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EARLY START WITH JOHN BERMAN AND ZORAIDA SAMBOLIN

Debt Deal in the Works?; Lack of Deal Could Lead to Credit Downgrade; Senate Women to the Rescue?; Iran-U.S. Meet at Nuclear Talks; World Markets Watching

Aired October 16, 2013 - 04:00   ET

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


(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), HOUSE SPEAKER: There are a lot of opinions about what direction to go. There have been no decisions about what exactly we will do.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: There have been repeated situation where we have agreements. Then he goes back, and it turns out that he can't control his caucus.

(END VIDEO CLIP)

ZORAIDA SAMBOLIN, CNN ANCHOR: A national debt disaster looming less than 18 hours away now. The Senate close to a deal, but the House refusing to play ball. Can Congress come together to prevent a predicted economic catastrophe?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It's too soon to judge. Maybe tomorrow I can come with a better conclusion but I think it's going well.

(END VIDEO CLIP)

JOHN BERMAN, CNN ANCHOR: So possible progress this morning in a long- term nuclear standoff. Iran in direct talks with the U.S. about scaling back its nuclear ambitions. We're live.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It was awesome, there were people sprinting to go and see this fish.

(END VIDEO CLIP)

SAMBOLIN: It was awesome. It is a rare 18-foot sea monster discovered off the coast of California. How one snorkeler made the discovery of a lifetime. Everybody is excited about this.

BERMAN: That's one weird looking fish right there.

(LAUGHTER)

SAMBOLIN: It's big. BERMAN: I don't want to call it ugly because I don't want insult it but it's weird looking.

SAMBOLIN: I don't think it cares.

BERMAN: Probably didn't care much right now.

SAMBOLIN: Yes.

BERMAN: Indeed.

Good morning, everyone. Welcome to EARLY START. I'm John Berman.

SAMBOLIN: And I'm Zoraida Sambolin. It is Wednesday, October 16th. It is 4:00 a.m. in the East.

BERMAN: And we're pretty much there, folks. Pretty much deadline day. Just a few hours to go before his country flies head first into the debt ceiling when the U.S. begins to run out of money to pay its bills.

And this morning, all eyes were on the leaders of the Senate working again to try to find a solution. There's no official deal yet but we pretty much know the parameters of this discussion. A plan to fund the government until January and raise the debt ceiling until February.

This comes after an absolutely wild day on Capitol Hill when House Speaker John Boehner tried to seize control of this debate only to have it all blow up in his face, thanks to opposition from inside his own caucus.

So this morning, the reality is this. Even if a deal can be reached it might not be in time to avert some serious repercussions. In fact, some of those repercussions have hit already.

Our CNN White House correspondent Jim Acosta begins our coverage.

(BEGIN VIDEOTAPE)

JIM ACOSTA, CNN NATIONAL POLITICAL CORRESPONDENT (voice-over): Time is running out. The debt ceiling is within sight and the last best hope of avoiding a potential default once again rests with Senate leaders Harry Reid and Mitch McConnell who were back to working on a last-minute deal.

REP. CHARLIE DENT (R), PENNSYLVANIA: John Boehner will likely be in a position where he will have to essentially pass the bill that is negotiated between Senators McConnell and Reid. And I believe that the House will first pass it and send it to the Senate.

ACOSTA: President Obama called for quick action.

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. ACOSTA: The president appeared to put the blame on House Speaker John Boehner's inability to corral Tea Party-backed Republicans.

OBAMA: There have been repeated situations where we have agreements then he goes back and it turns out that he can't control his caucus.

ACOSTA: That caucus is once again up in arms despite Boehner's tough talks.

BOEHNER: I have made clear for months and months that the idea of default is wrong. And we shouldn't get anywhere close to it.

ACOSTA: The speaker failed to convince House conservatives to line up behind Republican proposals to lift the debt ceiling and end the shutdown. It didn't matter anyway, as Reid said the GOP's plans were dead on arrival in the Senate.

