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YOUR MONEY

Deficit of Leadership; Consequences of the Government Shutdown for the U.S. Economy; Will Business Firmly Take Sides in the GOP's Internal Division?; Latest Deal Still Leaves Need for Grand Bargain; Mortgage Shutdown; Shut Out by the Shutdown; Head Start Held Back

Aired October 20, 2013 - 15:00   ET

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


CHRISTINE ROMANS, CNN ANCHOR: The government is open for business. Hey, America can pay its bills for now. I'm Christine Romans and this is YOUR MONEY.

(BEGIN VIDEO CLIP)

ROMANS (voice-over): Don't be fooled, the countdown to crisis continues. Congratulations, Washington --

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: I want to thank the leadership for coming together.

ROMANS: -- you've once again, narrowly averted a disaster of your own making.

UNIDENTIFIED FEMALE: Major partisan poison pills.

UNIDENTIFIED FEMALE: Holding the U.S. hostage in exchange for ransom.

UNIDENTIFIED MALE: With a gun to your head.

ROMANS (voice-over): Yes, the debt ceiling was raised and the government reopened. In other words what should have occurred from the start?

OBAMA: This whole shutdown has been completely unnecessary.

UNIDENTIFIED MALE: So, it's the worst case scenario hurt the American people.

UNIDENTIFIED MALE: Everybody lost.

ROMANS (voice-over): Investors are certainly happy to be back from the brink. The Dow climbed 200 points, just after the Senate announced the deal, but before you pop the champagne, remember these dates?

Well, now add two more of them to your calendar. January 15th, that's the day we face another government shutdown and February 7th we hit the debt ceiling again. There is no end in sight to Washington's short-term thinking while avoiding long-term problems. We've seen the bad -- OBAMA: I will not negotiate over the full faith and credit of the United States.

ROMANS: -- the worst --

JOHN BOEHNER, (R-OH), SPEAKER OF THE HOUSE: This isn't some damn game.

ROMANS (voice-over): -- and the ugly.

SEN. TED CRUZ (R-TX): I intend to speak in support of defunding Obamacare until I'm no longer able to stand.

ROMANS (voice-over): So, what comes next?

SEN. JOHN MCCAIN (R) ARIZONA: We're not going to shut down the government again, I guarantee it.

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: There is no guarantees of anything.

ROMANS (voice-over): The countdown to crisis continues.

(END VIDEO CLIP)

ROMANS: It is really something, isn't it, when progress is just doing your job. John King is CNN's chief national correspondent; Greg Valliere is the chief political strategist for Potomac Research Group.

Gentleman, thanks for joining me. John, this is no way to run the world's largest business.

Odds of a repeat in January?

JOHN KING, CNN CORRESPONDENT: You don't think this is the way to run a business?

I was thinking of quitting and starting a new university, the Management School of How Not To.

(LAUGHTER)

KING: CSPAN can be your video textbook right there. Just have people watch and see.

Look, the odds -- you heard Senator McCain, you've heard the leadership saying we won't do this again. We won't do this again.

The biggest motivation for not doing it again, Christine, is the damage to the Republican brand heading into those last dates you just circled on a calendar, happened to be in 2014, the election year. So, the Budget Committee people, they are starting to talk. They say they're going to work this out.

Logic tells you they won't do it again for both policy and political reasons, but I will end with this, I have not met logic in Washington in quite a long time.

ROMANS: Yes, I haven't either. Getting to you, Greg, you predict a 40 percent -- 40 percent chance of a budget deal. That's less than 50-50, but it is higher than most?

GREG VALLIERE, CHIEF POLITICAL STRATEGIST, POTOMAS RESEARCH GROUP: Yes, I actually think there is a decent chance not because they want to do the right thing, God forbid, but they --everyone hates the sequester, Christine.

Defense hawks hate what it's doing to the Pentagon, liberals hate what it's doing to NIH and I think there is a decent chance because of this antipathy to sequester that we're going to get a deal.

ROMANS: That's good news then.

John, but we still had damage and damage that is growing. S&P estimates this shutdown cost $24 billion. Listen.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI, (D), CALIFORNIA, HOUSE MINORITY LEADER: Was there a temper tantrum worth $24 billion? I don't think so.

(END VIDEO CLIP)

ROMANS: The president has been pretty pointed in his criticism of Republicans since the deal, but this doesn't sound like the conciliatory tone Washington might need to move forward.

You can't be blaming, right?

And counting winners and losers if we're really going to get a decent budget deal?

KING: But that is the problem. That is why we have had Band-Aid budgeting for the last several years, and it's why -- that we have a prospect of doing this all again, and having it come right after deadline again.

Because every time it ends up this: you have the policy concerns everybody knows, Christine. You've had guests on this program for a long time. You know, you have to make your choices, but you put Democrats and Republicans in a room, you tell them, this is the budget target, we have to look at Medicare, if we raise the retirement age, or maybe we means test it, everybody knows the policy choices that they have to go into a room and make and reach a bipartisan compromise.

