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updated 10/13/2013 11:55:47 AM ET 2013-10-13T15:55:47

DAVID GREGORY:

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And good Sunday morning.  Wish there were better news to tell you.  But Congress and President Obama are still crawling to the finish line in the race to find a solution to America's fiscal crisis with U.S. default possible this coming Thursday.  The focus is now in the Senate in session today.  House Speaker John Boehner announced Saturday that talks between the House G.O.P. and President Obama had broken down.  So bottom line, there is no agreement on ending the shutdown of the government or raising the nation's debt limit.  Joining me now, the Assistant Majority Leader of the Senate, Dick Durbin of Illinois, and Republican Senator Rob Portman of Ohio, welcome both to Meet the Press--

SENATOR DICK DURBIN:

Thank you, David.

SENATOR ROB PORTMAN:

Thank you.

DAVID GREGORY:

The leader of the Democrats, Harry Reid, the Majority Leader, Senator Durbin, said the following on Saturday.  And let me share it with our audience.

MAJORITY LEADER HARRY REID:

I hope that our talking is some solace to the American people and to the world.

DAVID GREGORY:

This is what should pass for progress in Congress in Washington doing its job?  That take solace in the fact that you're just talking?

SENATOR DICK DURBIN:

It's a breakthrough.  Hard to imagine, but it's a breakthrough.  They reach a point where the House Republicans and their leadership really have stepped to the sidelines.  They're not part of this at this point.  They can't agree among themselves about what they want to have done in this negotiation.

The conversation that started yesterday between Senator McConnell, the Republican Senate Leader and Senator Reid I think has the promise of finding a solution.  I don't want to be overly optimistic, but there's a lot at stake.  It isn't just the government shutdown.  And that of course has laid off 800,000 federal employees and denied people basic services.  It goes way beyond this, as we know.  If in four days, we default on our debt for the first time in our history, it is going to have a dramatic negative impact.

DAVID GREGORY:

Senator Portman, I want to get beyond talking points, want to get beyond just pure argument.  Because the American people simply want to know, why can't Congress do its job?

SENATOR ROB PORTMAN:

Well, first of all, Congress can't do its job unless Democrats are willing to talk.  And the reason what Harry Reid just said was a breakthrough is that the president has refused to negotiation.  I mean, it's unbelievable.  This is the first time in history that a President of the United States has said, "Look, I'm not even going to talk about it."

I served for two presidents, as you know, President Bush one and two, Leon Panetta, you're going to talk to later, has served for his (UNINTEL) director for another president.  You always talk about it.  Why?  Because these tough are tough votes, the president should engage.  You've got to deal with the underlying problem, which is the spending problem.

DAVID GREGORY:

So is it both of your positions, I think this is an important moment of clarity.  Do you both believe it's 100% the other side's fault?

SENATOR DICK DURBIN:

Here's the point we've reached.  We should have been in a budget six months ago to discuss these issues.  We tried 21 times in the Senate to go to budget conference and--

DAVID GREGORY:

I understand, that's the question.  Is it 100% the Republican's fault that we're here?

SENATOR DICK DURBIN:

I can tell you, if we had engaged in this negotiation in the budget conference and there was an impasse, then I'd say, "Well, there's fault on both sides."  The Republicans in the Senate would not allow us to go to a budget conference to even debate these issues for six months.

DAVID GREGORY:

That sounds like 100% in his view.  Is it 100% the president, the Democrat's fault, Senator?

SENATOR ROB PORTMAN:

With all due respect, for the last three years when the Senate Democrats were used to put a budget out, Democrats said, "We don't need a budget, we can still have these appropriations bills."  Which is why we're where we are.  Dick's right, not having appropriations bills.  David, I would say this.

I would say the greatest act of bipartisanship over the last few decades has been Republicans and Democrats alike overpromising and overspending.  And so yeah, there's fault on both sides.  And that's where we are.  And that's why the president and the leaders of Congress ought to take this opportunity to deal with the underlying problems.

Supposed to keep the budget caps in place that, my gosh we just put them in place two years ago, we've added almost $2 trillion to the debt since then, and what I understand from last night's discussion is the Democrats are now saying, "We want to bust those caps."  But second on the debt limit, we need to be sure that we're dealing with the underlying problem, which is a almost $17 trillion national debt.  And the president says he wants to do that, so let's work together to do it.

DAVID GREGORY:

We know it gets confusing fast.  So I want to ask each of you a bottom-line question, is do we have an agreement on raising the debt ceiling and ending the government shutdown by Thursday?  And if the answer is yes, Senator Durbin, what do you have to overcome?  What are the real sticking points now that have to be overcome?

SENATOR DICK DURBIN:

You're asking us if we have such an agreement?

DAVID GREGORY:

Do you think you'll have it by Thursday?  And if so, that means you will overcome what sticking points that you have right now?

SENATOR DICK DURBIN:

I'm a hopeful person.  And I believe we can do it.  I hope sensible people prevail.  Because at this point, it isn't just a shutdown and all of the damage that it's caused.  But if we default on our debt, it will have a dramatic, negative impact on the savings account and retirement account for every American.

DAVID GREGORY:

Understood.  But what are the sticking points?  That's really what I'm trying to get to.

SENATOR DICK DURBIN:

The sticking points, whether or not we will sit down in a budget conference finally and start hammering them out, what will be the spending level for this fiscal year--

(OVERTALK)

DAVID GREGORY:

For the rest of the year, yeah.

