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THE SITUATION ROOM

Shutdown Scorecard; Tea Party Punishment?; Interview with Congresswoman Diane Black

Aired October 17, 2013 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: I will talk to a Republican lawmaker who is taking part in those difficult negotiations.

And our shutdown scorecard. Did Republicans with presidential hopes strengthen or weaken their hands?

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Less than 24 hours after the end of a crippling federal crisis, a stunning new warning from Republican firebrand Ted Cruz. The Texas senator says he won't rule out another government shutdown in just a matter of months when the temporary fix approved late last night runs out.

Our correspondents are standing by with new information on the battles ahead.

Let's go first to our chief congressional correspondent, Dana Bash.

So what are we hearing from Senator Cruz? What does all this mean?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, we're not really sure.

An aide to Senator Cruz tells me that he is not ruling out pushing a strategy that once again could result in the government shutdown. But most of his Republican colleagues say good luck with that, no way. In fact, his Republican leader, Mitch McConnell, told "The Hill" newspaper he will not let the government shut down again and budget negotiators started working first thing this morning to make sure that doesn't happen.

(BEGIN VIDEOTAPE)

BASH (voice-over): These bipartisan images and conciliatory words may not be much, but they're a start.

SEN. PATTY MURRAY (D), WASHINGTON: We had a good conversation over breakfast this morning.

REP. PAUL RYAN (R), WISCONSIN: We want to look for ways to find common ground to get a budget agreement. BASH: After a 16-day government shutdown, it's understandable if you're skeptical. These are the first official budget negotiations in four years, only forced to start as part of the deal to reopen the government. Still, several House Republicans tell CNN there is reason for optimism.

Ted Cruz may not have regrets over a losing strategy to defund Obamacare, which led to the shutdown, but others do.

REP. TOM COLE (R), OKLAHOMA: This was the right cause to be fighting for, but probably not the smart fight to pick, and I think we learned some lessons.

BASH: House Speaker John Boehner never thought it was a smart fight, but he stuck with it anyway. GOP sources are near unanimous. They say Boehner earned new trust among conservatives and new power to negotiate in the future.

COLE: I think they are going to be more willing to listen, and again because he was proven correct and quite frankly without rubbing anybody's face in it, a lot of other voices were proven to be wrong.

BASH: Tom Cole is not one of those Tea Party-backed voices, and he calls himself a pragmatic House Republican, or as Aaron Schock calls it:

REP. AARON SCHOCK (R), ILLINOIS: The sane caucus.

BASH: Whatever you call them, they do make up the majority of House Republicans, and Schock admits they have to speak up more.

SCHOCK: I think you are going to see more of us become more vocal and not be taking for granted when it comes to always counting on our votes.

(END VIDEOTAPE)

BASH: Now, House Republican leaders were notably silent today, they were intentionally laying low, no statements responding to the president's remarks this morning that we would normally see, but privately, Wolf, House GOP sources I talked to said that they were disappointed, upset that the president didn't strike a more unifying tone to try to get everybody over the really bad crisis and divisions we have seen.

(CROSSTALK)

BLITZER: We will see if the president is going to pick up the phone, invite some of them over for dinner to continue that charm offensive he tried, but didn't get much success out it. But let's see if he does that right now.

Dana, thanks very much.

President Obama says there's no reason for the nation to lurch from crisis to crisis. He's warning Republicans that he and the American people are fed up right now.

Let's go to our senior correspondent, Brianna Keilar. She's watching this part of the story.

What are you seeing, Brianna?

BRIANNA KEILAR, CNN SENIOR WHITE HOUSE CORRESPONDENT: Wolf, the president's message is that his hardball strategy is here to say. Unlike in 2011, he did not negotiate with House Republicans. He sidelined them instead and he fared better because of it.

(BEGIN VIDEOTAPE)

KEILAR (voice-over): After besting Republicans in a battle over the government shutdown and possible default, President Obama lectured them.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: All of us need to stop focusing on the lobbyists, the bloggers and talking all of us need to stop focusing on the lobbyists and the bloggers and the talking heads on radio and the professional activists who profit from conflict, and focus on what the majority of Americans sent us here to do.

KEILAR: He outlined a three-part agenda he plans to pursue immediately, immigration reform, which is currently stalled, a farm bill, and a budget agreement that will determine how the government is funded as negotiators try to rein in spending. The president says he wants bipartisan solutions.

(on camera): If he really is serious about moving forward in a bipartisan way on some of these initiatives, why did he chide them for following bloggers and radio talk show hosts?

