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CNN Live Event/Special

Get It Done: Countdown to Debt Crisis - Hour Two

Aired July 31, 2011 - 22:00   ET

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

WOLF BLITZER, CNN ANCHOR: Hello. I'm Wolf Blitzer in Washington. We want to welcome our viewers in the United States and around the world to the CNN special report "Get it Done - Countdown to Debt Crisis".

DON LEMON, CNN ANCHOR: Absolutely, Wolf.

I'm Don Lemon at the CNN world headquarters in Atlanta where we are tracking breaking developments in Washington and around the world.

BLITZER: And we do have the breaking news coming in from the nation's capital right here in Washington. President Obama now says an agreement is in place to raise the nation's debt ceiling, averting a potential default on the United States' financial obligations.

LEMON: And we have complete coverage on every angle of the story -- what's in the deal, how it finally came about and how all the various players in this debate are reacting tonight.

We are also keeping an eye on the nation's stock markets where traders are reacting to news of a deal, Wolf. And I want to say we need to get to Jessica Yellin, our chief White House correspondent. She is standing by at the White House now.

Jessica, the president came out just a short time ago and said that it appears a deal is in the works, not the perfect deal but one at least that will keep the American people -- or America from going into default.

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: That's right, Don. And I have a little more information about how it came together. I just came from a briefing with senior White House officials who say this all happened between 8:10 and 8:20 this evening when it was buttoned up when the vice president and the president -- I should say the vice president called each of the congressional leaders and individually affirmed with them that they do, in fact, have a deal.

This came after the -- it all started, we are told, after the Boehner bill was voted on on Friday. And once that went through, once they had that vote in the House of Representatives, they say things started rolling. They began negotiations here. And as we have been reporting, Vice President Biden was actively engaged as with the president in talking back and forth with the leaders throughout this past few days.

The White House has a slightly different figure that they are putting forward. They say it is a $2.1 trillion deal to raise the debt limit. But many of the same numbers that we have been reporting throughout the night, their headline, the sort of emphasis we are getting from here is that the takeaway are two big points.

One, that we will not have to go through t5his kind of wrenching debate again, which they say is so important to the president. That was one of his top line priorities and so key to the economy.

And also that the American people have learned a great deal about the importance of deficit reduction, the importance of taking all these balanced considerations into account. And that we'll continue to watch this debate as it unfolds.

One point I've emphasized, Don, is we pressed these White House officials whether they were given any assurances by congressional leaders that they definitely have the votes to pass this measure. And they did say we need to ask the members of Congress. They would assume they wouldn't support this if they didn't have the votes. That's not a yes, Don.

LEMON: And, Jessica, Wolf is standing by in Washington.

BLITZER: Do you get a good understanding, Jessica, from these White House officials on what a balanced budget amendment to the constitution, what role that plays in this agreement as far as a vote is concerned at some point?

YELLIN: I actually asked that question, Wolf. And I was told it's part of this second phase of these talks. So there is the first phase of spending cuts. And then you go on to the second phase. That would happen as a vote. But the spending cuts and the allowance of the debt ceiling increase would not be tied to the outcome of that vote.

So it would be -- it would happen, it would be allowed to happen. But the outcome of the debt ceiling itself is not tied to the result of that vote. That's my understanding from here, Wolf.

BLITZER: It's a little bit complicated but it's a very important point especially for a lot of Republicans and some Democrats as well.

Jessica, thank you very much. Don't go too far away.

I want our viewers here in the United States and around the world to hear precisely what President Obama said earlier in the evening.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: There are still some very important votes to be taken by members of Congress, but I want to announce that the leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default, a default that would have had a devastating effect on our economy.

The first part of this agreement will cut about $1 trillion in spending over the next ten years, cuts that both parties had agreed to early on in this process. The result would be the lowest level of annual domestic spending since Dwight Eisenhower was president, but at a level that still allows us to make job-creating investments in things like education and research. We also made sure that these cuts wouldn't happen so abruptly that they would be a drag on a fragile economy.

No I've said from the beginning that the ultimate solution to our deficit problem must be balance. Despite what some Republicans have argued, I believe that we have to ask the wealthiest Americans and biggest corporations to pay their fair share by giving up tax breaks and special deductions. Despite what some in my own party have argued, I believe that we need to make some modest adjustments to programs like Medicare to ensure that they are still around for future generations.

That's why the second part of this agreement is so important. It establishes a bipartisan committee of Congress to report back by November with a proposal to further reduce the deficit which will then be put before the entire Congress for an up or down vote.

In this stage, everything will be on the table to hold us all accountable for making these reforms, tough cuts that both parties would find objectionable, would automatically go into effect if we don't act. And over the next few months, I will continue to make a detailed case to these lawmakers about why I believe a balanced approach is necessary to finish the job.

Now, is this the deal I would have preferred? No. I believe that we could have made the tough choices required on entitlement reform and tax reform right now, rather than through a special congressional committee process. But this compromise does make a serious down payment on the deficit reduction we need and gives each party a strong incentive to get a balanced plan done before the end of the year.

Most importantly, it will allow us to avoid default and end the crisis that Washington imposed on the rest of America. It ensures also that we will not face the same kind of crisis again in six months or eight months or 12 months. And it will begin to lift the cloud of debt and the cloud of uncertainty that hangs over our economy.