The problem is, policy keeps getting trumped by politics. And if you move into politics, you heard the president's tone, yes, he is trying to get some political gain here.

Some Democrats think, this is very unlikely, but some Democrats think and it is possible they can get the House back in 2014. So do you have serious policy discussions and cut an early deal, or do you still get the politics to try to drive the mid-term elections, and Republicans have their own political concerns? Just now, do you have Tea Party saying, we are going to target the Republicans who voted yes on this compromise. So there are profoundly serious policy issues that date back, really, to the Clinton administration.

You just simply have to deal with them.

ROMANS: And then, Greg, you also, you have personal ambitions too. I mean you know, this week I talked to Olympia Snowe, a former senator from Maine, who called them podium thumping belligerents who had taken over the House and the Senate.

And I said is Ted Cruz one of those?

And she said, yes. He fits the bill. We're not going to do anything if people are moving forward, still on their own -- for their own political reasons.

What do you think about that?

VALLIERE: Well, you would like to think that the ambitions that could get realized are from governors. I think they are the winners in all of this, whether it's Chris Christie or, you know, Midwestern governors like Kasich, I think they are the adults in the debate.

But let me just point out one other things, if I might, Christine. That despite all of this dysfunction in theater, there is still two great stories in Washington for the markets. Number one, the Federal Reserve --

ROMANS: Yes.

VALLIERE: -- because of all of this, is going to stay accommodated, very dovish, for longer than perhaps they would have. That's great for the market.

Number two, the budget deficit is in free fall.

ROMANS: Yes.

VALLIERE: We're going to get final numbers in about a week for the last fiscal year; we'll be down over 400 billion. The deficit continues to fall and most people don't realize it.

ROMANS: That's a very good point. Both of those reasons, one of the reasons why you had stocks at record highs this week, even though we know this countdown to crisis is not over.

Greg Valliere, John King, nice to see both of you, thank you.

VALLIERE: Great.

KING: Thank you.

(END VIDEOTAPE)

ROMANS: So how do we get from gridlock to grand bargain? We'll turn to the inspiration behind Tom Cruise's iconic character, Jerry Maguire.

(BEGIN VIDEO CLIP)

TOM CRUISE, ACTOR, "JERRY MAGUIRE": Show me the money. Show me the money.

(END VIDEO CLIP)

ROMANS: Can a famous sports agent with a history of negotiating gargantuan deals under harsh public scrutiny, can that be the way to find the solution to Washington stalemate?

Leigh Steinberg, next.

(COMMERCIAL BREAK)

ROMANS: Debt ceiling, shutdown, gridlock. You're sick of hearing it, I'm sick of saying it.

To get the long term solutions the U.S. deserves, it may just require something no one in D.C. has thought of yet. But on this show, it's not for lack of trying. Already, we've turned to political leaders, as well as business CEOs. That's not all.

When America's economy was held hostage, we brought you a former FBI crisis negotiator. And last week, we even turned to a relationship counselor. The goal? Repair the marriage between President Obama and the Republicans, a marriage strained by money and power.

Still searching, we turn to Leigh Steinberg for "The Score."

You want to figure out how to solve a big money negotiation playing out in the public eye? You turn to the man credited with inspiring Tom Cruise's character in "Jerry Maguire."

(BEGIN VIDEO CLIP)

"MAGUIRE": Show me the money. Show me the money.

CUBA GOODING, ACTOR, "ROD TIDWELL": Congratulations, you're still my agent.

(END VIDEO CLIP)

ROMANS: We need a sports agent and attorney like Leigh Steinberg to fix this negotiation.

Welcome to the program.

Leigh, now "Show me the money," it sounds a lot like the debt ceiling debate between Democrats and Republicans. If you're negotiating on behalf of a player, a player who wants more money, and a stubborn owner, who doesn't want to pay, how do you get a deal that works for everyone? Tell me.

LEIGH STEINBERG, SPORTS AGENT AND ATTORNEY: The critical key is to look at the person representing the other side and understand their value system and their priorities and see the world the way that they see it. It's the only way to craft a win-win solution.

So that instead of looking at each other needs, the congressional Republicans and President Obama stuck to their own agenda. And that never is going to be a way to solve anything. When you take proud men and put them up against a wall, and push them into confrontation, there comes a point at which neither side will ever give in.

ROMANS: It must be so fascinating to watch all of this from your vantage point, as somebody who is a master negotiator and has been in these very big deals with these big characters before.

You wrote a book in 1999. It's called " Winning with Integrity: Getting What You Want without Selling Your Soul."

It focuses on non- confrontational negotiating. Maybe these guys should read it. Listen.

(BEGIN VIDEO CLIP)

SEN. HARRY REID, (D) MAJORITY LEADER: I'm very disappointed with John Boehner, who had once again tried to preserve his role at the expense of the country.

REP. STEVE KING (R) IOWA: We know that he is spiteful. He is trying to teach America a lesson. This is a president that is not trying to do with the tools he's got the best that can be done for the American people.

(END VIDEO CLIP)

ROMANS: How can Washington sharpen its negotiating skills? Or maybe they need to be more polite?

