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LEGAL VIEW WITH ASHLEIGH BANFIELD
Senate Deal Reached, No Decision on House Move; Deal in Senate to Stop Country from Defaulting; Dow Up on News of Potential Debt Deal; Rep. Jeff Denham Talks Potential Debt Deal.
Aired October 16, 2013 - 11:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: No, not necessarily. Not necessarily. The market stills believes -- some would say foolishly, others would say because of experience -- that a deal will be done in time before he has to stop putting money in the tea pot and robbing the children's pocket money.
ASHLEIGH BANFIELD, CNN ANCHOR: I want to play what one of the congressman said to Kate Bolduan on "New Day" this morning.
QUEST: Oh, yes.
BANFIELD: I think it bears playing again.
BANFIELD: This is one of your leaders, folks. It is Representative Steve King, the Republican from Iowa, and he's referring to the potential that we could default on paying all of our tea pot economics. Have a listen.
(BEGIN VIDEO CLIP)
REP. STEVE KING, (R), IOWA: I'm not worried about this thing that they term "default." We are going to service our debt and pay the interest first and roll the principal over.
I actually don't believe it's a hard break tomorrow. It's just a date they picked on the calendar.
(END VIDEO CLIP)
BANFIELD: It's just a date they picked on the calendar.
QUEST: He's right.
QUEST: He's right. It's not a hard date. It's not a hard date. This is not like the budget show-down where at midnight the government has to close.
QUEST: He's absolutely correct on that. What it is is a date upon which Jack Lew can no longer go to the tea pot and go and take the children's pocket money. That's true. So eventually, a financial bill will arrive -- I mean, a financial bill --
QUEST: A bill will arrive that Lew can't pay and then --
BANFIELD: And he'll have to prioritize.
QUEST: And then he'll have to prioritize.
And I think the congressman is right. He will -- you know, the debt will be paid first. But that, in some view, could be a selective default.
BANFIELD: I'm terrible with Chinese phonetics. Do you know what this news service -- is it Chin Wah (ph)?
QUEST: Chin Wah (ph). Chin Wah (ph)
BANFIELD: The Chin Wah (ph) News Service, they released this statement and this is a partial piece of the statement: "But it's perhaps it's a good time for the befuddled world to start considering a de-Americanized world."
This is why I want to bring in our former labor secretary, Robert Reich.
Mr. Secretary, when I read thing things like that, it makes me wonder what it takes to lose your super-power status when it comes to being the 800-pound gorilla in the world, being the world's richest nation and being the guy who really calls the shots. What is the beginning of the end look like?
ROBERT REICH, PROFESSOR, UNIVERSITY OF CALIFORNIA, BERKELEY & FORMER LABOR SECRETARY: Well, the beginning of the end I don't think is happening, Ashleigh. But it could happen in the sense that the dollar is now what's called the reserve currency around the world. Most transactions, business transactions between companies and among nations are done in dollars. But if the world economy start losing its confidence in the dollar as a strong and stable currency because of all the shenanigans in Washington, then it is possible that more and more transactions will be done in other currencies, particularly the yuan from China or a yen or any other combination of currency. And this is something that many people in the global economy are concerned about.
We ought to be concerned about it too here in the United States because we have been getting a big, free ride on the fact that the dollar is the international currency of choice. If it's not the international currency of choice, then the dollar starts dropping relative to other currencies. That means everything that we purchase from the rest of the world becomes that much more expensive.
BANFIELD: We've been good at paying our bills. And if we can go to freecreditscore.com, we would get a pretty good rating.
Stand by if you will for a moment. I want to bring in our Dana Bash.
Dana, as we've been talking about this, I just want to note that on the bottom of the screen below you is the Dow. It's up 181 points now. We've flirted with over 200 just within the last 20, 30 minutes. And all of that based on the news that there is a deal in the works, not based on any kind of vote. Do you have any further information on the deal?
DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Our understanding now is that the Senate leaders are going to talk about it formally on the Senate floor when the Senate convenes at noon, so just under 30 minutes. As we talked about at the top of the hour, there was some discussion about whether or not they should put out a paper statement. But frankly, my sense is that -- I don't think that it's for sure, but knowing how they operate, my sense is they are too watching the Dow and seeing that they're fine, that they don't have the pressure to formally announce it before noon because the market is already reacting to the news reports about the fact that they have a deal. So top of the hour, when the Senate comes in, must-see TV.