SENATOR DICK DURBIN:

Whether there will be a sequester cut come the first 15 days of the new year, the new calendar year.  Those are the basic elements that I think we need to work on.

DAVID GREGORY:

Does the discussion about--

SENATOR ROB PORTMAN:

I'm a yes, by the way.

DAVID GREGORY:

A yes, the deal by Thursday?

SENATOR ROB PORTMAN:

Yes.

DAVID GREGORY:

Because you would've overcome what obstacle?

SENATOR ROB PORTMAN:

Well, because we will have decided as a Congress that we need to avoid going over the debt limit and we'll figure it out and it'll probably be a relatively short-term solution.

DAVID GREGORY:

But you know the House leadership, you know a lot of House-- Republicans in particular, they seem like they're quite unhappy here. They don't want to do a long-term extension raising of the debt ceiling.  They want to still have a conversation about ObamaCare.  In your estimation, should the discussion about ObamaCare be over?

SENATOR ROB PORTMAN:

Well, first of all, I oppose ObamaCare, I think we ought to repeal it and replace it.  And I think most Americans agree with that.  But we can minimize the damage in this process by doing certain things that were consistent with the original ObamaCare, like making people verify their income when they go on the exchanges.

We're dealing with the 40-hour work week so that more people aren't taking into 30 hours or below, part-time work.  But no, I think we ought to focus on these spending issues and we can and should.  I'm not suggesting there'll be a solution to all these long-term problems in the next two days.  But I do think that we'll figure out a way to put off this, to have the discussion, and I'm hopeful we'll do that actually in the next couple days.

DAVID GREGORY:

But my question then gets, so if you get past a crisis point and say, "Oh, I know, well, let's get into a bigger discussion about the budget."  You were on the Simpson-Bowles, that commission, you were on the super committee, both of those went nowhere.

SENATOR ROB PORTMAN:

It wasn't so super, it turned out.

DAVID GREGORY:

It wasn't so super.  Right.  So we still have a problem, which is the Democrats want more revenue, Republicans want to deal with the entitlements, which are really cannibalizing the budget.  Where is there a reason to be hopeful that Congress can get to something meaningful here?

SENATOR DICK DURBIN:

David, this may be heresy, but I think Simpson-Bowles got it right.  Put everything on the table.  We know that come ten years from now, Medicare is not sustainable financially.  We've got to do something.  Why wait ten years to see that reality?  We know that social security has 20 years or perhaps less.

What are we going to do about it today, in a small way, that will give it this longevity. And I have to say to the Republican side, for goodness sakes, we have a tax code that takes $1.3 trillion out of the treasury each year and in that, we cannot find some savings, closing some loopholes, quote, raising revenue?  Well, of course we can.

DAVID GREGORY:

Senator Portman, you referenced, I'll let you in in just a second.  Let me just raise this issue about ObamaCare, because I want to come back to that.  One of the issues is that for conservatives, this has been such a huge issue, even though the law's been passed and upheld by the court, they still argue, "No, there's a basis to really try to make it better, to replace it, to get rid of it." And then you had Dr. Ben Carson, who won this straw poll at the Values of Voters Summit here in Washington.  This is what he said on Friday, I want to get your response.

[TAPE: BEN CARSON:

I have to tell you, ObamaCare is really, I think, the worst thing that has happened in this nation since slavery.  And it is in a way, it is slavery in a way.]

DAVID GREGORY:

He was second in the straw poll.  How much damage does that do to your position that ObamaCare should be repealed?  Is that overstatement that's counterproductive?

ROB PORTMAN:

Well, he's a doctor who feels passionately about this issue, obviously.  He can speak for himself.  But let me just go back to what Dick said.

DAVID GREGORY:

Well, but is that something that as a senior Republican, you think, is helpful to the debate about ObamaCare?

ROB PORTMAN:

Well, I think what would be helpful is if we sat down and figured out how to make this less damaging to American families and to our American economy, because it is a huge problem.  By the way, it's not just a glitch in terms of the rollout, it's a breakdown.  Having tried myself to get on yesterday, I feel sorry for the New York Times research writer (UNINTEL) this morning who spent 11 days trying to get on, and end up with a blank screen.  So there are huge problems with it, but let's be honest, and we oughta be sure that we can minimize the damage.

DAVID GREGORY:

Does Secretary Sebelius keep her job, both of you?  Do you think--

SENATOR DICK DURBIN:

Absolutely.

DAVID GREGORY:

No question about what she's done?

SENATOR DICK DURBIN:

Understand we've been off to a rocky start for sure, because 15 million people wanted to get on.  Because why?  Because 50 million Americans don't have any insurance.  This is their first chance, many of them, to ever have health insurance.  They're desperate for an affordable health insurance policy.  And we haven't had much help when it comes to funding the startup of ObamaCare.

DAVID GREGORY:

Senator Roberts, your colleague in the Senate, Republican, said, that Secretary Sebelius, Head of Home of Health and Human Services should resign.

ROB PORTMAN:

Yeah, look, I don't think that's going to solve the problem, unfortunately.  I think it's much deeper than that.  I think the law is fundamentally flawed.  I also think this rollout has been a disaster, not just a glitch.  But let me go back to something Dick said, because I want to say something positive here about my colleague.

