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Clock Ticks Toward U.S. Default; New Lead in 40-Year-Old Mystery; Congressional Leader and White House Announce Debt Deal; Pundits Speculate if House will Pass Debt Deal
Aired August 01, 2011 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BROOKE BALDWIN, CNN ANCHOR: Hello, everyone. You ready for this? So the debt deal is done, right? Not exactly. We still need to see votes happen in both the Senate and the House. And on the House side, it looks like some Democrats could be holding this thing up. In fact I will be speak with one of them in just a moment here. Stay tuned for that.
Also, we expect to hear from the speaker of the House, John Boehner, this hour. We will carry that live for you. So stay tuned for that as well.
Let's begin here. And as the clock continues to tick, nine hours now -- we're not talking days -- we're talking hours, nine of them remaining until a potential default of the U.S. government. And Congress still hasn't voted on the debt reduction agreement announced last night. We heard the Senate would be voting first. Then we heard the House would be voting first. But the House still hasn't voted. And that tells me that there may be a problem rounding up some of those votes. We have just heard from the vice president, Vice President Joe Biden, after a meeting with congressional Democrats. Listen to this.
(BEGIN VIDEO CLIP)
JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: I didn't go to convince. I went to explain and lay out exactly how we got to where we were and why this is so important for the country.
In my career up here after 36 years, I never asked another person to vote against what they think their interest is. I am confident -- my sense -- I was --
(CROSSTALK)
BIDEN: -- well. My sense is that they expressed all their frustration, which I would be frustrated if I were sitting there as well, that we're going to be -- we're taken down to the wire like this.
And so what they want to know is they asked questions specifically about the proposed legislation. Excuse me. I'm sorry -- the proposed legislation. I thought it was a good meeting. And I feel confident that -- that this will pass.
(END VIDEO CLIP)
BALDWIN: That is the vice president just a short time ago. Still no votes on the debt reduction deal. We're again less than nine hours away from a potential default.
I want to bring in John King. He knows a thing or two about Washington, host of "JOHN KING, USA" 7:00 p.m. every single night.
John, you have been talking a heck of a lot about this, as I have. And we heard the vice president. He said, yes, he's confident this will pass, but still not seeing a vote yet. So does that spell a problem?
(LAUGHTER)
JOHN KING, HOST, "JOHN KING, USA": The picture you just showed, the live action on the House floor, they're debating the rule. First the House passes a rule which lays out how long they will debate this, what amendments can and cannot be offered. That's what you're seeing right now, Louise Slaughter, who is a member, senior Democrat on the Rules Committee right there from New York.
Then they will actually get about to debating the legislation. Here's a simple rule in Washington, Brooke. When nobody likes the deal before you, the longer you leave it hanging on the vine, the more likely you are you're going to get into trouble, which is one of the reasons the House decided to go first. They know the harder vote will be the House vote.
Speaker Boehner is going to lose a lot of his members because the conservative grassroots is saying that supercommittee that is part of this deal might try to raise taxes. Leader Pelosi on the Democratic side is going to lose a lot of the liberal left, because MoveOn.org, all the liberal organizations are saying that supercommittee is going to raid Social Security or make Medicare cuts.
When nobody's happy and you know both the conservative right and the liberal left are very, very unhappy, you have got to find the votes in the middle. And the longer you leave this out there, the more everybody's getting phone calls, the more everybody's getting pressure, which is why they're trying to get the harder vote, the House vote, today. I'm told the Senate vote, they had hoped to do that tonight.
Most likely now, the Senate vote will slip until tomorrow.
BALDWIN: So hang on a second. Just so I'm right on the deadline here, are we talking midnight tonight or tomorrow night?
KING: Well, that's the big question is what will Congress do? If the Senate holds over -- if the Senate holds its vote over, does the administration say, OK, you're going to do it some time during the day tomorrow, we can work it for a couple of hours? 9 Remember, no one thought the first days would be Armageddon of default. Or do they pass it at the last minute today? Do they add something that gives the president 24 or 48 hours? Remember, the president did say he would accept a short-term extension, short-term increase in the debt limit if, if they had the big framework. He said he wouldn't take one just for the sake of a short-term one.
If they needed to do a 24, 48 hours, they could resort to that. They haven't officially said no Senate vote tonight. But I was just in communication with somebody who said, they have got a little I's and T's and hiccups and problems and things that happen.
BALDWIN: I know they do. I just want to make sure. I want to be talking the same deadline Washington is talking.
Secondly I guess perhaps to continue your analogy about the House going first and hanging on the vine longer, let's talk Dems and Republicans here just within the House because it sounds as though the House Democrats are saying, Republicans, this is your deal, we're voting on here today. You go first, you stick your necks out there.
Is that the sense you're getting?
KING: Absolutely.
Look, the Democrats don't like this. There are going to be a lot of eat your peas votes on the Democratic side here. The Democratic leader, Nancy Pelosi, doesn't like this deal. What she most does not like about it, as she said herself, not one red cent guaranteed to come from wealthy Americans, even though you're going to have to cut some domestic programs for low-income Americans. She's not happy about that.
In the end, will she support President Obama? Of course she will. But how many votes can she deliver? How many of her people say no way? So, what the Democrats are saying -- Nancy Pelosi was asked coming out of that meeting you just showed, Vice President Biden, what's the vote count?
