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The Situation Room

S&P: Shutdown Has Cost $24 Billion; Awaiting Senate Vote On Deal; Interview With Rep. James Lankford; Awaiting Senate Vote on Deal

Aired October 16, 2013 - 17:00   ET

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

WOLF BLITZER, CNN ANCHOR: All right, Jake, thank you.

Happening now, breaking news, finally with just hours left until a debt disaster, lawmakers reach a deal to reopen the federal government, stave off default, but only for the time being. We may as well start counting down once again because this deal is only good for a few months.

Americans are paying a price, an extraordinary amount of economic damage has already been done and a cloud of uncertainty still hangs over the future. So will it all happen again? I'll ask a key member of the House Republican leadership. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN Breaking News.

BLITZER: But there's important breaking news coming into the SITUATION ROOM right now. Even with lawmakers apparently poised to temporarily reopen the government, extend the debt ceiling, Americans have already paid a huge price for this government shutdown. Standard & Poor's now says, it estimates, that the shutdown has already taken, get this, $24 billion out of the U.S. economy and warns that a default will roll back all the gains made in the recovery, put the economy right back in recession.

Doesn't look like there's going to be a default right now, but once again, in February, that whole issue could be decided. Once again, this whole issue could be revived.

This Standard & Poor's estimate, by the way, it already says, based on what has happened and the uncertainty of what will happen in January, when there could be another government shutdown, or February, when the debt ceiling once again has to be raised, based on that uncertainty, they now estimate, they now estimate that the U.S. economy in this fourth quarter will no longer grow at three percent which is what they earlier predicted.

It will now have a fourth quarter growth estimate of closer to two percent. That is a significant potential setback if this estimate from Standard & Poor's ratings services turns out to be true. Pretty ominous assessment from S&P right now.

Let's bring in our chief Congressional correspondent, Dana Bash. Dana, all right, let's set the scene right now. House Republicans, they resisted a deal. A clean bill for 16 days. Now, Speaker John Boehner says he won't block, effectively, what has emerged as a clean bill. So, what's going on? What's the latest? Walk us through what we can expect in the next few hours?

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Well, next few hours, we expect the Senate to actually hold a vote and then the House to follow suit sometime before the end of the night. But what is so fascinating is to watch the way this is playing out, within the Republican caucus specifically led by John Boehner.

The way a meeting that went on this afternoon was described to me, it was almost as if it was a general going in to talk to troops who knew they were defeated, trying to buck them up, even though they knew that this has -- that they've lost a war. And that is really actually how John Boehner described it, not just in private, but in public, on a radio show earlier today.

(BEGIN VIDEO CLIP)

VOICE OF REP. JOHN BOEHNER, (R) HOUSE SPEAKER: We've been locked in a fight over here, trying to bring government down to size, trying to do our best to stop Obamacare. We fought the good fight. We just didn't win.

(END VIDEO CLIP)

BLITZER: And what is so interesting, also, Wolf, is that I'm told that he and other Republican leaders sat in a room, was a pretty short meeting, only about 20, 25 minutes, and urged all of the rank and file Republicans to vote yes on this deal. And, it seems, just talking to some even the more conservative members, it sounds like some might be taking him up on that plea.

Now, why is this important? Because with regard to the perception of John Boehner's leadership, if he can get a majority of the majority of Republicans to vote yes, which he doesn't need, Democrats are going to help him out here, but if he can do it, it will certainly be a different kind of narrative with regard to how John Boehner is seen inside the Republican Party, particularly, among his troops.

BLITZER: It would be almost a vote of confidence if a majority of the Republicans in the House of Representatives voted in favor of what the Senate is expected to do in the next few hours. What about Ted Cruz, the Republican senator from Texas? He's not going to stand in the way. No more procedural obstacles to prevent a vote on the Senate floor. What are folks, Republicans, specifically, in the House, others saying about Ted Cruz?

BASH: Well, certainly, he has his big supporters and enough supporters in the House to have driven the House along with his strategy for 2 1/2 weeks to try to attach defunding Obamacare to the spending bill. But in his own Senate, he has so many people who, within his own party, who are just really surprisingly, openly hostile towards him.

In public and in private, I'm told that in a meeting that Senate Republicans had earlier today, once again, as they do in so many private meetings with him, they stood up and really gave it to him, saying, what you've done has really hurt us, will hurt our chances in some of our elections. Listen to an exchange that I had with him about this sentiment.

