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Congress Averts Debt Crisis, For Now; Biden Welcomes Back Furloughed Workers; House Staffer Suffers A Meltdown; Stocks Shrug Off Debt Deal; Government Begins To Function Again; Debt Deal Stuffed With Extras

Aired October 17, 2013 - 10:00   ET

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


CAROL COSTELLO, CNN ANCHOR: President Obama speaks later this hour. You will hear from him. That's because your government is fully open again. These are new pictures from outside the Air and Space Museum in Washington, D.C., one of the dozens of national museums opening their doors again for the first time in 16 days. These are live pictures. People really want to get into that museum.

The doors may be open, but your Congress is only slightly less dysfunctional this morning. Here is John McCain. Let's listen.

(BEGIN VIDEO CLIP)

SENATOR JOHN MCCAIN (R), ARIZONA: This was a terrible idea. I told you at the beginning how it was going to end. We know if they try it again how it's going to end. So hopefully, they won't try to do this again, at least not in my lifetime.

(END VIDEO CLIP)

COSTELLO: Just before bewitching hour of midnight, lawmakers voted to avert a debt crisis and end the shutdown, but any relief is tempered by reality. We will soon be doing this all over again. The measure keeps the government funded only through January 15th and the country can keep borrowing through February 7th and it forces no changes in Obamacare. On this morning after, some Republicans are angry and divided.

(BEGIN VIDEO CLIP)

SENATOR TED CRUZ (R), TEXAS: I would point out that had Senate Republicans united and supported House Republicans, the outcome of this, I believe, would have been very, very different. I wish that had happened, but it did not. But it does give a path going forward, that if the American people continue to rise up, I believe the House will continue to listen to the American people. And I hope, in time, the Senate begins to listen to the American people also.

(END VIDEO CLIP)

COSTELLO: We begin our coverage this morning with Jim Acosta. He is at the White House. Good morning. JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Good morning, Carol. That's right. What we've been seeing all morning is federal employees returning back to work here on the grounds of the White House. One thing that we can point out to our viewers, Carol, is that White House Chief of Staff Dennis McDonough was greeting some of those federal workers as they were entering the grounds of the Eisenhower Executive Office Building.

We shouted a question to Mr. McDonough about what his message was to those federal workers. His message was essentially is that they are glad to have those workers back. Also greeting federal workers returning from furlough is Vice President Joe Biden. He was over at the headquarters of the Environmental Protection Agency.

He actually had a few choice words about the 16-day government shutdown. He said, quote, "I am happy it has ended. It was unnecessary to begin with. I am happy it has ended." He also said at one point, Carol, there are no guarantees that this won't happen all over again, getting to the point that you were just making, that this continued resolution to reopen the government only carries us until January 15th.

However, we should point out a safety mechanism that was built into that legislation requires parties from both Democrats and Republicans to work together on legislation to get the government running for a much longer period of time. But here is some sound of the vice president. Let's listen to that.

(BEGIN VIDEO CLIP)

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES OF AMERICA: By the way, I didn't bring enough muffins.

UNIDENTIFIED FEMALE: He brought muffins. Come on.

(END VIDEO CLIP)

ACOSTA: Now, I'm not sure what you quite made out there, but you can see that the federal workers there were in high spirits. So was the vice president. We should also point out, Carol, President Obama will be talking at about 10:35 here at the White House. He is expected to really extend an olive branch to Republicans.

What we heard before the government shutdown was the president pledging to talk to Democrats and Republicans about a long-term budget agreement. He has vowed to get into some of these issues that the Democrats don't like to talk about, and that means curbing entitlement spending. Republicans will have a chance to hold him to his word in the coming weeks -- Carol.

COSTELLO: All very complicated issues that lawmakers will have to sit down and talk about and come to some sort of agreement. But Jim, the ink was barely dry on the budget deal before the Senate raced out of town. Take a look at this. Those calendar days you're going to see there in red, that's when the House is out of session, nearly two weeks this month and closer to three weeks next month. And in December, look at all that red. The House is in session only eight days. Shouldn't they start cracking down on the next deal to keep this from happening again?