STEINBERG: What they need to do is to be able to project a future well before it comes.

So the reality is that if I'm dealing with a general manager, I might say OK, let's assume that the players now at a camp, the public is angry, the owner is angry, everyone is in flames, what positions would we take then?

And to take those positions before the actual confrontation ever occurs. And the whole concept of blaming each other, there has to be, again, a paradigm of cooperation where people know that they are going to deal with the other person over and over and over again. It's going to come back over again.

So no one negotiation loses sight of the long term. And they're sitting in a little bubble, in which their reality is completely screened off from the reality of people that actually are out of work. ROMANS: And that is what really, really hurt about this, that it looked like a very political fight, for political winners and losers, and the American people really lost in the end. Leigh Steinberg, sports agent and attorney, really nice to meet you, thanks for your perspective on this.

STEINBERG: My pleasure.

ROMANS: Billionaire Mark Cuban is off the hook for insider trading. You might know him as the owner of the Dallas Mavericks or for his brutal honesty on the show, "Shark Tank." But he's also been in hot water with the SEC.

Back in 2004 he said I'm out, he dumped his entire share of mamma.com before details of a planned stock sale were announced. That saved him $750,000.

A judge found that sale did not break any federal rules.

Coming up, the U.S. has avoided a debt default for now. But with threats of a ratings downgrade and harsh words from abroad, how much damage has been done to America's global financial credibility? That's next.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

ROMANS: The reaction from markets, foreign creditors and ratings agencies to Washington's dysfunction? Not impressed, kind of like McKayla Maroney at the London Olympics, that's how we feel.

It's time to turn now to the best in the business, though. CNN business news, that is. Maggie Lake, Richard Quest and Zain Asher, all join me today.

Maggie, let's just say for this for a moment: the government is open. There is no shutdown. S&P ended the week, you know, hit record highs for the week. And it's the weekend. What could possibly go wrong, Maggie?

(LAUGHTER)

MAGGIE LAKE, CNN BUSINESS CORRESPONDENT: Everything, because nothing's changed. But for the moment, no. For the moment we're hearing, is that for stocks, not much. Because yesterday, the government opened, but more importantly, you have the Fed on the sidelines.

And that's what stock investors care about. With Washington still in dysfunction, and it is, and still facing the same argument, most people think it's going to keep the Fed's foot on the gas. And that is good for (inaudible).

ROMANS: Google topped the $1,000 this week, so everyone is talking about stocks for all the right reasons.

Richard, you know, the President of the United States this week, he said that the U.S. is still the safest and most reliable place to invest. Listen.

(BEGIN VIDEO CLIP)

OBAMA: Today, I want our people and our businesses and the rest of the world to know that the full faith and credit of the United States remains unquestioned.

(END VIDEO CLIP)

ROMANS: All right. At the same time, China's official news agency says the deal merely extends the fuse on the U.S. debt bond.

Richard, can America regain her standing and reputation?

RICHARD QUEST, CNN HOST: Yes and no. And in the sense that it may have gone, but it's not gone completely. It's still the biggest market in the world.

And where does the 600- pound gorilla sit? Where it wants to. So, as long as it's got big, deep, liquid markets, vast bonding requirements, investors will still be coming here.

What it is -- what has it lost, its credibility. It has created an element of exasperation and frustration, because as the can has been kicked down the road --

(LAUGHTER)

ROMANS: Or passed, in this case, nicely.

(LAUGHTER)

QUEST: -- and then once again, you know, the can gets kicked back again. It keeps getting kicked backwards and forwards, then what eventually happens, of course, everybody loses their temper. And they feel that the U.S. can't get its act together.

ROMANS: All right. So, meantime, here's the can. We've got to fill it with cash, because the more we kick the can, the more it costs the United States to borrow money. Right?

If we have interest rates going up, Zain, the irony here, if interest rates rise, the irony here, it actually -- it will cost more for the United States to service the debt that we already have. The ratings agencies this week, again, talking a warning of a downgrade from Fitch.

We had an actual downgrade back in 2011.

But Americans, I feel like, Americans, are they paying attention to downgrades and warnings anymore? Do they matter? ZAIN ASHER, CNN BUSINESS CORRESPONDENT: That's $10 million question. But I mean I think the fact is they didn't actually downgrade us. If they did actually downgrade us, this would be a completely different discussion.

It was just a warning. Everybody and their grandmother knew that we weren't going to default. We pay bills on time. The effects of the S&P downgrade in 2011, if you look at it, fine, equities did tank immediately after.

ROMANS: Right.

ASHER: But they since have come back with a vengeance. The Dow is up more than 40 cents since that time. Treasures have rallied. Rates are lower. It's had virtually no impact on our cost of borrowing.

And I think that I've been talking to Richard about this. In terms of public perception of rating agencies, they did take a hit in 2008 during the financial crisis. They took the most toxic mortgage-backed securities and --

(CROSSTALK)

QUEST: Don't, stop, you're all trying to turn the tables away from where the discussion properly lies. And the discussion here is we're in the new game.

