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Anderson Cooper 360 Degrees

Debt Ceiling Crisis Escalates

Aired July 28, 2011 - 22:00   ET

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

ANDERSON COOPER, CNN ANCHOR: Breaking news tonight, and what a night it is.

If you look closely at the Capitol you can almost make out beads of sweat on the dome. It is nothing, though, compared to how hard House Speaker John Boehner must be sweating it, how hard he's working and so far failing just to get his own Republicans to vote for a debt reduction bill, his debt reduction bill.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: The bill is not perfect. I have never said it was perfect. Nobody in my caucus believes it's perfect, but what this bill reflects is a sincere, honest effort to end this crisis in a bipartisan way to send it to the Senate where it can receive action.

(END VIDEO CLIP)

COOPER: Well, the vote was scheduled for yesterday, rescheduled for early this evening and then put on hold again so the leadership could wrangle votes. They're doing that literally as we speak, still promising a vote some time tonight. We will be live when it happens.

Now, yesterday, Speaker Boehner told the troops to -- quote -- "get their asses in line." Apparently not enough Republicans have, and now his credibility is on the line. Most of the opposition coming from Tea Party supporters, raw, open, direct rebellion.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We want to make sure we never get here again. I want to support something that makes sure we never get here again.

REP. CONNIE MACK (R), FLORIDA: The deal that is on the table makes the hole deeper. And so don't -- you shouldn't expect people who believe that we should balance the budget to vote for a deal that makes the hole deeper.

REP. TREY GOWDY (R), SOUTH CAROLINA: I can't support this plan. I would love to be able to support Speaker Boehner, Leader Cantor. I have to have something that transcends election cycles. I can't support it.

(END VIDEO CLIP) COOPER: Well, over on the Democratic-controlled Senate side, they are waiting to get a House bill simply so they can vote no on it. Then, experts say, the real bargaining could begin on some kind of compromise that both the House and the Senate might agree on.

But now that is on hold. And the stakes keep rising. The Dow industrials lost another 62 points today, making it five straight down days for the market and just four days until the debt clock runs out.

A lot of ground for us to cover tonight with chief White House correspondent Jessica Yellin, chief national correspondent John King, host of "JOHN KING, USA," and chief political analyst Gloria Borger.

Where do we stand right now, John?

JOHN KING, HOST, "JOHN KING, USA": Where we stand right now is that they have ordered pizza in Speaker Boehner's office. They have been shuttling around the House Republican leadership office trying to get two or three more votes.

You showed some of those Tea Party freshmen right there. What Speaker Boehner thought earlier in the day is that he was making progress getting some their colleagues and he thought he would get to the finish line.

And just before the scheduled vote they realized they were still a few short. So he's trying to convince them to come aboard. There's some talk tonight that he's trying to sweeten, maybe change the bill just a little bit, we don't have any details about that, though, to get them on board.

And, Anderson, here's where we stand tonight. He's short the votes. They still say it will come tonight. This is a major credibility test for the speaker of the House.

COOPER: And, Gloria, what happened? Because as John said it did look like things were moving in the direction of Speaker Boehner earlier today.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: I think you saw from that interview you ran before that John did with these freshmen he ran up against freshmen who don't owe him anything, Anderson.

They were elected outside of the establishment. And honestly, a lot of them don't care if they get reelected. They believe they were sent to Congress to make government smaller and to cut the deficit. And this is what they intend to do. And they believe that the Boehner bill is not strong enough because they understand that at some point there's going to have to be a compromise, so they want the House to have the strongest possible bargaining position that it can have.

And so they're willing to buck the speaker. And this, as John said, is a huge test, almost a referendum on the speakership.

COOPER: Jessica, in terms of what's happening in the White House tonight? JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Well, they're waiting. Anderson, after the acrimony of the last week it would almost be satisfying for them to see what's happening so Speaker Boehner all day today, except that every minute they're waiting we're ticking closer to a possible default.

And for the White House, the whole game right now is to get past this vote, so that they can get the Boehner bill behind them and then they can move on to the Senate where they feel that they have a better chance of reaching a compromise that the White House can live with.

And this is just dragging on and on. And so they just want this vote to be over with, so that they can move on to the next thing.

COOPER: Jessica, if you could just explain that to folks at home, because it is kind of confusing. So you're saying people in the Senate are basically just waiting for this Boehner bill to come. It's going to die in the Senate. And then what happens?

YELLIN: The idea is that either the Boehner bill dies in the House and you can move onto the Senate, where there is Harry Reid, the Democrat, runs the Senate. And he can cut a deal, the thinking is. The thinking is the Democrat who runs the Senate can cut a deal with Mitch McConnell, the Republican number two there, that the White House could live with.

And the idea is that together maybe they could forge a compromise that could get through the Senate and could go back over to the House of Representatives and maybe they could jam the House of Representatives, send it over to them at the very last minute because the clock would be ticking down. The thinking is maybe they would be forced to vote yes and it would get done at the very last minute. That's the Democrats' ideal best-case scenario. Who knows if it would happen.

COOPER: John, how much of this is about just Democrats and Republicans not wanting to get blamed or wanting to get credit?

KING: Well, right now they want to plant their flag. And Jessica just said a fabulous statement that sums up where we are tonight, "thinking that maybe."

(LAUGHTER)

KING: Nobody is sure. Nobody is sure in Washington tonight. We usually know where these things are heading. And we know they will be posturing. We know the Republicans have to make a point, the Democrats have to make a point and then you have a sense of where it's going.