ACOSTA: If only we had perks like that, right, Carol? Our vacation policy is not that generous. One thing we should mention is these members of Congress have some fence mending to do. If you look at those approval numbers for members of Congress, they are basically down to blood relatives and staffers, as John McCain likes to say. They are even losing some of those relatives and staff members in the middle of all this.

But speaking of the staff, those staffers will be working on these budget issues while the members are away. And the key conferees from both sides, people like Paul Ryan on the House side, people like Patty Murray, who is on the Democratic side. She will be very instrumental in this process ahead. I don't think we'll see as many vacation days from those members of Congress.

The key members will be involved in all of this. Keep in mind, Carol, the pressure is on. Can you imagine if they don't work something out by the middle of December and we start marching towards January 15th all over again? Republicans have a political, practical political impetus here.

That is if they do this all over again in a midterm election year that could have major consequences. The House could fall into Democratic hands. That's why people like John McCain are saying the government is not going to shut down again because there are too many ramifications that could follow if they were to let this happen -- Carol.

COSTELLO: OK, I hope you're right. Jim Acosta, thanks so much.

ACOSTA: You bet.

COSTELLO: The weeks of maneuvering and bickering have meant long hours and lots of stress for people who work on the edges of Congress, those who really do the people's business without fanfare or hidden motives. For one woman, the House stenographer that stress may have been too much. That's her in the highlighted circle as she marches to the podium. What happens after that is truly sad and bizarre.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Constitution would not have been written by free masons. They go against God.

UNIDENTIFIED MALE: Molly (ph), come on.

UNIDENTIFIED FEMALE: You cannot serve two masters. Praise be to God, Lord Jesus Christ.

(END VIDEO CLIP)

COSTELLO: Lawmakers who witnessed the apparent unraveling of their colleague were shaken and baffled. (BEGIN VIDEO CLIP)

REPRESENTATIVE PETER KING (R), NEW YORK: I thought it was somebody telling us we had two minutes to vote. I thought it was some official person. That's how she got there. Sergeant in arms didn't try to stop her.

JAKE TAPPER, HOST, CNN'S "THE LEAD": Because she works there.

KING: And that's where she's situated. She went up behind the podium where the president speaks from. They thought she was going to hand something to the speaker and then they realized. This all happened in about 10 seconds. Talking to people afterwards who work with her who said she's a perfectly normal, rational person but seemed to just lose it.

(END VIDEO CLIP)

COSTELLO: Capitol police tell us they were able to talk to the woman before she was taken to a local hospital for evaluation. It's a sad symbol of perhaps dysfunction in our government, a dysfunction that's having a critical impact on the U.S. economy, which lost $24 billion as a result of this partial government shutdown.

That's according to Standard & Poor's, which also says fourth quarter GDP will now grow at 2.4 percent instead of 3 percent and small businesses will be dealt with frozen contracts and stalled loans while skittish consumers cut back on spending. All of that for what many are calling a temporary fix.

Markets don't seem too impressed either. Wall Street falling at the open while the world markets are mostly lower. Monica Mehta is the managing principal for Seventh Capital Investment. She joins me live from New York. Good morning.

MONICA MEHTA, MANAGING PRINCIPAL, SEVENTH CAPITAL INVESTMENT: Good morning, Carol.

COSTELLO: So talk some more about the lasting impact on our economy that happens when you partially shut the government down for 16 days.

MEHTA: Well, I think it's really important to point out that while we have averted a short-term, self-created crisis, we have basically ensured that we are going to be facing a much bigger crisis down the road. And that's because the CBO has been pointing out for many years now that we have unsustainable, long-term debt. We have a spending problem.

And the only time in which our Democrats and Republicans have been dealing with these spending problems has been in debt ceiling negotiations. And what you're seeing over and over again is repeated behavior. You're seeing a lack of political will among politicians to deal with the problems, to make the difficult decisions that have to be made and it really isn't helping us for the long-term future.

And regardless of having a conclusion to this messy, almost tantrum- like shutdown we've seen for the last two weeks, we really have done nothing to shore up our economy and our long-term debt. And that's a problem.

