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At Debt's Door; Debt Doomsday Scenario?; Interview with Senator Kelly Ayotte of New Hampshire; Airport Employee Arrested; New Look At Teen Rape Claims

Aired October 16, 2013 - 08:00   ET

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


REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: The idea of default is wrong, and we shouldn't get anywhere close to it.

(END VIDEO CLIP)

KATE BOLDUAN, CNN ANCHOR: The 11th hour. We are in it. Hours away from the debt ceiling deadline, the Senate may be set to strike a deal. But no one knows if conservative Republicans will try to stop it.

CHRIS CUOMO, CNN ANCHOR: So what happens next? No one knows for sure. The financial markets may get shaky but the pain will come for sure if government delays upcoming payments to those who need help the most. We will break it down for you this morning.

MICHAELA PEREIRA, CNN ANCHOR: Outrage, a national uproar after a Missouri teen is allegedly raped by a football star, and is he not prosecuted. Now, state officials are stepping in, and we have the latest.

CUOMO: Your NEW DAY continues right now.

(BEGIN VIDEOTAPE)

(MUSIC)

ANNOUNCER: What you need to know --

SEN. HARRY REID (D-NV), MAJORITY LEADER: The Tea Party-driven part of the Republican Party doesn't follow logic.

ANNOUNCER: What you just have to see.

UNIDENTIFIED MALE: This is Virginia Jean with an SOS call, over.

ANNOUNCER: This is NEW DAY with Chris Cuomo, Kate Bolduan and Michaela Pereira.

(END VIDEOTAPE)

BOLDUAN: Good morning and welcome back to NEW DAY, everyone. It is Wednesday, October 16th, 8:00 in the East -- a beautiful day outside the U.S. Capitol here in Washington, but not so pretty inside the Capitol building. Lawmakers will be back for another round of last-minute deal-making to try and avoid hitting the debt ceiling limit, and that we've got to count down the hours, it seems at this point, Chris.

CUOMO: Less than 16 hours right now, and the people in D.C. are at least working on a deal, we know that. The fear is that bad things will happen when the clock strikes midnight. We don't really know what will happen but it is that doubt itself that may be the danger for the markets, depending on whom you listen to, that doubt could trigger severe financial market flux and the overall economic health could suffer.

So, we're going to get into all the possibilities, we'll lay out the domino's so to speak and show which way they could fall and whom they would land on, especially what it means for you and your wallet.

Plus, we're going to talk with a senator involved in high stakes negotiations, and find out what she has to say about what may happen next.

BOLDUAN: Absolutely. But, first, let's get you up-to-date on where things stand right now.

This morning, markets open at 9:30 Eastern, that's important every day but especially today. We'll see how investors react to the seemingly endless gridlock here on Capitol Hill, the House is back in session at 10:00, the Senate will be returning at noon but you can be sure negotiations and talks are picking up well before then, we'll get an update on if they can work out a deal.

But any agreement as you will know has to go through the House even if it passes the Senate, where attempts at a compromise seem to completely blow up yesterday leaving Republican leaders with what seems like very few options left.

We're covering all the angles of this critical deadline. Let's start with senior White House correspondent Jim Acosta.

Jim, what do you know?

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Kate, what we do right now is that Senator Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell are busying crafting a deal to prevent a government default get that to the president's desk by the end of the today.

Here's what the deal looks like now, according to a top Democrat and a top Republican senate source. Let's put this on screen for you.

The government would be reopened and funded until January 15th, the debt ceiling would be raised until February 7th, a budget conference of Democrats and Republican lawmakers would be convened, start working through some of these budget issues and income verification requirements would be beefed up in the president's health care law.

The question is whether or not they can get all of this done in time before the nation hits the debt ceiling at midnight tonight?

But in the words of one Senate Republican source: fear not.

(BEGIN VIDEOTAPE)

ACOSTA (voice-over): Time is running out, the debt ceiling is within sight, and the last best hope avenue voiding 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 whole lot of time 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 the 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.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: 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-NV), MAJORITY LEADER: Extremist Republicans in the House of Representatives are attempting to torpedo the Senate's bipartisan progress, with the 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 that may downgrade the nation's AAA credit rating, a potential repeat of what Standard & Poor's did after the last ceiling debate of 2011.

Although Fitch continues to believe that the debt ceiling will be raised soon, the agency said, the political brinksmanship could increase the risk of a U.S. default.

Some House conservatives were brushing off talk of dire consequences to come.

UNIDENTIFIED MALE: I just think most folks understand October 17th is not the drop dead date. There are no payments due for a couple weeks.