(BEGIN VIDEOTAPE)

BASH: As you well know, you have a lot of fellow Republicans really downright angry at you, because, here we are, almost three weeks later, the strategy that you started out on, to defund Obamacare as part of funding the government, they never thought was going to work, because the votes aren't there. And here we are, reopening the government after a lot of bruising, political warfare internally, and you've got nothing for it.

SEN. TED CRUZ, (R) TEXAS: Well, Dana, respectfully, I disagree with the premise of that. I think we have seen a remarkable thing happen. Months ago, when the effort to defund Obamacare began, official Washingtons scoffed. They scoffed that the American people would rise up. They scoffed that the House of Representatives would do anything, and they scoffed that the Senate would do anything.

We saw, first of all, millions upon millions of Americans rise up all over this country, over two million people signing a national petition to defund Obamacare. Unfortunately, the Senate chose not to follow the House. And in particular, we saw real division among Senate Republicans. That was unfortunate.

I would point out that had Senate Republicans united and supported House Republicans, the outcome of this, I believe, would have been very, very different. I wish that had happened, but it did not. But it does give a path going forward.

(END VIDEOTAPE)

BLITZER: Dana, strong words from Ted Cruz. He's not backing down at all, although, he's not going to filibuster or do any other procedural moves to try to block this upcoming vote on the Senate floor. Let's not forget, still has to be a Senate vote. It's got to pass in the Senate, but it's going to pass in the House of Representatives before it goes to the president for his signature.

Let's see how long all of that takes. Dana, thank you.

President Obama certainly did dig in his heel over this fight, involving spending and the debt. He's praising Congress for finally reaching this compromise. Let's bring in our senior White House correspondent, Brianna Keilar. So, what is the White House saying? Have they declared victory?

BRIANNA KEILAR, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Wolf, they're being careful not to. I think that White House officials feel, I would say, happy that they feel like the Tea Party contingent of House Republicans may have been weakened in this fight, but they're very careful not to be seen as sort of spiking the football. Here's what Jay Carney said this afternoon. (BEGIN VIDEO CLIP)

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: There are no winners here. We said that from the beginning and we're going to say it right up to the end, because it's true.

(END VIDEO CLIP)

KEILAR: Now, more than anything, I think the president feels like this whole thing has really been a waste of time, Wolf. I'm told that between Syria really taking up a lot of time and a lot of oxygen and then moving into this debt ceiling battle, that he's been very frustrated. He hasn't been able to push some of this has domestic agenda items, for instance, immigration reform, which you heard him talk about yesterday, so it's been frustrating for him, for sure.

BLITZER: What about the White House -- what are they saying about the possibility, and it's a very real possibility in January and in February, it's only a few months away, we're going to go through this process one more time?

KEILAR: Well, that's why the White House, you asked them about that, here we are, in just another moment, and they say that's what this strategy was all about, really trying to enforce to these Tea Party Republicans that they weren't going to get anything out of President Obama. Closer to the election, White House officials tell us they think Republicans will be even less inclined to pick this fight.

Because here, clearly, the White House was trying to send a message. Even though in the end, Wolf, they capitulated in a minor way on this income verification for Obamacare, it was something that was negotiated in the Senate. So in is a way, it was President Obama and the White House saying, you know, we may, through Senate Democrats, negotiate something with you.

Senate Republicans, more moderate Republicans, but when it comes to Tea Party Republicans, and even house GOP, who maybe don't really identify with the Tea Party, but are swayed by them, we are not going to negotiate with you. So really to kind of push that agenda is to do so at your own peril. Their message to those Republicans, in the end, all you're going to get is a lot more blame than us.

BLITZER: Brianna Keilar over at the White House, thanks very much. I assume at some point, we'll also hear from the president, but first, the Senate's got to pass the legislation, the House got to pass the legislation, it's got to go to the president's desk, but I assume, we'll hear from the president sooner rather than later.

And let's not forget the breaking news at the top of the hour, the Standard & Poor's rating services estimates that during the 16 days of this government shutdown, the U.S. Economy has already lost $24 billion, $24 billion, for this government shutdown so far.

Americans also already have seen major economic damage from this shutdown, but does this deal just put a temporary bandage on all the bleeding? How much damage have Republicans inflicted on themselves? Can the GOP make a comeback?

Plus, President Obama calls the glitches, the problems plaguing the Obamacare websites unacceptable. Will an end to the standoff in Washington improve things? Stay with us.

(COMMERCIAL BREAK)

BLITZER: We're waiting for a Senate vote, should be fairly soon, we're told. We're not exactly sure when, but there will be a vote in the United States Senate. You're looking on the left part of your screen, the floor of the U.S. Senate on this compromise worked out by the two leaders of the Senate, Mitch McConnell, the Republican leader, Harry Reid, the Democratic leader, the majority leader.