Now, this process has been messy. It's taken far too long. I have been concerned about the impact that it has had on business confidence and consumer confidence and the economy as a whole over the last month. Nevertheless, ultimately, the leaders of both parties have found their way toward compromise. And I want to thank them for that.

Most of all, I want to thank the American people. It's been your voices, your letters, your e-mails, your tweets, your phone calls that have compelled Washington to act in the final days. And the American people's voice is a very, very powerful thing.

We are not done yet. I want to urge members of both parties to do the right thing and support this deal with your votes over the next few days. It will allow us to avoid default. It will allow us to pay our bills. It will allow us to start reducing our deficit in a responsible way. And it will allow us to turn to the very important business of doing everything we can to create jobs, boost wages and grow this economy faster than it's currently growing. That's what the American people sent us here to do. And that's what we should be devoting all of our time to accomplishing in the months ahead.

Thank you very much, everyone.

(END VIDEO CLIP)

LEMON: All right. That was the president speaking out from the White House not long ago, Wolf. And, of course, the big question now is who's going to vote for this deal?

BLITZER: That's not a done deal until the Senate votes, the House votes and they pass the legislation. Let's bring in one Republican -- Congressman Michael Grimm is joining us, Republican of New York.

Are you in favor? Are you going to vote in favor of this agreement, Congressman?

REP. MICHAEL GRIMM, (R) NEW YORK: Yes. Yes, I am.

BLITZER: Tell us why you like it, because we heard some Tea Party activists earlier and I know you are sympathetic to the Tea Party movement. They are concerned and a lot of them are suggesting this is -- this is something they can't live with.

GRIMM: Well, I think part of it is the frustration that this new class in the tea party movement wants bold changes to Washington immediately. The reality is Washington is systemically broken, much more than I imagined until you get here and see it. And to have bold changes to something so systemically broken is going to take time.

So, I understand their frustration. This certainly is not perfect. I would have liked to have more cuts. But this is definitely a step in the right direction. We offer the first time in America's history. We are going to make sure that we actually cut spending more than we are raising the debt ceiling. That's never been done before. That is a historic change and we have to realize that. Is it all we wanted? No. It's not perfect, but it is certainly a good step forward.

LEMON: Do you believe that the speaker -- and Don Lemon is going to come in with a question as well, Congressman. But do you believe the speaker will have a majority of the Republican caucus on board when the roll call comes forward maybe as early as tomorrow on the House floor?

GRIMM: Yes, I do. And I base it on the fact that we just passed Boehner's bill and this is very, very similar. So I think that my conference will be -- will be there to support the speaker and to support this plan and be able to move forward past this debt ceiling crisis.

But I want to -- I want to make a point here. Nobody should be celebrating tonight because our country is still laden with an unbearable debt. We still have a debt crisis. Just because we have started to, you know, put the right foot forward, we still have a debt crisis that we have to deal with. We still have to worry that the rating agencies will downgrade our AAA rating. Let's hope that this plan that's coming forward is enough to discourage the S&P or Moody's from downgrading our AAA rating.

LEMON: And Representative, you were originally against raising the debt ceiling. What changed your mind about that in the final hours?

GRIMM: Well, from the beginning I said the same thing that I would not raise the debt ceiling unless there were substantial cuts and systemic reforms. This plan does have cuts and, more importantly, it has the caps and it also brings up the balanced budget amendment, which I think is extremely important to this debate. The American people have the right. They've earned it.

The simple truth is that they should vote on whether we should have a balanced budget amendment. But the only way for them to vote is for us to send it to the states. That means the House and the Senate has to pass it so that the states can ratify it.

I think that this brings that debate to the forefront. It will allow the American people to let their voices be heard even more. I have been listening but I fear that some of my colleagues, especially on the other side of the aisle, have not been listening to the American people, and they deserve that.

LEMON: Representative Grimm, thank you.

BLITZER: All right, Don, thank you. And thank you, Congressman, for joining us.

Let's bring back our chief political analyst Gloria Borger to assess the big picture right now. Let's just assume, by no means it's a done deal, but let's assume the president gets his way, the Senate passes it, the House passes it. The political fallout, if you will, because we are entering a heavy duty political season, as you know.

GLORIA BORGER, CNN CONTRIBUTOR: You know, Richard Quest and I were just talking before which is -- Wolf, I think we're going to be back here at Thanksgiving, OK.

So, get your ticket, Richard.

BLITZER: That's when the super-committee is supposed to come up...

BORGER: Right.

BLITZER: ...with their recommendation.

BORGER: And it's interesting. If you look at the sort of the big picture on all of this, what Congress is really saying is, we don't trust ourselves to do the job you hired us to do, which is to balance -- you know, to keep our books in order. And so as a result, because we have been unable to do that over the past decade or so, what we are telling you is that we are going to put ourselves in a straitjacket and we are going to threaten ourselves with cuts that we do not want to make and they will be hanging over our heads, cuts in Pentagon spending, cuts in entitlement programs, which we know we will never make, and only that, and only that, can force us to actually do our job.

So when this -- you have this committee, this committee cannot have a stalemate? Let's see if it does or it doesn't. And if it does have a stalemate, then Congress has to pass these cuts. So they are essentially saying, OK, we are forcing ourselves to work.