ROMANS: Yes.

QUEST: And the new game is in a rising China, an emboldened Asia, a Europe that's getting its act together. Getting its act together. Come on.

(CROSSTALK)

QUEST: No. Europe managing puts in place this week, the single supervisory mechanism, for super banking. I'm not saying they're going gang busters. And they are doing it very soft.

LAKE: Youth unemployment 50 percent, impossible to push the austerity. And Germans who want to pick up the bill -- they have a lot of problems at the end of the day.

(CROSSTALK)

(LAUGHTER)

QUEST: What I'm saying is --

LAKE: And they have a credibility issue, too.

QUEST: What I'm saying --

ASHER: You think rating agencies do matter, they're crucial.

QUEST: Ratings agencies matter because the market says they matter. LAKE: No, the market tells you that if you have to hear from a rating agency, then you're in trouble. Because you should have known it long --

QUEST: But making that -- rating agencies are still used for the basis of the funding decisions.

ROMANS: All right, at times like these, sometimes you just have to laugh, right?

Figuring out a compromise on the debt ceiling (inaudible) Washington, figuring out the definition of the debt ceiling is still stumping a lot of Americans, as "Late Night" host Jimmy Kimmel and his team discovered this week.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Do you think that the debt ceiling fan should be oscillating?

UNIDENTIFIED MALE: Yes, yes, to a certain extent.

UNIDENTIFIED FEMALE: And do you think the Republicans did the right thing by allowing Obamacare to move forward, even though the impending debt crisis --

UNIDENTIFIED MALE: No.

UNIDENTIFIED FEMALE: Do you think that the ceiling fans need to be reupholstered? Like what would be the right thing to do?

Yes, I guess so. I would say. They need to be reupholstered.

Of all of these sequesters in our government, who's your favorite?

UNIDENTIFIED MALE: Bill Corzine.

(END VIDEO CLIP)

ROMANS: All right. Check out Jimmy Kimmel live, on the whether people -- catch the full version of Kimmel's confusing question of the day. We cover this stuff. We think it's confusing, too.

Up next, pop quiz: which is the party of business, Republican or Democrats? Why the answer isn't always so clear, next.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

ROMANS: Economic catastrophe averted for now. But the damage to the economy and to the Republican Party may already have been done.

I'm Christine Romans. This is YOUR MONEY This is no way to run a business, let alone the world's largest economy. And now business itself is pushing back. The dysfunction in Washington and some trade groups and executives reevaluating conventional wisdom about the close relationship between business and the GOP.

(BEGIN VIDEO CLIP)

ROMANS (voice-over): Pop quiz: which is the party of business? Republicans or Democrats?

VALLIERE: It had been assumed that business and Republicans were in bed together. Now all of a sudden, you see the new breed of Republicans, mostly from the Tea Party, who are not all that friendly with Wall Street or banks or Big Business. It has really scrambled traditional thinking.

ROMANS (voice-over): A belief in low taxes and less regulation has united business and the GOP for decades, a philosophy famously articulated by President Ronald Reagan.

RONALD REAGAN, FORMER PRESIDENT OF THE UNITED STATES: Government is not the solution to our problem; government is the problem.

ROMANS (voice-over): And embraced by the party's standard bearer in 2012.

MITT ROMNEY, FORMER GOVERNOR OF MASSACHUSSETTS : Corporations are people, my friend.

ROMANS (voice-over): But a willingness by the GOP's right wing to threaten default and shut down the government is threatening to damage that historic alliance.

VALLIERE: I'd say there are a lot of Republicans, mostly all Tea Party Republicans, who may not get their phone calls answered when they ask big business for contributions.

ROMANS (voice-over): Those contributions have kept Republican war chests flush with cash. The $32 million spent by the U.S. Chamber of Commerce in 2012 went mostly to elect GOP candidates. The majority of financial sector contributions also benefit Republicans.

So could Democrats now benefit from a split within the party?

FRANK KEATING, CEO, AMERICAN BUSINESS ASSOCIATION: We are not going to blindly endorse one party over another.

VALLIERE: I think it would be a stretch to say that all of a sudden Democrats will get along much better with business. The basic interest of Wall Street and banks and business still is better represented by Republicans than by Democrats.

ROMANS: Case in point, Obamacare, the President's signature health care reform. Small business highly critical of the Affordable Care Act. Now that's health care. On Wall Street they are no fan of his financial reforms. Remember this 2009 interview?

OBAMA: I did not run for office to be helping out a bunch of, you know, fat cat bankers on Wall Street.

ROMANS (voice-over): Those fat cat bankers have deep pockets. They could choose to back more moderate Republican candidates in GOP primaries. Some retail and manufacturing trade groups have already said that's their plan.

(END VIDEO CLIP)

ROMANS: Former Republican Senator Olympia Snowe told me business groups who want to see more moderate Republicans elected to Congress must speak up and contribute to those candidates.