As soon as that vote starts, of course, you'll see it live here in the SITUATION ROOM. And then the legislation will go over to the House of Representatives. House of Representatives will have to pass exactly word for word what the Senate passes without any changes, and then, it will go to the president for his signature.

We anticipate all of that will happen in the next few hours or so, but we'll wait, we'll see. There always, potentially, could be some sort of setback. You'll see what happens, you'll see it here first right here on CNN.

Wall Street, though, already celebrating today. The Dow jumped 205 points. The NASDAQ and S&P 500 were also up by more than one percent. But by shutting the government for weeks, pushing the debt crisis to the brink of default, lawmakers have already inflicted some serious damage to the U.S. economy, to the country as a whole, even if this fix is passed later tonight.

It's also, remember, only temporary. It goes to January or February. So, could the bleeding start all over again? Let's discuss with our chief business correspondent, Christine Romans, CNN's Richard Quest, who's joining us from New York, and Diane Swonk, chief economist for Mesirow Financial. She's joining us from Chicago.

Guys, thanks very much. Let me get you on the breaking news, Christine. First of all, S&P saying 15, 16 days of this government shutdown has already cost the U.S. economy $24 billion, for what, $24 billion, and they've now downgraded the estimate of the economic growth in the fourth quarter of this year.

They earlier thought it was going to be three percent economic growth. They now think, because of the uncertainty of what's about to happen in January and February, and people are going to be reluctant to hire, big business or whatever, they now think it could be closer to two percent. That means jobs. That means a lot of money.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: It does. And look, when you're talking about jobs, two percent economic growth is not going to be churning out a whole lot of new jobs. And when you talk to business leaders, they are really worried about these budget battles, one after another, Wolf. Even though we've gotten past this countdown clock or about to, there will be other countdown clocks ahead and that does not instill confidence to consumers or in business.

When you look at $24 billion, for example, think of that as a natural disaster, hurricane shutdown, I've been calling it, right? Self- inflicted, self-inflicted. Washington made this mess. You can get over that kind of economic damage from a natural disaster, so to speak, if the economy, on the other end, is strong and vibrant and you have some clarity. we don't have that yet.

So Washington, don't pat yourself on the back quite yet for getting through this crisis that you made, because you have to show the world that you're going to govern and run a business a little bit better.

BLITZER: Kicking the can down the road, not the greatest financial policy right now. Richard Quest, yesterday, 24 hours ago exactly, Fitch, they put a negative rating watch on the U.S. They didn't downgrade the U.S. AAA rating, but it was a rating watch negative, as they called it. Now, S&P saying what I just reported, 24 billion already wasted, in effect, by this government shutdown, economic growth, they think, going from three percent in this quarter to two percent.

These are ominous signs out there, despite all the happiness, that at least there's not going to be a default right now.

RICHARD QUEST, CNN CORRESPONDENT: Oh, no question that there's happiness there's not going to be a default. But that's merely basically saying, delight and extraordinary happiness that the House didn't burn down. But you've still got singed timbers all around you and the whole thing is rather creeky and shaky, because you are going to be back here again in January and February.

Now, as for this $24 billion that they say it cost, well, some of it may come back as pent-up demand in the next quarter. But the real worry and risk here, and Dan will know this and will be able to talk about it is, most of it is gone. It's lost. It's not coming back. Economic growth, this is not the hurricane bounce back that you sometimes get. This is not pent-up demand that will come back.

It's gone forever in many cases. And what's worrying is that if you have this again in the fourth quarter and you have worry about it into the first quarter, you're now starting to not only have much slower growth in the U.S., well below trend, but, you're transmitting that slow, low, miserable growth to the rest of the world. And that's what the U.S. is going to do.

BLITZER: Let me get DianE to this conversation. Explain in understandable terms, you're an economist, what it means if there's only going to be two percent growth in the fourth quarter, the last three months of this year as opposed to three percent growth. What does that mean for jobs? What does that mean for incomes? What does that mean?

DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: Well, actually, I have it even weaker than that. I have it at 1.7 percent. And I think the important issue is, you're talking about an economy that's no longer bringing down the unemployment rate for the right reasons, which we've already seen. It's not fallen for the right reasons, but an unemployment rate that might even rise over the course of the quarter. And i think that's very important.