Now, we have a general sense of what a final deal could look like. What we don't have tonight is any proof that the people who have to make it are willing to make it and they can round up the votes to support it. So, yes, Speaker Boehner wants to lay down his marker. He knows it can't pass the Senate. Leader Reid wants to lay down his marker. He knows his plan probably can't pass the Senate and definitely can't pass the House. They're hostage to their rituals right now. Only when they get past their rituals will we get a real negotiation. The problem, Anderson, is, is this vote goes hours into the night. Now the Senate vote is pushed back after that, probably tomorrow, maybe into the weekend. And there's a funny date on a calendar called August 2 at which something bad is going to happen.

Are they exaggerating how bad? Who knows. We have never done this before. But something bad is going to happen. And it could cost somebody probably not a Social Security check, but it might cost some family whose son or daughter, husband or wife is in Iraq or Afghanistan, might cost them their check if we get three or four or five or six days past August 2.

COOPER: And, John, I heard you say earlier that we're seeing a generational divide in the House right now, the results of a generational divide.

KING: No question in the Republican Party there's a huge generational divide. As Gloria just noted, a lot of these 87 freshmen, they're not career politicians. They were car dealers, maybe they were prosecutors. Some of them were farmers. They don't feel beholden to the speaker.

And they think the people telling them they need to compromise are the people who built this pile of debt, who built this mess that we're in right now. And so they just don't -- frankly don't truss them. And they don't feel -- remember a lot of people are making fun of them. A lot of people say these crazy Tea Party people, why won't they compromise? They won the last election.

The last time America spoke they sent these people to Washington. So they think that's what they were sent here to do. Now, maybe the public's changed its mind. Maybe the president and the Democrats have convinced them otherwise. But, Anderson, they just in November won an election in which they promised to do pretty much exactly what they're doing right now.

COOPER: And, Gloria, it seems when you talk to some of them, they don't care necessarily about being reelected.

BORGER: No, they don't. These are...

COOPER: Which is actually kind of refreshing, I have got to say.

(CROSSTALK)

BORGER: Well, it is, but -- but -- but...

(CROSSTALK)

KING: It's a big but.

BORGER: ... compromise is the way things get done in Washington. And it shouldn't be a dirty word, I don't think. Maybe. But I understand that they're standing on principle. But they're also standing on the precipice of something, and that is the country going into default. You can understand politicians each arguing different points of view here. But at a certain point decisions are going to have to be made about which checks go out and which checks don't go out and the downgrading of our AAA status and on and on.

And at a certain point, I think what's going to happen here, quite honestly, is if a bill passes the House and a bill passes the Senate, then the people can negotiate behind the scenes. And I think what we're going to end up with is a bill in the House that's going to need moderate Democratic support because those freshmen Republicans will probably not vote for the final version.

I mean, it's kind of ironic we're focusing on them now. But it's going to be the moderates who are going in the House, moderate Democrats who are going to end up having to get this thing through. And the same thing with moderate Republicans in the Senate.

COOPER: Right.

So, John, right now you have House Speaker Boehner where, in his office on the phone? Can you paint the picture of what exactly is going on? I know Eric Cantor went to his office just recently.

KING: Well, they were in the speaker's office. Then they went to the whip's office. The whip is the guy who counts the votes. That's Congressman Kevin McCarthy. And then they went back to the speaker's office. And essentially they're calling in some of these nos, the people who have said no and they're saying, look, we need your votes.

And this is a list the Democrats put out. You can't see it on television because it's a white piece of paper, but there's 24 names here of House Republicans who have said they would vote no. The Democrats essentially saying if they flip-flop, if they change their mind, we're going to beat them up in the next campaign.

So you have a huge policy question of enormous domestic economic, international economic consequence and there's a lot of politics going on in the middle of it right now. And the speaker as you mentioned at the top of the show, look, just yesterday he said get your asses in line, essentially saying this is about me now, my credibility, my leverage with the president of the United States in this argument, in the next argument and in the one after that.

If John Boehner loses this vote tonight, if he has to pull that vote after scheduling it, it will be a public repudiation not by the Democrats, but from his own caucus. And he understands that. John Boehner has been in a Washington a long time. He understands the consequence of this vote and he's going to stay in his office until he figures out what he has to do to get this.

YELLIN: And, Anderson, that poses something of a challenge for the White House too if John Boehner should lose this vote because as much as they make like the bill to go down, they still need Speaker Boehner to have some measure of power. Because if a compromise bill gets through the Senate it will go back to the House of Representatives.

And they need the speaker of the House to be empowered enough to get it through the House of Representatives in the end. And they don't want a speaker who is so weakened that he can't push this bill through. Even as Gloria says, you need Democrats to get it through definitely but you still need a speaker who's empowered enough to get the bill done in the end.

COOPER: It's fascinating and I think for a lot of folks infuriating to watch this unfold at this late hour.

This Tea Party rebellion is -- we will talk to our correspondents all throughout this hour, talk to John and Gloria and Jessica as events warrant.

John talked about this as kind of a generational divide in the Republican Party. It's not exclusively generational. You will hear from Congressman Ron Paul in a moment. He and the younger rebels believe the Boehner bill doesn't go far enough or cut deep enough. So some don't think we should raise the debt limit at all. Some, Congressman Paul included, downplay the consequences of blowing through the current ceiling.

All say they're doing what the voters told them to do.

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE: I will not be casting my vote for that bill. I cannot. I am committed to not raising the debt ceiling. I don't believe for a moment that we will lose the full faith and credit of the United States.