COSTELLO: Do you think lawmakers realize that what they do directly affects the economy?

MEHTA: Gosh, I sure hope they realize it, because I think American families have been shoring up their personal finances for the past four and five years. The crisis was devastating for all Americans. And I think what you're seeing is that America is one of the richest countries in the world. But we are really behaving like a family that makes $1 million a year, but lives paycheck to paycheck.

There's really no reason for us to be in the situation that we're in right now and it's really a lack of political will and a prioritization of partisanship over making sound economic decisions that's really persistently bringing us to the same place over and over again.

COSTELLO: Monica, I hope lawmakers are listening to you this morning. Thank you so much. Monica Mehta, appreciate you being with us.

MEHTA: Thank you.

COSTELLO: You're welcome. Still to come in the NEWSROOM, the bill signed into law last night didn't just fund the government and raise the debt ceiling. Billions of dollars for other projects -- you know, pork were somehow stuffed into that bill.

(COMMERCIAL BREAK)

COSTELLO: Your government is back online today. By gosh, that means the panda cam at the National Zoo will also be back online. Your national treasures, parks and memorials are reopening and hundreds of thousands of federal workers, the most important part, they will be going back to work today and they will get back-pay.

But furloughed workers like Federal Investigator Scott Mumper in California still aren't happy because the deal is only for a few months.

(BEGIN VIDEO CLIP)

SCOTT MUMPER, FEDERAL EMPLOYEE: If they're going to kick the can down the road again and extend it through November or December, we're going to be -- you're going to be re-interviewing me again in another month or two.

(END VIDEO CLIP)

COSTELLO: Maybe, because last night's compromise only funds the government through January 15th and raises the debt ceiling through February 7th. There's something else wrapped up in that temporary bill, billions and billions of dollars in pork.

CNN's Athena Jones is on Capitol Hill to break it all down for us. Good morning.

ATHENA JONES, CNN CORRESPONDENT: Good morning, Carol. Like you said, there are a lot of dollars in this bill that have nothing to do with opening the government or raising the debt ceiling. Here's a list of a few them. I think we have -- put up in the screen. One is $2.2 billion for an Ohio River dam project.

Some folks have been criticizing Minority Leader Mitch McConnell because he's from the state of Kentucky and this project affects his state. His office says he didn't ask for this money. Other senators did. Another example, $636 million for firefighting for the Interior Department and the Forest Service, $450 million to repair flood damage roads in Colorado.

You remember that horrible flooding not too long ago in that state and $294 million for the VA to reduce veterans benefits claims backlog. So those are just some of the examples of some of the extras that are loaded on to this bill -- Carol.

COSTELLO: Some of those things are good, right? Like the money for flooding in Colorado and veterans benefits.

JONES: Well, certainly. I mean, some people call things that are add-ons like this pork. Others say it's necessary expenditures that are going to be put to very good use. So you have a debate over that. The bottom line is that this bill, this 35-page bill does a few more things and those are some of the examples, a few more things other than reopen the government until January 15th and raise the debt ceiling until February 7th and, of course, require that both sides sit down, try to come up with a larger deal that can avoid this crisis once again just a few months down the road -- Carol.

COSTELLO: See those things could have been in that larger budget bill, but they don't have one. Athena Jones, thank you so much.

JONES: Thanks.

COSTELLO: Still to come in the NEWSROOM, we're waiting to hear more from President Obama as the government reopens today. The president will speak from the state dining room of the White House. We will bring his remarks to you live.

Coming up, our team of correspondents and analysts break down what the president has to say.

(COMMERCIAL BREAK)

COSTELLO: Waiting for President Obama to talk about the government shutdown and its affects. He will do this as hundreds of thousands of government employees head back to work this morning after a temporary deal was reached on the debt ceiling and the funding of the government. But as the signs and barricades come down across Washington, the question remains, how do you move forward?

Because this debt debate could pop right back into, you know, our future in a few months. The president plans to tackle that question later this hour actually, in about 15 or 20 minutes. He will make that statement from the White House.

Last night he said Washington needs to earn back the trust of the American people after the 16-day long shutdown that almost resulted in the United States defaulting on its debt.