You're also further marginalizing people who have lost jobs. They're being delayed even further. We know that from the beige book today, from the Federal Reserve, that hiring was delayed because of both the Affordable Care Act and uncertainty about that, and also uncertainty about the shutdowns.

There was delay because of that. Also, some retailers I talked to today, motor vehicle traffic, the traffic in showrooms has fallen to a dribble. We've seen mortgage applications for new purchases -- purchase applications are down one percent from a year ago.

And as Richard pointed out, without that self-feeding momentum, and also Christine, we don't have the shock absorbers we once did to absorb this. And that manes that we can't recoup or catch up on many of the losses we've had.

BLITZER: I guess it's fair to say, too bad they didn't get a deal for a year or two as opposed to just a few months. On the other hand, it's better they got a deal for a few months than nothing, because it would have been a real disaster as of Thursday, Friday, Saturday, certainly within the next week or so if they wouldn't have done this deal.

Let's see what happens on the Senate floor and the House floor. Guys, thanks very much. Christine Romans, congratulations to you as well. Christine Romans is our new chief business correspondent for CNN. Excellent work.

We're waiting for this Senate vote on this compromise debt and spending deal. There you see Barbara Boxer, the senator from California. She's speaking on the Senate floor. Once that vote begins, you'll see it live here in the SITUATION ROOM.

Also, sobering words from one of the most powerful members of the Senate, John McCain calling this whole ordeal, and I'm quoting him now, "one of the more shameful chapters he's seen."

Plus, my interview with a key House Republican. Is he prepared to vote for the Senate's proposed deal to end the government shutdown, to raise the nation's debt ceiling? That's next. Stay with us. You're in the SITUATION ROOM.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, (R) ARIZONA: I think it's obvious that we are now seeing the end of this agonizing odyssey that this body has been put through, but far more importantly, the American people have been put through. It's one of the more shameful chapters that I have seen in the years that I have spent here in the Senate.

(END VIDEO CLIP) BLITZER: Sobering words from the longtime senator, John McCain, calling this whole ordeal, you just heard him say it, a shameful chapter. As we're waiting for a Senate vote on the compromise debt and spending deal, let's bring in our Republican congressman from Oklahoma, Representative James Lankford. He's the chairman of the House Republican Policy Committee. Congressman, thanks very much for joining us.

REP. JAMES LANKFORD, (R) OKLAHOMA: Thanks.

BLITZER: All right. So, you just came from this meeting in the Republican caucus. You heard the speaker tell everyone he hopes they'll vote for whatever emerges from the Senate. How will you vote?

LANKFORD: Yes. I'm still waiting to actually read the bill itself. The bill tax has not been available yet. We have a few outlines of it and some notes of what's in it, what's out of it, but no one's actually seen the actual text yet. So, I'm looking forward to get a chance to actually read that. I understand it's not very long. Thirty or 40 pages or so, but I'm looking forward to actually going through it.

BLITZER: But if it's the general outlines as all of us have been reporting and members have been discussing, basically kicking the can down the road until January and February, getting House Senate conferees to discuss at least the budget over the next few months by mid-December, hopefully coming up with some sort of agreement, is that good enough?

LANKFORD: Yes. I'm going to have to take a look at it, Wolf. I can tell you, there's a lot of support for it in the House to be able to say a couple things. One is to get this resolved. The other one is we've got to get to a budget conference. We've got to resolve our differences. There's been a push from the beginning to say we've got -- we have to actually sit down and negotiate things together.

If we don't sit down and negotiate things together, we're never going to get this resolved. So, this standoff for the last 2 1/2 weeks has been about the president saying, I won't meet with you until some other time, and us saying, all we want to do is be able to negotiate. So, we need (ph) the budget conference resolve this. Hopefully that will help. We still have a rising debt.

We still have significant issues with the Affordable Care Act, not just what we're saying, but what our constituents are saying about price (ph), about accessibility, about what's happening in their businesses, the hospitals, insurance companies.

There are real problems that are out there and I know everyone wants to watch over that and say it's just partisan bickering. And two, you actually talk with people that are affected and they're having a real problem.

BLITZER: Could you see a similar fight erupting in January or February? LANKFORD: I certainly hope not, obviously. This was never the intent. This has always been the challenge to be able to walk through this and say, how do we deal with these issues? The budget conference from understanding in the proposal is, the budget conference is to end by the middle of December.

We actually have the CR that extends until the middle of January that gives us some buffer time to be able to get this resolved. So, hopefully, we're not going to run into this again. The interesting thing about this, I actually have a bill that I've had for the last three years that prevents government shutdowns, that does an automatic CR with and across-the-board cuts to incentivize appropriations and so we never have this issue.