(END VIDEOTAPE)

ACOSTA: There is a different view over here at the White House. They do believe if the government wants to get in the business of picking and choosing which bills today also known as prioritization here in Washington. That is technically a default.

But a senior administration official told CNN last night that they don't believe that Thursday, tomorrow, is a drop dead date, that if the markets see the Senate and the House working on a deal that they're hopeful Wall Street will respond accordingly and not go into a panic. But, of course, we have to see if the markets believe that one -- Kate, Chris.

CUOMO: All right. Jim, thank you.

Doubt in D.C. is kind of business as usual, right, but doubt in the markets could mean something unusually negative for you.

Business correspondent Alison Kosik joins us now to explain.

Risk, doubt, it all goes together for the markets.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: And you know what, if we go through the debt ceiling, if there's no solution you can bet the markets are going to tank, because one trader said this to me the other day, he said, Wall Street is a voting booth and they're going to vote their displeasure by selling off.

But one thing to keep in mind as midnight, the sky is not going to fall because the debt ceiling didn't get raised. The debt ceiling is really just a date, the so-called X date of October 17th, it's the day Secretary Lew announced he'd run out of magic tricks to manipulate the Treasury's ability to pay debt. So, sure, it's the date, but there's some leeway there. The Treasury has $30 billion in cash on hand tomorrow, plus tax receipts that will be rolling in.

Now, the crunch time, the crunch time that could really come at the end of October, the government has got to make some choices t has billions of dollars in payments to make to Social Security, Medicare recipients, the military.

So, big question, how does it decide who gets paid? It's a nightmare scenario when you think about there are real people involved. These people depend on the payments to pay their bills so they're real Americans' lives involved here.

CUOMO: All right. Let's put those questions to the people in power. Alison Kosik, thank you very much. Let's get down to Kate.

BOLDUAN: All right. Chris, thanks so much.

Let's talk more about this. Joining me now is a member of the bipartisan group of senators who has been working very hard to try to get a deal done, to try to get through this seemingly endless gridlock -- Republican Senator Kelly Ayotte of New Hampshire.

Senator, great to see you. Thank you so much.

SEN. KELLY AYOTTE (R), NEW HAMPSHIRE: Great to see you, Kate.

BOLDUAN: Thank you, thank you.

So, we -- everyone is looking for answers this morning --

AYOTTE: Yes.

BOLDUAN: -- because it seems yesterday, everything was thrown in flux. In the Senate, where do things stand now, when do you think we'll see a vote, and where are you going to stand on that?

AYOTTE: I think right now that Leader Mitch McConnell, along with Harry Reid, the majority leader of the Senate, are trying to resolve this, and get a resolution and agreement. That can be brought up in the Senate and then voted on, on the House of Representatives, because yesterday it fell apart in the House. And we've got to get this resolved.

I've been part of a bipartisan group because we're just frustrated that nothing's been happening and the country deserves better.

BOLDUAN: What do you think of some of the contours of the deal? We have no deal until we have a deal --

AYOTTE: That's true.

BOLDUAN: Nothing's been announced, but the contours --

AYOTTE: We've come close. Let's think about it several times, exactly.

BOLDUAN: Are you confident at this point more than in past days that this is going to get done in the Senate?

AYOTTE: I am confident because we cannot obviously default. We have to make sure that we open up the government. And it's time to get this resolved on behalf of the American people.

And I think there's a recognition right now in the Senate as demonstrated by the fact, part of this bipartisan group led by Susan Collins, and seven Democrats, seven Republicans, we were prepared to sign onto a plan.

I think there's a growing sense of frustration that this has to get resolved right away.

BOLDUAN: Who is going to go first, the House or the Senate?

AYOTTE: I think right now, it's going to be the Senate because last night it fell apart in the house so I think the most likely scenario is that something passes out of the Senate and then it's voted on in the House of Representatives. BOLDUAN: You think that pushes us past the Thursday deadline?

AYOTTE: Well, if we get past Thursday deadline, right, which isn't acceptable, we need to have a clear agreement in place and a path forward to get this done, to open up the government, to address the debt ceiling issue. And then, obviously, with what I'm seeing for an agreement, we'll be back at this in January.

BOLDUAN: What happens then? I mean, we're going to be pushed -- this is going to be pushed a couple months so are we going to be back in the middle of this crisis again in just a few months?

AYOTTE: Well, here's my hope. I mean, I think people are so sick of governing by crisis.

BOLDUAN: Yes.

