cruz says he won't block it? Will others try to block it, Mike Lee of Utah, for example?

BORGER: I think they kind of come together.

UNIDENTIFIED FEMALE: I assume they've all worked together.

Then what happens? The House and the speaker allows what may pass in the Senate to come up for a yea or nay vote on the floor of the House?

BORGER: Exactly. And we have to presume it passes in the House, that there are now enough Republicans who would join with Democrats to get this done.

I think Ted Cruz's decision was kind of one of the last issues regarding the timing of this because he could have held this up for as much as 30 hours, and it's clear that he's decided not to do that, whether there was pressure put upon him from the leadership or whether he thought that for his own political reasons that this has been such a disaster for the Republican Party as a whole that he may have decided to back off and just let this go through. He was clearly still making his points about Obamacare.

BLITZER: All right, let's listen in to Cruz a little bit.

CRUZ: But what matters more than any politicians in Washington is all of the people across this country who are hurting right now, who are getting in the mail a notification that the health care they're relying on for their care, for their parents' care, for their children's care, that it's being canceled because of Obamacare.

President Obama promised the American people Obamacare would lower your health insurance premiums. I would venture to say virtually every person across this country has seen exactly the opposite happen, has seen premiums going up and up and up and everyone who clicks on Obamacare and sees the premiums sees the premiums going up and up and up.

President Obama promised the American people, if you like your health insurance, you can keep it. We now know that statement was flat-out, categorically false. People all over this country are losing their health insurance. Fifteen thousand UPS employees got a notification in the mail that they were losing spousal coverage, that their husbands and wives were all losing the health insurance that they wanted and they liked.

That is happening all over the country. It's wrong. And the focus in my few should not be on the politics of Washington. The politics of Washington at the end of the day doesn't matter.

What the focus should be is on making Washington, D.C., listen to the American people and respond to the very real harms that Obamacare is causing the millions of people.

Thank you very much.


BLITZER: All right, so there you have it, Ted Cruz, adamantly opposed, as we all know to the Affordable Care Act, known as Obamacare.

John McCain is on the floor of the Senate. I'm curious to hear how he's reacting to all of this.

SENATOR JOHN MCCAIN (R), ARIZONA: ... will work with my -- I'm proud to have worked with the members from the other side and on my side of the aisle.

And this isn't the last crisis that we are going to go through, but I think we have the framework for the kind of bipartisanship that the American people need and want.

So I thank them. I look forward to working with them in the future. And I also enjoyed the spirited discussions that we had.

And I want to thank, especially, my friend from Maine who enriched me with a small side wager that we made during the course of this discussion. I yield the floor.


UNIDENTIFIED FEMALE: The senator from Minnesota.

KLOBUCHAR: Madame president, I thank the senator from Arizona. He brought a very experienced voice to our group, and especially, I want to thank Senator Collins for bringing this group together.

I think it shows what courage is going to be in the next year in this chamber and in the Congress. It's not going to just be standing here by yourself making a speech with no one there.

Courage is going to be whether or not you're willing to stand next to someone you don't always agree with for the betterment of this country.

This -

BLITZER: Amy Klobuchar is the senator from Minnesota. She was one of the main players in working out this deal, part of that so-called "Gang of 12," six Democrats, six Republicans working together.

John McCain was part of that group. Susan Collins, the senator from Maine really took a great initiative in coming up with some of the parameters that were eventually agreed upon by the Republican and Democratic leaders in the Senate.