So, I've never been supportive of shutdowns. I think it's the wrong way to be able to run government. There is a way to be able to fix that. And hopefully in the days ahead, we'll be able to run my bill. It's actually fixed this in the days ahead.

BLITZER: Looking back, was it a blunder to link the government shutdown to the issue of Obamacare?

LANKFORD: That's actually a tough one, Wolf, just in practical terms. As we approach the October 1, that was actually the beginning of the fiscal year, obviously the beginning of the exchanges for the Affordable Care Act, we spent all of August and September with constituents, just bombarding us, saying, they see there are major problems, they want us to be able to address those.

It all kind of came down to a head during that time period. What's interesting is, our office is flooded with calls saying, hey, they want the shutdown to end, but it's just as flooded with calls people saying, oh, I've never seen signed up until now and I just found out my insurance is $200 more a month or their company just found up they're not going to be able to see with same insurance they have last year.

And so, there are all kinds of issues that are still flooding to our office, that the farther this is gone, the more people don't like the shutdown, but the farther it's gone, we're getting more and more call saying they're finding out that practical effects on their life and their livelihood for the Affordable Care Act.

BLITZER: If you vote, excuse me for interrupting, congressman.

LANKFORD: That's all right. Go ahead.

BLITZER: If you vote in favor of whatever emerges from the Senate, are you fearful that you could be primaried next time you seek re- election?

LANKFORD: No. I think the people in my district want us to be able to resolve this. they also want to see the long-term debt resolved and they also want to see to start to make progress in the Affordable Care Act. So, it's this combination of all those things. I'm going to be able to look and see, are we making progress on long-term debt? That's what the debt ceiling has been about. You mentioned Fitch earlier. Fitch in 2011 did not downgrade us, specifically because in our last debt ceiling fight, we actually came to an agreement that has reduced spending and has started to balance out some of that. That didn't happen in this one. So, while Fitch doesn't like the partisan bickering and neither do we, they also want to see some resolution.

That's not occurring this time period. So, we're just as concerned about a downgrade from Fitch when we don't resolve problems as when we do when we just have problems.

BLITZER: Congressman, thanks very much for coming in.

LANKFORD: You bet.

BLITZER: We're waiting for this Senate vote to come up. Barbara Boxer, the senator from California, she's speaking on the Senate floor now. Once the voting begins, you'll see it live here in the SITUATION ROOM. After it passes the Senate, we assume it will pass for the lopsided margin in the Senate. It will go to the House of Representatives. We'll see what happens there.

The House speaker, John Boehner, by the way, at least right now he's surrendering this current fight, but can he stop Tea Party supporters in his own Republican caucus from waging a similar fight in January or February? All that coming up. First, this "Impact your World."

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(COMMERCIAL BREAK)

BLITZER: Standing by for a critical vote on the floor of the United States Senate. A vote that could end the government shutdown, raise the nation's debt ceiling. We expect that vote fairly soon. We'll have live coverage, coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: All right. So we're standing by for a Senate vote for the spending and debt deal. The House expected to vote on it shortly after the Senate does. We'll have live coverage here in THE SITUATION ROOM.

It's a breakthrough, there's no doubt about that, but this would be just a temporary fix, at the same time, reopening the government until mid-January, extending the nation's debt ceiling until early February. Let's discuss the political fallout from what's going on.

Joining us, our CNN political commentator, Ryan Lizza, the Washington correspondent for "The New Yorker" magazine, our CNN political commentator, the former Bush speechwriter, David Frum, and our CNN chief political analyst, Gloria Borger.

Should the president be gracious right now?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Of course.

BLITZER: Because he clearly got the better end of this, even though he didn't get everything he wanted.

BORGER: You know, Wolf, first of all, this is not a president who's sort of prone to gloating. I think that's not in his nature. He should be magnanimous. He won, and don't forget, he's going to be back at this again. He's got a lot of budget negotiations he's got to get through. He's got an immigration bill, an agenda, remember that? There was an agenda that he wants to deal with.

So I think, of course, he should be magnanimous and come out and say, look, you fought the good fight, Obamacare is law of the land. I don't know if he mentions Obamacare, actually. I just think he moves on.

BLITZER: Do the Republicans do this once again in January or February, assume (inaudible) House-Senate conferees, they don't have a grand bargain on long-term entitlement reform or tax reform or any of those major budget issues. Let's say they don't achieve that.

If they do, that would be excellent. But let's say they don't.

Do we go through this again in January?