(CROSSTALK)
BALDWIN: She said, ask the speaker.
KING: She said, ask the speaker.
BALDWIN: I heard that.
KING: He has the majority. Essentially the Democrats are saying, let's see how many Republicans go forward. Let's see how many votes we need.
A lot of Democrats go back to the TARP, the bailout votes in the Bush administration, where they say it was a big crisis facing the country. You had a compromise nobody liked. And the Republicans bolted.
What the Democrats want to say is, let's let the Republicans vote first. Let's let John Boehner deal with his family crisis, his family feud before the Democrats have that play out theirs. BALDWIN: Conservative icon Grover Norquist, he has blessed this agreement. He said -- quote -- "real spending cuts, no tax hike, onward."
On the flip side, liberal icon economist Paul Krugman, he says he's not happy -- quote -- "The GOP has just demonstrated its willingness to risk financial collapse unless it gets everything its most extreme members want."
And now one more for you, John King, USA. Let's listen to Congressman Gary Ackerman, Democrat of New York.
(BEGIN VIDEO CLIP)
REP. GARY ACKERMAN (D), NEW YORK: This has been a terrible process. They invited our president, who they have been insulting since he was reelected, failing to recognize that he is the president of the United States, they invited him to negotiate at a strip poker table, and he showed up half-naked.
(END VIDEO CLIP)
BALDWIN: Just if I may repeat that, Congressman Gary Ackerman has just said that Republicans forced the president to bargain at a strip poker table and the president showed up half-naked.
John King, why are the Democrats and progressive so nonplused?
KING: They're not happy with their president. And you heard that right there. We're a family cable network, so we will keep this one mostly dressed, if you will.
BALDWIN: We will keep it clean.
But the Democrats essentially are saying that the president sat down in these negotiations and he started it by being half-naked, by giving things away before the game had even started, before the negotiations and the fight had even started. Democrats are not happy about that. The president, remember, at the beginning, he said he wanted a balanced deal. That would include some tax increases.
He has no guarantee of that. They may come up -- Grover Norquist has blessed this. But there is no guarantee that tax increases won't come up in the supercommittee part. But there's also no guarantee there will be tax increases, so the liberals don't like that.
When they go, Brooke, for those second round of cuts, then you have a -- they're doing the low-hanging fruit right now. When they get to the second round of cuts, you're going to have to have a bleak choice there. If you don't raise taxes, then you're going to have some deep, substantial cuts in domestic programs.
And look at the timetable here. This supercommittee, supposed to have recommendations around Thanksgiving, so that Congress will consider them in December. December 2011 quickly becomes January 2012, which is a presidential and a congressional election year. You hear a lot of people are saying this deal will quiet the politics of this for some time.
No. We don't know how the vote is going to go today. This is not going to quiet the politics of this for more than maybe 48 or 72 hours.
BALDWIN: Yes, wow. It's kind of exciting, politics going on there in Washington. You got a good job. So do I, John King.
Stand by. I may want to come back to you, friend. All right, John King, thank you very much.
Joining me now, though, Representative Earl Blumenauer, Democrat of Oregon.
And, sir, with the clock ticking down toward a potential default of the U.S. government, what are you hearing up there about the fate of this debt reduction agreement, as it's officially called?
REP. EARL BLUMENAUER (D), OREGON: Well, it's extraordinarily frustrating for a number of us.
This is an absolutely artificial crisis. We have raised the debt ceiling 102 times. We did it seven times for George Bush. This is an artificial crisis that has been created. We're still trying to find out exactly how the pieces work. As I understand it -- and I just left that meeting with Vice President Biden and a very spirited exchange -- what is going to happen is, we're going to start moving forward with more cuts that will actually depress the economy and make it worse in the short term.
And there are very few guarantees that we're going to be able to get out from under this cloud. We don't know exactly how it's going to work. We have the threat of a government shutdown looming in less than two months and no guarantees that this is going to work.
The American public is overwhelmingly supportive of a balanced approach of revenues and cuts. We have voted to move in that direction. That's a nonstarter for my Republican friends. Well, then they're -- I think they're going to be hard-pressed to be able to pull that across the finish line.
BALDWIN: Congressman, take me back to the spirited debate in that room with the vice president. We saw him come out. He appeared pretty confident that this thing will pass.
But when you say spirited, can you be more specific? What were some of the concerns that were brought up among some of your colleagues?
BLUMENAUER: Well, one of the things I shared with the vice president, when we had this discussion a year ago in December, and we were talking about then the deal on tax cuts, my point to him at that point was that, well, we're never going to have more leverage than you have now.
If you give in on this, what's going to happen with the C.R. and we're faced with a shutdown and what's going to happen with the threat of the debt ceiling limitation looming? People have seen this movie before. They're looking for some assurances that we're not just going to kick this can down the road, as you said a moment ago, for a few hours or a few days --
BALDWIN: Sure.
BLUMENAUER: -- and then be locked back into another crisis going forward?
And, as it stands now, it's not clear to me that this is a good resolution.
BALDWIN: Congressman Blumenauer, let me just jump in. I know you know all the different bits and pieces, the different iterations of these different deals.
