Alex Witt | October 13, 2013
>>> welcome back to "weekends with alex witt ." headlines for you at the half. at least four new mexico boys are confirmed to be home and safe after missing from a rural ranch for troubled youth on friday. an abuse investigation at the property is underway with the program director named as a person of interest. an amber alert will remain in effect for the other boys until investigators know they are okay.
>>> frustrating moments for people in 17 states who rely on food stamps to purchase groceries. a system outage saturday left many unable to use their cards for purchases. xerox, which runs the system, said a test of back-up systems caused that glitch. the outing had nothing to do with the government shutdown .
>>> 67 people were arrested in st. petersburg, russia, after a fight broke out between gay activists and opponents. in june, russia adopted a law that bans homosexual propaganda directed at minors.
>>> the white house and congress have just four days to come to an agreement on a debt ceiling increase before the u.s. government could default. in an interview on today's "meet the press," the imf head spoke about concerns she's hearing from global finance ministers.
>> one thing was certain around the table. it was that if there is that degree of disruption, that lack of certainty, that lack of trust in the u.s. signature, it would mean massive disruption the world over. we would be at risk of tipping yet again into recession.
>> joining me now is democratic congressman john delaney . i'm glad to have you here. thanks for joining me.
>> nice to be here.
>> first of all, where dot negotiations stand right now?
>> well, it appears that the negotiations right now are between the white house and the senate with the senate republicans really stepping forward because talks have broken down between the white house and the house republicans. it feels to me like the negotiations are between the president, the senate republicans, and of course harry reid .
>> okay. i want to focus on the debt ceiling with you, sir. what do you think happens when the stock market opens tomorrow with this default looming on thursday?
>> you know, i tend to think that the markets will give us until tuesday to work out an agreement, which is, you know, when the u.s. markets will resume after the holiday weekend.
>> absolutely. you're right.
>> so i think, you know, tuesday is the big date. i think at this point, if you look how the markets reacted thursday and friday, which is they reacted positively based on encouraging signs about a deal, i would say the markets embedded in those asusumptions that something would happen this weekend, and if something doesn't happen by tuesday morning, we could see markets down quite a bit. that's only part of the story with the debt ceiling. obviously markets would be disrupted. it would have a very negative effect on the u.s. economy . what hasn't been talked about enough is the fact that we've probably already done some damage in terms of how the international financial community, the monetary community, if you will, views the united states . that's a consequential thing for this country. unfortunately, this country will be a borrower for a long time, if you look at our level of debt. we clearly have to do some significant things to lower our debt, but we won't be able to do that overnight. we'll be in the world marks borrowing money for a long time. i would have to think that based on what's happened, there's some minor calibration among global investors about how they think about the u.s. credit. it's unfortunate.
>> have you been hearing anything directly from the banks, you and your colleagues on the financial services committee ?
>> yeah, i think the banks, you know -- obviously this is a very significant thing for them. the banks trade in treasury bills for their clients. they use treasury bills as collateral for counterparties. they obviously, particularly the larger banks, are very active in the global financial markets . i think they understand very directly the potential negative implications this could have. to be clear, i don't think anyone fully understands all of the implications. obviously we've never been in this position. so we have heard from the banks, but we hear it from businesses, not just the financial community. we hear it from small businesses . this is an issue that affects average americans up to the largest corporations and financial institutions in the world.
>> okay. what would be the economic impact if this government does default?
>> so i think you'd have to measure it a couple different ways. there would be a short-term impact clearly. markets would disrupt. that would affect short-term growth. there would be a lot of uncertainty. we have to assume at some point we would get ourselves out of a default position. so i would describe a default position as having potentially very negative and potentially catastrophic implications in the short term. spike in interest rates , markets fall, lack of confidence, people unable to execute transactions where u.s. treasuries is collateral. that would really hurt growth, which is something we need a lot of these days. it would cause a spike in unemployment. and it would disrupt marks. that's the short-term implications. as i said, the long-term implications, i think, are very severe. i think a default would to some extenl extent increase the u.s. borrowing costs. we'll be borrowing from the global markets for a very long time. any increase in our borrowing cost is a fiscally irresponsible thing to do. that'll even put more pressure on an already challenged budget that we have.
>> so quickly, by that description, would you be willing to vote in favor of a short-term deal if it means avoiding this kind of financial crisis ?
>> i think i would vote for a short-term deal to raise the debt ceiling, certainly. i think you have to. i think as a fiduciary steward of the country and the citizens in this country who rely upon the member of congress to get things done, we have to vote for a short-term increase to get things done. obviously, people like myself and many, many others would like a longer term increase so we could put the debt ceiling aside and get to it the real work of doing the things we need to do to change the fiscal trajectory of this country. this country has two problems. it has a growth problem, and it has a debt problem. there's a way of actually addressing those problems together, but it involves adopting some pro-growth policies, making hard decisions, doing things it like tax reform , which both encourages growth and can produce revenues that lower the debt. that's the stuff we should be working on. it's a lot easier to work on those things when the debt ceiling is pushed aside for a while.