BLITZER: And it will be interesting, Richard, when we see the makeup of the super-committee. There will be an equal number of Democrats and an equal number of Republicans.

RICHARD QUEST, CNN INTERNATIONAL BUSINESS CORRESPONDENT: Yes.

BLITZER: But the question -- let's say they put moderate Democrats and moderate Republicans, they could come up with a deal. But what if they put sort of much more radical Republicans, much more radical Democrats on that committee. They will never be able to come up with a deal.

QUEST: And then you -- and then you're in your straitjacket. And as the president said, "Tough cuts both parties find objectionable." Now, you know, we used to have an old saying, that's no way to run a railroad. I mean, what they have basically done is boxed themselves in with one route out and if they don't take it, there will be some nasty cuts for everybody.

That is what's on the table. And what people are going to be looking for, what the markets are going to be looking for over the next six months is exactly how that super committee is doing its work. And the first whiff of trouble, then you're going to be back to square one.

BORGER: And, you know, it's interesting, because you did have a super-committee. You had the Erskine Bowles Commission. Although senators and House members will say, "Oh, they weren't all elected officials. Elected officials behave differently." Well, yes, they do in fact, but not necessarily better. But you had a committee and there was not unanimous agreement and, in fact, there were some Republicans who did agree to the plan but Paul Ryan, for example, did not.

BLITZER: Yes. Interesting.

BORGER: So what makes you think it would be better this time?

BLITZER: Even though they deny it, and I suspect some officials at the White House are second guessing the president's own decision not to embrace the immediately that Bowles-Simpson Commission. We probably wouldn't be having this debate right now if it would have been passed by the House and the Senate.

We have a lot more to discuss, guys. Don't go too far away. Don Lemon is looking at all of this as well.

Don, a fascinating, important and, dare I say, historic night here in Washington, D.C. LEMON: Oh, absolutely. And just listening to some of the words and the phrasing there -- straitjackets, we're boxing ourselves into a corner here. That's pretty tough talk and I want Donna Brazile and Alex Castellanos to weigh in on this. And I know Donna is getting some information from her sources. So think about that question and then we'll talk about it on the other side of the break.

(COMMERCIAL BREAK)

BLITZER: All right. We've got breaking news. We finally, finally have received a statement from the Democratic leader in the House of Representatives, the Minority Leader Nancy Pelosi. Let's bring back our congressional correspondent Kate Bolduan.

All right, Kate, read the statement to us.

KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: I will, Wolf. And it's interesting. She uses some artful wording. I will read it to you so you have the full statement.

Nancy Pelosi just released a statement saying, "We all agree that our nation cannot default on our obligations and that we must honor our nation's commitments to our seniors and our men and women in the military." Then she goes on to say the following. "I look forward to reviewing the legislation with my caucus to see what level of support we can provide."

Very telling statement, Wolf. Clearly, the top Democrat in the House of Representatives is not signing on to this deal, is not -- is not getting behind it quite yet. Reiterating what we heard from her in the hallways a little early today, saying she needs to review the legislation and she needs to speak with her caucus before she makes any further moves -- Wolf.

BLITZER: Yes. So a little wishy-washy, that statement, I should say. She didn't say like the Democratic leader in the Senate Harry Reid said or the Republican leader in the Senate Mitch McConnell said or the Speaker of the House John Boehner said that they are going to support this deal that the president has announced tonight.

She's saying, you know what, I'm going to review it with my caucus and then we'll make a decision. Now, that's not exactly a ringing endorsement. And the Democrats are going to have to be on board, as you well know, Kate, in order to get 216 votes in the House of Representatives tomorrow or Tuesday. A lot of Democrats are going to support it because there will be plenty of Republicans, Tea Party supporters and some others who don't like this deal.

So, it's going to have to be bipartisan. Nancy Pelosi is going to have to bring some Democrats on board, I suspect. I don't even know if she's going to vote in favor of it. Maybe she herself doesn't know if she's going to vote in favor of it at this point.

But you want to add another point, Kate?

BOLDUAN: Yes. You know, that would be very interesting and something that's not unheard of. We have seen that in the past. I mean, we know that Steny Hoyer, the Whip, the Democratic Whip, the number two Democrat in the House he's often integral in pulling together the caucus, in pulling together enough support around some of this very controversial votes.

But you said it, Wolf. There is really no question that this bill to make it through the House, this compromise is going to need Republican support and it's going to need Democratic support to get through. And the question tomorrow will be just how many Republicans John Boehner can bring along and how many Democrats the other side can bring along -- Wolf.

BLITZER: I suspect in the end they will get the 216 they need, but it's not a done deal yet.

Kate, thanks very much.

And Don, Kate makes an excellent point. The number two Democrat in the House of Representatives, Steny Hoyer of Maryland, he always does what the president wants. He almost always does what the president wants. And Nancy Pelosi, not so much when it came to extending the operation in Afghanistan. It was Steny Hoyer who led the fight for the White House and the Democrats in the House of Representatives. Nancy Pelosi wasn't all that enthusiastic about keeping this war going on in Afghanistan.

That's just one example and we might see something similar happen this time around. I will be anxious. I know you are going to talk to Donna Brazile to get her take on what's going on in the House amongst these Democrats.

LEMON: And you know, Wolf, Nancy Pelosi, she does her own thing when it comes -- if she wants something, she will stick to her guns about it. She will side with the president when she sees fit. But again, she is her own person.