BANFIELD: Must-see TV, but any word about a potential meeting between the Senate majority leader and the speaker of House today?
BASH: No word about a meeting. I think what we're looking for next, and this is probably what you're referring to, is the question about whether the House is going to take the deal, take the legislation that they write-up in the Senate and put it on the House floor first in order to expedite the process. That would expedite it in a big way. We're talking about potentially days. If Ted Cruz and other Republicans decide that they want to use the tools that they have at their disposal, any Senator does, to slow this train down. So we're waiting to see if that is formal. You had at the bottom of your screen that a Boehner spokesman, Michael Steele (ph), insists that no decision has been made. Again, just before coming on here, multiple Republicans sources say still absolutely no decision has been made. But certainly the indication that Democrats are getting in the Senate, Democrats, our sources are getting in the House, and others are getting is that that is likely where John Boehner is going to go. But as you've just been saying with other guests that we've had on, we have to be very careful because just when we think the House is going to go one way, they go another way. So we'll see.
But, again, this is a process question. It's just a question of how it's going to happen, not whether it's going to happen. How and when, not whether.
BANFIELD: OK, all right. Dana Bash, thank you.
And just again, the Dow at 178, up. But the debt clock over on the far right, 12 hours, 23 minutes until this country is no longer allowed to borrow any money to help pay its bills. Doesn't mean we're out of money. Just means we're not going to have quite enough like we need.
Congressional Republicans say, listen, all we want is fiscal responsibility. But that clock doesn't care. Default comes when that clock hits zero on something.
Representative Jeff Denham is on Capitol Hill. He's waiting for a break-through plan. We're going to talk to him next. Is the vote on his part going to be up or down to any potential deal? That's coming up next.
BANFIELD: Welcome back to our viewers in the United States and around the world.
Breaking news this hour of a deal in the United States Senate to head off a default on this country's debt. Now the pressure is building on the speaker of the House, John Boehner. So far, he has been unable to push through a plan that both Tea Party members and GOP moderates can agree upon and approve. And prospects of a House vote on the Senate plan remain unclear as of now.
A member of his own party likens his job to, quote, "herding cats." And that can't be good.
Earlier, we spoke with Democrat James Clyburn, and now it's the Republican's turn.
Joining us live from Capitol Hill is California Representative Jeff Denham.
Congressman Jeff Denham, thanks so much for being with us.
First, to the breaking news. Has the speaker been reaching out to you? Have you been hearing from within your party whether or not that vote is going to actually hit the floor at some point today?
REP. JEFF DENHAM, (R), CALIFORNIA: Ashleigh, thanks for having me back again.
We hear that there is an agreement brewing right now, both in the Senate as well as talks in the House. We need to do everything we can to avoid this debt ceiling. We understand, both Republicans and Democrats, understand how bad this can be for our nation as well as the world economy.
BANFIELD: So based on the contours that our Dana Bash has been outlining -- I'll just quickly go over with you again -- a budget deadline set for around December 13th, raising the debt ceiling through February 7th and funding the government through January 15th. And the only little concession at this point looks like income verification for the citizens applying for the subsidiaries in Obamacare, it's a far cry from what House Republicans were asking for two and a half weeks ago, defunding of Obamacare. Could you vote for this?
DENHAM: I'm waiting to see what the details of the agreement are. But certainly I've got big concerns. Neither party has made big concessions on this issue. And we've failed over the last couple of years to have a debt commission that provides real results to the American people. So we have big issues on the line.
The biggest issue for me is if we're going to set up a separate committee or take this into conference, I want some guarantees for the American public that Congress and the president is actually going to get its job done this time.
BANFIELD: Based on the contours again, the parameters that I just laid out, because that seems to be the working position of what this bill would outline, again, could you vote yes based on what I just explained to you?
DENHAM: Not without the understanding of the guarantee of what this conference committee is going to come up with. It's been done in the past. We had Simpson and Bowles. That was the president's own commission that had bipartisan results. Yet, those results were never implemented.
I mean, this is an ongoing problem. The president himself said it was unpatriotic to have $9 trillion worth of debt. $30,000 for every man, woman and child. Now we're double that, so $60,000 for every man, woman, and child and $18 trillion worth of debt. That's something that downgrades with each of the different financial institutions just as much as the financial crisis that we're about ready to hit.