REP. JOE WALSH (R), ILLINOIS: We know in August our government's going to have plenty of revenues to service our debt, take care of our military and take care of our senior citizens.

REP. PHIL GINGREY (R), GEORGIA: I love my speaker. And I have deep respect for our leadership. But I just feel so strongly about this, and I think I'm trying to do what's right for the American people.

REP. LOUIE GOHMERT (R), TEXAS: Politically we're told, gee, this is the political thing to do. You have got to do the political thing. If you don't vote for the Boehner bill you're voting for Obama. That's not true.

(END VIDEO CLIP)

COOPER: Congressman Louie Gohmert of Texas who went into a meeting today with Speaker Boehner's office saying he'd been called to the principal's office. He came out saying his vote was still no -- quote -- "a bloody, beaten-down no."

Congressman Ron Paul is also a no vote. I spoke to him just a few moments ago.

(BEGIN VIDEOTAPE) COOPER: So, Congressman, you're not willing to support the Boehner bill at this point. Why?

REP. RON PAUL (R), TEXAS: Well, it raises the debt limit. And I have made too many promises that I wouldn't raise the debt limit. I have never voted for the appropriation bill and I have been worried about our spending for many, many years, if not decades.

So, I think that would only encourage people to spend more money. If debt is the problem, raising the debt limit by $2.4 billion, I don't see how it can be a solution.

COOPER: You talk about obviously the principles behind your not supporting it. Is part of your thinking though also politics of what happens to the bill in the Senate and what happens after that?

PAUL: No. I think that's sort of not much of my concern. That's what most of what's going on here, is all the politics. I have heard that they already know what they will finally come out of this, but they have to go up to the last minute to see who gets blamed for whatever and see who can get the best edge. But I think the leaders have more or less agreed on something to raise the debt limit.

COOPER: You think regardless of what you vote, regardless of whether or not the Boehner bill moved forward tonight, that the debt limit will still be raised?

PAUL: Yes, one way or the other, yes. They're going to raise it. They will not default by not paying the bills.

Governments our size and in this much debt always default in a different manner. The default has to come. But they will default by paying the bills off with bad money. So we're constantly defaulting. And we have done this over many, many years.

COOPER: You talk about the politics that are happening among other people on Capitol Hill right now. For folks who are watching at home, they see this, a lot of people see this as just pure politics going back and forth. Can you explain? What is happening there right now? What are the politics behind all this?

PAUL: Well, I'm not an insider. I don't know the exact details.

(CROSSTALK)

COOPER: You're a congressman. You're pretty much an insider, aren't you?

PAUL: Yes. But I'm not in John Boehner's office. He doesn't ask me my opinion.

But what my opinion is, is that they're trying to find out who's going to get blame and who's going to get credit because they know they have to achieve something.

COOPER: What do you make of what's going on with the GOP, though? What does it say about John Boehner as speaker of the House or about who's -- who's in charge of the Republican Party if John Boehner, the speaker of the House, can't wrangle his own members?

PAUL: Well, I think he has a tough job. He has a lot of new members.

So even though I disagree with his answers and his programs, I sort of have a bit of sympathy for him trying to put them all together and get something passed. But just think of what happened to Paul Ryan. He made a proposal and he got bashed pretty badly. So Boehner still has to put up with the Senate and the president and it goes back and forth.

It's in many ways just a power struggle, who's going to end up with the power in government and who's going to get blamed. So that's what I see going on. But I think Speaker Boehner under the circumstances he is probably earnestly trying to solve this problem.

But it's an insolvable problem, because we're bankrupt. Nobody wants to admit the real problem. We're bankrupt and we can't continue spending. And even these temporary proposals won't address the subject, that we will default. We won't default by not paying the bills. We will default by more inflation. And that is a serious problem.

COOPER: I want to play something that I know you have heard, I'm sure you have heard, John McCain speaking on the floor yesterday. Let's just play that for our viewers.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: The Republican House that failed to raise the debt ceiling would somehow escape all the blame. Then Democrats would have no choice but to pass a balanced budget amendment and reform entitlements and the Tea Party Hobbits could return to Middle Earth, having defeated Mordor.

This is the kind of crack political thinking that turned Sharron Angle and Christine O'Donnell into GOP Senate nominees.

(END VIDEO CLIP)

COOPER: He was reading obviously from a "Wall Street Journal" editorial, though, but pretty harsh words about the influence of the Tea Party, the effect of the Tea Party right now on this debate. What do you make of what he said?

PAUL: He sounds angry.

I'm pretty upset. And I haven't had the philosophy of sound money and personal liberty that I desire, but I hope I don't sound that angry, because I think that we have to change people's ideas and change people's attitude about government and find out what the role of government ought to be.

See, nobody talks about, in the midst of all this, we should be talking about why we can't be the policemen of the world and why the entitlement system has to be totally revamped.

COOPER: Do you think the impact of these new members, these Tea Party members -- and sort of ideologically you were out in front of a lot of these folks. Do you think it's been a good influence right now? Do you think it's a good, positive effect what's happening right now, this dissension within the Republican Party? Do you think that's ultimately a good thing?

PAUL: I think so. It calls attention to our problems. I just hope we can follow through with the right answers. If it's all anger and screaming and blaming, it won't work.

But if it comes to the conclusion that I have come to a long time ago, that we have to change our attitude about what the role of government is and maybe we ought to just follow the Constitution, because that gives us a pretty good guideline. But we don't do that.

But I think the subject that the younger members bring up and the pressures, you know, put on dealing with the subject, I think is very good, because it brings us closer to that day when we decide the real issues.