Wolf Blitzer is in Washington to take it from here. Good morning, Wolf.

WOLF BLITZER, CNN ANCHOR: Good morning, Carol. Thanks very much. An important day here in the nation's capital, the president, as you say, is expected to speak in about 15 minutes or so from the state dining room of the White House. He is going to be speaking about not only what happens happened here in Washington, but where we all go from here.

We have a full team of correspondents and analysts standing by to break it all down for our viewers here in the United States and around the world. Our senior White House correspondent Jim Acosta, our chief congressional correspondent, Dana Bash, our CNN political contributor Will Cain, our chief national correspondent John King and chief political analyst Gloria Borger.

Jim, let me start with you over there. Give us a little preview what do we anticipate the president will say? Because some of his aides are suggesting he is part of the no glow zone.

ACOSTA: That's right, no spiking the football over here at the White House and part because, Wolf, he has to start working with Democrats and Republicans to start working on these larger budget issues. That is a requirement in the continuing resolution to reopen the government. They all have to come back by the middle of December so we don't have to go through this all over again.

From what we understand by talking to people from the White House, the president is expected to basically extend an olive branch to Republicans to say I'm ready to talk about the tough issues, issues that we haven't been able to agree on in the last several months, even the last couple of years, Wolf, since the last debt ceiling crisis. And what does that mean? That means perhaps a conversation that Democrats don't like.

That is curbing the entitlement spending. That is really one of the big drivers of the national debt. The president said before the government shutdown, before the nation was on the verge of default that he was basically pledging to have these conversations with Republicans and Democrats so they can find a way to a lasting sort of budget compromise that could start bringing down the national debt in a major way.

Now Republicans will get a chance to hold him to his word. Wolf, one other thing that we might also see from the president is that he might be welcoming back federal workers, you know, 70 percent of the staff has been furloughed during this crisis. They were working on a shoe string budget.

When I would go back to the press office, normally you would see lots of employees back there. There are basically four employees during this entire crisis that we saw White House Chief Of Staff Dennis McDonough greet a steady stream of government employees as they were entering the grounds of the Eisenhower Executive Office Building earlier this morning.

Vice President Joe Biden was at the headquarters of the EPA, also talking to federal workers. He brought some coffee cakes over to the security desk at that building and at one point said to a reporter that there's no guarantee that we won't go through this all over again. The president has to make sure that doesn't happen and part of that means extending the olive branch down Pennsylvania Avenue -- Wolf.

BLITZER: All right, Jim, standby. Dana Bash is up on Capitol Hill. Dana, one way of extending that olive branch is if the House-Senate budget conferees as they are called can work out some sort of deal. We know that Patty Murray, the chair of the Senate Budget Committee, Paul Ryan, the chair of the House Budget Committee, they are supposed to start meeting today and they are supposed to work until mid- December to try to come up with a real budget agreement, something they haven't been able to come up with the past several years.

So how does that look? I give some sort of context. Patty Murray, of course, voted for the deal on the Senate floor yesterday. Paul Ryan, the Republican vice presidential nominee voted against what the speaker wanted, voted against the deal yesterday on the House floor.

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: It's so true. It's really going to be a fascinating dynamic. The good news is that they are meeting. People out there think, OK, Congress isn't doing their work or things are really messed up and think this is a perfect example. Because funding the government is a basic thing that Congress is supposed to do in the constitution.

Not only have they been having these crises, funding the government sort of at the end of each fiscal year, but they also haven't done budgets. And this is the fault of both parties, Wolf. The Republicans haven't wanted to meet with Democrats over the past year and a half. Before that, Democrats didn't do their own budgets for lots of reasons, but primarily because they were concerned about getting hit politically for spending increases.

So fault is on both sides. The fact that they're meeting is very important and very note worthy. However, you're exactly right. These two people are going to be primary players. They do, by all accounts, get along very well. They have a good relationship. Patty Murray is also in the Democratic leadership and Paul Ryan is somebody who has his sights on higher office in the near future.

So the fact is that he's going to compromise, but I think he's going to have the right in his brain and maybe sitting on his shoulder saying you can compromise, but not too much, because if your name is on a big compromised budget, you might be in big trouble with conservatives, at least on the base.