BANFIELD: Again, I want to keep pressing you on this. I understand what you're saying. You want to know about the budget negotiations and what kind of pressures you can hold over the opposing party when it comes to budget negotiations. But it seems like short of a gun being held to both of these parties, you all can't seem to come to any agreement. And I highly doubt that in this bill there could be any language that would connote a gun to your heads. Could you not at least move forward to open the government after 16 days and avert catastrophe? 12 hours, 16 minutes, I know that's arbitrary. But effectively, really destroy our national credit rating. Could you not at least move forward with these parameters?
DENHAM: Look, Ashleigh, I believe that we've got to do something. I think we've all wanted to avert this fiscal cliff, this huge debt ceiling that's hanging over our head right now. We need to do everything we can to come together.
And I also agree that these guarantees, while we've had so many different committees and debt commissions, that there is no certainty on what will actually come out that it will actually get implemented. One guarantee we could have, certainly the president could come out and show some leadership and say, we're putting this committee together, whatever they come up with, bipartisan, coming out of that committee, I will implement.
DENHAM: That is something I think the American people would like to see. BANFIELD: Speaking of bipartisan politics, it's been eating away at me. Why is it, if many in your party have felt that as though you've been held hostage by a very intransient wing of your party, many say the Tea Partiers have been dictating the politics for the rest of your party, why haven't the rest of your party gotten together with, say, some more conservative Democrats, moderate Democrats and cut the Tea Party out of the negotiating process and been able to move forward instead of sticking around and being stymied?
DENHAM: We can continue to pass bills over into the House, and we've done a number of those, but really it comes down to the leadership of the president. Is he going to implement what comes out of this committee so we can solve this once and for all or are we going to see another failed attempt like we saw with Simpson-Bowles? I don't think that there's anybody in my party that's holding the conference up any more than the challenges that I've seen on the Democratic side. What we need to do is come together as Republicans and Democrats for an American solution.
BANFIELD: Congressman Denham, thank you for your time. We'll watch you on the floor today if, in fact, you end up there. And we'll see how things go. And the best of the luck to you and the rest of your colleagues for ending this disaster.
So I want to get a quick final comment as we continue to watch the Dow. We're at 200 on the Dow. We've been flirting around 200 points since the word of the deal became public a little over an hour and a half or so ago. And again, we could get that formally announced very shortly.
I want to bring in the former labor secretary, Robert Reich.
Professor Reich, just your comments. When you hear those two different sides answering these questions about will you or won't you, it seems like everybody is still stuck on the notion, but how am I going to have leverage later, certainly from the Republican side. How am I going to have leverage later if I go ahead and give this, what they call, blank check now? Isn't that fair?
REICH: Well, Ashleigh, I think the real sad commentary on our democracy right now is that financial markets are pushing our representatives to do the right thing. It's not as if average citizens are having that much impact. Although the polls are showing a tremendous pressure on the Republican Party right now, greater pressure arguably than on the Democratic Party in terms of loss of favor abilities. But it's the financial markets that are calling the shots. And the expectation is that when we get to the next deadline in January and February, those financial markets will already have internalized an assumption about the future, about whether, in fact, our government is working or not working. And that pressure is also going to be greater than it is now.
In other words, it wall street essentially that is determining the outcome of what happens in Washington.
BANFIELD: 10 seconds left. What's your outlook for today, Mr. Secretary?
REICH: Well, I think that the stock market is going to do relatively well in terms of short-term speculators. I think the bond market in terms of interest that's being paid and demanded to lend money to the treasury, is still going to be wild and we're still going to be seeing interest rates on short-term treasuries that are far too high relative to what you and I would like to see as the real risk.
BANFIELD: Another quick look at the Dow. We're up 201 points, again, on the news that the Senate deal has been reached.
Mr. Secretary, thanks so much for being us with. It's always great to have your perspective.
REICH: Thanks, Ashleigh.
BANFIELD: I want to let you know we're going to shift our coverage down to Washington, D.C., live. That's where my colleague, Wolf Blitzer, is standing by. He is going to take over the coverage after this short break.
Thanks, everyone, for watching. We'll see you again tomorrow.
ANNOUNCER: This is CNN breaking news.