SENATOR DICK DURBIN:

Give it some time.  Give it some time.

ROB PORTMAN:

He has been willing, and he's shown political courage, to do so, to talk about these issues.  And I think this morning, if we can leave with anything, it is that this is an opportunity over the next couple days, but really over the next couple months, because I think we'll probably push this down the road a little bit, to deal with the underlying problem.

And that is the fact that we have these historic levels of debt and deficit that are hurting the economy today.  It's like a wet blanket on the economy today.  That's why we're not, in my view, getting the kind of robust recovery we all hope for.  But it is immoral to do to future generations.  And we keep building up this debt and deficit, and Dick's exactly right.

We've got to deal with the part of the budget that's not being talked about, which is two-thirds of the budget, and the fastest-growing part.  And if we don't do that, we will have failed.  If we do do that, we'll surprise the American people and do the right thing.

DAVID GREGORY:

All right, we're going to have to leave it there, because I'm out of time.  Senators, thank you very much.  I know you're back to work today, which is why you're here this morning, and we appreciate your time very much.

SENATOR DICK DURBIN:

Thank you.

DAVID GREGORY:

Let me continue the discussion now and bring in Leon Panetta.  He's served as Congressman, Budget Director, White House Chief of Staff, C.I.A. Director, and most recently, Secretary of Defense.  I would list other jobs he did, but we're running out of time on the program.  Secretary Panetta, welcome back to the program.

LEON PANETTA:

How are you?

DAVID GREGORY:

As you hear all of this, I want to come back to this 100% point.  Is part of the real problem in Washington that you have two sides who are not interesting in really negotiating, but really digging in and saying, "Look, this is truly 100% the other side's fault?"

LEON PANETTA:

Well, look, there's a lot of politics and sound bite wars going on in this town.  And I understand it, been part of the political process.  But ultimately, I think both sides are really pretty much at the same place, you know?  Once you get past some of the rhetoric and some of the extremes, the fact is everybody knows we've got to extend the debt limit in order to avoid that catastrophe.

Everybody knows we've got to end this crazy shutdown of the federal government that's taking place, stop hurting the American people.  And everybody wants to get into negotiations.  What you just heard is a good example where Republicans and Democrats have to engage in the broader negotiations on the budget.  On entitlements, all of the health care entitlements, on discretionary spending, and on tax reform.

DAVID GREGORY:

But we talk about it like it's a revelation, it's an epiphany.  Even the two senators who say, "We agree on this, we've got to get back this way."  Here you are on Meet the Press in 1996 with the last shutdown.  And this is what you said then.

[TAPE: SECRETARY LEON PANETTA:

If there's anything we've learned over the last few months is that the policy of threats and basically holding the country hostage, whether it's on a continuing resolution or a debt ceiling, or raising these kinds of blackmail approaches to trying to get their agenda adopted just does not work.  It's been a disaster.]

DAVID GREGORY:

Seventeen years ago, the same thing is being said now.

LEON PANETTA:

David, I am really surprised that the lessons that were learned 17 years ago, that you don't shut the government down, you don't hurt the American people, that lesson, obviously was not learned and it's been repeated.  You don't win in this town politically by hurting the American people.  And that's what we're doing.

We're hurting kids, we're hurting families, we're hurting individuals that are losing their pay, not paying their mortgages.  I mean, why would you allow a small minority who can't get their way to basically take out their vengeance on their fellow citizens.  That's what's happening.

DAVID GREGORY:

You're talking about House Republicans, but the president also knew that this day was coming.  He also knew what the deadline was.  And he appears to have made a calculation, having just been reelected, that, "Hey, I'm going to preserve for future presidents an ability not to negotiate over the debt ceiling."  Even though as Senator Portman pointed out previous presidents have negotiated on this.

It's why we introduced the idea of having to raise the debt ceiling.  Does the president bear responsibility?  You are a Democrat, you work for him, but now you're out of government, can take a step back.  Does he also bear responsibility for playing around with default by pushing it this far?

LEON PANETTA:

Well, I've been 3,000 miles from Washington.  I have to tell you, the American people are angry, they're frustrated, they're mad, they think that this town has gone nuts in the way they're dealing with it.  And I think both sides will bear some responsibility for that.

But I think the president has also indicated he's willing to negotiate on the key issues.  The Republicans want to negotiation on the key issues.  For goodness sakes, that's where this ballgame has to wind up.  It has to wind up in the broader discussion about how do you reduce the deficit, how do you end this crazy sequester.

Because the fact is, we are paying a heavy price right now for what is happening to this country.  America is being weakened.  And that's the last thing that ought to happen.  Members swear an oath to protect and defend the constitution against all enemies, foreign and domestic.  What they're doing by the shutdown, by this threat on the debt limit, is weakening America and sending a message to the world that the United States can't govern.  That's a lousy message for the world to hear.

DAVID GREGORY:

When the sequester was passed, before it was passed, you warned as Defense Secretary, of "grave consequences for America's military readiness."

LEON PANETTA:

Right.

DAVID GREGORY:

There are some who look at that and say, "That was an overstatement."  That yes, sequester cuts have hurt.  But as you sit here now out of office, out of your job as Defense Secretary, do you believe America is critically unprepared for national security threat that can be met?