SEN. HARRY REID (D), MAJORITY LEADER: Extremist Republicans in the House of Representatives are attempting to torpedo the Senate's bipartisan progress with a bill that can't pass the Senate.

ACOSTA: That portrait of Washington dysfunction was all the respected Fitch Ratings Agency needed to see. Fitch issued a warning it may downgrade the nation's AAA credit rating, a potential repeat of what Standard & Poor's did after the last debt ceiling debate of 2011. Although Fitch continues to believe that the debt ceiling will be raised soon, the agency said, the political brinkmanship could increase the risk of a U.S. default. Some House conservatives were brushing off talks of dire consequences to come.

REP. TIM HUELSKAMP (R), KANSAS: I just think most folks understand October 17th is not the drop dead date. There are no payments due for a couple of weeks.

ACOSTA: Jim Acosta, CNN, Washington.

(END VIDEOTAPE)

SAMBOLIN: So the latest talk this morning is that we could see a vote as soon as today, possibly first in the House, then in the Senate later this week. If both sides don't reach a deal by midnight, though, the Treasury Department says it will have to start picking and choosing which bills they're going to pay.

So let's bring in Maribel Aber to talk about what happens next. Is the bottom going to fall out?

MARIBEL ABER, CNN CORRESPONDENT: The bottom is not going to fall just quite yet. A lot of people talking about this October 17th day that's coming. As we've been saying, though, October 17th is the day, though, that Treasury Secretary Jack Lew has said that the U.S. will run out of money to pay all its debts unless the borrowing limit is raised.

So it's estimated that the U.S. will have about $30 billion on hand plus money that's coming in from tax receipts. So the 17th isn't that drop dead date, Zoraida, as far as the default goes. But Wall Street thinks that the real default may be some time in late October. So whatever the case is read of the default has been unsettling investors and driving rates on the shortest duration of the U.S. Treasury just in case there is some kind of disruption in the Treasury's ability to pay out on those bonds.

OK. Let's walk through some of these dates that are happening here. October 17th, that's coming up. Right? Treasury Department runs out of short-term funding moves. Then comes October 22nd, that's when the CBO, the Congressional Budget Office, estimates that government exhausts reserves, it starts missing payments. So this is where it gets, you know, very, very critical.

October 23rd, $12 billion in Social Security payments are scheduled. October 31st, CBO estimates the government exhausts cash balance about $6 billion interest payment that is due, OK. And November 1st, $55 billion in Medicare, Social Security, military payments. Those are all scheduled. So that's the scary time that we're all waiting for here.

BERMAN: Talk to me about Fitch because this credit agency just gave a pretty stern warning to the United States here. We've been sort of through this before where the U.S. was literally downgraded. Are we at risk of that again here?

ABER: Well, OK. Let's talk about that, the credit rating Fitch, it put the U.S. pretty much, we'll call it on notice right now. OK. We were -- we walked down this road before. The American government could get a downgrade in its AAA credit rating. That's if the debt ceiling crisis is not resolved.

Now Fitch analysts say they believe that that ceiling will be raised soon. OK. But the -- it point out the political brinksmanship that we've all been talking about over this debt debate could increase the risk of default.

And, you know, you mentioned, John, Standard & Poor's downgraded the U.S. to AA-plus in 2011. Fitch and Moody's still have the U.S. at AAA right now.

Let's remember the economy is in a fragile state right now. We're not looking at a full housing recovery. We still have unemployment very high. And -- the housing market just trying to come around the bend. The scary part is these interest rates that could go up. Think about banks. Not being able to loan to banks. They're not going to loan to other banks. And what does that mean to you and I? If a bank won't loan to another bank, they will not loan to you and I, right?

BERMAN: It feels like 2008. You have a credit freeze there which was the big, big problem. So what are the markets saying right now? You mentioned that they're really scared about November 1st so we're not there yet. How scared are they right now?

ABER: Remember the market is a little bit used to this uncertainty, this instability. Investors around the world, though, right now actually seem a little bit optimistic. I'll tell you, I'm looking at Asian markets. Not a lot of volatility there. Actually, the Nikkei was up. OK. U.S. futures, though, are actually higher, which is surprising. You know --

BERMAN: That's because I think Harry Reid and Mitch McConnell are sitting down saying they're going to come out with something this morning.