I want to walk our viewers through how this thing would work if indeed it is passed in those days. In order to raise the debt limit and prevent a default, Congress would agree to $917 billion in immediate spending cuts. So then a six-person committee, three Democrats, three Republicans, would then have to find a way to save an even bigger chunk, that chunk being $1.5 trillion.
Should the committee not reach an agreement to do so or should Congress reject their proposals, Congress would then be required to pass a balanced budget amendment or automatic spending cuts would start to kick in, cuts largely taken from the military, from defense.
So there is some real incentive there to get something done on this committee. Congressman, does that -- running down that, does that sound about right to you? Do I have that right?
BLUMENAUER: You are saying what the words say. But bear in mind the crew, the Republican crew that's running the House right now, when we got in the spring with some really tough issues regarding this continuing resolution in government spending, remember, they were pretending that they could just pass a bill in the House and it would be imposed on the Senate.
We have no idea what these folks will do if faced with, for example, real spending cuts in the Department of Defense. Our understanding is that right now Speaker Boehner is talking to the Armed Services Committee because they're not interested in this piece going forward, some of the Republican rank and file.
So it's a deal that is more apparent than real. Perhaps it will come together in the next couple hours. But it's not at all clear that it is enforceable at this point. You're hearing very different things from what the speaker says it means and what we just heard from the administration.
(CROSSTALK)
BALDWIN: Yes. So let me throw this at you then. At this very late hour, would you prefer, sir, that the president invoke the 14th Amendment, which, who knows, it could lead to a congressional crisis? Would you favor that?
BLUMENAUER: I would guarantee you that if Dick Cheney was in the White House and Democrats would somehow be so irresponsible as to play games with the debt ceiling, he would throw that lever in a heartbeat.
BALDWIN: But what about President Obama?
BLUMENAUER: I think the president should.
BALDWIN: You do? You do? Did the president get rolled by the Republicans on this, do you think?
(CROSSTALK)
BLUMENAUER: I think the president assumed, as he has said, that they were going to be reasonable, they wouldn't hold the nation's and the world's economy hostage.
They would be willing to do that, and there are some people that would throw the switch. I think the 14th Amendment is clear that he has this authority. I think this is a serious problem. And I do think, frankly, if this breaks down, there will be one of two things that will happen. There will be something that will pass that will give a few hours or a few days' breathing room or the president will throw the 14th Amendment lever.
BALDWIN: We will all be waiting and watching.
Congressman Earl Blumenauer, Democrat from Oregon, sir, I appreciate you coming on. Quite a couple of hours you have in front of you there. Thank you, sir.
BLUMENAUER: My pleasure. You bet.
BALDWIN: And Capitol Hill obviously focused on the votes in the House and then the Senate. But the rest of us are watching our wallets. How is this showdown in Washington affecting the markets all around the world?
CNN's Richard Quest shedding some light on that right after the break.
And a real-life mystery that reads -- kind of reads like a scene from a "James Bond" thriller. A man hijacks a plane, collects a ransom, jumps into the night sky -- why the FBI has new hope of solving this 40-year-old whodunit straight ahead.
(COMMERCIAL BREAK)
BALDWIN: Just a quick reminder. It's 3:17 on the East Coast. We're still waiting for House Speaker John Boehner on the status of the vote in the House on the debt reduction agreement. We're expecting to hear from him at the bottom of the hour, so in just about 13 or so minutes from now, as the clock continues to tick toward a potential default of the U.S. government. But joining me now from Washington, CNN's Richard Quest. He came across the pond from his usual post in London. Richard, nice to see you.
Let's talk about the markets here, specifically the overseas markets. I know they breathed a sigh of relief when word of the debt deal spread last night and into the early hours today. Did they forget that the deal still needs to clear Congress and get the president's autograph?
RICHARD QUEST, CNN CORRESPONDENT: Not at all. The rally, the relief rally that took place was literally an inch wide and an inch deep and a mile wide.
And it's not surprising that it petered out at the first whiff of problems. And that was certainly even the case here in the United States, where those bad manufacturing numbers which from the ISM took any enthusiasm out of the market and turned the Dow Jones in exactly the opposite direction.
Two or three top economists and analysts that I have been speaking to over the last few hours all say the same thing. If this deal does not pass the House and the Senate in timely fashion, not only are we back to square one, but you're looking at a Lehman situation, and that could be just as dramatic.
BALDWIN: What about the rating agencies? I know CNN has reached out to Moody's, S&P today. They're not commenting publicly. I have read that several analysts are advising investors that the U.S. could still face a downgrade of its AAA crediting rating. What are you hearing there?
QUEST: Well, on the back of the actual vote so far, one rating agency says that they're minded not to actually go ahead with their negative move downwards.
The other two are biding their time and not saying anything specific. However, remember, the rating agencies would downgrade not because of a debt deal here, but because of the long-term debt outlook.
And even when this deal comes in to force, in two years' time, the U.S. will still have a budget deficit of 6 percent. Now, if the best that the U.S. can come up with is a budget deficit of 6 percent down from 9 percent or 10 percent, then that will not probably be good enough for the rating agencies not to actually move the rating down a notch or so. But the jury is still firmly out on that one.