And Wolf, as Kate was reading that statement, you took the words out of my mouth. This isn't exactly a ringing endorsement from Nancy Pelosi. And as you said, I want to bring in now CNN contributors Donna Brazile and Alex Castellanos.

Donna, I understand that you've gotten some information from your Democratic sources and I'm wondering, I don't know if that was it. Did Kate steal your thunder or do you have more information?

DONNA BRAZILE, CNN CONTRIBUTOR: No, look, Speaker Pelosi -- well, the minority leader leads by consensus. She enjoys listening to her caucus. I have just received a copy of some of the broad outlines of this proposal. And I believe tomorrow when she has an opportunity to really get into the detail, she will be able to explain the framework of this.

Look, we knew from day one that the Democrats could not swallow these cuts, cuts, cuts. But it appears that the cuts in the discretionary part of this so-called framework will come from both what we call the safety net, the social safety net, as well as defense. And that should at least on the issue of fairness, that should give some Democrats reason to take another look at this deal.

There is also an exemption of Medicaid and programs for low income Americans. Look, after all, we are still coming out of this recession. For many Americans, they are still in the recession. In fact, some Americans are in a big depression.

So I think they are going to look at the social safety net and the trigger mechanisms that will also produce another round of cuts. What Democrats are looking for is again they want to avoid default, they want a balanced approach and they want shared sacrifice.

And if the Speaker -- I keep calling her the Speaker because in my mind she will always be my Speaker, but if Ms. Pelosi is able to at least explain this framework so that Democrats understand what's at stake, remember, this is a Republican framework.

But the president, I believe, has been able to carve out some good items in this framework including preserving Pel Grants for needy students. So there's some good stuff in this and I hope we just don't throw it overboard simply because the Tea Party inspired it, the Republicans pushed it, but there may be some good items in here for Democrats to take a look at as well.

LEMON: And I want to let Alex Castellanos get in a response here. But Also Ali Velshi is standing by and I think it's appropriate for Ali to weigh in on this because he knows the economics here. So we'll listen to Alex first and then Ali goes for comment.

Do you hear what Donna is saying here, Alex? And do you agree with what some people on the panel had said? Gloria Borger said that it was a straitjacket that we're in. We are backing ourselves into a corner. Do you agree with that, with this plan?

ALEX CASTELLANOS, CNN CONTRIBUTOR: Yes, I think it's that old national lampoon cover. You know, buy this magazine or we'll shoot this dog. We basically put ourselves in a position where we're forcing ourselves to do something about a growing problem -- the deficit.

But it's so funny. You know, you see all these movies about people switching bodies and John Boehner has just become Nancy Pelosi and vice versa. This statement could have been put out by John Boehner a week ago. It turns out Republicans may have their tax pledge from Grover Norquist but Democrats have their own pledges, too.

It's very tough for Democrats to cut spending. That's what they believe. We may not agree with it as Republicans, but you have to respect that those are their principles. And so for them to cut spending at all is going to be very tough.

LEMON: So, Ali Velshi, listen, you hear Donna talk about entitlements, social programs and the jury is still out though on whether or not this particular deal will create jobs. Don't answer that question, Ali Velshi. We'll be back after the break and then we'll get your response. Don't go anywhere.

(COMMERCIAL BREAK)

LEMON: All right. let's bring in Ali Velshi, Alex Castellanos and Donna Brazile back into the conversation.

Ali, the jury is still out on whether this deal that's on the table now creates jobs. You're not so sure about it and economists aren't either.

ALI VELSHI, CNN CORRESPONDENT: No. And it's 10:27 on the East Coast and I'm concerned -- Alex knows I'm a fan of his, but I'm concerned that if we don't check this fact that by 5:00 in the morning, when I come back in here, it's going to be a GOP talking point.

Now, look, we all know that if we didn't increase the debt ceiling, it could have increased interest rates. Increase in interest rates takes money that you otherwise are going to spend on things and put them to interest. That could have been something that killed jobs. But to suggest, as Alex did, that this was about creating jobs is like me saying that I saved a life because I didn't kill somebody tonight.

That doesn't make sense, Alex. I just need to connect this to how you think this creates a single job. What one employer was waiting for this to happen to hire somebody and why?

CASTELLANOS: Good questions.

VELSHI: Alex, go ahead.

CASTELLANOS: First of all, we are all for paying our bills. Yes. We are for paying our bills. We are for raising the debt ceiling. We've spent the money, we have to pay our bills. That's not the question.

Debt ceiling, having to raise it constantly is a symptom of an endemic problem that we are spending more than we take in. And my contention is that that does affect job growth and raising taxes is not the way to do that.

Ali, you asked for some evidence. Happen to have some. Michael Boskin, a fairly respected economist, has noted in the "Wall Street Journal" and other places that macroeconomics has improved quite a bit since the days of John Maynard Keynes and the new Keynesian models take longer time horizons. A little more sophisticated. They looked at Obama stimulus back in 2009, gave it a multiplier of nearly nothing.

Christina Romer, other new Keynesians looked at the multiplier effect of tax cuts. They found multipliers of three to five. Leaving people's money turns out to be a more efficient way of growing the economy. Leaving money in their pockets than taking their money to Washington and then giving it back to them.