WOLF BLITZER, CNN ANCHOR: I'm Wolf Blitzer in Washington.
We're following breaking news, really important breaking news here in the nation's capital. There may be a deal to end the government shutdown and raise the nation's debt ceiling.
We have our reporters, our analysts standing by to follow what's going on. We're anticipating a formal statement from the Senate leadership at the top of the hour.
Dana Bash joins us from Capitol Hill, Jim Acosta at the White House. Gloria Borger is here with me in our D.C. studio.
Dana, let's go to you.
First of all, what exactly do we think will happen within the next ten minutes or so the?
BASH: We expect the Senate to formally convene, and Senate leaders, Democratic Leader Harry Reid, Republican Leader Mitch McConnell to, once all of the pomp and circumstance is done, the prayer and the pledge and things like that, that they will come and formally discuss what we have been reporting and what Mitch McConnell has been telling his Republican rank and file behind closed doors about for the last hour, which is a deal that they have reached.
The deal is very similar to what we have been talking about for two days. With regard to what Senate leaders are talking about, open the government immediately, keep the government running until January 15th. Raise the debt ceiling immediately and do that till February 7th, and make sure that budget conferees negotiators, people who are supposed to actually do the work of Congress put a budget together, that they have a deadline to do that by December 13th.
Then, of course, there is the whole question of Obamacare. After all of this, Wolf, the obvious question is, well, did Republicans get any changes to Obamacare? Very, very small. Very minor. A provision to basically an anti-fraud provision to verify people's incomes if they're getting subsidies for Obamacare. I was just told this morning that is actually something Democrats wrote.
I think it's important to take a step back and sort of look where we are and also know that is why in the halls here right now you're hearing so much frustration not just from Democrats but from Republicans about this, from their perspective, this wrong-headed strategy from the get-go to the try to attach defunding Obamacare to funding the government. They knew many Republicans say it was never going to work. The numbers just aren't there in terms of the votes in the Senate. There's still a Democratic president. It was never going to work and there's a lot of frustration that, after all of this, there's barely any change to Obamacare. I mean, to say it is minuscule is probably giving it too much credit.
BLITZER: Income verification. Everybody wants income verification. They don't want any fraud as far as that is concerned. So that is a very, very modest adjustment, tweak, if you will, to Obamacare.
I want to make sure we welcome our viewers not only here in the United States but around the world. There are enormous international ramifications to what is about to happen here in Washington, D.C. Ramifications for America, for the United States, also for countries around the world.
Dana, a quick question before I bring Jim Acosta into this conversation.
It's a little unusual, people probably will be a little confused wondering if this deal is worked out in the U.S. Senate, why is it going to come up for a vote in the House of Representatives first?
BASH: I should say that we don't have firm confirmation that that is going to happen. It looks like the most likely route right now. But if it is, in fact, a Senate deal but is brought up first in the House, the reason is because, procedurally, it would be the fastest way to get this deal out of Congress, to get it passed through the House, through the Senate, to the president's desk. But again, I was just e- mailing and texting with House Republican leadership sources. They insist that John Boehner has not made a final decision that that is the route he's going to take. And as you know, things have changed moment to moment within the walls of John Boehner's office over the past few days and weeks. So I think we should -- certainly we're hearing optimism in the Democrats that it's going to happen, probability from Republican sources, but it's not a done deal. But if it were to happen, that would be the reason just to expedite it. Because, you can't forget that there is still Senator Ted Cruz, Mike Lee, the Republicans who helped devise this strategy, which most of the Republican colleagues think was wrong-headed to device the strategy to do whatever it takes to stop the trains, to reopen the government or to fund the government because of their opposition to Obamacare. They still have tools at their disposal as any Senator does to slow down this train. And Ted Cruz and his aides -- we were talking to them this morning -- they are being very cagey about whether they will use those tools. But if he does, you can be sure, according to several Senate Democratic sources I've talked to, that Senate Democratic Leader Harry Reid will force him to do so to on the to this in the view of all public to have him come to the Senate floor and I say I object because of X, Y and Z, effectively trying to make him a pariah when it comes to wall street and to the economy.
BLITZER: It if it does pass the House of Representatives before it comes to the Senate, there are less procedural roadblocks standing in the way that could delay passage. Eventually, it will pass. More than 60 Senators will support Harry Reid and Mitch McConnell but the delay process could be a few more days. No one wants that.