BALDWIN: Let me take you back to a point you made a moment ago when you were saying you were talking to some top economists and they say kind of worse-case scenario, it could be the Lehman scenario. Remind us all what you mean by that.
QUEST: Oh, yes, absolutely. We had a subprime crisis.
We had problems, something smelly in the financial world. Everybody knew things were a little unsavory. But it was -- and Bear Stearns had already gone. But it was the failure of Lehman Brothers, that overnight sudden-shock failure at the weekend of Lehman Brothers that had everybody saying, who's next? What's the counterparty risk?
It was that that gummed up the financial markets and led, of course, to huge trauma and the eventual recession. Now, if we end up with the vote here that doesn't happen or fails or something goes wrong, then the world is going to sell the dollar. The world is going to be concerned about U.S. treasuries, and the question of default goes back to the top of the agenda. In that scenario, you cannot expect anything other than volatility and turmoil.
BALDWIN: I was listening to an interview with Fareed Zakaria and IMF chief Christine Lagarde. And she was saying that traditionally the U.S. has had -- there's been a positive bias toward U.S. Treasury bills and just even this looming crisis has already begun to chip away at some of that positive bias.
Well, the question to you, in terms of a global perception, is the United States' image overseas, is it becoming increasingly tarnished because of this -- let's just call it what it is, a circus in Washington?
QUEST: You don't -- you never want to say and be so definitive as to say tarnished, over and done with.
I would say people are slightly disgusted and almost certainly confused with a real worry that this may not get sorted out. We talk about an accident may happen. What do we mean by that? By that I mean, the vote suddenly gets put off, a bill suddenly arrives at the Treasury, something doesn't get paid.
And without anybody noticing, one of the spinning plates that they have been doing so badly suddenly comes crashing to the floor. That is still a real possibility. And that is why people like myself, yourself and everybody who's watching it are doing it so carefully. There are dozens of plates spinning at the moment, any one of which could come crashing to the floor.
BALDWIN: Richard Quest, I don't like the scenario you're painting. Hopefully, we don't see that. But that is certainly one reality.
Richard, thank you so much, live for me on the Mall in Washington.
And, look, we're not going very far from the debt crisis, of course, but we have some breaking news here out of New Hampshire, where divers have discovered a female body in a river just a quarter- mile from where 11-year-old Celina Cass was last seen.
Meantime, her father now coming forward. He is breaking his silence.
(BEGIN VIDEO CLIP) UNIDENTIFIED MALE: I can't believe that she's walked off. I just can't believe it. Somebody has had to kidnap her. That's the only thing I can see that has happened.
(END VIDEO CLIP)
BALDWIN: What he thinks happened to his 11-year-old daughter -- we will take you live to New Hampshire. More on this breaking news coming up next.
(COMMERCIAL BREAK)
BALDWIN: All right, breaking news. Divers have found a female body in a river not too far from the home of 11-year-old Celina Cass. She is the young girl who just vanished from her bedroom in New Hampshire one week ago today.
Reporter Adam Harding from CNN affiliate WMUR is outside that command center in West Stewartstown, New Hampshire.
And, Adam, just bring me up to speed. What can you tell me in terms of the details about this body found today?
ADAM HARDING, WMUR REPORTER: Well, today marks day seven of this investigation. And investigators had pretty much stayed tight-lipped as for how their investigation was moving forward.
I can tell you, though, the attorney general here for New Hampshire just a few minutes ago did release a statement saying that they found what appears to be a body in the Connecticut river. A source is confirming that it is that of a female. But any identification, that has not been made public yet.
This is where the media will be addressed. We understand it should be relatively soon from the state's attorney general. But to bring you up to speed, so to say, was earlier today, investigators within minutes at around 11:00 a.m. just swarmed around this dam on the Connecticut River, which separates New Hampshire and Vermont, because think about this.
This town is about a mile from Vermont and about a mile from Canada. So we're talking a lot of agencies, state and federal level agencies working this investigation, and really within minutes, the most activity this small town has ever seen in this investigation now on day seven here.
BALDWIN: I'm going to go ahead and presume obviously it's too early, the body hasn't been I.D.ed yet. You said it was found right around 11:00 a.m.
And I think this is interesting. I was speaking to the assistant attorney general last week and she made the point to me that every single person in this town, Adam, I think she said it was 800 people, every single person was being questioned.
Talk to me a little bit more about the search here and the fact that I imagine there are neighbors talking. I know now that the father of this young girl is talking. What are you hearing as far as that?
HARDING: Yes. Well, investigators really have been back and forth across this town, up and down. In fact, they were in a pond yesterday and they said the bottom line is, they weren't considering it a recovery mission. And it's not the same body of water where today's developments came from.
They just wanted to make sure that every stone, as they put it, did not go unturned. You mentioned the community, a town of 800. I will go one step further. There were only nine students in the fourth grade class. That's where this little 11-year-old girl, Celina Cass -- she was in the fourth grade, just finished up the fourth grade, heading into the fifth.
BALDWIN: Wow.
HARDING: And you might see this little ribbon that I'm wearing. This was actually made by one of the nine students who really there's been such a grassroots effort to get her name, her face, her picture. And you did talk about the biological father.