ABER: Right. Right. So that's something we'll be watching very closely today.

BERMAN: There is no extra time, though, to spare now. I mean, this is it. They got to get it done now before the rest of the world, I think the entire financial situation, just crumbles.

ABER: Absolutely.

SAMBOLIN: When you talk about that downgrade, that warning, when does that actually happen? At what point do that actually -- do they say OK, we're going to downgrade?

ABER: Well, that's what we're watching right now. We don't know. I mean, we're watching all with bated breath what's happening with this deal. That's really what's going to tell us.

BERMAN: They could do it at anytime when it all falls apart.

SAMBOLIN: Yes. I wonder about these deadlines, I guess, is my question. You know, you have this October 17th deadline, then they throw on the November 1st deadline. And you just wonder --

BERMAN: Deadlines are tough.

SAMBOLIN: -- at what point is it really that the bottom falls out?

BERMAN: But if you read between the lines of what Fitch is saying, they're saying, you know, no matter what you do, we are really disgusted --

ABER: Absolutely.

SAMBOLIN: Yes.

BERMAN: -- with the U.S. already.

ABER: That's right.

BERMAN: And that's a bad place to be.

SAMBOLIN: Kind of across the country, right? Other countries -- other countries also are feeling exactly the same way. Like how dare you do this to your own economy when it affects us as well.

ABER: Exactly, especially when you think about Japan and China that own so much U.S. Debt. Right.

SAMBOLIN: All right.

BERMAN: Maribel, thank you for that happy chat this morning.

(LAUGHTER)

No. Great to have you, though. Appreciate it.

ABER: Yes.

SAMBOLIN: We'd like to start on a positive note, right?

BERMAN: Yes. Maribel is going to be back in a few minutes to talk about "Money Time" all the things going on in the financial world beyond this. Not that there is much.

SAMBOLIN: I know. So one group of lawmakers has had a measure of success working together to end partisan gridlock and resolve the debt and shutdown crisis. We're talking about female senators.

CNN's Athena Jones has more on the special role that they are playing this time.

(BEGIN VIDEOTAPE)

ATHENA JONES, CNN CORRESPONDENT (voice-over): Will the women of the Senate save the day? Well, they've certainly been trying to. A plan by Republican Senator Susan Collins formed the basis of a key proposal to reopen the government and avoid a first-ever default on the U.S. debt. While that plan's prospects may now be uncertain, Senate women are still front and center.

Collins' worked with a bipartisan group of senators, men and women, to put her plan together but women were at the forefront, and she says that's no coincidence.

SEN. SUSAN COLLINS (R), MAINE: So the women of the Senate span the ideological spectrum, we certainly don't think alike, we do share in the interest and problem solving and we tend to be more collaborative in our approach than many of our male colleagues.

JONES: Fellow Republicans Lisa Murkowski and Kelly Ayotte were among the first to sign on. Ayotte says to expect more women taking the lead in the future.

SEN. KELLY AYOTTE (R),NEW HAMPSHIRE: We have 20 women in the Senate now, that's a historic number. We can have many more. But we're not shy, we're stepping up. We're going to lead.

JONES: Democrats like Heidi Heitkamp, Amy Klobuchar and Jeanne Shaheen also got on board.

SEN. JEANNE SHAHEEN (D), NEW HAMPSHIRE: We trust each other. And I think that's very important when you get to this kind of delicate negotiation.

JONES: And Collins spent all weekend phoning and e-mailing with Democrat Patty Murray to craft budget language.

Women members have a history of coming together on the softball field as well.

UNIDENTIFIED FEMALE: And last year's MVP Kirsten Gillibrand. Let's give it to her. Extraordinaire.

JONES: Facing off against the press in a yearly fundraiser. And Congresswoman Debbie Wasserman Schultz says when it comes to negotiating they bring something different to the table.