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: The shutdown that we went through had real consequences, real costs, as did the threat of default that was precipitated by the strategy pursued by some on Capitol Hill. You can't ignore that.

KEILAR (voice-over): When the government runs out of funding in mid-January, we could see a repeat. I asked the president about that.

(on camera): Mr. President, is this going to happen all over against in a few months?

OBAMA: No.

(LAUGHTER)

(END VIDEOTAPE)

KEILAR: A very firm no there, and while White House officials acknowledge that maybe some Republicans will be tempted to pursue this strategy again, Wolf, as they are concerned about being primaried to the right in these upcoming midterm elections next year, they think that what may win out is national Republicans being concerned about their brand being damaged with independents.

BLITZER: Let's hope the president is right there won't be another shutdown or any serious threats to America's creditworthiness or anything along those lines. Good work, Brianna. Glad you got the president to answer that question, even as he was quickly walking out of the Briefing Room -- Brianna Keilar over at the White House.

Around Washington and across the nation, we saw hundreds of thousands of federal employees go back to work today, and national parks, monuments, museums all reopened. Vice President Joe Biden went to the EPA to personally welcome workers back. He even brought some muffins.

The barriers that have kept visitors out of the World War II Memorial here in the nation's capital we are taken down. National Park Service workers were busy picking up trash that had piled up during the 16-day shutdown. Tourists lined up to get into the reopened Air and Space Museum here in Washington, one of the Smithsonian's most popular attractions.

And the historic Ohio Clock that stands near the Senate chamber is ticking again after the man in charge of winding it returned to work from his furlough. All good news.

Still ahead, Wall Street's reaction to the deal struck in Washington, and the bottom line of the crisis, what it really cost America's economy. And will the Tea Party punish Republicans who voted to end the shutdown? We're keeping score of the winners and the losers. You know what? Tweet us your thoughts. Use the hashtag SITROOM.

(COMMERCIAL BREAK)

BLITZER: Wall Street welcomed the end of the government shutdown to a point. The S&P 500 was the most bullish. The index hit a record high today, closing above 1733. The Nasdaq also gained ground, but the Dow dipped slightly after several Fortune 500 companies reported weak earnings. More on the economic toll from the shutdown, the debt crisis, right after this.

(COMMERCIAL BREAK)

BLITZER: Glaring headlines about the end of the government shutdown and what it cost the country.

House Democratic Leader Nancy Pelosi is calling it a $24 billion temper tantrum by Republicans. Here's how President Obama described the damage, from risking default on the federal debt.

(BEGIN VIDEO CLIP)

OBAMA: We know that just the threat of default -- of America not paying all the bills that we owe on time -- increased our borrowing costs, which adds to our deficit.

And, of course, we know that the American people's frustration with what goes on in this town has never been higher.

(END VIDEO CLIP)

BLITZER: So are Democrats overstating the impact on the economy? What's going on?

Let's bring in CNN's Richard Quest, who has been watching all of this.

Richard, even though the U.S. avoided any default or anything along those lines, how much damage do you believe this crisis really did cause?

RICHARD QUEST, CNN CORRESPONDENT: S&P puts the number at $24 billion. Every economist I have spoken to seems to suggest in the fourth quarter it's knocked about half-a-percent off America's GDP.

That's quite sizable when you think that growth was already weak. And that half-a-point has gone. It's not coming back. There's no bounce-back. If you then factor into the first quarter of next year the uncertainty over January or February, one has to say that not only has growth gone as a result of this, but the confidence will remain weak.

If you want hard anecdotal evidence, a colleague here at CNN, about to get a mortgage, their mortgage rate went down just a fraction today because of the deal, saving them $40 a month, more than $6,500 over the course of the mortgage. That's what happens when you have certainty.

BLITZER: If there's $24 billion that was lost to the economy by those 16 days of a government shutdown, Richard, and if the fourth- quarter growth goes down let's say half-a-percent, that's a lot of jobs potentially lost in the United States.

QUEST: It's both potential lost, but I think more likely jobs not created, because there won't be the demand. Remember, employers in America are only taking on new workers at the last possible moment.

Look at the last jobs report, look at the last Fed minutes, and the one thing the Fed said again and again in the Minutes is that the recovery is not being job-led. Jobs are not being created. Workers are leaving the work force. They're not seeking employment, and that's what's dangerous about this.

On the other side, it almost certainly guarantees the Fed will keep their foot firmly on the gas for the foreseeable future. Probably the thought of withdrawing tapering or beginning tapering at this point is unthinkable, bearing in mind the effect it could have.