>> all right. democratic congressman john delaney , thank you very much. you were right, stock markets open tomorrow, bond market is closed. investors take note of that. thank you.
>> thank you.
>> let's bring in washington bureau chief lynn sweet and jonathan alter , author of "the center holds." hi, guys. lynn, i'll begin with you. senate reconvening in about 25 minutes or so. where do we sit at this moment? how fast do you think a deal might get done? any realistic timeline?
>> timeline is we're still hurtling towards the thursday deadline for default. what's really interesting here is not so much whether the senate can make a deal because they have a history of bipartisanship and the two leaders, mcconnell and reid , are talking. they started talking at 9:00 a.m . yesterday morning. the big question is, can senate republicans sell whatever compromise they make with senate democrats to the house republicans or at least enough of them so that speaker boehner will allow a vote.
>> so jonathan , the president having met with senate democrats on saturday, what's the evolution of white house thinking at this point?
>> well, they feel like they have the upper hand, but as congressman delaney said, the effects of failure here are catastrophic, potentially catastrophic for the economy. so they have to play their cards even though they're holding the high cards pretty skillfully in the next couple days. what's bothering me a little bit now is i feel like there's a lack of creativity in this end game . for instance, there's a parliamentary procedure in the house of representatives called a discharge petition , which is a way to get a bill to the floor of the house without the speaker's support. so there actually is another option, but it doesn't seem to be being explored very much right now. you don't hear very much talk about a discharge petition . a discharge petition , by the way, was the way the civil rights act of 1964 was passed because there was a segregationist committee chairman in the house at that time who was preventing it from goin going to the floor, so they went around him. my question for people is why isn't there more conversation about how to go around john boehner 's weak leadership?
>> well, just for the record, i know you were in a car actually traveling here, but i spoke with representative david cicilline . he did sign that along with his counterpart in rhode island . they're around 180 signatures right now, short of what they need.
>> short of what they need. for instance, if you got the business community , which really wants this to come to an end, if you got the business community to put pressure on other members of congress to at least sign the discharge petition , obviously the pressure that they're putting on the speaker to bring this to the floor is not working because the speaker is worried about losing his speakership if he does bring it to the floor. there's more than one way to skin a cat. i'm glad you've been exploring it this morning.
>> real quick, jonathan , is the white house concerned that those abysmal numbers with most americans blaming the gop for all this crisis, are they worried they might get tainted by this in the process as well the longer this goes on?
>> sure. already the president's numbers are not healthy. they're among the worst he's experienced in his presidency. so this is hurting everybody. also, just one other quick note. the framing of the discussion over the sequester is also harmful to the white house because i've seen reporting this morning, abc news, for instance, reported that the white house is pushing for spending increases. that is entirely false. what they're pushing for is the restoration of the spending that came before these draconian short-term sequestration cuts. so that's leading people to believe that, oh, these liberal democrats , they want spending increases. no, what they're looking to do is to prevent the full effect of these sequester cuts, which were not rational and which were a budget gimmick in 2011 .
>> so lynn, we have senate majority leader harry reid and senator chuck schumer . they opened the formal talks with mitch mcconnell . senator lamar alexander as well. this happened on saturday. here's how reid described those talks.
>> the conversations were extremely cordial but very preliminary, of course. nothing conclusive. i hope that our talking is some solace to the american people and to the world.
>> what does solace mean there? does it mean jittery financial markets are not going to tank monday morning?
>> i was at that press conference yesterday where i think part of what they were trying to do, and this was just the democratic leaders there, was to say there might be an end in sight. just by virtue of mcconnell and reid talking, alex and jonathan . so even the idea -- i think what the senate leaders are trying to do, both republican and democrat, is say, well, we might be able to craft a bipartisan plan. but i still go back to what i think is a main problem, selling it to most -- and when i say most, 232 republicans, if they could embrace a senate republican plan, then you have the framework to get a vote.
>> okay. we have to book more time for our segments. i love talking with the beoth of you together and apart.
>> jonathan , this is the button that some democrats were wearing on the hill yesterday saying i signed the discharge petition and i took a picture of it. some people are on it.
>> i know the democrats are on it. now the business community has to get on it. even if their members are not for this compromise, it deserves a vote. that is embedded in our constitution. the right to bring this thing to a vote. every business leader out there should be telling their congressman at least let this go to the floor so our elected representatives can decide.
>> then see what happens. see how that vote plays out. okay. good to see you both. thanks.