REP. DEBBIE WASSERMAN SCHULTZ (D), FLORIDA: Women are not as focused on obliterating the other side. They want to find a way to get to yes.

JONES: Collins says Senate women have forged close relationships over the years through monthly bipartisan dinners. Bonds that can be key.

COLLINS: There is a sisterhood here that transcends party lines and I think in this case has helped us to produce some results.

JONES: Athena Jones, CNN, Capitol Hill.

(END VIDEOTAPE)

SAMBOLIN: Our thanks to Athena for that.

BERMAN: So, by the way, if, you know, more women would make the situation better in Washington, put in 235 women in the House.

SAMBOLIN: Bring it up. That's right.

BERMAN: And 100 women in the Senate. Whatever it takes. Get this done.

All right. So it's not clear this morning how much progress is being made in Washington. But in Geneva there are big developments to tell you about this morning regarding Iran's nuclear program. Including a very unusual high-level meeting involving a top official from the State Department and from one of Iran's -- from Iran's Foreign Ministry as well.

Reza Sayah is live in Tehran this morning.

Reza, Iran has now made its own proposal for the easing of the crippling sanctions against that country. But what is the Iranian government asking for in return?

REZA SAYAH, CNN INTERNATIONAL CORRESPONDENT: Well, John, it's critical to point out that at this point, we don't know the specifics of what's happening in Geneva with these nuclear negotiations. Everything is happening behind closed doors. Everything being kept secret for now. But we can tell you generally what their position is. They have essentially three demands.

They say they want to keep their nuclear program. They say they're abiding by international law, not doing anything illegal. They also want to -- continue enriching uranium. They say that's their right to based on international law. They may, they've signaled that they may suspend uranium enrichment at 20 percent which could seemingly prevent them from obtaining the fuel necessary to build a bomb and they want to be treated with respect as equals.

In return, they want some of these economic sanctions lifted. Obviously, we don't know the outcomes of these talks but that doesn't mean Iranians are short of opinions and prognostications and predictions. And one of the best ways to gauge public opinion is to talk to Iran's famous cab drivers and we did just that.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (Through Translator): I think it's fine if they come and investigate and see that Iran doesn't have bad intentions. Iran has good intentions.

UNIDENTIFIED MALE (Through Translator): Iran shouldn't have to give up anything. We shouldn't have to give up our rights. What belongs to us is our business.

UNIDENTIFIED MALE (Through Translator): I don't like for another country to come and make decisions for me. Everything should be based on friendship.

UNIDENTIFIED MALE (Through Translator): The only thing we should give is confidence to the international community that we are not deviating from our nuclear programs.

UNIDENTIFIED MALE (Through Translator): Our nuclear rights belong to us. Why do other countries have theirs but when it comes to Iran, they say we can't have it. Why?

(END VIDEO CLIP)

SAYAH: Just a taste of where Iranians stand when it comes to nuclear talks. Some are skeptical. Some are optimistic that a deal could be reached. All of them say they should be able continue their nuclear program.

John and Zoraida, and all of them, everyone we spoke to, say they want a settlement to be reached and for all sides to get together and end this 34-year-old conflict.

BERMAN: Reza Sayah for us in Tehran with a little taxicab diplomacy this morning.

Reza, thank you so much. Always fascinating to hear from people literally on the ground in these situations.

SAMBOLIN: No, absolutely. I thought that was really insightful.

Let's get an early look on our weather now with Alexandra Steele.

Good morning. ALEXANDRA STEELE, AMS METEOROLOGIST: Hi, everyone. Good morning.

All right. Well, if you are traveling today pretty quiet around the country. New York area airports, though, will see some low clouds and low visibility. This thing may slowdown for a little while here this morning. Atlanta, Chicago, much cooler, windy conditions, and low visibility as well there this morning.

Here's the forecast. What we've got really is this cold front moving through. Behind it temperatures dropping off, like a lot of the country, the southwest, the northwest, Florida, warm conditions today. And right along the eastern seaboard, still dry until that front makes it toward you later in the week.