(CROSSTALK)

LEMON: Listen, we have to wrap this up. I want to wrap this up really soon because we've got to get to other folks here. But listen... BRAZILE: There is no evidence.

LEMON: ...without getting too in the weeds here about the economic talks and Wall Street talk and what have you, again, the jury is still out and no one knows exactly what this deal is going to do, the one that's on the table. I think it's fair to say that we are in uncharted territory here.

First, I will let you answer, Ali, and then Donna, I will give you the final word, and we have to do it quickly. Go ahead.

VELSHI: All right. I think you are right. We don't entirely know. What we do know is that we weren't in -- the boat wasn't sinking, we decided that it was sinking and we've now plugged the hole that we kind of shot into the bottom of the boat. I totally accept the fact that this is necessary. I have been saying it's been necessary as does everybody else. I just don't understand how anybody can argue that this creates a single job. I do not understand that there's any benefit to this particular deal other than the fact that the debt ceiling need to be increased. So I just want to -- I just -- I just want to understand that a little bit.

(CROSSTALK)

LEMON: You can't respond to that because Wolf Blitzer is standing by in Washington.

BRAZILE: You're taking my time, Alex.

LEMON: But go ahead. I'll give you -- if you can do it in five to 10 seconds, Donna, I'll let you finish up here. Go ahead.

BRAZILE: There is no evidence that trickledown economics work. What we need is investment in job growth and job creation. These cuts will have serious effect on state and local governments when they begin to make more severe cuts at that level. More people will be laid off. More needs for government services. Alex, we need a balanced approach. We need revenues on the table as well as spending cuts. Last word.

LEMON: To be fair, go ahead, Alex. Quickly, please.

CASTELLANOS: Without fiscal discipline, without becoming a country that doesn't spend more than it takes in, we won't have the stability and respect of the world to create any job. The debt ceiling is a symptom of a much larger problem.

LEMON: Alex Castellanos, Donna Brazile and also Ali Velshi. Wolf Blitzer, you have to talk to these folks every single day on "THE SITUATION ROOM" and how do you keep them all wrangled in when they are this passionate about the discussion?

WOLF BLITZER, CNN CO-ANCHOR: That's what I like about them. I love that passion and I know you do as well, Don. We have a passionate member of the House of Representatives also standing by. Congresswoman Barbara Lee of California. She is here. We're going to talk to her in just a moment on the other side. She's got very strong views on what is happening right now. My conversation with Congresswoman Barbara Lee when we come back.

(COMMERCIAL BREAK)

LEMON: Welcome back, everyone, to our continuing coverage here. The clock is still ticking toward default. If the U.S. doesn't raise its debt ceiling but the details appear to be falling into place to finally get it done, to finally get it done. There you see the clock there. And we've heard from the president and we've also heard from leaders in Congress. They say they have struck a deal to raise the nation's debt limit and cut the nation's spending.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: There are still some very important votes to be taken by members of Congress, but I want to announce that the leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default, a default that would have had a devastating effect on our economy.

The first part of this agreement will cut about $1 trillion in spending over the next ten years, cuts that both parties had agreed to early on in this process. The result would be the lowest level of annual domestic spending since Dwight Eisenhower was president, but at a level that still allows us to make job-creating investments in things like education and research. We also made sure that these cuts wouldn't happen so abruptly that they would be a drag on a fragile economy.

(END VIDEO CLIP)

LEMON: That was the president speaking just a short time ago.

Both the Senate and the House still have to approve the plan. It would initially raise the debt ceiling by $900 billion which would get us to about February. And raising it again after that is a multi-step process involving a joint committee that will have to be created to work toward more debt reduction measures. So in total, the plan calls for more than $2.4 trillion in deficit reduction.

And Wolf Blitzer, we just heard from Nancy Pelosi, the Minority Leader. She is not quite signed on yet. She wants to look at it. And also there are concerns from other Democrats and the Congressional Black Caucus as well.

BLITZER: Yes. Some liberal Democrats, Don, they see the deal as nothing less than a betrayal by the White House. Congresswoman Barbara Lee, a Democrat of California, is joining us now with some thoughts on what is going on.

Congresswoman, thanks very much for joining us.

REP. BARBARA LEE (D), CALIFORNIA: Very happy to be with you this evening, Wolf.

BLITZER: Are you with the president on this deal?

LEE: Well, first of all, I have to say that too often we are asked to vote on legislation where we haven't even had an opportunity to read it. And so I definitely want to read exactly what is in this deal.

Secondly, I listened to Speaker Boehner and have read his comments. And it appears that this deal is a deal that is similar to the bill which he introduced, of course, which I voted against.

Thirdly, I'm not sure how in the world in this deal Medicare, Medicaid and social security would not be up for grabs. I have to see that and be assured of that.

Fourthly, I don't know where these cuts are going to take place. Who will get hurt? Obviously, if you are talking about discretionary spending, it's the poor, it's low income individuals, it's the working poor and it's middle income people. I would suggest if all of these facts are accurate we will see more people falling into poverty and we will see this deal create more job loss.

Now, yes, we must have a bill or something to help us from going off the brink in terms of economic disaster that's looming, and so we have to have a deal. However, I want to remind you that the debt ceiling has been raised many, many, many times under Democratic and Republican presidents. We should have raised this debt ceiling. I think it was a fundamental mistake to engage in deficit reduction negotiations around one simple matter, and that's lifting the debt ceiling.