BALDWIN: You spoke with him, didn't you?
HARDING: No one in the family had made any public -- yes, we spoke with him last night. Now, this case was interesting because there had not been one public plea from any family members up until last night.
And the father, the biological father was in the hospital in a medically induced coma just days ago. He found out his little girl was missing on Tuesday of last week. He was still in the hospital. He said it was his faith that really got him healthy. And he wanted to make a public plea for any information. It was very hard to listen to this man, very heartbroken.
And a lot of people are confused and angered as well because they just -- they want closure. And right now, authorities still have not ended this investigation up here.
BALDWIN: Quickly, Adam, do we know yet when the next briefing will be held? We want to stay on the story too here at CNN.
HARDING: We are hearing, but it's unconfirmed, anywhere from 4:00 to 5:00 this afternoon. Again, that could easily change. A lot of the times, they say 5:30, it's ended up being 6:30, closer to 7:00.
BALDWIN: OK.
HARDING: So we're all still waiting. As you can see, there's a podium here. And we're just waiting now for authorities to make official statement.
BALDWIN: Adam Harding reporting for me from New Hampshire, from our CNN affiliate WMUR, Adam, thanks so much. And there's another podium we're staring at here. This is on Capitol Hill. We're waiting to hear from Speaker Boehner any moment now. CNN's John King was just telling me that the Senate -- did you hear this? The Senate may actually delay the vote on this deal all the way potentially until tomorrow. We know it's going to the House first, then the Senate. So what's going on up there? What's going on in the House? We're going to hear pretty shortly.
Also coming up, Donald Trump, he is going to call in to the show. He called the debt deal earlier today a joke. He accuses the president of maneuvering for political gain. What's he thinking about all this? We're covering the story from every angle -- be right back.
(COMMERCIAL BREAK)
BALDWIN: All right, we are one day before the big debt deadline of August 2nd. And essentially the deadline tonight is midnight. Now, as I was just talking to my colleague, John King USA, that deadline may move just a tad. Let me tell you why.
Let's show the live picture of the House floor. Here's what's happening right now. Members of the House -- actually that's a picture of the podium nearby as we wait for Speaker Boehner to speak here any moment and give us a status update as far as perhaps how confident he is that that he can get those votes to pass. Keep in mind in the House they have to have 216 -- 216 is the magic number.
This bill first goes to the House. They're actually debating right now on the rules. This is procedural. Once they debate on the rules, they officially open up the debate on this budget amendment bill. And then they will put it for a vote.
But the big question is, will it pass the House? From what everyone seems to be talking about, it appears more likely to pass the Senate than the House. Here are live pictures from the Senate. It appears more likely to pass the Senate than the House. So that's why they're putting it forth to the House first for a vote.
And who knows when this thing could officially be open to a vote? And if it goes way late into the evening hours, as John was explaining to me, the Senate -- if it passes the House, may not even take it up until tomorrow.
And we have been hearing, look, this thing may not pass because of Republicans and it may not pass because of Democrats. In fact, we heard from Vice President Joe Biden a short time ago coming out of a meeting with his caucus, with a bunch of Democrats. He seemed pretty confident, but it's not necessarily a done deal. Take a listen.
(BEGIN VIDEO CLIP)
BIDEN: Look, I didn't go to convince. I went to explain And lay out exactly how we got to where we were and why this is so important for the country. My career up here for 36 years, I never asked another person to vote against what they think their interest is. I'm confident -- well, my sense is they expressed all their frustration, which I'd be frustrated if I were sitting there as well, that we were taken down to the wire like this. And so what they want to know is -- they asked questions specifically about the proposed legislation. I thought it was a good meeting, and I feel confident that this will pass.
(END VIDEO CLIP)
BALDWIN: There he said "I feel confident this will pass." Let's bring in chief political analyst Gloria Borger who's standing by watching for Speaker Boehner, as am I. Gloria, nice job filling in for Candy Crowley yesterday morning on "STATE OF THE UNION." I was watching you back and forth with Senator McConnell. Let me just ask you, why is this taking so long? Why are we still waiting to hear from Speaker Boehner? Why hasn't this been put to a vote yet?
GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well I think first of all they want to make sure they have all the votes. We're just getting reports the speaker told Diane Sawyer at ABC News in a pretape, this comes from somebody at ABC that Jessica Yellin saw this tweet that the speaker told Diane Sawyer he did have the votes. But you never know until you know.
And they're clearly trying to convince the sort of recalcitrant Republican that is they need to do this for their own good even if they don't like everything in it. And Nancy Pelosi has to make the case to Democrats that they're going to get a second bite of the apple on the revenue issue after this joint committee reports.
So each side has to -- it's going to come down to the wire here. A few votes one way or another, the speaker knows he's going to lose about 80 of his conservatives. So he's got to make sure he's got his ducks in a row.
BALDWIN: Let's explain that. To your point about potentially taking up some revenue increases, I think the CBO estimated $2.1 trillion today. And so this thing happens in two stages. So initially they would be providing $917 billion in spending cuts over the course of the next ten years through spending caps, et cetera. But then they have this committee. There are lots of committees in Washington, I realize.
BORGER: Yes.
