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NBC "The Rachel Maddow Show" - Transcript: Debt Limit

Interview

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SEN. SHELDON WHITEHOUSE (D), RHODE ISLAND: Very happy to be with you.
MADDOW: So, growing up, my dad always told me, close only counts in
horseshoes and hand grenades. Does --

WHITEHOUSE: This is the hand grenade version of that.

MADDOW: Oh, I was going to ask, does close also count in debt ceilings? Are we already in dangerous territory?

WHITEHOUSE: Yes, it absolutely does. There are two consequences of a default from not raising the debt ceiling. One is if you actually don`t do it, and then markets and interest rates adjust in probably unimaginably bad ways. But even when you get close, other countries, bankers, people buying treasury securities look around and think this security doesn`t seem quite as secure as it used to. I think I`m going to have to charge a little bit more in order to come in and be a buyer.

And because we pay the interest, that comes right out of the taxpayers` pocket. So, it`s very irresponsible to drive too close to the debt limit and to force all those costs on the taxpayers and to create all that uncertainty in the economic world.

MADDOW: What is your understanding of the status of discussions right now,
both in the senate and also overall towards some sort of resolution? One
theory about why the markets are not freaking out too much already is that
there`s faith that a last-minute deal will be worked out. Is that your
sense that that`s true?

WHITEHOUSE: Well, you`ve heard the tone in the last day or so. Harry Reid and Mitch McConnell have had nothing but nice things to say about each other. There`s been a constant spirit, a tone of optimism. And now, with the meetings scheduled for both caucuses tomorrow, I think it`s logical to conclude that they have an agreement that they intend to present and that we`ll then be voting on it tomorrow afternoon, and that leaves Speaker Boehner back where he was at the very beginning, which is, it`s his choice. Let them vote and this is over or not.

MADDOW: If the House does what it did before, the last time it was in this situation, and John Boehner does not choose to bring up a measure that can pass for a vote, are you of the belief that President Obama could act unilaterally in some way, that there is any other option? Obviously, the White House and the president himself have been very clear that they don`t want to do that. They think it could cause maybe even more problems than it might solve. What do you think about that as a constitutional matter?

WHITEHOUSE: It`s a -- whether or not there`s a Article 2 or a 14th Amendment constitutional option that the president has, even if there is one, just set that question aside for the sake of argument. Even if there is one, him going to it sends that same signal to the markets and to the rest of the world that something really weird is going on in America, that this particular issue of American debt has a cloud over it, has a question mark around it, and that could have a very, very bad effect on markets and interest rates, and that, in turn, comes home to hit Americans in their pocketbooks.

MADDOW: Every time I have heard you talk about this issue, and whatever I have talked to you about other issues, you have always seemed to me like a very pragmatic and grounded kind of senator. That`s part of the reason I wanted to talk to you about this.

Because of that and because you`re on the budget committee, I have to ask you what it is like to try to negotiate and talk to your colleagues across the aisle about this when so many -- seems like increasing numbers of Republicans, even in the senate, even senators who you think would be the experience to know better, are just saying this wouldn't be a big deal, wouldn't be catastrophic to hit the debt ceiling. They deny that it could really harm the country. How does that affect your work?

WHITEHOUSE: You just kind of have to take your breath in and say, my God, did he really just say that? What is he thinking? If you were to -- I mean, the prevailing theory is, OK, so, we don`t allow the debt limit to go up, but there`s still some money coming in and we can still pay off the Chinese with that and everything`s going to be fine.

Well, sure, except the fact that you have to sell treasuries out into a market, and the market is now looking around at a country that is maybe not sending out checks on time to Social Security recipients. Maybe has gone into a much deeper government shutdown because there is no liquidity at all.

I mean, the consequences, even if you`re still paying the Chinese, are terrible. Investors aren`t idiots. They can look across the table and see what else is happening. It`s not just going to be the checks going to them. So, it`s like climate denial. Its really hard to reconcile it with reality.

MADDOW: Senator Sheldon Whitehouse of Rhode Island -- thank you very much
for being with us tonight, sir. It`s good to have you here.

WHITEHOUSE: Thank you.

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