Biggest changes, though, Minneapolis, Chicago, about 10 degrees cooler today than the past couple of days. The front has passed. The temperatures have dropped but the skies are clearing. 75 today in Washington, 78 in Atlanta, Georgia. And the warmest spots there in south Florida, sunny skies and Miami in 87.

Have a great day.

BERMAN: Thank you so much. So?

SAMBOLIN: Our other top story of the morning.

(LAUGHTER)

BERMAN: Our other top story in the morning. A big evening in the Berman household. The Boston Red Sox pitching a shutout in game three of the American League Championship series. This was an incredibly tense, neck and neck game. They beat the Tigers 1-0. The game's only run came right here. Mike Napoli, boom, a 3-2 pitch, parks it over the left field wall there. That's against Justin Verlander. Not an easy thing to do, by the way. Boston now has a 2-1 game lead in this series despite just some fantastic pitching from Detroit.

Let's talk about the National League for a second. The St. Louis Cardinals, they are looking good. They are just a win away now from advancing to the World Series. They beat the Dodgers 4-2 last night.

SAMBOLIN: Wow.

BERMAN: That's Matt Holliday with a homerun right there. The Cards can punch their ticket all the way to the World Series with a win in game five this afternoon in Los Angeles.

SAMBOLIN: How excited are you, Berman?

BERMAN: I get more nervous than excited as time goes on. Look. That was a really tense game last night. Look, there were no hits, practically no hits the entire game.

SAMBOLIN: Did you actually stay up and watch it?

BERMAN: It was -- the Red Sox played in the afternoon yesterday, 4:00 start.

SAMBOLIN: I thought they played in the evening.

BERMAN: No.

SAMBOLIN: So you did watch it.

(LAUGHTER)

BERMAN: Mercifully they started in the afternoon.

SAMBOLIN: All right. Coming up, an accused al Qaeda member appearing in a New York courtroom. What happened when a suspected terrorist faced a judge.

BERMAN: And a popular sports supplement pulled from the shelves for containing an ingredient similar to meth. Really? We'll have that when we come back.

(COMMERCIAL BREAK)

BERMAN: Welcome back to EARLY START, everyone.

A terror suspect picked up in Libya has now had his day in a U.S. court facing charges he worked for al Qaeda and was involved in a deadly attack on U.S. embassies in Africa.

Deborah Feyerick has the story.

(BEGIN VIDEOTAPE)

DEBORAH FEYERICK, CNN NATIONAL CORRESPONDENT (on camera): Abu Anas al-Libi entered this federal court here in Manhattan. His hands were shackled. His hair was short . A full reddish beard graying around his face. He seemed unsteady on his feet. And then he told the court he was 49 years old and that he appeared 10 to 15 years older.

Now through a translator, he said that, yes, he understood the charges against him, and no, he could not afford a lawyer. And so the attorney next to him entered a not guilty plea to all the charges. He's charged with conspiring to kill Americans at two U.S. embassies in east Africa. He's also accused of taking surveillance photos of the U.S. embassy in Nairobi, Kenya. The attack there killed more than 200 people including embassy personnel.

Now a judge signed off on a medical order Abu Anas al-Libi suffering from hepatitis C. According to Stanley whose family says it is not going to involve in al Qaeda for years as Texas got out even before these bombings ever took place.

He was interrogated on board a navy vessel by members of a high value detainee team, unclear what kind of information he did provide. He is expected to be in court again next week.

Deborah Feyerick, CNN, New York.

(END VIDEOTAPE)

SAMBOLIN: Our thanks to Deborah. Twenty-one minutes pas the hour.

The maker of Craze which the popular sports supplement has suspended production and sale of this product after researchers say they found a methamphetamine-like compound in it. More testing needs to be done to find out if it poses any real health risks. Bust last week, 24 cases of liver failure and one death in Hawaii would linked to another similar supplement. Oxyelite Pro. Oxyelite I think. O-X -- there it is, so that you can't see it O-X-Y --

BERMAN: OxyElite.

SAMBOLIN: Elite. There were go. Pro. Thank you very much.