BALDWIN: But you have this committee essentially assigned to what, to determine how to cut that next chunk of change, the next $1.5 trillion. And among those cuts, that might include revenue increases, am I right?
BORGER: Right. And then if they can't do their work, they had this kind of sword hanging over their heads.
BALDWIN: Sword of Damocles.
BORGER: Yes, like children being forced to do their homework, right? OK, if you don't do your homework, guess what. You're not going to be able to go out this weekend.
So it's sort of like, OK, if we can't do our jobs, then we have all these onerous cuts that nobody likes. And so the theory at least is that the pressure will be on members of Congress to pass something. Now, I'm a little skeptical because I've been around a lot of commissions.
(LAUGHTER)
But Mitch McConnell yesterday on "STATE OF THE UNION" told me, no, no, this is different, it's a committee. It's not full of outsiders. It's members of Congress. They know they have to get something done. And we've set up votes -- forced votes, no amendments, et cetera, that should make it easier for them to do their jobs.
BALDWIN: There is. I think we can't be clear enough on the fact that we cannot be breathing a sigh of relief, or Washington certainly can't, just because there was a deal brokered in the late hours on Sunday. It doesn't mean it will definitively pass the House and the Senate. Gloria Borger, thank you so much.
Stand by for me, folks. Reminder, hours to go here. In just a couple of minutes, I'm going to bring in Donald Trump, who called this agreement a joke.
Also coming up, what's going on outside the beltway here? Let's bring in Rick Newman with "U.S. News and World Report," because, Rick, I think the last time you were on this show, you were saying folks in Washington aren't thinking beyond the beltway and the conversation needs to towards jobs. My conversation with Rick right after this break. Stay here.
(COMMERCIAL BREAK)
BALDWIN: A reminder -- we're waiting for Speaker Boehner to speak there in just a moment. Here we go, Speaker Boehner. Let's take it live.
(BEGIN LIVE COVERAGE)
REP. JOHN BOEHNER, (R) HOUSE MAJORITY LEADER: Good afternoon, everyone. In January, our first week that we were sworn into office, the president asked for an increase in the debt ceiling, and I made clear at that time that there would be no increase in the debt ceiling without significant cuts in spending and changes to the way we spend the American people's money.
Shortly after that I was in New York and gave a speech and outlined that I thought the spending cuts should exceed the amount of the debt limit increase, and there should be no taxes as part of this agreement.
And when you look at what we've been able to achieve, we've met those two standards that have been outlined. I've been very consistent that it's time for America to deal with its spending problem and deal with the fact that we made promises to the American people that our kids and grandkids just can't afford.
In addition to that, we've worked with our members and listened to the American people. We have a real interest making sure that we don't get into this spot again and that we ought to have a balanced budget amendment to the constitution.
And I think if you look at the structure of the balanced budget issues in this agreement, it gives us the best shot that we've had in the 20 years that I've been here to build support for a balanced budget amendment to the constitution to put the kind of fiscal handcuffs on this Congress that are sorely need. If we had been operating under a balanced budget amendment, we'd have never gotten ourselves into the mess that we're in.
But this is really important for our fiscal future. But it's also important for the fact that our economy needs to get going. Beginning to take steps toward fixing our fiscal problems will, in fact, provide more confidence for employers in America, the people we expect to reinvest in our economy and to create jobs.
REP. ERIC CANTOR, (R) MAJORITY LEADER: The House will vote on a measure today that although not perfect will begin to change the culture here in Washington.
(END LIVE COVERAGE)
BALDWIN: OK, so you've heard from Speaker Boehner. I want to bring back Gloria Borger, and I also want to bring in Rick Newman, chief business correspondent, "U.S. News and World Report." And Gloria, let me jump back to you. Speaker Boehner mentioned they had wanted the cuts to exceed the amount of the debt ceiling increased and no revenue increases, no tax increases. So he got both.
BORGER: And support -- he said this leads the way to kind of build support for a balanced budget amendment, which, as you know, was a very large concern for some of those Republicans. So he's clearly making the case that we got the better deal here. So take yes for an answer. Declare victory, vote for this, go home, and we won, right, which is exactly the case he needs to make to his Republicans.
Now, some of them just aren't going to buy it. They're just not going to buy it. They're going to say, it's not good enough for us.
BALDWIN: Why do we think they won? Did we get the tone from that quick, quick speech there that they have 216, that they have the votes?
BORGER: Well, I sort of get the sense that he doesn't want to say what he's got because you never do that. But it's clear that he was sort of making his closing argument, which is the same as his opening argument. And I think he's not willing to tell you he's got the votes until he does.
But, you know, again, it's the case he's going to make, just like the president makes the case that we are going to revisit revenues. We got to save Medicaid, for example, from the worst cuts here. And we're going to work this out and we get another shot at it later on.
And by the way, you know Obama says he's not going to come back and have to go through this again in six months, which he believes is a large victory for the White House.
BORGER: Sure. Gloria, thank you.
Rick Newman, to yes, because let's just play that "what if?" game. What if the votes don't happen in the House? What happens then?
RICK NEWMAN, CHIEF BUSINESS CORRESPONDENT, "U.S. NEWS AND WORLD REPORT": I'm sure a lot of people on Wall Street are asking that very question at this very minute and making contingency plans and in fact executing them. We've seen this show before. It seems sadly familiar. We've almost got a deal, everybody says it's going to be in everyone's best interest, and yet the votes aren't there.