I would say tapering now doesn't begin until December, possibly not until the new year. That seems to be what Wall Street is telling us.

BLITZER: A gloomy assessment indeed.

Richard, thanks very much.

Let's get to our shutdown scorecard right now, the winners, the losers, the lessons learned.

Here's other chief national correspondent, John King.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Wolf, one of the biggest lessons of the debt ceiling debate and government shutdown debate of the last few weeks is that the president and his Republican critics live in what you might call a parallel political universe.

What do I mean by that? The president still views the world this way. Less than a year ago he won a huge reelection victory in the Electoral College. Remember as the president was winning, Mitt Romney vowed to repeal Obamacare. The president defended the law. He thinks that verdict should stand today.

House Republicans though have a very different view, in part because they live in red America. Across the country, look at all that red in all those House districts, all those counties Mitt Romney won. Mitt Romney actually won more House districts than President Obama. These members think the voters want them to stand up to the president, including on the health care law, because, remember, all this started when 80 House Republicans signed a letter to the speaker saying we will not fund vote to fund the government, meaning we will not vote to keep the government open unless that legislation also strips all the money from the president's health care play. And 80 of them said Obamacare money in, you don't get our vote.

In the end, 71 of them stood their ground, only nine yes votes among those 80 for the compromise that raised the debt ceiling and reopened the government. Here's another way to look at it. If you're running for president and you're a Republican in the Congress, well, the safe vote was no.

2016 presidential prospects Ted Cruz, Rand Paul, Marco Rubio and Paul Ryan all deciding to vote no, even though the Republican leadership wanted them to vote in favor of the compromise.

For some members of the House, though, you would have to say this, all politics is local. Of the 232 House Republicans, it's a remarkably low number, but 17, only 17 go home to districts that they won, meaning a Republican House member, but the president won those districts seeking reelection.

Of those 17, 15 decided to vote yes, voting the way the president would have wanted them to vote, because their districts perhaps less Republican-leaning than most of their colleagues. One last footnote. As we watch to see how this plays out going forward, the Tea Party called this deal horrible, said it would punish those who voted yes.

Watch these three races in 2014. The Senate Republican leader, Mitch McConnell, he brokered the deal. He voted yes. One of his key deputies, Lamar Alexander of Tennessee, and the prominent Republican Senator Lindsey Graham of South Carolina all voted yes, all on the ballot next year, all facing Tea Party primary challengers. These will be key tests of whether the Tea Party can keep its threat the punish those who voted yes -- Wolf.

BLITZER: John King, thanks very much, excellent explanation.

Just ahead, we are taking you inside the make-or-break discussions that have begun today on the budget aimed at avoiding another crisis only a few months from now. Republican Congresswoman Diane Black is taking part in those talks. She's standing by live. There you see here.

By the way, if you have a question for her, go ahead, tweet us that question about the next big battle. Use the hashtag SITROOM.

(COMMERCIAL BREAK)

BLITZER: In case you missed it, there was an added jolt of drama during the late-night vote to end the government shutdown. A woman walked up to the front of the House chamber and started shouting about Jesus and the Free Masons, and how the House is divided. We're told she's a longtime stenographer for the House of Representatives who apparently just snapped. She was removed from the Capitol, taken to a hospital for evaluation. More on the shutdown fallout right after this.

(COMMERCIAL BREAK)

BLITZER: The House and Senate negotiators aren't wasting any time. They're formally beginning talks today to try to prevent another budget and debt crisis in just a few months.

We're joined now by Republican Congresswoman Diane Black. She's part of those negotiations. She's joining us from Tennessee. She's a Republican.

Congresswoman, thanks very much for coming in.

REP. DIANE BLACK (R), TENNESSEE: You're very welcome, Wolf. Thank you for having me.

BLITZER: I know you have got until mid-December, this deadline for these House-Senate Budget Committee members to come up with a big package on the budget. Is it doable?

BLACK: Well, I think that it's great that we're finally back to regular order, and we're talking with the Senate, which is what we should be doing. It's what our Constitution says.

And we are looking forward to having some common ground that we can find to deal with our nation's most pressing problems, our fiscal problems of our debt and deficit spending.

BLITZER: Well, good luck. Let's hope you guys succeed. The country is counting on all of you to do the right thing.

Let's talk about little bit. You voted against the deal on the House floor last night. Is that right?

BLACK: I did indeed.

(CROSSTALK)

BLITZER: I was going to say, why did you vote against it? Because the country was suffering. S&P already said $24 billion had been lost to the U.S. economy. They were downgrading their estimate of economic growth in the fourth quarter. Why didn't you go along with the speaker of the House, the majority leader, the majority whip, and accept this last-minute compromise?