BERMAN: No. It's bit -- look, this is serious stuff. You're taking serious risks with this. You know people take it to build up their bodies, get better workouts. But it's (INAUDIBLE).

SAMBOLIN: But when they find those substances that are like methamphetamine, my goodness. Be careful with your kids because, you know, they go and buy a lot of this stuff and they don't know what they're putting in their body.

BOLDUAN: They sure do. All right. I know you like sea serpines. You're big on sea monsters, right?

SAMBOLIN: I love them. I absolutely love them.

BERMAN: Well, we have a story for then. Take a look at this. That's actually an 18-foot-long or Fish.

SAMBOLIN: Fish.

BERMAN: Eighteen feet long. Understandably --

SAMBOLIN: He's kind of cure actually.

(CROSSTALK)

SAMBOLIN: Yes.

BERMAN: He has a smile on his face. It was found off the southern California cost on Sunday. Look at that ship there.

(LAUGHTER)

A marine science instructor found the ore fish by mistake.

SAMBOLIN: Wow.

(BEGIN VIDEO CLIP)

MARK WEDDINGTON: She was snorkeling, sees this giant fish on the bottom of the ocean, swims down, grabs it by the tail, and swims it to the beach. It was awesome, there were people sprinting to go and see this fish.

(END VIDEO CLIP)

BERMAN: So they're saying this fish likely died of natural causes. Researchers say since oar fish live thousands of feet below the surface.

SAMBOLIN: Look at her.

BERMAN: They're rarely seen or studied. This --

SAMBOLIN: Oh, my goodness, that's a great way to see it. You can actually see how large or how long it is.

BERMAN: So the plan here is to actually bury it so it can decompose and will expose the giant skeleton that way, and I suppose then study it or have something awesome for the wall. A very big wall. You know, a big wall thing, right?

(LAUGHTER)

That was a really long fish.

SAMBOLIN: I don't think that's what they're going to do with it.

BERMAN: No, they will study it.

SAMBOLIN: But I think they will be studying it. Yes.

BERMAN: Oar fish.

SAMBOLIN: Poor fish? Is that --

BERMAN: I said an oar fish.

(LAUGHTER)

SAMBOLIN: All right. We'll be right back.

(COMMERCIAL BREAK)

BERMAN: Welcome back to EARLY START, everyone. It is "Money Time." Maribel Aber is back with us again.

Hey, Maribel.

ABER: I'm back. It's great to be with you, guys. Let's get started with this biz, OK. Well, you know what investors around the world waiting to see what will happen next, of course in Congress, but they aren't panicking today. Interesting here. Japan's Nikkei actually closed higher today. There were early of signs that stocks in Europe would be lower. Before today, European stocks rose four days. Their longest winning streak in two months.

With the deadline of tomorrow for Congress to avert the debt ceiling crisis, there's no sign that the situation will be resolved any time soon. Ratings agency Fitch announced after the bell on Tuesday that it had put the U.S. on notice for a possible downgrade.

Fitch said the political brinksmanship in Washington is a default risk. And it's not clear when Fitch will make a final decision on whether to go through with the downgrade. We're talking about timing, right? If the debt ceiling isn't raised by tomorrow the Treasury Department will not be able to borrow money to cover all its obligations. So it includes interest payments, Social Security, Medicare, military pay and much more. How on earth can the government decide whih bills to pay.

BERMAN: That's the tough question.

SAMBOLIN: Tough question, yes.

BERMAN: One they do not want to have to face even if they do not reach a deal tomorrow. There's hope that if a deal isn't place, the markets will stay at least through Saturday or Sunday when the board could happen. Let's hope everyone stays calm here because it's all of our money at stake.

SAMBOLIN: It's such a shame that we're at the end of the cliff, right?

BERMAN: Yes.

SAMBOLIN: It's a shame.

BERMAN: Such a shame we've been here before. And we just keep going again and again.

SAMBOLIN: All right. Thank you, Maribel. Appreciate it.

BERMAN: We'll be right back.

(COMMERCIAL BREAK)