COOPER: Congressman Ron Paul, I appreciate your time. Thank you.

PAUL: OK, Anderson.

(END VIDEOTAPE)

COOPER: Well, Democrats are promising no help on this bill, on the Boehner bill, making it the GOP's legislation to pass or fail to pass.

Joining me now is House Minority Whip Steny Hoyer of Maryland.

Thanks so much for being with us, Congressman.

You said there will be no Democrat voting for the Boehner bill. Is that still the case tonight?

REP. STENY HOYER (D-MD), HOUSE MINORITY WHIP: I believe it is, yes, Anderson.

I think that the Democrats have clearly made a determination that this is a bad bill, a bad bill for the country. It doesn't represent any kind of a compromise. It doesn't represent any result of discussions that have occurred over the last months. This is simply a Republican bill to seek the additional cuts which we need to make, but we need to make those in a fashion that will not hurt people, will not undermine the operations of government, while at the same time bringing down the debt and deficit.

But what we really see here, Anderson, in my opinion is the party of no not being able to agree even with itself, much less with those it shares responsibility with in the Congress of the United States and with the president of the United States. And it does so at a time of great risk to America and to America's families. And that's deeply unfortunate. COOPER: What do you make of what is going on in the Republican Party right now in terms of what you yourself are seeing on Capitol Hill? You have been on Capitol Hill. You know how it works. Have you ever seen anything like this?

HOYER: I don't think I have seen anything just like this, with the stakes so very high and every leader in the Republican Party believing that we ought not to put the credit of the United States at risk and possibly default for the first time in the history of our country.

I don't think I have seen leaders unable to lead their members in such a critical confrontation with America's credit at risk. Now, I will tell you this. The party of no has walked away repeatedly now when we have tried to come to an agreement. And, very frankly, TARP, the temporary asset relief program, which was very controversial, but was requested by President George Bush, a Republican, and very frankly, at that point in time, when Ben Bernanke said if we didn't act, we would go into a depression, not a recession, but a depression, very frankly, two-thirds of the Republicans walked away from their own president at a time of crisis.

So there is some precedent for them not being able to get majorities at a time of crisis when their country is in trouble.

COOPER: How much, though, just on the Democratic side, though, is this about politics, about wanting the Boehner bill to go to the Senate, where it's basically going to get tabled and then Senator Harry Reid moves forward on his version?

HOYER: Look, Anderson, the Democratic Party, its leadership and its members, believe that we have to get a handle on the deficit. We have to bring down our national debt. It's not sustainable. We understand that.

But we don't want to put the credit of the United States at risk in that process. In fact, it will lead us in the exact opposite direction. It will bring the economy further down. It will slow growth, slow revenues. And it will have the opposite effect of what the Republicans say they want to accomplish and we know we want to accomplish.

And when you say it's politics, very frankly, it's a tough vote, because the public tends to think it means you're going to borrow more. In fact, lifting the debt, as you know, is simply about paying the bills we have already incurred.

And Democrats voted overwhelmingly. And, very frankly, I think there are well over 170 votes for a clean debt limit extension, so that we make sure that America does not default on its obligations. We believe that's the moral and fiscally responsible path to take.

But, at the same time, we are prepared to work with our Republican friends and address responsibly bringing down the deficit. The gang of six is a perfect example of that, the Bowles-Simpson commission perfect examples of that, where Republicans and Democrats joined together to make a very substantive recommendation to bring the debt down.

COOPER: But a lot of Republicans are saying, look, a lot of these cuts that the Democrats are talking about are kind of phantom cuts, phantom savings based on savings on troop levels in Iraq and Afghanistan.

HOYER: Well, interestingly enough, while they're calling the overseas contingency operation dollars phantom funds, Anderson, you may know, they used those funds and put them in their own budget that they have already voted for and relied on.

COOPER: So where do you see this going? What do you think happens tonight? What do you think happens tomorrow?

HOYER: Well, of course I don't know what's going to happen tonight. Obviously the Republicans are meeting with themselves to see whether or not they have the votes to pass what John Boehner has offered as a purely partisan alternative. We were not involved in those discussions. We were not involved in the decisions.

And it's interesting that even in their own party, it is deeply factionalized, deeply divided party, divided against their leadership, angry at their leadership. And a party that is divided itself has difficulty working with the president or working with us. And that's unfortunate. And the country is the poorer for it. And the image of America is poorer for it.

And I would hope that if they cannot get the votes or even if they can get the votes and the bill fails in the Senate, that our Republican colleagues will sit down at the table with us and reach agreement, not walk away, but reach agreement.

COOPER: Can John Boehner survive as speaker if he's not able to get this passed, if he's not able to get his members on board?

HOYER: I don't know the answer to that, Anderson. But the question is not whether John Boehner can survive or whether Steny Hoyer can survive. The issue is, will the best interests of America survive? Will we have the courage to act responsibly so that America is and is perceived by the rest of the world as the leader they thought it was and want it to be.

COOPER: Congressman Hoyer, I appreciate your time on a busy night. Thank you.

HOYER: Thank you.

COOPER: Let us know what you think. We're on Facebook. You can follow me on Twitter @AndersonCooper. I will also be tweeting tonight.

Just ahead tonight, Congressman Joe Walsh, one of the Tea Party freshmen who are voting no. Also, our political panel will come back.

Again, we expect a vote some time tonight, although frankly who knows? It has been a day of assumptions and assumptions overturned. Our breaking news coverage continues in a moment.