BLITZER: You're absolutely right, Dana. Gloria Borger is here as we await the president. He has been making, as you know, Gloria, a major statement now as this deal was worked out last night in the House and the Senate. The Senate vote was 81 in favor of the deal, 18 against, including three of the big Republican names, names that have been for 2016, Marco Rubio, Rand Paul, Ted Cruz, Paul Ryan on the House side --

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: That's what I was going to say.

BLITZER: To get the presidential nomination in 2016, must you be on record opposing these kind of deals?

BORGER: Paul Ryan's name popped out at us last night when we were watching this vote because obviously he has to cut this deal. Congressman Peter King suggested maybe he voted against it so he would have more credibility with the Tea Party in cutting a budget deal. I'm not so sure about that. I think Paul Ryan voted yes on the fiscal cliff and I think that was a real political problem for him.

And I think if you look at those votes, as you point out, these are potential 2016 presidential candidates. They decided that they could vote no. It would still pass. It would still pass, and they would then have some credibility with the Tea Party. These people are afraid. People are afraid of losing their Senate seats. They're afraid of losing their House seats, being primaried on the right and this is a real problem. This vote last night was scored by conservative groups like heritage --

BLITZER: What does that mean?

BORGER: A no vote counts against you. I mean a yes vote counts against you if you're a conservative. So this was tough for a lot of people.

BLITZER: I was surprised about Paul Ryan voting nay because of that op-ed he wrote last week in the "Wall Street Journal," which he laid out a plan to reopen the government, raise the debt ceiling, never mentioned Obamacare in that "Wall Street Journal" op-ed article at all. He was criticized by a bunch of Republicans for failing to talk about Obamacare in that article. Yesterday, he went ahead and voted against this deal.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: And I think for two reasons Gloria just mentioned. Number one, Tea Party negotiations because one of these challenges, he wants the Democrats to agree to cut Medicare and social security. It will be very difficult for them to do that especially because of the timetable, early in the election year is when they'll be putting this plan together and Republicans want to do some kind of tax reform that could include revenues.

It is very clear from Rand Paul, Marco Rubio, Ted Cruz, the safe vote was no. How does this play out? You have the policy divide between the Republicans and Democrats. You have the political divide between the Democrats and Republicans. What about the internal feud within the Republican Party? Speaker Boehner survives here, but as Gloria noted, the Tea Party says let's attack the Republicans who voted yes. BLITZER: Will Cain, let's talk about those Republicans who voted yes. Mitch McConnell, the Senate Republican leader not only voted yes, he put the deal together with Harry Reid, running for re-election. There's a Tea Party candidate who is challenging him. How does this play out in Kentucky?

WILL CAIN, CNN POLITICAL CONTRIBUTOR: Not only that, Wolf, there's the fishy presence of $2.2 billion going to Kentucky in pork in this deal. Add that on and it looks pretty bad for Mitch McConnell. Here is the thing. This is the divide within the Republican Party. It somehow continues to be overlooked.

This divide had very little to do with ideology. This ideology had very little to do with goals. It was only ever about strategy. In a few moments, President Obama will come out at that podium. I anticipate while there are talks that he may offer some kind of olive branch to Republicans, what we'll hear a de-legitimization of the tactic that was used over the last couple of weeks.

We'll hear things about 800,000 workers that were furloughed. We'll hear about crunches on GDP, but that only ever analyzes the cause side of the equation. Republicans were aware of that. The benefit side that we hope to accomplish changes to Obamacare that would offset, also having a negative impact on the economy.

The divide was, can you really accomplish that goal? Can you strategically accomplish that goal? The tactic isn't illegitimate. The system was built to protect minority interest, three branches of government, two Houses of the legislature, funding power, vetoes. That's the purpose, but can it accomplish your goal? That was the divide within the Republican Party.

BLITZER: All right, Will, everybody stand by. You see the state dining room over there at White House. The president will be walking in momentarily. We'll take a quick break. When we come back, we'll hear from the president of the United States.

(COMMERCIAL BREAK)