LEON PANETTA:

I think our readiness has been badly damaged.  We've got 12 combat squadrons that have been grounded.  Half of the air force is not combat-ready.  We've got ships that are not being deployed.  We've got training rotations that have been canceled.  We've got 800,000 federal employees that have been furloughed under sequester, and that are now taking a hit on the shutdown.  All of this is impacting on our readiness and our ability to be able to handle a major crisis outside of Afghanistan.

DAVID GREGORY:

President just launched two special operations here to fight terrorists.  If that's the number one goal, he seems to have been quite capable of launching that in this past week.

LEON PANETTA:

Look, the SEALs and their operations and our ability to use special forces in these kinds of attacks, yes.  But let me tell you something.  On the broader crisis such as a Middle East, we are going to be impacting on our readiness and our ability to respond to a crisis in that part of the world.

DAVID GREGORY:

Alright, Secretary Panetta, I appreciate your time this morning here as well.  We will take a break here.  Coming up, Washington's dysfunction is on full display as the world's financial leaders are gathering in Washington this weekend.  My exclusive interview with the Head of the International Monetary Fund, Christine Lagarde, is next.  Why she says failure to reach an agreement could cause in her words "massive disruption."  We're back here on Meet the Press in one minute.

(* * *COMMERCIALS NOT TRANSCRIBED.* * *)

DAVID GREGORY:

Against the backdrop of a possible U.S. default, the world’s financial leaders are in Washington this weekend for the International Monetary Fund’s annual meeting. The IMF serves as the world’s financial watchdog and rescue agency. Last night, I sat down with the head of the IMF, Christine Lagarde, in this exclusive interview.

[TAPE: DAVID GREGORY:

So as we sit here, there's no deal.  The American government is barreling toward default.  How scary is this to you?

CHRISTINE LAGARDE:

It's very, very concerning.  You know, I've spent the last three days with nearly 300 finance ministers and governors of central banks from across the world.  And the world was doing better.  There was recovery in the U.S..  In Europe, at least.  Japan was turning the corner.  The American markets were still going fast.  And the low income countries were really showing strong growth.

And they all came together to talk about the U.S. monetary policy and its impact on American market economies and how they should well prepare for that.  And then, they found out that the debt ceiling was the issue.  They found out that the government had shut down, and that there was no remedy in sight.  So it's really completely transformed the meeting in the last few days.

DAVID GREGORY:

So help me understand, from your point of view, managing director of the IMF, International Monetary Fund, where you're providing aid to countries at risk around the globe, but you're also keeping an eye on the U.S. economy, the global economy.  Obviously there is a credibility issue for the United States here.  But help me understand the actual economic shock that would result from us not raising this debt ceiling and being in a position where America can't pay all its bills on time?

CHRISTINE LAGARDE:

Okay.  Do you remember 2008, the beginning of the great recession?

DAVID GREGORY:

Yes.

CHRISTINE LAGARDE:

Well, if there was a combination of the government shutdown for a period of time and, more seriously, more damaging, if the debt ceiling was not lifted with a degree of certainty and enough time so that people could, you know, sort of have the assurance that the economy was in good standing, that would bring about so much uncertainty, so much risk of disruption, that the standing of the U.S. economy would, again, be at risk.  That some of the obligations that the first economy in the world has would not be respected.

And I think, you know, there was a lot of discussion amongst the finance ministers from all over the world about the technical aspects of it.  And you can argue forever as to whether the impact is going to be two and a half, 3%, 5%, how much public spending will have to be cut, how many more people will be unemployed.

But one thing for 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.  And we would be at risk of tipping, yet again, into recession.

DAVID GREGORY:

You mean--

CHRISTINE LAGARDE:

That was the impression around that big table.

DAVID GREGORY:

Right, in 2008, "The Great Recession," as it's called, this would mean another recession, from your point of view?

CHRISTINE LAGARDE:

If it wasn't resolved, yes, that's what the risk is.

DAVID GREGORY:

You know there are some figures in our government, in Congress, Senator Rand Paul, others, who say, "You know, this is overstated.  The Treasury can do things that-- the concept of default is hyperbole."

CHRISTINE LAGARDE:

But creative accounting is not the solution.  And markets know that.  The counterparts through the United States know that.  And when you are the largest economy in the world, when you are the safe heaven in all circumstances, as has been the case, you can't go into that creating accounting business.

You have to honor your signature.  You have to give certainty to the rest of the world.  And you have to make sure that your own economy is consolidating that welcome recovery that we have seen in the last few days.  Because it impacts the entire economy.

DAVID GREGORY:

The result of this budget fight, and previous fights, has been part of a global debate about whether governments need to cut spending, deal with their entitlement state.  You know the Americans' budget is overrun with mandatory spending on entitlement programs like Medicare and Social Security.  Is austerity the answer?  Are spending cuts that you hear American conservatives say are so necessary, is that the answer for our economy?  Or is Europe teaching us that that's the wrong answer during a period of slow growth?

CHRISTINE LAGARDE:

You know, when we look at the U.S. economy, we say something which is bizarre.  We say, "Hurry up, but slow down."  "Hurry up," because measures have to be taken now to deal with entitlements, as you suggested.  Because there is a lot of entitlement coming up, and big liabilities coming up, as well, in terms of interest payments.

But we say, "Slow down," because the point is not to contract the economy by slashing spending brutally now, as recovery is picking up.  So the pace of consolidation has to be sensible in order to protect that growth which is generating jobs, and which is helping in all sorts of ways.  But hurry up to deal with entitlement that will come up and haunt you in a few years' time.  So it's a balanced approach.