(COMMERCIAL BREAK)

COOPER: Kate Bolduan on Capitol Hill has some news for us.

Kate, what have you heard?

KATE BOLDUAN, CNN CORRESPONDENT: Hey there, Anderson.

We were just actually standing right outside House Speaker John Boehner's office waiting to get the latest from him, and the House majority whip, Kevin McCarthy, came out and as he was rushing past reporters, we said, what's the latest?

And he said there will no vote tonight. So, after all of these hours that members as well as House Republican leaders have been trying to work very hard to try to build support around House Speaker John Boehner's proposal, it appears that at least for the evening they're either giving up that attempt or they haven't gotten the votes yet, because Kevin McCarthy has just come out now to tell us there will be no vote tonight. Obviously a lot is in flux. And obviously we will have to figure out where this goes from here. But that's the latest, no vote this evening after they abruptly stopped debate on this measure around -- before 6:00 this evening.

And it's been in flux since and we have been watching members coming in and out of the House speaker's -- House leaders' offices. They have been trying to garner support, they have been trying to round it up. And it seems that they're still working on it at this very hour.

COOPER: Do we know how many vote they have at this point?

BOLDUAN: We don't. That's been one question. Every member that's been coming out, we have been asking them how many votes do they have or how many votes are they short, and they keep telling us, we're coming close. It's coming together. And at this point we're told we will see. So, that's the latest for now.

COOPER: All right, Kate, I appreciate it. I know it's been a long night for you and will probably continue to be one.

John King also joins us and Gloria Borger.

John, what do you make of it?

KING: I make the fact that the speaker just can't get some stubborn members to come along.

I was e-mailing with a top House leadership aide, as Kate was bringing us that news and just beforehand who said, it's more than one. I don't know how many votes shy, but he said it's more than one. And obviously they have been having these meetings throughout the night. And you reach a point, Anderson, where you just realize it's not there. And the speaker, we talked about this, his credibility is on the line here. What this suggests to me is that he still needs two or three votes. And because of that, he realizes tonight he's not just going to be able to twist an arm. He's going to have to most likely make changes to the plan. And that will take time. They will have to make some legislative changes if that's the case. It's an if. It's an if.

If that's the case, have to make changes, might have to go to the Congressional Budget Office and say, hey, we're changing this plan. How much do we save? There's some horse-trading going on. And the speaker realized he wasn't going to finish it tonight.

BORGER: Anderson, in the old days it used to be that when you were doing this kind of maneuvering and arm-twisting you could offer somebody an earmark and say, OK, we will give you this amount of money in your district, right?

Well, that doesn't happen anymore. And that's not what these members are about. When they're going into the speaker's office, they're talking about, how do we get to a balance budget amendment, for example? How can we play this so we can make sure that the cuts that we get eventually are going to be serious and deep cuts? How can we ensure that the Democrats aren't going to try and raise taxes on us?

And so, you know, these are kind of deep philosophical, ideological and for some of these members, I would argue, even theological issues. And that's what they're talking about in those -- in the backrooms right now.

COOPER: And, John, tomorrow, how does this process restart? I mean, again, it's him just trying to make changes for individual members?

KING: If we have learned anything over the past few days -- and I would argue over the past few months back to the last election, is the old rules don't necessarily apply here in Washington.

There are two ways to look at this. The speaker can try to salvage this vote, the tactics of this vote. He can try to make changes, he can try to twist arms, he can try to do what it takes to get him to that magic number, which I'm told is more than one vote away. Is it three? Is it or four? Is it two? I don't have the answer to that tonight.

So you can view this two ways: either this is a collapse for the speaker tonight and he tries to repair it and pass something symptom tomorrow, or is this with the clock ticking another moment of reset?

We've had several in this conversation. And do we go back to conversations about a different deal, a bigger deal, a negotiation between the House and Senate? The House doesn't want that. The freshmen don't want that. They want to plant their flag on this.

But this is going to cause another reset button. And it's going to cause -- because of the date on the calendar just around the corner, now August 2nd, they're already scheduled to work through the weekend. Will we just do the same tactics or will this cause some bigger conversation? That's a big question. BORGER: And earlier in the week, Anderson, we were talking about whether the White House might possibly agree to some kind of a short- term patch of two to three days in order to get the negotiations really moving again.

And I think, you know, as the clock ticks, I think we have to look back to that scenario and wonder whether that's a possibility again.

COOPER: Remember all that grand bargain big talk? Doesn't that seem like 20 years ago? Was that like two weeks ago?

BORGER: Yes. Although if you talk to some Democrats and Jessica has been reporting that the White House is still talking about some kind of a grand bargain, right? So it seems like a long time ago. But funny how these things work, right?

COOPER: Yes. John, Gloria, thank you.

I want to bring in two other perspectives now. On the left, Democratic strategist and CNN contributor Cornell Belcher, formerly a pollster for the 2008 Obama campaign. And on the right, former California Senate candidate, McCain 2008 adviser, and Hewlett-Packard CEO, Carly Fiorina, currently she's vice chairwoman of the National Republican Senatorial Committee.

Carly, let me start off with you. Just in terms of the politics of this, how do you think Republicans are looking at this in terms of the political, who is going to get blamed for this? What are the politics behind this maneuvering?

CARLY FIORINA, VICE CHAIRWOMAN, NRSC: Well, I'm not a politician so I'm probably not the best person to ask about the politics. But as a Republican I would say this. I think it's disappointing that several, a handful of freshmen Republican Congress people, don't understand how much impact they've already had.