DAVID FRUM, CNN POLITICAL COMMENTATOR: You can't do it too often. It's fun for everybody, it's good for cable news. So we now are in a pattern of financial crises every six weeks. Because why should Italy be the only country to give the rest of the world heart attacks? Seriously.

Republicans, I don't know that they've done themselves a favor by setting this so early, because if it goes -- because is there any hope in January they'll be able to get this passed in 2014?

But the party does need a bit of time to do an after-action report, a kind of searching self-inquiry as to how it walked itself into this. And not for the first time; since 2009, there have been a series of these tactical blunders, strategic mistakes based on misreading --

(CROSSTALK)

BORGER: Don't you think a lot of them have done that publicly already?

FRUM: No --

(CROSSTALK)

BORGER: John McCain's been out there, Lindsey Graham.

FRUM: The original passage of Obamacare, back in 2010, came about in the same way, by not thinking hard about where are the votes, and what kind of deal do we cut, if we go for everything, we can end up with nothing.

BLITZER: Boehner himself didn't want to do this. He was sort of forced into it. There are a whole bunch of Republicans who from day one thought it was a major mistake to link Obamacare, which passed to the government shutdown. So this was all pretty predictable.

RYAN LIZZA, "THE NEW YORKER" MAGAZINE: Well, It's kind of amazing. The pundits and the political elite, for once, were completely correct. I mean, the way this has played out is the way that everyone predicted it would play out.

What's going to happen tonight is exactly the end game that everyone predicted. The entire strategic elite of the Republican Party, its leadership in the House and the Senate, all predicted this would happen. And yet, Boehner was forced to do it anyway.

BORGER: (Inaudible) playing a Washington game. Ted Cruz knew it was going to lose. He's a smart guy. He wasn't playing a Washington game. He was playing a game for his own personal recognition and for the Tea Party in the long term, although I would argue that backfired.

LIZZA: Let me say one thing. I think on this question of is this a win for Obama or not? There's probably no one that has actually won, considering what's gone on here.

But the only sense it might be a win for the White House is if Republicans don't do this again. If Obama really has broken the back of that faction in the House of Representatives and if he really has taught them that they can't extract policy concessions by threaten a default, then that will be a sort of victory. BLITZER: The president clearly did not want only a 2- or 3-month temporary -- he wanted it to go on until the end of 2014 into 2015 --

LIZZA: But they believe that they've convinced the Republicans that this is a losing strategy.

BLITZER: Let me read to you this excerpt from the editorial in "The Wall Street Journal" today, usually fairly conservative, Republicans love the editorial page of "The Wall Street Journal." We'll put it up on the screen.

"House Republicans picked a goal they couldn't achieve in trying to defund Obamacare from one house of Congress, and then they picked a means they couldn't sustain politically by pursuing a long government shutdown and threatening to blow through the debt limit. Republicans can best help their cause now by getting this over with and moving on to fight more intelligently another day."

FRUM: Even there, that is not truth telling because so-called defunding Obamacare is not actually defunding Obamacare. The taxes in Obamacare that fall on higher income taxpayers, they're the law of the land. Those taxes are going to be collected no matter what Congress does.

The regulations under Obamacare, those get issued, no matter what. Many of them have been issued and there will be more.

So even "The Wall Street Journal," in trying to cool people down, is giving people a fantasy. The time to have done business on Obamacare was in 2010.

And at this point, some of us warned back then, that if you don't do business on this, you will be spending the next decade fighting for things that could have been had for the asking in 2010, and that is going to be true, because by 2017, the next clear opportunity, this thing is going to be embedded in the American body of politics.

(CROSSTALK)

BLITZER: The only way they can get rid of Obamacare is if they become the majority in the House and Senate and the White House in 2016. Then they might have a shot.

BORGER: This is the danger that Senator Pat Moynihan always used to talk about, which is, you shouldn't pass landmark pieces of legislation with strict party line votes, because it will come back and hurt you in the end. And that is exactly -- now, the Democrats say they may not have any choice, but that is what's happened. And that's part of the problem.

BLITZER: All right. Always good to quote Pat Moynihan.

BORGER: Always.

BLITZER: He's a great senator from New York. All right, guys, thanks very much. We're waiting for that Senate vote on the compromise debt and spending bill. You're looking at live pictures. We'll have live coverage here in THE SITUATION ROOM.

The crisis certainly generating a lot of shock and disbelief around the world. Has it done any serious damage to the U.S. standing on the world stage, plus, it's been the centerpiece of the entire ordeal. The GOP effort to defund, get rid of Obamacare. So what impact will a possible deal have on the president's health care law? Stay with us.