DAVID GREGORY:

Quickly, if we get past this crisis, if the debt ceiling is raised, if the government is reopened, what's your general view of how things are going economically in the United States and where you see it going?

CHRISTINE LAGARDE:

We see real improvement in the economy.  When you look at the housing sector, when you look at the automotive industry, where you look at the de-leveraging that has taken place, in banks, in corporate, in households, it's a much healthier economy than it was, obviously, back in 2008-2009.  A lot of work has been done.  And the economy is, I'm almost about to say, "was," but I hope "is" really on its way to recovery.

DAVID GREGORY:

Sustained recovery?

CHRISTINE LAGARDE:

Everybody wishes that it is sustained recovery.  And if it is healthy because it deals with this "hurry up but slow down" in terms of fiscal consolidations, if it continues to develop the confidence and the trust that engages enterprises to invest, yes.

DAVID GREGORY:

Janet Yellen, as you know, has been nominated to run The Federal Reserve.  And it got me thinking about an historic moment for a woman at The Federal Reserve, and the powerful example that you are as a lawyer, as a managing director of the IMF.  Both of you now very powerful women in institutions dominated by men.  How do you hope to be a role model to women, both of you?  How can you both be role models to younger women, particularly?

CHRISTINE LAGARDE:

Well, what I can tell you for myself, but I think I've got-- you can talk for Janet on that one, is that it doesn't go to our heads.  We don't take it seriously.  We do our job.  We try to do the best we can.  And if we can inspire young women, if we can give the message that, "Yes, girls can do it," that's brilliant.  Because, yes, they can do it.

DAVID GREGORY:

Sheryl Sandberg, as you know, writes about the concept of leaning-in, not taking yourself out of the game before you get to a powerful position as a woman.  You wrote the forward for the French version.  And you wrote something that struck me, that you want this book to be part of a much wider conversation about how to "break down the larger external barriers that women face in business, in leadership, and the society more generally."  How do you break those barriers down, from your point of view?

CHRISTINE LAGARDE:

(UNINTEL PHRASE) you have to be competent.  So you have to work hard.  You have to study.  You have to be engaged in what you do.  And the barriers that you find on the way, try to rally support of men and women around you, men and women, to break those barriers.  And third, don't take yourself too seriously.  Try to, you know, bring a bit of humor in the equation.  It helps.

DAVID GREGORY:

And as you have said on more than one occasion, "Smile and grit your teeth a lot."

CHRISTINE LAGARDE:

Yes.  (LAUGHTER)

DAVID GREGORY:

Sometimes you have to, right?

CHRISTINE LAGARDE:

I've done quite a bit of that.  (LAUGHTER) END TAPE]

DAVID GREGORY:

And coming up here, we're going to get a live update from CNBC's Andrew Ross Sorkin on how failure to reach an agreement could impact the financial markets, what might we see this week.  Plus a new poll out this week has some jaw-dropping numbers.

Has the view of the American people toward Washington finally reached rock bottom?  Our political roundtable is here, Washington Post columnist Kathleen Parker, PBS's Judy Woodruff, former Congressman Harold Ford, Junior, and our own Political Director and Chief White House Correspondent, Chuck Todd.  We're back here in a moment.

(***Commercial Break***)

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(***Commercial Break***)

ANNOUNCER:

Meet the Press is back with our political roundtable. Here this morning, Harold Ford, Kathleen Parker, Judy Woodruff, and Chuck Todd.  Now, David Gregory.

DAVID GREGORY:

And we're going to get to them in just a moment, but I want to check in with CNBC's Andrew Ross Sorkin, because Andrew, we've been talking about the impact on the markets.  Thus far, the markets have been okay.  But you listen to Christine Lagarde, as we get into this week, closer to Thursday with default, that could change, right?

ANDREW ROSS SORKIN:

Absolutely.  You know, thus far, we have not cratered.  You've seen the market come down, but not nearly as much as you might have expected.  It actually came back up towards the end of the week on expectations.  We get a deal because at base, Wall Street considers all of this theater, or at least bad theater at the moment, expecting some form of rationality at the end of this.

Tomorrow is Columbus Day.  The stock market is open.  I imagine it might be down a bit.  But the day to watch is going to be Tuesday.  That's when the bond market reopens, and that's when people are going to be really focused on treasuries.  And you're going to start seeing banks and other institutional investors who haven't positioned themselves for this on expectations we would get a deal start to say, "Maybe there's more to this and maybe we actually have to get ready."  And if that's the case, I think we could be in for a bit of a ride.

DAVID GREGORY:

People also may not understand how much money it costs the government to be shut down.  We talked about that on Twitter in our interview on Friday.  You made the point $1.6 billion last week, according to an analytics from I.H.S.--

(OVERTALK)

DAVID GREGORY:

--cost that.

ANDREW ROSS SORKIN:

And each additional day in terms of economic output in this country is $160 million.  Those are the numbers.  So there are huge stakes here.  If we get past the debt ceiling without a deal, even if we increase the interest rate on treasuries by one point, that's $120 billion annually.

So huge cost to the real economy, there's going to be a cloud, an overhang either way, because whatever deal we get sounds like it's going to be a short-term deal.  Through the holidays, people are going to continue to be nervous, it's going to impact investment.  I can't tell you that this ends badly, but I can't tell you that it ends well.