(BEGIN VIDEO CLIP)

OLYMPIA SNOWE, FORMER U.S. REPUBLICAN SENATOR FROM MAINE: They have to get engaged. They can be detached or aloof from what's transpiring in Washington because it affects them and their employees each and every day and it's affecting the future of this country.

(END VIDEO CLIP)

ROMANS: So, will business firmly take sides in the GOP's internal division?

David Frum is a CNN political commentator and contributing editor for "The Daily Beast." He's also a former speech writer for President George W. Bush, so he knows a little something about the Republican brand.

Will Cain is a conservative CNN contributor and an analyst for theblaze.com.

David, let me start with you. You've said Tea Party extremism contaminates the whole Republican brand. Should big business come to the rescue here?

DAVID FRUM, CNN POLITICAL COMMENTATOR; CONTRIBUTING EDITOR FOR "THE DAILY BEAST": Republicans need business help. You know one of the things that I think needs to be stressed, even in the package you just did, was that the impending default was not so much a strike against Wall Street as it was a strike against government suppliers.

The interest on the debt was probably -- would probably have been paid in that eventuality. What would not have been paid are the invoices --

ROMANS: Right.

FRUM: -- that come from when people provide meals to the military.

The U.S. government is the biggest supplier -- sorry, purchaser -- of goods and services on Planet Earth, and the people who provide that would have been in a line, instead of being paid in 15 days, who knows?

And those are the people who would have been stiffed, businesses, big and small that are federal contractors, and those are businesses that can make their voice heard and can support Republicans who want to say we want to run the government, not close the government.

ROMANS: I mean do you hear privately some of these trade associations and people in business saying that they were too lackadaisical last time, that they are going to be a lot more aggressive in primaries to make sure the right candidates are in the right place, to make sure something like this doesn't happen again, David.

FRUM: Well, the Republican -- the Tea Party candidates in 2010 and 2012 -- the bad candidates that won Republican primaries, probably cost five or maybe even six Senate seats, and that's the difference between a Republican majority in the Senate and a Republican minority today.

We could have had Mike Castle voting to run the government instead of having Christine O'Donnell play her part in helping Republicans lose the ability to run the government.

ROMANS: Well I want to show you some polls here -- the rift within the government -- the Republican Party, rather, growing. In four months, just four months, moderate Republicans' views of the Tea Party have dropped 19 points. Many business executives, they do support the Tea Party principles, right --

FRUM: Right.

ROMANS: -- of less government spending and ending Obamacare. So is this more a disagreement over tactics than goals?

WILL CAIN, POLITICAL ANALYST: It's 100 percent a disagreement over tactics, and a disagreement over short-term versus long-term. The Republican Party needs to be about markets, not businesses. Not some businesses who get Obamacare waivers, who get payments from the government. We need to represent markets as a whole. That is the goal.

And the difference on the Tea Party versus Republican brand right now and businesses ultimately supporting principles you talked about, what we're looking at here is short-termism.

Businesses have a normalcy bias and a short-term bias. They want everything to go well right now. But in the long run, Obamacare and government spending the economy have a depressing effect and you have to sometimes look at long-term implications.

ROMANS: But it is interesting because you know I was at the Fortune Most Powerful Women Conference this week, you guys, and I will tell that those business leaders were not looking short-term, they're looking long-term, and the dysfunction of the U.S. government right now and how they think that's going to play out over the weeks and months and how that's not good for the American economy. So they are looking long term. David, I want to bring this up -- $24 billion is how much the 16-day government shutdown took out of the U.S. economy. This is the estimate of Standard & Poor's. We could be back here in three months. How bad is this for financial markets for consumers?

FRUM: I don't know how --

ROMANS: On everyone.

FRUM: -- I don't know how anybody comes up with quantifying it, but here's what I do know -- that -- I will use the term default because a contract with the United States is constitutionally protected under the Fifth Amendment. It is just as sacred an obligation as a debt instrument is. If you don't pay the grocer, you go just as bust as if you don't pay the mortgage.

So, the United States under -- had things come to the worst, would have not paid people with constitutionally-protected obligations. The risk of that used to be zero. Today, the risk of that is not zero.

What that costs, I don't know, but going from zero to a universe of the United States as a riskless commitment and the United States as not a riskless commitment -- that is an epical change and it happened in 2011, it's happened again now, it is disturbing and any business owner would be concerned about it for the long term of the country and for the long term of American business.

ROMANS: All right, we're going to be a little heavy hashing this out, I'm sure at least three of those calendar dates between now and February.

Will, David, nice to see you. Thanks, guys.

(END VIDEOTAPE)

Everyone has advice for Washington these days including Israeli Prime Minister Benjamin Netanyahu.

(BEGIN VIDEO CLIP)

BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER : With all its flaws, the American political system has a lot riding for it. It's probably the best political system in the world. But we improved on one thing.

(END VIDEO CLIP)

ROMANS: Up next, I'm going to tell you what that one thing is and how that one thing could end the dysfunction in Washington.