AYOTTE: I actually hope that if we're going to do a budget conference that we resolve this on behalf of the nation, a larger fiscal agreement. If not, I think that we can't have this happen again. So, there has to be a resolution up front on what the funding for the government is going to be, so that we're not ever in a position where we shut the government down again.

I think we've proven this is not good for the country, and again, I never signed on to this defunding strategy even though I'm an opponent of Obamacare because I didn't think it was a winning strategy.

BOLDUAN: Well, I actually, that's one of your good friends said the same thing, John McCain. He said, he quoted in the "New York Times", it's a great quote.

He says, "It's very, very serious. Republicans have to understand that we have lost this battle," as he predicted, he says, "weeks ago, that we would not be able to win because we were demanding something that was not achievable."

AYOTTE: He's absolutely right and as evidenced by the fact that the government's been shut down, but the Obamacare exchanges have opened. So even getting it done with the government shutdown was not possible.

BOLDUAN: Conservatives brought this defunding fight forward.

AYOTTE: Right.

BOLDUAN: It's not going to happen. It's never going to happen.

AYOTTE: Yes, it was an ill-conceived strategy from the beginning, not a winning strategy.

BOLDUAN: So, would you say -- is it worth it for the Republican brand? Is this tarnishing the brand?

AYOTTE: I don't think it was worth it, that's why I didn't support it, and I think the American people want us to resolve this now and not go down this road again. We can oppose Obamacare, and I do, and I think we've already seen some of the problems and the flaws coming forward.

BOLDUAN: Glitches for sure.

AYOTTE: Of course, absolutely.

But that said, we can't shut down the government. We have to fund the government. Obviously, deal with the $17 trillion in debt. I think we're losing the forest through the trees on some of the bigger picture issues for the country.

BOLDUAN: One person who put himself squarely in the center of the fight is one of your colleagues, Senator Ted Cruz.

AYOTTE: Yes.

BOLDUAN: Can he hold this up? Do you think he's going to hold this up?

AYOTTE: It's up to him. I would hope that he wouldn't. I mean, in the Senate obviously in terms of certain time frames, senators can cause to you run out the clock, but what's he trying to gain at this point?

I would hope that whatever comes forward, that we would allow a vote on it as soon as possible because we are coming up against this deadline. It's not acceptable for the American people.

And even if you're going to vote against it, let's get the agreement resolved. Let's move forward and I think the people of this country want people to solve problems.

BOLDUAN: Real quick -- what's your message then? If it gets done in the Senate, what's your message then for House Speaker John Boehner? What would you tell him today?

AYOTTE: My message would be, obviously, I don't envy the position that Speaker Boehner has been in -- but to allow it to come up for a vote and to get it resolved on behalf of the nation. And I know --

BOLDUAN: Even if it's majority Democrats?

AYOTTE: I know he's been in a difficult position but we're at the time when we have to get it done. So I believe that he needs to bring it up for a vote and obviously --

BOLDUAN: Counted (INAUDIBLE) to move forward.

AYOTTE: He's in a difficult position and I think in part because of this defunding strategy. There's been certain groups that have been pushing that in the House and has put him in a very difficult position.

BOLDUAN: All right. Senator, you're at this -- you are -- I don't know if we say you're at ground zero, you're at the center of it all because the Senate is going to need to do something.

AYOTTE: We do.

BOLDUAN: And we're going to watch it -- we're going to be here watching you do it.

AYOTTE: Thanks, Kate.

BOLDUAN: Great to see you. Thank you so much for your time. Really appreciate it.

AYOTTE: Appreciate it. Thank you.

BOLDUAN: All right. Chris, a little bit of optimism it seems we could be getting here, the senator says they will likely get something done in the Senate but what does that mean? We don't have a deal until we have a deal, that's the one thing that we know after this seemingly endless gridlock in Washington. We'll have more on that just ahead.

But, first, let's talk about the headlines making news at this hour. Let's straight back to Michaela.

PEREIRA: All right. Kate, thanks so much.

Making news now:

Cautious optimism during a second day of talks on Iran's nuclear program in Geneva. Iran is pushing the U.S., Iran and four other world powers to ease economic sanctions, in exchange for scaling back nuclear activities. Senior State Department officials they have detailed technical discussions with high-ranking Iranians including the deputy foreign minister.

A tense standoff in Memphis ends with two officers shot, a home in flames and a suspect dead inside. Police say Aaron Dumas wanted for allegedly shooting his ex-girlfriend and her brother, fired at police as they tried to arrest him. He then barricaded himself and could not be talked out of it. Short time later, the home was engulfed. The officers' injuries for their part are not life-threatening.