BLACK: Wolf, I came to Washington to make some really tough decisions and to deal with what I think is the most pressing issue in this country, and that is our debt and our deficit spending.

This bill, unfortunately, last night gave the president a blank check and did nothing to control the out-of-control spending in Washington. And I have said since I have come to Washington that I will not give the president a blank check.

I wish the president would have come to sit down and talk with us, and talk with us about how we could solve these issues. Look, I didn't want the government to be closed down. I remind people I voted for four bipartisan measures to keep the government open and keep it running. Closing down the government, no one wins. And the American people are the biggest losers of all.

BLITZER: Well, the president did invite all Republican members of Congress to come over to the White House, but your Republican leadership only decided that the leaders, the key committee chairs and others would go president. But he did invite all of you to come over and sit down and talk, which is what you wanted.

We asked some of our followers on Twitter to send a suggested question. You can respond, but let me just read this one that came in. This is from one of the -- Wanda, I think her name is. "On your no-vote, just what did you all accomplish? Party of fiscal responsibility?" she says. "What a laugh."

Go ahead. What did you accomplish by shutting down the government for 16 days?

BLACK: Listen, Wolf, I'm going to say it again. We did not shut down the government.

The government was shut down because we could not get the Senate to come and negotiate with us and we could not get the president. When our leaders went to the White House to have dinner, this is what the president told them: I will not negotiate. I will not negotiate.

This is not just behind closed doors. He said this out in public: I will not negotiate.

And that is not what the leader of our country should be saying to Congress. He will negotiate with leaders from Syria and Russia and Iran, but not with the members of Congress?

That is not the way our form of government was set up, to have a king who just says, I will not negotiate.

BLITZER: But, Congresswoman, you really didn't...

BLACK: So I'm going to disagree with you.

BLITZER: You didn't really expect he was going to defund Obamacare, his signature achievement in his first term, something he worked really hard to get through the House and Senate, ratified by the Supreme Court as constitutional. And then he won reelection by five million votes, decisively with the Electoral College as well?

You didn't really think he was going to make some significant changes to that signature piece of legislation that became the law of the land?

BLACK: Wolf, let's look at what he has done.

He has delayed the employer mandate because big business came after him and asked him to do that. He has delayed the verification piece, and just weakened that so much that now it's just self- attestation. Somebody can just in and say, here's how much I make.

And there's a lot of fraud and abuse that will occur as a result of this. He delayed the SHOP, which is for the small businesses. He's delayed, delayed, delayed the things that he wanted to delayed, but what about the individuals that are suffering, that they're seeing that their premiums are going up and that they're losing their jobs, and they're getting limited choices on their health care?

Why didn't the president delay that for the everyday working person that's suffering as a result of this bill?

BLITZER: All right, so just want to be precise, Congresswoman. No regrets on what you and your colleagues did?

BLACK: I don't have a regret.

I have a regret that those that should have been coming to the table and talking to us about this when we started these bills coming to them in the Senate, where they just turned our bills down and wouldn't even go and sit down to the table. We started that in September, on September the 20th. We sent them the first bill.

You tell me, have you asked the president why he wouldn't come and sit down with Congress? Have you asked Harry Reid, why would you not sit down with the leaders of the House of Representatives and find a solution to this, instead of continuing to stall and keep the government closed? That's who needs to be asked the question.

BLITZER: Harry Reid did sit down with Mitch McConnell, the Republican leader in the Senate. They worked out this deal that was overwhelmingly passed in the Senate and in the House of Representatives, including from your own Republican leadership. But...

(CROSSTALK) BLACK: And it did nothing to address the problems that we have right now.

(CROSSTALK)

BLITZER: So have you lost confidence -- have you lost confidence in the speaker?

BLACK: Not at all.

I mean, the speaker is the leader. And he made a decision that he felt was best for most of our conference. And I had to make a decision about what I think is best for my district and the American people that I represent in my district.

Ultimately, we are going to have to make a decision on this. We can keep kicking this can, but, eventually, it's going to hit us. And I say we stop now and we say to the president and we say to Harry Reid, let's come to the table, let's talk. And let's hope that what happens here with the budget.

BLITZER: Diane Black, a congresswoman, Republican, from Tennessee, thanks very much for coming in.

BLACK: You're welcome, Wolf. Thank you for having me.

BLITZER: Thank you.

That's it for me. Thanks very much for watching.

"CROSSFIRE" starts right now.