BLITZER: But that's obviously...

LEE: We have to create jobs.

BLITZER: At this point with only what, a day left, you can look back and say the president should have done this, should have invoked the 14th Amendment to the Constitution, should have done a lot of things. But at this point, if you don't raise the debt ceiling by Tuesday, Congresswoman, you know what's going to happen to your constituents, to Americans all over the country. Interest rates are going to go up. There's going to be a real strain on the economy. America's AAA credit rating could go down. That's going to put pressure on you to vote in favor of this, even though from your perspective it's by no means perfect.

LEE: We understand the consequences and have been working day and night to make sure that we don't have this catastrophe that we all recognize could happen. And so what I'm saying to you, Wolf, is we have to look at this and we have to make sure that the Republicans put up their votes. This is their deal, first of all.

Secondly, we have to make sure that within this deal -- and I said we haven't even had a chance to read this -- that Medicare, Medicaid and social security and the most vulnerable are protected. We can't say any deal is a good deal if in fact we're going to have millions of people the next day out of work, the next day suffering.

And so, this entire deal is a deal that, yes, we need to look at, we need to understand and we need to know exactly what is taking place. But from what I hear and what I have read and what I have learned, it is a deal that is very similar to the one that Speaker Boehner presented and he has to make sure that his Republicans vote for his deal.

Senator McConnell and Speaker Boehner worked this out. They have the numbers. They have the votes. And I would suggest if Medicare is touched and if Medicaid is touched and if social security and discretionary spending is so deep, that's what they want. That's what they asked for and that's what they got.

BLITZER: Congresswoman, in this first round before the so-called super congressional committee comes up with its recommendations, in the first round, there is no impact on social security, Medicare, Medicaid. That's all left for the committee to decide down the road, how there will be what's called entitlement reform, how there will be tax reform. All of that is punted, if you will, to this committee down the road. So, that's going to be...

LEE: But this opens...

BLITZER: There is no impact on social security, Medicare or Medicaid, at least in the first round.

LEE: First round, this opens the door to the second round. And I have to tell you, I'm on the appropriations committee and I know exactly how these cuts are being made and what those negotiations are. And so I worry about these triggers.

If there is no revenue, if there is no tax increases, which, I mean, millionaires and billionaires and oil companies and all of those who have been benefiting from this economy, if those tax cuts and if those measures, those revenue-enhancement measures are not on the table, what would happen? More discretionary cuts across the board. That means more senior citizens, more people who are poor, more low-income people are going to get hurt. I just cannot accept that.

And so, this does open the door for that type of cut to take place and that's unacceptable, Wolf. And so, we have to read this. We have to know what's at stake. People need to understand that there is a possibility that this does lead to a cut in Medicare and Medicaid, and we have to be very careful in how we approach this.

Speaker Boehner and Senator McConnell negotiated this. This is what they wanted. They have the votes. They can pass this, you know. And we need to get back to looking at how we the next days start creating jobs, because this deal is definitely going to end up with a net job loss. People are going to lose their jobs and it's going to be a very dire situation for millions of Americans.

BLITZER: Congresswoman, appreciate you joining us tonight. Thanks very much.

LEMON: And Wolf...

(CROSSTALK) BLITZER: I was just going to say we just heard a little skepticism there from Congresswoman Barbara Lee. Not little skepticism. A lot of skepticism. She wants to read the legislation. That's what Nancy Pelosi, the Democratic leader in the House, says she wants to read it, too, before committee. But there are going to be a lot of Democrats just like there are going to be a lot of Republicans who are going to vote no for very, very different reasons.

LEMON: Yes. I'm wondering as I'm listening to her, do we actually have a deal here, Wolf? And Wolf, can I say this? You know, you were talking about to the Congresswoman about how important it is to her constituents and the American people. So far, on CNNPolitics.com, which you contribute to and I do as well, one million page views, which is remarkable, just tonight, which is remarkable, on a Sunday night. And that just shows you how much people are interested in this, Wolf, because they know it's going to affect them.

And then here's another question -- Has the Tea Party gained respect or lost it during this debt showdown? We're going to ask a couple of CNN contributors -- the "BEST POLITICAL TEAM ON TELEVISION," in two minutes.

(COMMERCIAL BREAK)

BLITZER: It's been messy to be sure. It's taken a way too long but ultimately the leaders of both parties found a way to compromise with the president of the United States. Those were the words that we heard from President Obama earlier in the evening over at the White House.

LEMON: Exactly right. He said it's been a messy process, Wolf. And he hailed a nearly 11th hour agreement by congressional leaders to raise the federal debt limit here. But he warned there is a lot more work to do. And you have been hearing it from the people that you've been talking to as well. A lot more work to do.

So I want to bring in CNN contributor and New York 1 news political anchor and that is Errol Louis. Also joining us is CNN contributor and the editor of RedState.com, Mr. Erick Erickson, joining me on set here in Atlanta.

To you first then, Eric, and before the break, I asked the question -- if this really -- where the Tea Party has gained its respect in Washington. Or, do you think because of the process that many Democrats feel that they got nothing, Republicans got most of what they wanted and the Tea Party had a big influence, that this is going to push people further into their corners, where they won't negotiate with each other?