(COMMERCIAL BREAK)

ROMANS: Another deadline narrowly avoided by a last-minute deal but the deal just creates more deadlines, thus the need for a grand bargain. The idea -- solve all of our major fiscal issues all at one. Reform entitlements like Medicare and Social Security, improve and update the tax code, slow our rapidly-rising debt and shrink the deficit.

Seems impossible but it may be essential to break the gridlock in Washington.

So how does it get done? I'm going to give you three possible pacts. Number one, lock them up. Lawmakers only, no aides, no press no food. How about that? In one location -- maybe the White House, a resort somewhere, I don't care -- the woods.

They can't leave until they come up with the best plan. Hey, but they can use all these other deficit reduction plans as their guide -- maybe just pick one. Or we should adopt a system using Israel. Here's Prime Minister Benjamin Netanyahu telling our Piers Morgan how it works there.

(BEGIN VIDEO CLIP)

NETANYAHU : See, in our case, if you don't get a budget by December 31st , an automatic budget goes in 1/12th of last year's budget each month. And if you still don't get a budget six months later, we all go to elections. You know what, Piers? We always get a budget.

(END VIDEO CLIP)

ROMANS: There you go, that's solution number two -- throw them out if they don't make a budget.

Now, hold elections after six months without a budget -- that'll get lawmakers talking for sure and could help produce a grand bargain.

Finally, solution number three -- your idea. What's your idea? Maybe the answer comes from the people, not from the people who the lawmakers who haven't been able to figure it out. I want you to tweet me @christineromans, I want you to post on my Facebook page your idea because Washington needs some fresh thinking.

And for some more of that fresh thinking, we've invited CNN's political analyst Ryan Lizza, Washington correspondent for "The New Yorker."

So, Ryan --

RYAN LIZZA, CNN POLITICAL ANALYST: How are you?

ROMANS: Do these solutions work or do you have a better one?

LIZZA: Well, I like the Israeli solution but you know they have a parliamentary system, right. I mean, the problem is that we have a presidential system, and in our system the opposition in our system opposes.

We need a political reform commission. We need a commission that would look at all of the political processes in this country and come up with some solutions that are practical and you know stuff that doesn't require a constitutional amendment, so on my list would be actually five things, OK? Return a little bit more money and politics -- yes, more money and politics. Allow John Boehner to buy votes. They got rid of earmarks, they got rid of pork, and what does that do?

That does not give -- that takes away one of the tools of the leadership in the House to actually grow the votes.

The parties need to be -- have more money. The parties need to have more influence in elections because when the parties don't have an influence on elections, all of the influence flows to these outside, very ideological groups.

So if you could raise the contributions that parties were allowed to give candidates, you would empower the parties a little bit more, Christine -

ROMANS: That's interesting.

LIZZA: -- yes, because the parties are moderating influences, right?

ROMANS: Well, here's the thing, you know we've been complaining about business as usual for so long. You know, complaining about it and then you get business as not usual, which is, you know, the Tea Party influence and Senator Ted Cruz and his influence, and then we're complaining about the upstarts. So no matter what --

LIZZA: Yes.

ROMANS: -- if the American people who don't like what the solution is.

Let me bring you -- let me give you another solution -- there's this idea in tech, right, in Silicon Valley -- disruption innovation. Harvard business professor Clayton Christiansen coined this phrase, it defines -- I'm going to give you the definition.

"A process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors."

The idea is to disrupt, get rid of the status quo. So on the one hand you want -- you to disrupt and get them to get a solution, on the other hand, I think Tea Party supporters think that's who they are. They are the disrupters who are creating better change.

LIZZA: That's absolutely right. That's the most disruptive influence in our politics since 2010 has been the Tea Party.

Unfortunately, the core ideology of the Tea Party is no compromise. That is the problem, right. And in our system, our system is premised on compromise.

If we don't have compromise in Congress, nothing gets done because we have this separation of powers where Congress and the presidential -- and the president are co-equal branches of government. Very, very different than Netanyahu's parliamentary system.

ROMANS: Right.

LIZZA: And if you have one party that at its core says no compromise, then you can't get anything -- you cannot get anything done.

ROMANS: So let me bring this to you, because I'm going to get screaming, raging email and Twitter about how no one's holding the president accountable. How's he going to be able to go into the next round of budget negotiations which started in you know, now --

LIZZA: Now, yes.

ROMANS: -- and how is he going to be able to lead better or differently than he led the last time? There have only been two times we've been looking or talking about a downgrade of the U.S. credit rating. And both times it's this Speaker of the House and this president.

So how does the leadership change?

LIZZA: I hate to be so pessimistic, but this is the ninth committee conference supercommittee commission that is trying to get the elusive grand bargain.

And Boehner's problem is he doesn't control his caucus because of internal caucus problems.

Obama's problem is that he and the White House just don't seem to understand Congress as well as previous presidents do and don't do as much as reaching out as previous presidents.

Here's the silver lining. The silver lining is that maybe out of this last chaotic situation both Boehner has a little bit more credibility with his radicals and he can sell them on a deal and the president has a little bit more interest in his -- in burnishing his legacy and getting -- and finally getting a deal.

