CNN "The Situation Room" - Transcript: Debt Limit

Interview

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BLITZER: It's a good point. Tom Foreman, excellent explanation. Thanks very much.

Wall Street clearly worrying about the debt ceiling mess. Nervous investors sent the Dow down another 136 points today. The S&P and the NASDAQ indices were also down almost one percent.

So, what's the answer to the shutdown stalemate, the debt ceiling dispute? Joining us now, two members of Congress, Republican Jeb Hensarling of Texas. He's the chairman of the Financial Services Committee, Democratic congressman, Steve Israel, of New York. He chairs the Democratic Congressional Campaign Committee.

I just want to make sure both of you agree with that dire scenario. Congressman Hensarling, first to you, that Tom Foreman just laid out, do you accept that?

REP. JEB HENSARLING, (R) TEXAS: Oh, I think it would be quite dire for America to default on its bonds, on its sovereign debt. That's why House Republicans back in May put forth H.R. 807, the Full Faith and Credit Act, to say that the United States cannot default on its debt. Basically, it takes payment of interest and principal on our debt out of the calculation of the debt ceiling, and yet, the president has issued a veto threat on this.

The only conclusion you can reach is that he wants to use this as a hostage to force Congress to rubber stamp his spendthrift ways that are bankrupting our nation. That's not what the American people want. The debt ceiling is there for a purpose. I mean, it's like the smoke alarm and Democrats want to unplug the smoke alarm and Republicans want to go out and fight the fire. That's the difference.

BLITZER: Congressman Israel, is that right?

REP. STEVE ISRAEL, (D) NEW YORK: Well, no surprise that I'm going to fundamentally disagree. And quite honestly, you know, I was in my district this morning in New York, people are tired of that kind of rhetoric. They're tired of the blame and the sound bites, Wolf. They want solutions. And there is a solution to this.

Everything that Tom just mentioned, the consequences of a default, entirely avoidable. Jeb, you and I can go on the floor of the House, you just heard the bells ring, we can go on the floor of the House in an hour. We can reopen the government, 195 Democrats. That's 99 percent of our caucus will

(CROSSTALK)

BLITZER: One at a time.

ISRAEL: Please let me finish.

We will provide you with 98 percent of our caucus, if you could find 25 members of your own. That's step one.

Step two, we will negotiate a long-term continued responsible and balanced approach to our debt, as we have. We will cut spending, we'll work with you on that. We will generate revenues. We'll work with you on that.

But you want us to negotiate with unreasonableness. And you have thrown in the kitchen sink...

BLITZER: All right.

ISRAEL: -- in these negotiations.

BLITZER: Go ahead, Congressman.

HENSARLING: Steve, your party has become the party of no. The president and Harry Reid could not think -- make things more clear that they refuse to negotiate. House Republicans put on one, two, three, four different proposals on the table. Now, we're not through negotiating, but we are through negotiating with ourselves.

And, again, if you want to take the specter of default off the table, then why don't you call upon the president, why don't you call upon Harry Reid, to take it off the table and pass The Full Faith and Credit Act?

ISRAEL: Here's why.

HENSARLING: Now when it comes. Let me...

BLITZER: All right, let him explain.

Go ahead, Congressman Israel.

HENSARLING: And we...

BLITZER: Answer the question that Congressman Hensarling just raised...

ISRAEL: I would love to.

BLITZER: Why won't you support that legislation...

ISRAEL: Because...

BLITZER: -- so that there won't be this crisis raising the debt ceiling...

ISRAEL: Sure.

BLITZER: -- every few years?

ISRAEL: For two reasons. Number one, because Jeb's legislation has the absolute wrong priorities for the middle class. What Jeb's legislation says is, we can default. They accept the fact that we can default. And if we do, China gets paid first.

So if you're on Social Security, you get in line.

If you're on Medicare, you get in line. If you're a veteran, you get in line. But an investment bank in China, you're first in line.

That's the first reason I oppose this.

And secondly, it's not necessary. We don't have to have bills ordering the priorities for paying our debt if Republicans will simply agree to pay the credit card bills that they themselves have -- have mounted...

HENSARLING: So...

ISRAEL: -- over the past several years.

HENSARLING: So, Wolf, the short answer is, is we're going to hold the specter of default hostage for our spending priorities -- the very same spending...

ISRAEL: China...

HENSARLING: -- priorities that have created more debt in the president's first four years than our nation's first 200. We are on the road to national bankruptcy.

ISRAEL: Jeb...

HENSARLING: And what you hear from the Washington class is no, we'll deal with it tomorrow...

ISRAEL: Jeb...

HENSARLING: -- we'll deal with it tomorrow.

The debt ceiling vote, half the time we've had debt ceiling votes, we have attached to it something to bend the cost curve to try to put us back on the road to fiscal solvency. And, in fact, pay as you go -- when your party was in the majority, was attached...

BLITZER: All right...

HENSARLING: -- to the debt ceiling. Graham Rudman, The Balanced Budget Act, the latest sequester, all attached to the debt ceiling.

BLITZER: Congressman, go...

(CROSSTALK)

BLITZER: -- go ahead.

ISRAEL: Let's end the filibuster and let's talk about reality, Jeb.

Have you voted for farm subsidies?

Have you voted for farm subsidies?

HENSARLING: I don't believe in farm subsidies. You're changing the subject.