And what I mean by that is, the Republicans and the Republicans alone, I would argue, have totally changed the conversation in Washington, D.C. over the last less than six months. From how much should we spend to how much must we save. And from a belief that the way to close deficits is to raise taxes to a recognition that the only way to close deficits is to cut spending.

That is a tremendous accomplishment. And I also think it's worth reflecting on, and I hope that White House is reflecting tonight, on the role that they've played in bringing us to this point.

You will remember less than a week ago, President Obama went to the press room and talked to the press and said, I have told the leaders of the House and the Senate, Harry Reid, Mitch McConnell, Nancy Pelosi, John Boehner, to come to my office tomorrow morning, Saturday morning at 11:00 and bring me a deal that can pass both the House and the Senate.

And in fact that deal was brought to him by Nancy Pelosi and Harry Reid on Sunday night. And he turned that deal down. And the next night he went on television and castigated the Republican Party, not exactly helpful in reaching a compromise.

So I think there's plenty of blame to go around here. But I must say I'm disappointed that Republicans -- a couple of Republicans, can't accept the progress, the huge progress that has been made and the huge difference that they've made in the conversation and the mindset of Washington, D.C. about a critical issue of national importance.

COOPER: Cornell?

CORNELL BELCHER, CNN CONTRIBUTOR: Well, of course, I'm going to push back on some of that. And then actually I want to sort of not play partisan politics and try to speak to something bigger.

I don't think they've changed the conversation that much. Typically especially with the American people, because the American people actually still think that we do need revenues along with cuts to get there on this.

But, you know, this is such a humongous debacle that it blows our minds. It would almost be comical if we were not headed for a cliff. The fact of the matter is, even if he passes this bill, it is dead on arrival in the Senate. Not only among Democrats say they're not going to vote for it, but you have got a number of Republicans who say they won't vote for it.

So instead of the speaker being held hostage by a group of radical tea partiers, why doesn't he get bigger than the moment? I mean, not playing partisan politics here, why doesn't he take this moment, pick up the phone and call Nancy Pelosi or Congressman Hoyer and say, you know what, what is there that we can do with this bill that will get a modicum of Democrat votes so that we can move this country forward?

If he were to do that, he might go down as one of the greatest speakers in our nation's history, as opposed to the speaker that he's -- to the history that he's about to inherit with this sort of partisan bickering.

COOPER: Carly, do you think that's possible, that he could do that given the partisanship of this date? Won't a lot more Republicans then jump ship?

FIORINA: I think John Boehner has been talking to the other side all along. I think he has spent more time talking with President Obama than perhaps anyone else. I'm quite confident that he has spent and continues to spend time talking with his Democratic counterparts, both in the House and in the Senate.

And I have confidence, I truly do, as I think the president does, that ultimately the leaders in both the House and the Senate, Democrats and Republicans, will find a way to avoid default.

But I must say that Republicans have been utterly consistent in talking about a deal that will work and that will pass. And I talked about this deal when I was on your show several weeks ago, Anderson. It's a deal that says, yes, we need revenues but we're not going to get them by raising tax rates, we're going to get them by reforming the tax code and closing loopholes.

And we have to cut spending and we have to do some basic reforms to entitlement programs. That deal has been on the table for months. People know what that deal is. But the president of the United States would not take that deal. And the Democrats, until Harry Reid's most recent plan, cobbled together on Sunday night, the Democrats have not offered a single plan.

And the president of the United States has never offered a plan that could be scored, that was clear, that was consistent, and that he would put his reputation on.

COOPER: Cornell, what about that? You hear that from a lot of Republicans, saying, look, the president talks about it but hasn't offered a plan.

BELCHER: Well, I'm a little confused here. Because all of a sudden now the speaker has been reaching out to Democrats and trying to work in a bipartisan...

FIORINA: He has been.

BELCHER: Well, then, Congressman Hoyer must be lying then. Because he certainly hasn't been reaching out to him and talking to him. They're not including Democrats in this conversation. So I'm not going to let you muddy up the waters in that like he's being bipartisan.

FIORINA: That's just factually not correct. He has talked with Nancy Pelosi, Harry Reid, and President Obama for weeks and weeks and weeks.

BELCHER: We are not in negotiations right now in that back room. And my simple point would be this. If he were to in fact reach out to Democrats and say, OK, what are some of your ideals to put in this bill so that we can move forward and not be held hostage by a radical group of freshmen as they take this country over the cliff? It would make him a bigger leader.

I don't think we're going to get there by just cutting away the parts of this program that help middle class Americans. Our economists don't believe that and certainly middle class Americans don't believe it.

Depending on what public poll you look at, you've got 60 or 70 percent of Americans, and even almost a plurality of Republicans who want a balanced approach to this. It is the tea party faction that is holding this hostage.

FIORINA: Well, that's interesting. Because I actually just don't think your facts are correct. If the tea party loved this bill so much, it would have passed by now. The truth is that for all your talk about a balanced approach, the only people who have put forward real plans are the Republicans.

And it is also true that John Boehner has spent hours, days, weeks, trying to reach a deal with President Obama, with his counterparts. Look, I agree that we're at a terrible place. But I think it's just factually incorrect to lay all the blame for this at the Republicans' feet and not to look back just two weeks to history.

(CROSSTALK)

COOPER: Cornell, your final thought and I've got to go.

BELCHER: Well, which part is factually incorrect? He can't get his own bill to the floor? The president hasn't met him with compromises? The president has even taken off revenues now and said, OK, fine, let's make cuts. They still can't get a deal. Which part of that is factually incorrect?