But look, I hate to say this, but it's -- the problem that's been a little -

ROMANS: Then don't say. Leave me with the silver lining and don't say anything else.

LIZZA: There you go.

ROMANS: Cut his mike. Ryan Lizza calling for more money in politics, more earmarks, well, just leave me with that. Ryan Lizza from "The New Yorker." Nice to see you again.

LIZZA: Thanks, Christine.

ROMANS: All right, Al Gore may not have invented the Internet but he did try to buy Twitter. The former vice president told Bloomberg TV he and former Current TV co-founder Joel Hyatt went after the social network. Twitter has remained independent. But pretty soon you're going to have the opportunity to buy a piece of the company.

Give me 60 seconds on the clock -- it's "Money Time."

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ROMANS (voice-over): A hidden cost for the want-fries-with-that economy? Low wages and you pay. A new study finds 52 percent of fast food workers' families get government aid. Programs like food stamps and Medicaid.

Twitter is heading to the New York Stock Exchange. The stock's November debut drawing a lot of attention. It's a big loss for the NASDAQ following last year's Facebook botched IPO.

Apple just hired its only female executive, Burberry CEO Angela Ahrendts will head up the retail arm starting next year. She will join nine men in Apple's executive suite.

Netflix might not be cable's archenemy after all. The online video service reportedly in talks with Comcast and others to make Netflix available on cable boxes.

Quid pro panda? Do China a favor, and you could be rewarded with a bear. Beijing has 50 pandas on loan to zoos around the world. Those loans tend to follow major trade and investment deals with China.

And finally, congratulations to a good friend of the show, economist Robert Shiller. He won a Nobel Prize this week for predicting the housing and dotcom bubble.

(END VIDEOTAPE)

ROMANS: The government is open for business. But the shame of Washington's dysfunction remains.

MARY BRADY, MORTGAGE HELD UP IN SHUTDOWN: I do everything that I'm supposed to do, I get my bills paid, I pay my taxes, and all of a sudden, I'm trying to do an improvement for myself only to have them say you can't do that.

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ROMANS: Her story, next.

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ROMANS: Congratulations, Congress, you did your job. You funded the government and allowed the U.S. to pay its bills.

But in the meantime, $24 billion is gone. That's how much the shutdown yanked out of the economy, according to Standard & Poor's.

For that price, we could pay fund the national school lunch program for two and a half years. We could pay for more than half of all 2013 Pell grants, or make much needed investment in our aging infrastructure at airports. Instead Washington's dysfunction hurt the economy and a lot of innocent bystanders.

Alison Kosik joins me now with more.

Alison.

ALISON KOSIK, CNN CORRESPONDENT: Christine, the government is up and running, but that doesn't mean all is back to normal. The shutdown's effects were felt across this country even delaying mortgage refinancing. We met up with one Connecticut mother whose re-fi was shut down by Washington's dysfunction.

(BEGIN VIDEOTAPE)

MARY BRADY, MORTGAGE HELD UP IN SHUTDOWN: But I feel like I gave my checkbook to toddlers.

KOSIK (voice-over): Mary Brady is feeling trapped, the refinance on her $260,000 mortgage is yet another victim of the government shutdown.

BRADY: I know my problem might seem like a small thing, I'm just -- I'm just a cog in the machine, but to me it's affecting a lot of other things.

KOSIK: The Connecticut nurse and divorced mother of two was scheduled to close on her refinancing last week. A run-of-the-mill transaction that would save her almost $600 per month according to Michael Menatian, her mortgage banker.

MICHAEL MENATIAN, PRESIDENT, SANBORN MORTGAGE CORPORATION: Credit history, job stability, equity in the home, I mean you could not ask for a better loan.

KOSIK (voice-over): At issue, a routine fraud report found that her Social Security number may have been compromised, requiring verification from the IRS. But furloughs at the tax agency meant there was no one there to do so.

MENATIAN: The form's been sent in, and we can't get anybody. There's no one to talk to.

KOSIK: That means Mary is missing out on cold cash, money she planned to use to fund her master's degree and home improvements.

BRADY: Unfortunately, with this kind of up-in-the-air, I might have to put those plans on hold.

You can see they're difficult to open.

I do everything I'm supposed to do. I get my bills paid. I pay my taxes. And all of a sudden I'm trying to do an improvement for myself, only to have them say you can't do that.

MENATIAN: Here's somebody that's, you know, for no fault of their own, because this fraud alert was pulled and the government shutdown, who would have thought, you know, can't go forward with their lives. KOSIK: Even with the shutdown lifted, the IRS is facing a massive backlog for these requests. That means a simple Social Security verification, a process that normally takes a few days could take a few weeks. We called the IRS for more information, no word on exactly how long these delays are going to be. Christine?

ROMANS: All right. Another reason why the shutdown is over, but it still matters. Alison Kosik, thank you.