So it does seem like sooner or later there's going to be some kind of deal. And the way they're backing into this almost might end up being good news for the economy in the near term. One thing I think economists will breathe a sigh of relief over is we're not looking at a lot of dramatic spending cuts right away. So if you're looking at the economy for the rest of this year or next year, it actually would be good news if some of the toughest decisions got kicked down the road, put into the super Congress, that commission they're talking about.
So in a way, it looks as if nothing dramatic is happening. And if this actually passes I think there will be a huge sigh of relief on Wall Street. But we have to get there, first.
BALDWIN: Let's talk about the opposite potentially. I was just talking to Richard Quest, one of our anchors for CNN International. He's out on the Washington mall. He was talking to me about a possible Lehman scenario. Back when Congress rejected the bank bailout, Lehman Brothers went under, stock market, boom, dropping. And then Congress decided, you know, maybe that bailout wasn't such a bad idea after all. In terms of prognosticating the future here, could you see that happening at all?
NEWMAN: I don't think that's like to happen. And there's an important difference between now and the fall of 2008. Lehman Brothers was an all-or-nothing situation. Either they saved it or it failed completely and took everybody attached to Lehman Brothers down with it.
The U.S. government is not going to fail completely. The worst- case scenario, I think, is that the U.S. government muddles through in a way that's disruptive. For instance, if they don't pass this deal and the treasury has to start dropping a plate or two, as Richard alluded to, and I loved his metaphor, by the way. Yes, then it's going to get ugly. But that ugliness, I think, will be the thing that will finally bring another five or ten votes across the line in the House and say, look, we can't just let the whole economy fall apart here. And then we'll be able to put the pieces back together, if you will. It's not going to be neat. But I don't think we're on the verge of a catastrophe here.
BALDWIN: OK, Rick Newman, thank you so much. And Gloria Borger, thank you so much as well.
And continuing this conversation, you know his name -- Donald Trump. He is an outspoken critic of President Obama, and that's putting it mildly. Coming up next, I'll ask Mr. Trump why he calls this debt agreement a joke. Don't miss this.
(COMMERCIAL BREAK)
BALDWIN: So the debt ceiling deal is a joke, at least that is what Donald Trump says. And he goes even further, saying President Obama basically pushed this problem down the road so he could focus on getting reelected. And Donald Trump good enough to join me by phone. Mr. Trump, nice to meet you live over television here. Thanks for calling in to this show.
Let me begin with this. I know you are good at picking winners and you're good at picking losers. In terms of the debt deal thus far, who won?
DONALD TRUMP, BUSINESSMAN (on the phone): Well, I think you have really two losers here in terms of sides. You have the Democrats and the Republicans. One thing Obama got that was fantastic for him in terms of his own political ambitions was the fact that he got it past the election so that this won't be coming up again until after the election.
And from what I watched through watching you and others, Brooke, in all fairness, I was looking -- and I see very strongly that that was the main point he had. I will not, he said, approve any deal if it comes due before the election, because if this mess came due again prior to the election, it would be virtually impossible for him to win the reelection. So he got a huge point with that, and I'm frankly amazed that the Republicans let that happen. You know, I thought they were going to kick it out a year.
But as far as the loser, the biggest loser is the country because they do very little cutting. They're not cutting.
BALDWIN: They're not cutting enough in your opinion?
TRUMP: I was hearing $4 trillion, $5 trillion, I was hearing all of these numbers. The number they're cutting is just a small fraction of those numbers originally. All of the time you and I and everybody else, we're hearing about the $4 trillion number, and then you see this. And the other thing is the cuts don't really take effect for two or three years. So, you know, it just seems that the country is the biggest loser of all.
BALDWIN: You know, in terms of the cuts, I know initially it's $917 billion, and it's ultimately another $1.5 trillion. In terms of negotiating, you bill yourself as a top negotiator. President Obama in terms of negotiating, and to your point, not cutting enough, what did he do wrong? What did he do right? If you were in his shoes, what would you have done?
TRUMP: Well, first of all, I don't bill myself as a top negotiator. You're calling me, I don't call you, you know what I mean? I don't know if I'm a good negotiator or not, but I never billed myself as a great negotiator. I don't like to talk that way.
BALDWIN: That's what they were doing on the Hill. They were negotiating.
TRUMP: As far as Obama is concerned, what he really did right is getting this past the election. That's what he did right for himself and for the Democratic Party for getting reelected.
I think that his, you know -- he was not there. He was AWOL in terms of negotiation, in terms of leadership, he wasn't there. And really the Senate and the house negotiated a Bill and it looks like he's probably going to be approving that bill, assuming it gets passed, which I assume it will at this point. But it's disappointing to me because the cuts are so little.
BALDWIN: Donald trump, do me a favor, stand by. I'm getting word right now that the speaker of the House John Boehner is getting questions. We want to hear some of those answers. Stand by for me. Let's listen to Speaker Boehner.
(INAUDIBLE)
BOEHNER: Listen, I've got a big job to do here. Those running for president have their own aspirations. My goal is to get this bill passed, signed into law, to solve this debt crisis and help get the American people back to work.
KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: Mr. Speaker, do you have the votes?
BALDWIN: I hear Kate Bolduan yelling the question "do you have the votes?" And he walks off the stage.
Donald Trump, back to you. Let's talk about debt. And you can correct me on this number. I read this "Forbes" article about you. You filed for corporate bankruptcy four times? Do I have the number right, four?
TRUMP: Let me just explain something to you, because it's always misreported. I've never filed for bankruptcy.
BALDWIN: Not personal.
TRUMP: Like Carl Icon, like Henry Kravitz, like many of the biggest business people today, we use the laws of this country to our advantage because they're there. Why shouldn't we? So I will buy a company or I'll have a company and I'll do things and I'll negotiate, and if it doesn't work out, you negotiate from a stronger position.
But I never filed for bankruptcy as you understand. But I do use, like many of the business leaders in the country, many of the biggest, I've used the laws of this country to my benefit.
BALDWIN: Let me ask you this, could debt ever be a good thing, is my point? You have to spend a little money to make a little money.
TRUMP: I love debt. I mean, I've used debt to become very rich, because it's leverage. You can't become really, really rich without debt. What you'll do is you'll use it, and if things are good, that's great. And if things aren't bad, you'll renegotiate and you'll do something or you'll do something lots of the biggest or the most important business leaders have done, you'll take advantage of the laws given to you, which in some places are the chapter laws. What you do is you have to do. But debt can be a great thing if you know how to use it. But it's a very dangerous thing. It's a very, very slippery slope.
BALDWIN: On the hill, there's been a lot of criticism towards the Tea Party-backed Republicans and some have been very much so saying they're the ones holding these talks hostage, that they absolutely did not want to raise the revenue and they're not. so that's a win in their column. I just want to use a metaphor for you. Let's say you're running a company and you have some recalcitrant members of the board. As CEO, how do you handle them?
TRUMP: Well, it's called you get in a room and talk to them. I think Boehner really did a very good job. He tried very hard. But I have great respect and even love for the Tea Party because they've done something that nobody has been able to do -- they made people think. we're already close to $15 trillion in debt. We're going up to $21 trillion or $22 trillion in debt. The Tea Party made people realize that we cannot continue on this path.
And what's really happening is the country is doing very poorly. The unemployment rate is going through the roof. If you look at what's going on, other countries are eating our lunch between China and OPEC and so many other countries. They're just eating out lunch. And our country is becoming a very, very -- let's call it a very unsuccessful country. And the Tea Party made people realize some of these things. And I have great respect for the Tea Party and I know many of the people that are really leaders of the Tea Party. And I like them a lot and I respect them a lot.
BALDWIN: Donald Trump, thanks for taking two seconds out of your day to call. Appreciate it. Offering up his perspective.
So big question, do we have a debt deal today? Will we? Let's check in with Wolf Blitzer, the man who never sleeps. Wolf is next.
(COMMERCIAL BREAK)
BALDWIN: Before we get you to Wolf, I want to point out that I was sitting there talking to Donald Trump. We heard from House Speaker John Boehner and our Congressional Correspondent Kate Bolduan was in the room, and she asked a very important question, and I want to make sure we hear Speaker Boehner's answer. Her question is, what would the bill do to department of defense spending? Here was his answer.
(BEGIN VIDEO CLIP)
BOLDUAN: Are you losing Republican support because of concerns over defense cut at this point?
BOEHNER: I just met with all the members of our armed services committee. They clearly had some concerns about the defense numbers in this bill. But as I told them, this is the best defense number we're going to get. And frankly, if we don't pass the bill, it's pretty clear to me what will happen. The defense number will go down. And so I believe that many of our members from the armed services committee will be supporting the work of the House.
(END VIDEO CLIP)
BALDWIN: Speaker Boehner, just a moment ago. Let's go to Washington not to Wolf Blitzer who has been watching all of this. I don't think he slept a wink all weekend. Wolf, you were on television. I don't know, just -- you know, beginning with the tone of the speaker there, do you think -- I know you don't know, but do you think he has the votes in the House?
WOLF BLITZER, CNN HOST, "THE SITUATION ROOM": It looks like they're pretty confident the GOP leadership, they were all there showing a united front, the speaker John Boehner, the majority leader Eric Cantor, Kevin McCarthy, Jeb Hensarling. You heard them all. And then Paul Ryan, the chairman of the House budget committee, very popular, younger member, he came out and endorsed this plan, saying this is -- may not be perfect, but it's the best they can do. And he urged his Republican colleagues to go forward and vote in favor of it. In fact, he predicted more than a majority, more than half of the Republican members of the house of the Republican members, there are 240 Republicans in the house would go on to support it.
If that is the case, if it turns out a majority of the Republicans have it, there probably will be enough Democrats to bring it over the top to 216. But it's going to be close. It's not going to be overwhelmingly approved. It's going to be a close vote. We'll watch it every second of the way. I'm not exactly sure what time that roll call will take place, but if it happens between 5:00 and 7:00 in "THE SITUATION ROOM" we'll of course carry it live. I suspect we'll carry it live whenever it airs because CNN that kind of stuff, as you know, Brooke.