(COMMERCIAL BREAK)

BLITZER: We're waiting for that Senate vote on the compromise debt and spending deal. We're now told it will definitely take place.

Well, if anything is definite in the Senate, before 7:00 pm Eastern. We'll, of course, have live coverage here on CNN.

This government shutdown, by the way, is already the third longest on record. The longest ran 21 days during the Clinton administration, back in the winter of '95-'96. In the Jimmy Carter era, there was an 18-day shutdown in October of 1978. The current shutdown, as you know, is now in its 16th day. That tops another Carter administration shutdown, which lasted 12 days in 1977. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Dick Durbin, the number two senator on the Democratic side, says there have been a little snafu, a little language issue drafting the language in the Senate that he says it's not serious, that they're going to work it out. Not all that unusual. The vote probably going to happen, he says, before 7:00 p.m. Eastern.

Let's see if they -- if they figure out, he says it's certainly not insurmountable, always a little bit of legal language that they've got to work into this legislation.

This crisis certainly is having a serious impact on the U.S. image, the U.S. role on the world stage.

CNN's Anna Coren is here in Washington. She's joining us now with more on this part of the story. Just came in from Hong Kong.

Folks are watching us all over the world right now and what are they saying?

ANNA COREN, CNN INTERNATIONAL CORRESPONDENT: I think there is shock and disbelief, Wolf, that the world's superpower could become so dysfunctional and that lawmakers would allow it to get to this point. As we know, one of the world's most vocal critics has been China and China has every reason to be angry. They a bit earlier in the week called for the de-Americanization of the world.

You know, they have a lot invested in this. $1.3 trillion in U.S. treasury bonds. They're the largest foreign holder of U.S. debt, so they expect the U.S. to act responsibly and not default, which would obviously have global repercussions.

BLITZER: You think about it, a year ago, everyone here was worried about what was going on in Europe, whether in Italy or Greece, other countries, Spain, and now in Europe, in Asia, in Latin America, they're worried about the United States.

COREN: Yes -- America is being compared to Greece in some parts of the world. I think this has really hurt America's reputation and its credibility. You know, I've come from the OPEC summit in Bali, Indonesia, which obviously President Obama had to cancel because he was stuck here dealing with the government shutdown. And there were real questions raised as to America's influence and its commitment to the Asia Pacific.

As we know, it wants to rebalance its foreign policy, that Asia pivot, and to counter the rise of China. But obviously Obama's absence really gave it to China. They just -- they just stole the show. So I think there's a -- there's a real feeling that if America cannot deal with its own affairs in its own backyard, what business does it have in a place like the Asia Pacific.

BLITZER: Yes. Let's hope we don't go --

COREN: Is America losing its (INAUDIBLE) in the world?

BLITZER: Let's hope we don't go through this again in January or February.

COREN: Yes.

BLITZER: That'll be pretty embarrassing.

Anna, good to have you here in Washington. Thanks very much.

At the center of this entire ordeal, at least in the beginning of it, the Republican efforts to try to defund or delay Obamacare. So will the president's health care law be impacted by this interim deal, if it makes its way through the Senate and the House, sign into law by the president?

Let's bring in our senior medical correspondent Elizabeth Cohen. She's got more on this part of the story.

So what is going on as far as Obamacare is concerned right now, Elizabeth?

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: But, Wolf, I want to be clear we don't -- I don't have the Senate deal in my hands, none of us do. We haven't read it, but from what a senior White House official has told CNN, it doesn't -- the deal doesn't change Obamacare hardly at all. It doesn't make substantial changes.

So let me describe the change that it does make. The way that Obamacare works is if you want to get a subsidy in order to buy insurance, you have to tell the government what your income is. You have to report your income and then Obamacare goes and verifies that income with various government databases.

So what the Senate deal does, as it's been explained to us, is it tells the inspector general, hey, you know, can you later do a retrospective analysis to make sure that that verification process was done properly, and experts who we talked to said this is a technical change, it does not affect Obamacare in a substantial way, it certainly doesn't affect users' experience with Obamacare. You still get the same benefits, subsidies, insurance policies -- Wolf.

BLITZER: You know, Elizabeth, the way people sign up for Obamacare right now, you go to healthcare.gov, the site as we all know has been riddled with serious problems. Last night the president spoke about it in an interview in Iowa on KCCI.

Let me play that little clip.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I am the first to acknowledge that the Web site that was supposed to do this all in a seamless way has had way more glitches than I think are acceptable, and we've got people working around the clock to do that. And we've seen some significant progress, but until it's 100 percent, I'm not going to be satisfied.