Some frightening moments aboard a flight from Dallas to Atlanta -- an engine on the Spirit Airlines jet bursting into flames moments after takeoff. Passengers say it was so bright it looked like the inside of the plane was on fire. The plane returned to Dallas and passengers were moved to another jet for the trip to Atlanta.

Spirit Airlines says the passengers weren't in any danger and the crew followed procedure by returning to the airport.

The college basketball player suing her former school. Ashley Cooper (ph) played at the college of the Holy Cross in Massachusetts for two seasons. She claims head coach, Bill Gibbons, abused players physically and verbally and that the school ignored complaints. Gibbons, for his part, did not comment. The school says he's looking into the allegations.

Bears gone wild in Lake Tahoe, California. Officials in the town of Trekkie (ph) say there have been a rash of bear break-ins. The bears were said to be searching for food in people's cars. Most recently, a bear actually got locked in a vehicle and authorities had to break the windows to get the bear out. Officials say recent dry winters and summers led to a lack of food for the bears so they go searching elsewhere like your center console.

CUOMO: Hmm. By letter of the law, the entering of the vehicle makes it grand theft auto, and that is a felony in most states, so.

PEREIRA: Hey, Indra, how's that weather?

INDRA PETERSONS, AMS METEOROLOGIST: Great, Michaela.

(LAUGHTER)

PETERSONS: I see two against one, 100 percent.

(LAUGHTER)

PETERSONS: Looks beautiful! Cold front stretching across the country again today. We're still talking about light rain, and of course, cool temperatures. Generally speaking, only about an inch of rain with these guys, but remember, there are two systems making a way through the country. It's about a time you get through one. Even more cold air is going to follow up behind it.

Light rain today. We're looking about an inch kind of starting to spread in through New York and kind of going all the way down through Texas again where we are still looking at the heavier amounts. So, octave remnants. Tropical storm, Octave, you remember. That was in the pacific. It is now just a remnant, but all that tropical moisture is still there and is mixing in with that cold front.

And we're continuing to see the heavier amounts there of rain. Also spreading through Arkansas and Louisiana today. It's a flooding concerns in those regions. Otherwise, we're talking about anywhere from four to five inches of rain. So, yes, that's the flooding concern I was talking about. Cool air again being the second story. That cold air continues to make its way to the east. And remember, there were two cold fronts out there.

So, even though it's slow moving, we're going to talk about temperatures staying cold for a while. Here, it looks like still warm. Philly and D.C. still in the 70. Even as we go in through tomorrow, you'll notice that cold air only makes its way to the Ohio Valley and then by the weekend, just as we start the weekend, we're going to see that cold air spread all the way into the northeast.

And remember, it's staying because you have another cold front behind it that's going to back it up. So, we're getting ready for the chill that is here, guys. I'm going to smile about it.

PEREIRA: You're going to enjoy it. It's beautiful. The chill is beautiful.

PETERSONS: Yes. PEREIRA: Right?

CUOMO: Yes.

(LAUGHTER)

(CROSSTALK)

PEREIRA: Right?

(LAUGHTER)

CUOMO: Coming up on NEW DAY, police say they have their man in those dry ice explosions at LAX. You will not believe who they say is responsible. We'll give you a live report with all the details.

PEREIRA: Also calls to revisit a Missouri rape case involving a 14- year-old girl where the charges were thrown out. Why the state's attorney general says what transpired is appalling?

(COMMERCIAL BREAK)

CUOMO: Welcome back to NEW DAY. Braking overnight, a ground service worker, that's who's been busted for allegedly setting off two dry ice bombs earlier this week at LAX, Los Angeles International Airport. CNN's Casey Wian is live on the scene with the latest. Good morning, Casey. What do we know?

CASEY WIAN, CNN CORRESPONDENT: Well, we know, Chris that, the Los Angeles Police Department late last night said they arrested 28-year- old Decarlo Bennett (ph). As you mentioned he is employed by a ground services firm here at Los Angeles International Airport. He is being held on a charge of possessing or exploding a destructive device near an aircraft.

Two of those bombs made of dry ice and soda bottles were found on this tarmac right behind me here at the international at Tom Bradley International Terminal at LAX. And if a dry ice bomb sounds like some sort of prank, let me tell you how the bail has been set and just how seriously authorities are taking this case.

His bail, despite the fact that no one was injured, no property was damaged set at $1 million -- Kate.

BOLDUAN: All right, Casey, thank you so much for that.