DAVID GREGORY:

All right, Andrew Ross Sorkin, we know you'll be watching it all week long.  Thanks so much for taking the time this morning.

ANDREW ROSS SORKIN:

Thank you.

DAVID GREGORY:

Our full roundtable is here.  I wanted to show everybody, as we look at the politics of this and the impact of this here at the end of the week, here from our NBC News Wall Street Journal poll about reelection.  And here was the question.  "Would you vote to replace every member of Congress if you could?"  Sixty percent in our poll, 60% said yes.  Chuck you talked about it as a political depression.  That is the question for all of you.  Are we in a political depression?

CHUCK TODD:

Well, when you have eight in ten Americans say the country's headed in the wrong direction, and we're not in an economic downturn.  We're not in an economic downturn.  It is a fragile economic recovery.  But we're in recovery.  It's clear we're in recovery.  There is a little bit of optimism.  So when you have eight in ten Americans say we're headed in the wrong direction, and it's not the pocketbook, and it's not a war overseas, then what is it?

It is this.  It is, you know, the last time we had this, the only other time we were this bad in our poll, was during the Great Recession and right after Lehman Brothers.  So there's no other way to explain it.  And I think that the country is totally now fed up with this broken political system.  And yes, right now Democrats are quote, unquote, "benefitting" because the Republicans are taking the beating.  But this is the crisis in confidence in government and the political system.  This is the hangover that's going to--

(OVERTALK)

DAVID GREGORY:

And Judy Woodruff, you've covered these issues over time.  Yes, a couple of years ago, but it goes farther back.  We were talking to Leon Panetta back in 1996 they were talking about the need to deal with Medicare.  So it's Washington's inability to get to pass this fundamental belief that, "You're 100% wrong and I'm 100% right."

JUDY WOODRUFF:

That's right, David.  I mean, I didn't cover the Great Depression, but when you think about it, this is as bad as it gets.  If you go back to the 1930s, before F.D.R.  And what the similarities are, back then, it was the rich and the poor who were hurt by what was going on.  Today, it is, as Chuck just said, it's Democrats and Republicans.

Yes, Republicans are hurt in the short run, because people don't like, they think they're mainly responsible for the shutdown and for what's going on.  But in the long term, when people lose confidence in government, and they think Washington is dysfunctional, Democrats believe government should work, government should be there to help solve our problems.  So the public no longer believes, has any faith in government, that hurts the Democrats too.

DAVID GREGORY:

Kathleen?

KATHLEEN PARKER:

I'm actually surprised it's not more than 60%.

MALE VOICE:

See, that's the optimist.

DAVID GREGORY:

That is a high, though.  We'll get there.  Don't worry, it'll get there.

KATHLEEN PARKER:

It is a high.  But even on the Hill, Republicans and Democrats are equally frustrated and equally disgusted with not only one another, but each other.  Not the opposite party necessarily but even among themselves.  And one of the strangest things as we watch all of this is it seems to me that the two protagonists, Speaker Boehner and the president, are essentially being driven by other parties.

And it's sort of sad and tragic in a way that they each know what the other needs and seem willing to have provided that at a certain point.  I think we're well past that point now.  But the president is being driven apparently by Senator Reid and for poor John Boehner, I always precede his name with poor, poor John Boehner is faced with this tea party insurrection.  And so it's almost as though there is no one who can kind of take control of what's come apart.  And everybody seems to want to and they don't know how.

DAVID GREGORY:

Yeah, but I raised this point before and I raise it a second time because as Chuck said, the Republicans have taken such a beating on this (UNINTEL).  But the president knew this was coming as well.  And he didn't have to face reelection again.  So is there a certain aspect of this where he said, "Look, not only am I going to protect a future president from having to deal with these kinds of demands, but I can also do some real damage to Republicans here if they appear to be intransigent and have a strategy to shutdown ObamaCare, which doesn't have support."

HAROLD FORD, JR.:

What's becoming increasingly clear, and you asked that question of the two senators, "Would each of you be willing to blame the other side 100%," and it was interesting to hear their answer.  What's becoming increasingly clear is the president's going to probably have to engage in a little give and take.

There are two issues here.  One, you have whether or not we raise the debt ceiling, you have the proposal to raise it for six weeks, a proposal to raise it so the end of January, and you have a third one where you want to end it to take to the end of the year.  Second, open the government.  You've got a group that wants to push it out till the end of January, another group that wants to push it out for a few months later.

When we look back, we're going to wonder how on earth could the president and others not come to some agreement when you have plausible, attainable kind of goals in front of us.  Two, the economy's ready to take off.  You saw last week the market exploded.  The single gain the day of the year, once it looked like a deal was within reach.

Last week, reports demonstrated that America is now the number-one energy producer in the world, about to overtake Russia in natural gas, oil, and other petroleum products, which means more jobs, more high-paying jobs.  Americans want to work.  They want to get beyond this moment. It seems for those who are outside of this, and I'm not as close to Washington as I was before, that a deal is within reach.

And to Kathleen's point, it appears that their forces, Tea Party on one side, perhaps a liberal progressives and liberals on the other, that are stopping us from actually doing each side taking a small step in conceding a little bit.  Boehner conceding a little bit with Republicans on some spending and President Obama conceding with Democrats around whether it's ObamaCare or perhaps some spending cuts.