(END VIDEO CLIP)

BLITZER: Yes. And, you know, Elizabeth, as you know, they had two or three years to get that Web site ready, they spent hundreds of millions of dollars to do it. The president himself is clearly so angry and frustrated that it's not yet ready.

COHEN: Right. And it's interesting because he didn't always express that frustration. On October 1st he came out and said, hey, you know what? New programs, new web sites have glitches. He used as an example the Apple IOS 7, the new operating system that just came out, that that had a glitch and it got fixed quickly and wasn't a big deal.

And then people starting saying wait a minute, you know, this is not a minor glitch that can be fixed easily. This is a bigger deal. So it's interesting now to hear him say two weeks into the process, you know, that yes, this is A -- you know, a substantial problem that needs to be fixed. Because that isn't the tone of what he said in the beginning.

BLITZER: Certainly isn't. All right. Thanks very much, Elizabeth Cohen, reporting for us.

Coming up, once again we're awaiting a Senate vote to end the shutdown, extend the debt ceiling. The clock is ticking. That vote we expect to come up in the next hour.

We'll also tell you what needs to happen tonight to get the government running once again, if possible, by tomorrow morning.

(COMMERCIAL BREAK) BLITZER: We're standing by for a Senate vote on the compromise debt and spending bill, the debt ceiling deadline. A little under six hours away. Will Congress pass a bill tonight, extend the debt ceiling, open the government?

Stay with us. You're in the SITUATION ROOM.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN SPECIAL CORRESPONDENT (voice-over): Senator Ted Cruz, poster boy for the shutdown, led the press pack, as he headed for -- wait a minute, the microphone is back there. About-face, but not much saving face, as Uncle Sam turned around the boat before it went over the falls. Say good-bye to all those shutdown jokes.

JIMMY KIMMEL, HOST, "JIMMY KIMMEL LIVE": Our Congress today, in case you haven't heard, continued to play America's least favorite game show "No Deal or No Deal."

UNIDENTIFIED MALE: It's time for let's make a deal.

ASHLEIGH BANFIELD, CNN ANCHOR: There is a deal in the works.

UNIDENTIFIED MALE: This is a done deal.

BLITZER: There's not a deal until there's a deal.

RICHARD QUEST, CNN INTERNATIONAL ANCHOR: The mess and tenor of a deal.

LUKE RUSSERT, MSNBC CORRESPONDENT: Get this (INAUDIBLE) like Stevie Wonder once said, signed, sealed and delivered.

MOOS: Or as the Senate chaplain put it.

REV. BARRY BLACK, SENATE CHAPLAIN: Lord, we see a faint light at the end of a long, dark tunnel.

MOOS: Amen.

(On camera): With the shutdown and possible default are behind us, in the rear-view mirror, so to speak, so are some of those special moments.

UNIDENTIFIED MALE: I'm going to demonstrate if the Republican side will look at me. I will show you who's responsible. Right here. Here you are. Who is -- who's responsible for shutting the national parks?

MOOS (voice-over): But what are we going to do without all those weird metaphors? Senator Cruz was compared to a rabbit by a Republican consultant.

ALEX CASTELLANOS, REPUBLICAN CONSULTANT: He's having bunny sex, the snowshoe hair every 10 years multiplies sixfold.

ANDERSON COOPER, CNN'S AC 360: Are you high? What are you talking about?

(LAUGHTER)

CASTELLANOS: I'm high.

MOOS: Just hours before a deal was struck, a FOX News psychiatrist used President Obama's tough talk --

OBAMA: You do not hold people hostage --

MOOS: -- to psychoanalyze the president.

DR. KEITH ABLOW, PSYCHIATRIST: There's a real victim mentality here. I think the president going back to when his dad abandoned him, when his mother left him with his grandparents, the president sees himself as the victim in chief.

MOOS: Cartoonist (INAUDIBLE) turned the movie "Gravity" into "Insanity," with the spaceship labeled shutdown exploding and the voters untethered, floating off into space.

The most succinct announcement of crisis averted was a tweet by Peewee Herman, "No government default, 15 more days until Halloween."

Maybe Congress deserves a price for making a deal.

UNIDENTIFIED MALE: It's a trip to Puerto Rico.

MOOS: Make it one way. Why stop at finger pointing when you can point mirrors.

Jeanne Moos, CNN --

UNIDENTIFIED MALE: Who's responsible.

MOOS: New York.

(END VIDEOTAPE)