FIORINA: Well, let's just start with the fact that Nancy Pelosi, Harry Reid, Mitch McConnell, and John Boehner came to the agreement, came to the agreement.

BELCHER: Harry Reid has a bill right now, as a matter of fact, a bill that at least will get brought to the floor.

FIORINA: Maybe if you'd let me answer the question or respond to your comment.

COOPER: We've got to wrap it up. So just a final thought from you.

FIORINA: Those four folks presented a plan to the president on Sunday evening. The president rejected it. And now we are in a place where two different plans have been hastily proposed to try and get a compromise here.

You can say many, many things about the Republicans. But what you cannot say is that John Boehner hasn't been working in good faith to try and solve this problem.

COOPER: OK. Cornell, your final thought and then I've got to go.

BELCHER: I'm sorry, did you say Harry Reid and Nancy Pelosi, all four of them came and put a plan before the president and he rejected it? Because I think that would be news to the White House.

FIORINA: The president of the United States...

BELCHER: Because I don't think the president has seen that plan.

FIORINA: ... asked the four of them to come forward with a plan, Nancy Pelosi and Harry Reid presented a plan that involved -- this has been talked about, that involved another vote within six months. Something that, by the way, is customary. Debt ceiling increases have been voted on roughly every seven months for the last several decades.

The president rejected that. Because he doesn't want to have this debate again.

BELCHER: This is blowing my mind, literally. What you have right now is a speaker trying to fight with his own caucus to bring forth a plan, a budget plan that is already dead on arrival. So it's political theater at its height. And...

FIORINA: But so is Harry Reid's plan, for that matter.

BELCHER: ... your ideal is that -- well, his plan -- at least his plan can make it to the floor. He's putting forward a plan right now that we all know is not going to go anywhere. He's wasting our time.

COOPER: All right. I've got to wrap it up, guys. I'm sorry, we're out of time. Cornell Belcher, Carly Fiorina, appreciate it.

FIORINA: Thanks, Anderson.

BELCHER: Thank you.

COOPER: Up next, how the White House is reacting to what's going on. And we'll talk to more folks on what's going on right now on Capitol Hill. Be right back.

(COMMERCIAL BREAK)

COOPER: Well, Congressman Joe Walsh of Illinois, a House freshman, a tea party favorite, has been a loud voice in the rebellion that Speaker Boehner has been trying to tame. He joins me now.

What do you make of it? No vote tonight. Is that good news for you?

REP. JOE WALSH (R), ILLINOIS: Hey, Anderson, I take a contrarian view. I think this entire debate is good. The speaker is doing a great job trying to advocate for a plan, and their lobbying that they've been doing with each one of us has been very respectful.

My colleague Steny Hoyer, who was on before, Anderson, I think he kept referring to us Republicans as the "party of no." I don't get that. The Republicans a week ago passed the only plan right now that has been passed out of a body of Congress up here.

Look, I've been pretty clear in how I feel about this president. I think one of the major reasons why we're here in the eleventh hour is because this guy has not led at all. The Senate Democrats haven't done anything. You may not like what the Republicans have done, but they're the only folks in town who have been trying to deal with this debt ceiling issue.

COOPER: What would it take for you to support a Boehner plan? How would his plan have to change?

WALSH: I think for a lot of us, Anderson -- and again, it's a great first step. But for a lot of us it's going to take systemic reform that makes sure we never get here again. One of your prior guests said this isn't the old days anymore. This isn't the old days.

I mean, step back for one minute and imagine how life would be different if these Republicans hadn't come to Congress this year. We would have raised the debt ceiling 3, 4, 5, 6, who knows how many trillion? We'd still be spending money like there's no tomorrow. Thank God the Republicans came here and have changed the conversation. COOPER: But you're saying systemic reform. What exactly does that mean? I mean, in order to...

WALSH: That means -- Anderson, that means the only way we are going to get this town to change the way they spend money is by passing a balanced budget amendment, by forcing both houses every year to balance their books. It's part of "cut, cap, and balance," again, that House passed with 234 votes last week.

COOPER: And is a potential default next week acceptable to you?

WALSH: I don't buy this notion of default. To me that's a false choice. Default means you can't service your debt, you can't pay off your debt, Anderson. And there's plenty of government revenues to do that. One of the things that has been harmful in this debate is, there has been this obsession with August 2nd, August 2nd.

We need to get this right. We need a balanced budget amendment. If it takes us a few days more to make sure we get it right, let's do it.

COOPER: And if Moody's, if others downgrade the U.S. credit rating?

WALSH: Well, a downgrade is serious, Anderson. And what the folks at Moody's and Standard & Poor's told us last week is, you may get downgraded even if you raise this debt ceiling.

If you raise this debt ceiling and don't get serious about spending, in all likelihood you will get downgraded. "Cut, cap, and balance" met the credit agencies' criteria to avoid a downgrade.

COOPER: Congressman Joe Walsh, I appreciate you sticking around for us tonight. Thank you so much.

WALSH: Thank you, Anderson.

COOPER: Appreciate it.

A lot to talk about still. We're going to be live into the 11:00 hour to continue with this breaking news. No vote tonight, a very tense night on Capitol Hill. And at the White House. More details ahead.

(COMMERCIAL BREAK)

COOPER: Over now to breaking news. No vote tonight in House Speaker John Boehner's debt plan. He doesn't have enough GOP support. The vote put on hold yet again. We're joined by chief White House correspondent Jessica Yellin and senior legal correspondent Jeffrey Toobin.