BASH: And that is an important point and a good point to button on, Wolf. By all accounts, this is just a matter of time. It's not, as we have seen, the roller coaster of the past few weeks where are they going to have the votes, aren't they going to have the votes. The votes appear to be there in both chambers for this deal. It's just a question of what it can happen. That, gain, would depend how the process works out and on those Republican Senators who started the strategy to begin with.
BLITZER: Yeah, the market is up, up beat about all this developments here in Washington, up nearly 200 points so far.
Dana, stand by.
So what are they saying at the White House? We should be getting a formal White House press briefing at the bottom of the hour. That's when it's scheduled, Jay Carney, the White House press secretary.
Jim Acosta standing by at the White House.
Are they thrilled, smiling, happy? What's the mood over there, Jim?
JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Wolf, they don't have the champagne bottles out of the fridge just yet. I think that the collective sense over here at the White House is, we'll see. Mainly, because thieve seen this movie before. They've seen hopeful signs come out of the capitol and then seen those deals blow up. That happened yesterday when we saw House Speaker John Boehner try to corral Tea Party Republicans behind some kind of deal. He couldn't even do that. So there is real curiosity at the White House what can be accomplished over on Capitol Hill. But they are hopeful. They are optimistic.
But having said all of that, Dana was talking about income verification, that one bullet point in this Senate plan taking shape. I have talked to some officials at the White House and they do believe that is really no big deal. That is not a major concession from the president. Essentially, this is going to be OK with President Obama if and when this lands on his desk. And that is very interesting, Wolf, because, keep in mind, throughout this entire ordeal, the president has said over and over again, we've heard Jay Carney say it over and over again in the briefing room, the president is not going to trade concessions for reopening the government or trade concessions on Obamacare, importantly, for a raise in the nation's debt ceiling.
And basically, Wolf, if everything that Dana Bash is talking about comes to fruition and this is passed out of the Congress and brought over to the White House later today for the president's signature, he will have accomplished something that he set out at the very beginning of all of this. Why did the president set out on this mission from the get-go? A lot of this goes back to 2011. Wolf, during that debt ceiling fight, the White House gave up a lot. They gave up sequestration in the form of that Budget Control Act. This White House has never liked sequestration. From that point forward, you get the sense from this White House that the president hated that deal. He did not want to go through that again.
They say, historically speaking, they want to the set a precedent. They don't think future presidents should have to deal with this. When the debt ceiling comes up, the president has to be trade concessions with Congress and the nation has to be on the verge of default. It would be very interesting, I think, in the coming days, if and when the president has a news conference, to ask him if he thinks that the law should be changed governing the debt ceiling. My sense is that they would like to see that changed because they don't want to come -- they don't want to be at this point in February. On February 7th, they don't want to be at this point again. At this stage, there's really nothing preventing that from happening. They may get out of this jam this time around but there's nothing preventing this from happening next time around -- Wolf?
BLITZER: It seems to me the only real concessions, Jim, that the president made in this entire negotiating process over the past 15, 16 days of this government shutdown, and earlier leading up to the shutdown, he would have wanted clean bills to extend the nation's -- the debt ceiling for at least a year, if not longer the end of 2014.
ACOSTA: That's right.
BLITZER: Also he wanted the government shutdown. He wanted a one- year fiscal funding bill to keep the government open at least for a year. Now that he's had to accept a much shorter time line in both of these areas, he's going to get, for all practical purposes, clean bills, but only to keep the government funded, what, until January 15th, and keep the nation's fiscal situation clean, if you will, the debt ceiling until February 7th.
ACOSTA: That's right.
BLITZER: So these are concessions on the president's part.
ACOSTA: That's absolutely right, Wolf. I think the strategic minds inside the White House would have loved a debt ceiling increase for another year. That would have brought us to October, mid-October of 2014. Why? Because the midterm elections would only be two weeks away. They sort of were wondering here at the White House why Republicans did not take a debt ceiling increase that took them past the midterms so they didn't wind up in the situation all over again right before the midterm elections. Because, theoretically speaking, and you've heard this from some House Republicans, they have said, well, this is happening now in 2013. It's not really happening in 2014. And the election is next year. The thinking being that, well, people will have forgotten about all of this by the time next year comes around.
But having said all of that, 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 of February.
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.