ERICK ERICKSON, CNN CONTRIBUTOR: You know, it's interesting to hear you say that there is a feeling among Democrats that they feel like the Tea Party got most of what they wanted. If you talk to people on the right, they would disagree with you. It's become a talking point...

LEMON: Why would they disagree? There are no revenues and things like that?

ERICKSON: But when you look at this, I think that's the great myth that the Democrats and Republicans are both pushing. For example, under this commission, the way it's structured, because the Bush tax cuts are planned to go out of phase, they could decouple the middle class tax cuts and fix the AMT, the alternative minimum tax, which they do every year within this commission. And that would then free them up to raise $2 trillion to $3 trillion in tax increases and still be revenue neutral.

So, it's going to be interesting to see how they deal with the Bush tax cuts in the actual language. A lot of Tea Party people want to see that. But as for respect, you know, it's very funny that the same conversations we are having now, the same polling we're seeing, the same arguments we are seeing, they are exactly what the arguments were in 2010 before the Democrats were out of power.

LEMON: Well, they're exactly what the arguments have been for decades now, because we look back at the last 40 years over raising the debt ceiling and over and over again and some of the same players you can see doing the same thing.

Here's the thing, though. I think that most Americans, the question that was on most Americans' minds -- why did you attach the debt ceiling to the deficit talks, because some people say you manufactured this entire crisis by doing so?

ERICKSON: Well, I don't think it was the Tea Party who were manufacturing the crisis. But a lot of the Tea Party activists have been saying that August 2nd is a false deadline. In fact, the argument that I've been making is actually I think if Republicans were to get to August 3rd and the world doesn't end, they would be emboldened and even push for more. That's probably not going to happen now.

But, you know, the deficit and the debt ceiling are intrinsically alike. You're raising the debt ceiling and dealing with the deficit. It's all pretty much the same argument. And no one in Washington -- Democrat or Republican -- really wants to deal with the issue.

LEMON: I want to go to Errol Louis now in New York tonight.

So, Errol, my question is -- it's a similar one. He says -- Erick here says, well, Republicans didn't get everything they wanted, that's what Democrats are saying, and there was compromise here. Do you buy into that?

ERROL LOUIS, CNN CONTRIBUTOR: Well, that's true. I mean, they didn't get what they wanted. What they wanted in some cases was a fairly radical agenda, which couldn't possibly be enacted, right? So, it wasn't going to happen any which way you look at it. And the reality, of course, is that while a small minority can if fact help set the agenda, and that is no small achievement in our system, you can set the agenda, you can push things pretty far. I think we've all seen that happen over the last couple of weeks. But you don't necessarily win if you don't control a majority of the Congress, you don't get to dictate your will to the American people.

I think what we have seen here, though, and the polls sort of underscore, this is that a lot of swing voters, a lot of people who wanted to maybe give the Tea Party a chance, a lot of independent voters, appear to be turned off. Their approval ratings in the polls have been dwindling steadily ever since they actually took power. And I'm pretty sure when this is all over, that trend is going to continue.

LEMON: Wolf?

BLITZER: Let me ask Erick Erickson a question.

Erick, you think that the Tea Party caucus in the House of Representatives, most of those who believe in the Tea Party movement will be with the speaker, vote with the speaker in favor of this legislation or will vote against it?

ERICKSON: Honestly, Wolf, I think it depends on what the Democrats do. If the Democrats don't bring enough votes, then, yes, they will. Some of them will not if there are enough votes so they can say that they stood up to it.

By and large, though, I think the majority of them will. You need to look at the 22 who voted against the speaker's plan on Friday. I suspect those 22 will again not vote for this plan and pick up a few more. But, frankly, I mean, it's all politics at this point, Wolf. If the speaker can get to 218 with Democrats, there will be less Republicans willing to vote for it. The more Republicans he needs, the more they will vote for it.

BLITZER: So you basically agree, Erick, and I want Errol to weigh in as well, that when the dust settles tomorrow or early Tuesday morning or whatever, this will be the law of the land. It will have passed the House and the Senate and the president will sign it into law.

ERICKSON: Unless something happens overnight to give lie to Republicans on this tax argument with the deficit commission or really spook the Democrats on entitlement reform. Yes, I think so. By and large, the right and the left will oppose it. The center will probably prevail on this and get it to the president.

But Wolf, I do have to say, for perspective, we sometimes forget that these fights go on all the time. No one remembers that the continuing resolution (INAUDIBLE) which was the fight at the time that would call Republicans or Democrats to listen six months no one will be talking about this.

BLITZER: What do you think, Errol?

LOUIS: Well, I think, look, the leadership has had a hard time corralling their members, and that's true on both the Senate and the House. I don't think they would put themselves out here quite so publicly in a national forum if they didn't really think that they had the votes. So, I wouldn't be surprised. On the other hand, I think they may have moved the battle to this new commission. And I think, you know, look, this is not new. You remember, Wolf Blitzer, the Gramm-Rudman-Hollings fight back in the 1980s. And then there was another version of it with some budget deficit legislation passed in the 1990s. This goes on all the time. They're creating a new commission now. They're going to try and move the fight there and the fight will continue. There will be those who say spending should never ever go above a certain level and it's usually an arbitrary number, some percentage of GDP or something like that.

And then on the other side, you will have the Keynesians saying we need to spend. We need to spend on infrastructure. We need to repair what's wrong. We need to do something about the unemployment in this country. And the fight will continue.