KATHLEEN PARKER:

So your point is the fact is there were several proposals made that were completely within reasonable bounds by anyone's measure, including Senator Susan Collins’ proposal and--

(OVERTALK)

KATHLEEN PARKER:

--she worked with Democrats.  Why--

HAROLD FORD, JR.:

To me, none of these are reasonable right now, because we're talking about six weeks, six months, eight weeks, maybe three months.  You go to the cost of the shutdown, the cost of doing this six weeks at a time, even six months at a time, the cost of not having a budget that we haven't had in I don't know how long, an actual budget, the cost of doing that for the federal government is also costing us money.  That's what's sort of to me the most frustrating and I assume the most frustrating part to the public--

MALE VOICE:

I agree with you.

(OVERTALK)

HAROLD FORD, JR.:

--is that they're fighting over a six-week deal.

CHUCK TODD:

But we need something to get beyond this moment is the only point that I make.

JUDY WOODRUFF:

But you talk to the White House, and they make it clear, the president is not going to bend from the debt limit.  He does not want to go with a short-term agreement on the debt limit, because you turn around, and it's December or January, do it again.

CHUCK TODD:

We'll just do this again.

JUDY WOODRUFF:

But they say if you can remove the threat of a debt limit, the president is ready to talk about spending, about appropriations, about the sequester, those automatic across-the-board cuts.  So they're saying that ability is there.  But Republicans have got to get over the debt limit.

(OVERTALK)

DAVID GREGORY:

What is the nitty-gritty?  I mean, here I asked the senators, so if you do get a deal by Thursday, what will they have overcome, Chuck?  Because part of it is, how much do you spend for the next fiscal year?  And there's some debate about--

CHUCK TODD:

Right.

DAVID GREGORY:

That's one thing.  But ObamaCare seems to be off the discussion.

CHUCK TODD:

Almost totally.  Listen to Rob Portman.  His two demands now were--

DAVID GREGORY:

But he's not a House Republican.

CHUCK TODD:

No he's not.  Were employee verification and what, the medical device tax at this point.  So the demands on healthcare now are very, very tiny.  The problem for the Republicans has been the deal that Mitch McConnell and John Boehner would take they can't sell.  What they think would be a win, Mitch McConnell's gone out there and saying, "Hey, look at these spending caps."

And John Boehner is a guy that wants to do something about Medicare and social security.  Problem is, that does not sell with the Tea Party.  So the Tea Party caucus does not want this.  They do not believe a big entitlement deal really is something to tout, certainly not something to take home to voters.

(OVERTALK)

DAVID GREGORY:

But Speaker Boehner could win an increase in the debt ceiling as well as a reopen the government if he chooses to avoid the Hastert rule.  What is the likelihood as you count this up with everybody on the Hill--

CHUCK TODD:

On a Wednesday?

(OVERTALK)

CHUCK TODD:

I think it's a Tuesday or Wednesday.

DAVID GREGORY:

He does not have the majority of Republicans, he obviously, we get all the Democrats could bring maybe 40--

(OVERTALK)

CHUCK TODD:

Well look, talks broke down last between McConnell and Reid.  Senate Republicans thought they had a deal Friday night, everybody thought yesterday it was all going to happen, and then Reid backed out.  Part of that's the White House.  They didn't like the sequester issues and all this, and these numbers that were rallying around Collins.  I think on Wednesday Boehner just takes the Senate bill that's sitting there.  Don't forget, at any point in time, he can just blow that out there, throw it in, put it all as one bill, and then we sort of punt for six weeks.

DAVID GREGORY:

Kathleen, ObamaCare still the center of this in terms of the debating piece of this.  And we were talking about Kathleen Sebelius, she's the Secretary of Health and Human Services.  She runs the healthcare plan.  She runs ObamaCare.

KATHLEEN PARKER:

But she thinks she runs Homeland Security.

DAVID GREGORY:

Right, I need to apologize.

HAROLD FORD, JR.:

But it's part of ObamaCare.

(OVERTALK)

HAROLD FORD, JR.:

Department of Homeland Security is part of the security verification.

DAVID GREGORY:

Yeah, that's right.  Okay, thank you.

(OVERTALK)

KATHLEEN PARKER:

The we forget, we fixed that.

DAVID GREGORY:

She's on Jon Stewart this week and it didn't go well.  Watch this.

[TAPE: JON STEWART:

Ran into a challenge.  I'm going to try and download every movie ever made and you're going to try to sign up for ObamaCare.  And we'll see which happens first.]

DAVID GREGORY:

Funny line.  Unfortunately, a lot of truth.  She struggled to answer why you give a business a year delay but not an individual who has to adhere to the individual mandate.

KATHLEEN PARKER:

Well, they don't want to give the correct answer, which is that ObamaCare falls apart without the individual mandate.  We need the young people to pay for--

DAVID GREGORY:

Healthy people, right.

KATHLEEN PARKER:

Yeah, the unhealthier folks.  As a fellow Kathleen, I think we could cut her just a little bit of slack.  I think she was not effective.  She should've been far better prepared with her answers.  There is no good answer to the individual mandate.  There also is no good answer to why this disastrous rollout.

These people had plenty of time to get it together, on the one hand, but they also had plenty of time to at least get their answers straight.  So that when they were asked, they could say, not, "It's going to get better, every day it's getting better."  But it just shouldn't have happened this way.