Jessica, I want to ask you, our previous guest, Carly Fiorina, was talking about a meeting at the White House, I think, on Sunday, that she said was Harry Reid and Nancy Pelosi, who came up with a plan, and the president passed on it. Is that true?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Well, the president was willing to make some -- the president was willing to forward on certain plans, but there was a lot of -- they needed an agreement with the Republicans in order to go forward.

And the fundamental breakdown was that they didn't have that agreement. There's a lot of backward looking we could do at this point, Anderson. But the bottom line is, right now at the White House there's enormous frustration. Because what they're looking at is the clock ticking and the fact that Speaker Boehner has a bill that in their view couldn't get any Democratic votes, couldn't get through the Senate.

And he couldn't get Republicans at this point to even sign onto the bill. So why are they, in their view, wasting all this time still on a bill that was just going to get Republican support?

The question now is, what does the president do? What is the president's next move? Will he call a meeting of leaders? How involved does he get? My information from sources at this point is he has not planned to call leaders, he has not called leaders to the White House yet for any meetings in the coming days. That could change.

When he was in the middle of things, it didn't get a deal done, so he took a different tact. Let the House and the Senate try to do it on their own. Maybe he'll get more involved tomorrow. We'll have to wait and see. He has been monitoring events from the residence.

COOPER: Jeff Toobin joins us as well. Jeff, what do you make of all of this? .

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, just one of the things that's so interesting about what's happening now is how much our whole political dialogue has moved to the right since the 2010 elections.

When President Obama gave his speech he said, I want a balanced approach. I want some revenues and some budget cuts. Well, the revenues are gone. There are no more tax increases in the Boehner plan, there are no more tax increases in the Reid plan.

So even that is not conservative enough for the House Republicans. So what makes this so perilous is that the Republicans can't even coalesce on a plan that clearly has no chance of passing the Senate or getting approved by President Obama.

So you think, how does this get solved when even Boehner's plan failed, when clearly Reid's plan or anything that comes out of the Senate is going to be to the left of what Boehner's plan failed at today?

COOPER: There are a number of Republicans who have been concerned that they're being set up to take the blame for whatever eventually happens.

TOOBIN: Well, you know, maybe that's because they deserve the blame. I mean, you've got to pass something. And John Boehner, with great fanfare, said, we're going to pass something today. Well, they couldn't get anything done. I mean, whatever you think about President Obama, he said, he can't sign something that hasn't been passed by Congress. And neither the House nor the Senate at this point has any plan that is, it seems, three days away, remotely likely to get to his desk.

And as Jessica said, he's frustrated. But ultimately this is Congress's job to try to get something passed.

COOPER: And, Jessica, tomorrow morning, what happens? Do we know? At the White House.

YELLIN: Well, tomorrow morning, first of all, they're watching the markets. I mean, who knows how the markets are going to react to this? Part of what the downgrade potential is about is the inability for Washington to function. So the markets could go haywire simply over this. So there's some anxiety about that.

I wouldn't be surprised if we do see the president come out and make some kind of statement. They're not advising that. But I wouldn't be surprised. And we could see the president call people back to the White House for another meeting and try to knock heads or try to forge a compromise.

Who knows what the path forward will be? The big question is, will the U.S. Senate try to break off and just go on its own? Until now Harry Reid, the Democratic leader, has waited for Speaker Boehner to sort of get his vote over with and then he can proceed on his own.

But maybe at this point, who knows, maybe Senator Reid will say, you know what? Enough. I'm going to go on my own and stop waiting.

COOPER: Jessica Yellin at the White House, Jeff Toobin as well, thanks.

We're going to continue to follow the breaking news, we're going to be live into our 11:00 hour.

Also ahead, other stories making news. A bizarre day in the child sexual assault trial of Warren Jeffs, the leader of that polygamist sect. And an Army private who was AWOL is arrested in Texas, not for skipping base, police say he was found with a stash of weapons and was planning to use them against U.S. troops.

(COMMERCIAL BREAK)

COOPER: Let's check into some other stories we're following. Tom Foreman has the 360 news and business bulletin -- Tom.

TOM FOREMAN, CNN ANCHOR: Hi, Anderson.

Texas police say a Muslim-American private planned to attack fellow soldiers at Fort Hood, 21-year-old Naser Abdo was arrested after a gun shop tipped off police that he looked suspicious and purchased a lot of ammunition. Abdo was AWOL from Fort Campbell, Kentucky. Police believe he was acting alone. Tomorrow in Norway police will interview Anders Breivik for the second time. He's suspected of killing at least 76 people in two attacks last Friday.

Inside a Texas courtroom today, Warren Jeffs fired his defense team and opted to represent himself in his child sexual assault trial. But when it was time for him to present his opening statement, he refused. Jeffs is the leader of a fundamentalist Mormon sect.

The trustee trying to recover money from Bernie Madoff's Ponzi scheme reached a settlement with one of the funds that fed investor money to Madoff. Tremont Group Holdings has agreed to pay $1 billion to the victim's compensation fund.

And speaking of money, someone offered a bid for nearly $1 million to buy this rubber rendering of Casey Anthony's face. The mask was auctioned on eBay. Now we'll see if they actually come through with the money.

COOPER: I don't understand that at all. Why would someone do that?

FOREMAN: I don't know. Doesn't make any sense.

COOPER: All right. Yes. We're live at the top of the hour with breaking news. Tom, thanks. No vote tonight on the debt ceiling. We'll talk to Ron Paul, Steny Hoyer, and our political panel, next.