ISRAEL: I have -- no, no, I'm not.

HENSARLING: Why are you holding...

ISRAEL: Here's the point I'm making.

HENSARLING: -- why are you holding...

ISRAEL: Jeb...

(CROSSTALK)

ISRAEL: -- please let me make the point. Please don't interrupt. I -- I've listened to your point and I respect your point. But that's the problem with Washington, one side believes that they have all the absolutes and they don't let the other side talk. So let me talk just for a moment.

Both parties have been on the floor of the House. And both parties, in fact, have supported different kinds of investments and spending. Your party, in fact, has led the fight to support spending for things like farm subsidies.

To now say that it's OK for us to do that spending, but not pay the bill for that spending, and hold the middle class hostage, I think, is fundamentally wrong.

HENSARLING: OK. Well, I can tell you what the fundamental difference is. American families understand that there is a fundamental difference when you borrow money for a mortgage, paying that mortgage, versus canceling your vacation to Las Vegas, because you can no longer afford it. OK, families every single day have to get around the kitchen table and prioritize.

Payments on our bonds are not equivalent to funding the travel expenses for the Alabama watermelon queen, paying for pottery classes in Morocco and the thousands of other things that squander the hardworking...

BLITZER: All right...

HENSARLING: -- money of the hardworking taxpayer.

BLITZER: Very quickly, answer that, because I have one follow-up question for Congressman Hensarling.

Go ahead, Congressman Israel.

ISRAEL: Jeb, we're -- we're all for sitting down with you, as we have, as we did in the last debt ceiling cliff that you perpetrated on the American people, to negotiate specific spending cuts. The Budget Control Act cuts spending by over $1 trillion. I supported that. We are ready, willing and able to negotiate going forward.

BLITZER: All right.

ISRAEL: We are going to support spending reductions. We also are going to support generating revenues, because you can't say that you're not going to exceed the debt ceiling because you don't want to raise taxes on the wealthiest.

Let's take a balanced...

BLITZER: All right...

ISRAEL: -- approach, the kind of balanced approach the American people want us to take.

BLITZER: One final question for Congressman Hensarling.

Here's what the president said today, urging you, Republicans, to do this.

Listen to the president.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If Republicans and Speaker Boehner are saying there are not enough votes, then they should prove it. Let the bill go to the floor and let's see what happens. Just vote. Let every member of Congress vote their conscience and they can determine whether or not they want to shut the government down.

(END VIDEO CLIP)

BLITZER: All right, so why not just allow an up and down vote on a clean resolution, without any strings attached. If you have the votes, fine. If, as Speaker Boehner says, there are no votes there and the president says there are, why not simply allow the vote, Congressman Hensarling?

HENSARLING: Well, Wolf, we have bipartisan support now to pay our veterans and the president said no.

BLITZER: No, no, no, no.

HENSARLING: We have bipartisan votes...

BLITZER: But why -- why not allow a...

HENSARLING: We have bi...

BLITZER: -- simple up and down vote on this...

HENSARLING: Why don't we...

BLITZER: -- (INAUDIBLE) resolution?

HENSARLING: No, Wolf why don't -- why don't we take votes that have already passed the House with strong bipartisan support to keep our parks open?

The president has said no.

To pay our veterans?

The president has said no.

To fund the Women and Infant Children program?

BLITZER: All of that is...

HENSARLING: The president has said no.

BLITZER: -- all of that is true, but why...

HENSARLING: Pediatric cancer...

BLITZER: -- but here's...

HENSARLING: -- research...

BLITZER: -- but the question...

HENSARLING: -- at the National Institutes of Health...

BLITZER: -- are you afraid...

HENSARLING: The president has said no.

BLITZER: Here's the question.

Are you afraid the president is right, if that clean CR comes up for a vote, it will pass?

HENSARLING: No, I'm not -- I'm not in the last. But I -- here -- they are theorizing about...

ISRAEL: It will pass.

HENSARLING: -- some bipartisan vote, but instead, we have bipartisan support in the House and the only person who's trying to ensure the key functions of the government are shut down is the president, Harry Reid and a number of their Democratic Congressional allies...

ISRAEL: Jeb, you got (INAUDIBLE)...

HENSARLING: -- but not all of them.

ISRAEL: -- I have 195...

HENSARLING: We're getting...

(CROSSTALK)

BLITZER: All right, hold on.

HENSARLING: -- 25 to 35 Democrats on all of these votes.

So why isn't the president opening up the government?

Again, he wants to use it hostage for his radical spending agenda, that's helping bankrupt America...

BLITZER: All right...

HENSARLING: -- and keeping tens of millions...

BLITZER: -- a final thought, Congressman Israel.

HENSARLING: -- our fellow Americans out of work.

ISRAEL: We have 195 Democrats willing to support reopening the government in the next 15 minutes on your budget, Jeb, on your $998 billion budget. Take yes for an answer.

BLITZER: All right, we'll leave it on that note.

I suspect that vote is not going to happen any time soon, unless the speaker decides he wants that vote to happen. And so far, he has said -- said no. And the president says no on all these piecemeal pieces of legislation that Congressman Hensarling is supporting, together with all the other Republicans.

A good debate. Let's continue this discussion down the road.

Thanks very much to both of you for joining us.

HENSARLING: Thank you.

ISRAEL: Thank you, Wolf.

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