Missouri's lieutenant governor is calling for a grand jury to review a controversial rape case of 14-year-old girl accused a high school football player of sexual assault, but the prosecutor dropped the case. That decision has drawn widespread criticism. CNN's Ana Cabrera is in Maryville, Missouri with much more on this. So, where do things stand today, Ana?

ANA CABRERA, CNN CORRESPONDENT: Well, Kate, there is growing pressure for the prosecuting attorney in this case to further explain his ruling as the small town in Maryville, Missouri, has been thrown into the center of controversy.

In fact, people from all around the country are planning to come here to protest next week calling for justice for Daisy Coleman (ph) who says she was raped and then bullied. Even the state of Missouri is now demanding answers.

(BEGIN VIDEOTAPE)

CABRERA (voice-over): The highest levels of the Missouri State government are now stepping in after a prosecutor mysteriously dropped sexual assault charges against a Maryville high school football star even after he admitted to having sexual relations with Daisy Coleman, a then 14-year-old at his school.

Lieutenant governor, Peter Kinder, says he's appalled by the facts that have come out and is calling for a grand jury to review all the evidence.

SHERIFF DARREN WHITE, NODAWAY COUNTY: Is Daisy Coleman a victim, absolutely. Did Daisy Coleman deserve justice? Absolutely.

CABRERA: The sheriff's office arrested the then 17-year-old high school senior, Matthew Barnett, and two of his friends in January 2012 for allegedly sexually assaulting Daisy and her friend, Paige Borlan. But prosecuting attorney, Robert Rice, dropped the charges against Barnett, citing insufficient evidence. In a statement, he says the victims refused to cooperate and wouldn't agree to testify.

MELINDA COLEMAN, MOTHER OF ALLEGED RAPE VICTIM: That's a lie.

CABRERA: Why would he say that?

COLEMAN: I don't know. We thought we had done everything. He never said anything else. Nobody ever asked us for anything else.

CABRERA: Daisy's mother says it was Rice who wanted them to plead the fifth and leave town.

COLEMAN: We did not refuse to testify with the felony case. We absolutely did not.

CABRERA: Daisy's family believes the prosecutor was pressured into dropping the charges because of the suspect's political and social status. Barnett's lawyer released a statement saying while his client admits the sexual encounter with Daisy Coleman, the legal issue was whether a crime was committed adding that Daisy's mother freely admitted that her daughter does not always tell the truth.

Daisy says she was relentlessly bullied afterwards and the family felt forced to move to another community. Now, nearly two years later, she says she's doing much better. The family hoping this call for an investigation means justice is on the horizon.

DAISY COLEMAN, ALLEGED RAPE VICTIM: I feel great once I found out we were all standing in the hallway and we all jumped up and we were excited and we hugged, and we were all happy about it. (END VIDEOTAPE)

CABRERA (on-camera): Now, important to note that the lieutenant governor really does not have the authority to convene a grand jury. His call to action is meant to be a political statement that adds pressure to the state attorney general and the prosecuting attorney, Robert Rice, to ask for the circuit court to convene that grand jury.

So, we'll have to wait and see if that, indeed, happens. But Prosecutor Rice in the past couple of days as we've tried to talk to him numerous times continues to decline to comment -- Kate.

BOLDUAN: All right. We'll have to see what happens with that building pressure. Ana, thank you so much for bringing us up to date this morning.

Coming up next on NEW DAY, here in Washington, the question today, can lawmakers turn chaos into compromise? And, can they do it in time to beat the midnight debt ceiling deadline? Two of the hosts of CNN's "Crossfire" will weigh in. Chris, back to you.

CUOMO: All right, Kate.

Plus, we have a NEW DAY exclusive for you, a promising young man just looking for help after a car crash blown away by police. Tragic misunderstanding or something far more sinister? We will speak exclusively with the victim's fiancee.

(COMMERCIAL BREAK)

BOLDUAN: Welcome back to NEW DAY. It is Wednesday, October 16th and I am live in the nation's capital, a beautiful day here but a lot of work to be done, because they are racing against the clock. And right now, the clock now seems to be winning. Less than 16 hours until the U.S. goes up against the debt ceiling.

The House failed to vote on a debt deal last night, putting the pressure squarely back on the Senate. The Senate's leaders, Harry Reid, Mitch McConnell, they are trying to revive a bipartisan compromise and they are optimistic, we're hearing some optimism this morning that they will have a deal today.

We're told that the Senate deal would possibly fund the government through January 15th, raise the debt ceiling through February 7th. Once a compromise is struck in the senate, then of course, it will be up to the House to get a bill to the president's desk on time.