BLITZER: All right, guys. Thanks very much. Errol Louis, Erick Erickson. Good discussion. Don, you know what? I think around end of November, Thanksgiving, we're going to be doing this again.

LEMON: I think we will and I think we'll be doing it after that and after that because this conversation continues to come up. As I said, 40 years we looked back earlier on the exact same talk and talking points when it comes to this issue.

Financial markets around the world are reacting to the news that a deal has been reached in the debt limit crisis, Wolf. We're going to talk about it with Ali Velshi and Richard Quest right after the break.

(COMMERCIAL BREAK)

BLITZER: All right. Let's try to move the story ahead, Don, as we go forward. What happens next? Gloria Borger is with us, Ali Velshi and Richard Quest.

Gloria, where do we go from here?

GLORIA BORGER, CNN CONTRIBUTOR: We go to the House of Representatives. I mean, the Senate is going to probably vote before and then all eyes are going to be on the House to see how they're going to cobble this together. I'm sure the speaker is going to lose an awful lot of his Republicans. But the Democrats are going to have to pull it out for the president.

BLITZER: A done deal as far as you can tell, Richard?

RICHARD QUEST, CNN INTERNATIONAL BUSINESS CORRESPONDENT: The markets take a sigh of relief but it won't last. The first whiff of trouble and we're back to square one.

BLITZER: I love Richard Quest because he tells us what he really -- whiff.

Don, let's bring Ali Velshi in. What do you think, Ali?

LEMON: Colorful language from Richard there as always.

VELSHI: The markets aren't up so much that -- Richard's right, there is not a whole lot of leeway for this. I will tell you, what we're waiting for overnight, my friends at CNN Money are telling me that it's underway right now, it's the CBO scoring of this deal. And I think when it comes out tomorrow, it may to some people look like less of a done deal, but it is, because you've got the opposition on the right and you're going to start to see opposition bubbling from the left.

The good news is that a lot of those cuts that are going to come to entitlement programs are going to come later in this episode, and by then , hopefully, we'll have seen some economic growth.

So generally speaking, I think you're going to see a muted deposit of economic response when markets here in the United States open up in the morning.

LEMON: And you know what? I want to ask Gloria Borger this. Ali brings up a very pertinent point here. When you hear Representative Barbara Lee and then you hear that Nancy Pelosi hasn't signed on, and there are some trepidation about this. Is it really a done deal, Gloria? Do they have enough votes to get this passed even with the opposition?

BORGER: Nothing's ever done until it's done. And I think we have to wait for the House. I think what Nancy Pelosi is going to do in her caucus tomorrow is she's going to figure out how many votes she has. And I would presume she might say to John Boehner, this is how many votes I can deliver, how many votes can you deliver? And then they would probably try and work it out from there to see if they need some more votes, where are they going to get them? But I presume that Nancy Pelosi does want to get this done.

LEMON: And just a quick one for Ali.

Ali, I mean, we are expecting the markets tomorrow to respond positively. But we don't know that for sure because the overseas markets haven't. That's not for sure, but do we know?

VELSHI: Yes. I mean, look, it generally follows the pattern, right? That Asian markets are followed by European markets. If there's not some extra factor that's going to come into play, I don't think there's any story that's close to this big.

So, for the moment, we are seeing Asian markets having firmed up. Japan's up a little under 2 percent. We'll probably -- you know, we'll track it overnight and see how that follows into Europe. But there will be a lot of analysis tonight to see, as Gloria said, what the support level is for this and what the economic impact is and what the cost is from the Congressional Budget Office. I think we'll have a very crystal clear view before by early morning by early morning before the sun rises in the East. Probably going to be positive.

BLITZER: And Richard Quest, I just want to make this point. The markets would go down if the House of Representatives defeats this, which I don't expect will happen. But it would go down. They would also go down if for some reason the credit rating agencies say, you know what, we are not all that happy with this deal, and America's AAA rating is going to go down.

QUEST: I'm not saying this is Greece, but I am saying that every time there was an agreement with Greece, the markets rallied only to unwind a few weeks later.

BLITZER: Well, this is United States, I can assure you right now. It's not Greece.

QUEST: It's not Greece, it's not Greece.

BORGER: All that doom!

BLITZER: And Gloria, as the president of the United States, he's going to have his work cut out for him to get those Democrats, especially in the House, in line.

BORGER: Yes, I guess he will, but he'll say to them, you get another bite at the apple on the deficit commission, we are going to protect you.

BLITZER: What a story, Don. You know, we have been covering it for a while. The president came out tonight. He announced an agreement has been reached. But until the Senate and the House formalize it, we'll know tomorrow presumably, it's not a done deal yet.

It's been a pleasure working with you. I'm Wolf Blitzer. Good night from Washington.

LEMON: Yes and I agree. I love what Gloria said. It's not done, Wolf, until it's done. And so we'll see what happens tomorrow. We'll be watching Ali Velshi tomorrow morning starting at 5:00 a.m. here on CNN and then, of course, you in "THE SITUATION ROOM" as well.

I really enjoyed working with you. A whole cast of characters. You guys can come back every weekend. You are always welcome. Wolf Blitzer in Washington. I'm Don Lemon at the CNN world headquarters in Atlanta. See you back next weekend. Good night.