A 16-day shutdown with no benefit. But the shutdown certainly mattered. And that's what's important to remember because the deal to raise the debt ceiling and reopen the government is a temporary reprieve from crisis, not a solution. The effects of the shutdown were felt far from U.S. shores in some of the most sacred places for America's veterans and their families.

Two dozen military cemeteries closed, but groundskeepers in Suresnes, France, they kept mowing the lawn even though they were technically off the clock. Jim Bittermann has the story.

(BEGIN VIDEOTAPE)

ANGELO MUNSEL, SURESNES CEMETERY ATTENDANT: We take care and pride in our headstones and on the grounds. We want to do this also for the men and women that are buried here. These people sacrificed their lives for our country, OK? The least we can do is take care of them. And so ...

JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): In normal times, the cemeteries which are operated by the U.S. Battle Monuments Commission and stretch from Normandy to the Philippines, attracts hundreds of thousands of visitors each year.

Relatives and friends of the fallen plan their trips to pay homage long in advance. But in recent days if they didn't see the brief notice on the commission's website or hear about the shutdown ahead of time, they were in for a disappointment.

At the big military cemetery in Normandy near Omaha Beach, emotions over the past two weeks have run high.

CAT HENDERSON FROM SEATTLE, WASHINGTON: We traveled all the way here to see the cemetery, and we get this. I am never voting for Republicans again ever.

BITTERMAN: And it's not just Americans who have been put out by the closings.

STEVE WOOLLEY, BRITISH TOURIST: This is a problem between the different parties.

Why should it affect a cemetery?

BITTERMANN (voice-over): Sverker Weisglas from Sweden drove his ailing father her to visit the D-Day beaches and cemetery, one of his last wishes which Weisglas now thinks may not be fulfilled. SVERKER WEISGLAS, SWEDISH TOURIST: If there's time, there might be a possibility, but I doubt it.

BITTERMANN: The shutdown felt around the world has already taken not only an economic toll but an emotional one, far outside American borders -- Jim Bittermann, CNN, Suresnes, France.

(END VIDEOTAPE)

ROMANS: Thankfully that cemetery is now open but it is little consolation to those shut out by the shameful shutdown in Washington.

Up next, 3-year-old Malachi Rhodes got a lesson in government this month. A lesson he didn't deserve. More on why our political leaders are failing some of our neediest kids. Next.

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ROMANS: Short-term thinking, long-term problems in Washington and families everywhere suffer.

Here's an example. President Obama has made it a goal to expand early childhood education but he and Education Secretary Arne Duncan are playing defense in Washington, not improving or expanding early childhood ed, but managing through cuts.

The forced budget cuts known as sequester shut out 57,000 children this fall from Head Start day care and preschool programs. These programs serve low-income families.

This is Malachi Rhodes. He has autism. He's been getting regular speech therapy from this Head Start program in Bridgeport, Connecticut. He was lucky he did not lose his spot there because of the sequester, but then when the government shut down, his school shut down, too.

Thanks to a private donation, he got back to class after a few days, much sooner than our elected officials were able to reach a deal.

I recently asked Secretary Duncan about this climate in Washington.

(BEGIN VIDEO CLIP)

ARNE DUNCAN, EDUCATION SECRETARY : Politicians think short term. They think about the next news cycle, they think about the next election. Early childhood investment is the best investment we in the country can make. The President and I are absolutely convinced of that. It's also the ultimate long-term investment as you know.

(END VIDEO CLIP)

ROMANS: Long term, but so few people in Washington are focused on the long term, and that sort of thinking prevents some parents like Malachi's mother, Melanie, a single mom, from planning long-term in her own life. She was worried she'd have to give up her new job as a school bus driver to take care of her son when he lost his spot. She has a message for Congress.

(BEGIN VIDEO CLIP)

MELANIE RHODES, MOTHER, HEAD START PROGRAM STUDENT : You need to work together, stop fighting amongst each other. Think about us, think about the single parents, think about the ones that need daycare to take care of our children.

(END VIDEO CLIP)

ROMANS: We couldn't agree more and hope everyone keeps that in mind as these new deadlines loom.

Now Secretary Duncan, a Democrat, recently told me how he loves getting out of dysfunctional Washington.

Similar distaste from a Republican I interviewed this week -- former Senator Olympia Snowe from Maine. She retired because the atmosphere is so toxic.

At Fortunes Most Powerful Women Conference she told me this new class of "podium-thumping belligerents" she calls them is hurting the country.

Also at the Fortune conference, Sheryl Sandberg, Facebook's chief operating officer, the author of the book "Lean In." I wanted to leave you with this exchange.

(BEGIN VIDEO CLIP)

SHERYL SANDBERG, COO, FACEBOOK : Please raise your hand if you were called "bossy' as a child.

Keep your hands up. Please keep your hand up if your brother was called bossy. Please raise your hand if you've been told you're too aggressive at work. Please raise your hand if your male colleagues have been told they're too aggressive. That's what "Lean In" is trying to change.

ROMANS: That's it for YOUR MONEY. We're here every Saturday at 9:30 am, 2:00 pm Eastern and Sunday again at 3:00 pm. Have a great weekend.

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