DAVID GREGORY:

All right, let me get a break in, we'll here from others on this question and have more with our roundtable right after this.

(* * *COMMERCIALS NOT TRANSCRIBED.* * *)                      

DAVID GREGORY:

Final moments here with all of you, the unusual effects of the shutdown.  So because of the shutdown, there's no administrative personnel to manage quota allocation so that fishermen can go out and fish or crab and that is why you had Keith Colburn from The Deadliest Catch on television testifying on Capitol Hill this week.  Watch.

[TAPE: KEITH COLBURN:

At some point you're going to run out of Band-Aids.  And at some point, you're going to need a tourniquet.  I'm here on behalf of fishermen.  I'm here for crabbers, but I'm here for fishermen.  I'm here for our markets to be solid, for our economy to be good, for people to be able to buy my crab.]

DAVID GREGORY:

And the guy just wants to go fishing.  He was the most eloquent on Capitol Hill just saying, "Do your job.  I've got to go fishing.  I've got to make a living."

JUDY WOODRUFF:

Well, and there are serious, and there are not so serious repercussions from this, David.  But the fact is, and most of the country isn't feeling it.  Most of the polls, your poll, NBC poll this week showed that.  But there are serious effects too.  We know at N.I.H. people are not being accepted for medical clinical trials.

We know that, what is it, the White House said yesterday out of the five scientists in the government who are the winners of Nobel prizes, four of them are furloughed.  Which is just a symbolic way of saying, "Research has been shut down."  The Centers for Disease Control, Food Inspections are cut down.  The salmonella outbreak on the West Coast, the work that's been done on that.  So one example like that.

HAROLD FORD, JR.:

1974, my dad was elected to Congress.  It was the Watergate era.  People had lost tremendous confidence in Congress.  I think as historians look back 20, 30, 40 years from now, this moment will rank up there from 2008 to 2014 as a time in which as we talked and your polling demonstrates, a lack of confidence, a dearth of confidence.

It may be hard to recover from as quickly as we'd like.  And I hope it doesn't discourage quality people from running for political office over the next five to ten years, because it's clear if anything from this mess, that's what we need most.

DAVID GREGORY:

All right, we're going to take a break here, we're going to come back in just a minute.  Chuck Todd will stick around with his First Read Sunday, including an exclusive preview of new findings that will make you rethink the idea of the state of partisan politics today when we come back with Chuck in just a minute.

(* * *COMMERCIALS NOT TRANSCRIBED.* * *)

DAVID GREGORY:

We're back once again here with Chuck Todd for his First Read Sunday, a look at the week ahead in politics.  And first the New Jersey Senate race.

CHUCK TODD:

Right, if it's Tuesday, somebody's going to be voting somewhere this Tuesday.  Harry Reid is going to get one more Democratic Senator.  We do know Cory Booker's going to win.  But what's been interesting about this race, David, it's just kind of limped to the finish line here.  He was a heavy favorite.  The Republican here, Steve  Lonegan, he's very conservative, he's a proud Tea Party Republican, even had Sarah Palin campaigning with him yesterday.

So not the way to win swing votes in New Jersey.  But the more interesting thing is going to be how Cory Booker, he is going to be an impatient man when he's in the U.S. Senate.  This is not going to be somebody who's going to enjoy being at the backbench.  He's going to be a rabble-rouser I think a little bit.  It's going to be interesting to watch.

DAVID GREGORY:

What else?

CHUCK TODD:

Well, you move on, I want to show you some of the, speaking of rabble-rousers in the U.S. Senate, let's talk about Ted Cruz.  And I want to use him as an example here.  Because in our poll, one part that hasn't been covered is how divided the Republican party is.  They really are in two camps.

There's half of the Republican party identifies with the Tea Party, half identifies with the non-Tea Party.  And you see here the split.  Ted Cruz, enormously popular with the Tea Party.  But look at this, he's got a net negative rating with non-Tea Party Republicans.  And this is the divide that we're seeing play out right now in Congress.

DAVID GREGORY:

And how about Chris Christie who could, be in a primary fight with him saying he'd kill himself if he had to be in the Senate right now.  Different approach to this whole thing.

CHUCK TODD:

Totally different approach.  But Ted Cruz has not been hurt with his base.

DAVID GREGORY:

That's the key point?  Okay.  What else here?

CHUCK TODD:

That's the important point here.  And then on Tuesday, we're unveiling an NBC Esquire study.  Esquire Magazine came to us because they said, "What is the American political center?  How big is it?"  Well, we did this interesting survey with the Obama and Romney pollsters, they were our team on this.  The center is the majority in this country.

The left wing and the right wing combined are a minority.  And this is what the center is, though.  It's sort of a disconnect, isn't it?  They do identify with one party over the other, but not comfortably.  They like the government safety net.  They're social libertarians, they're not really church-going people.

But most interesting of course that you need to know what they're doing later today if they're not watching the show today, they're drinking beer and watching football.  That's the other thing we learned about these kind of-- but it is a very interesting study.  We're going to have a lot of details on it on Tuesday, and people can go on the web and find out where they fall in the American political--

(OVERTALK)

DAVID GREGORY:

And people have to wonder, if it's 51%, does that mean anything more--

(OVERTALK)

CHUCK TODD:

This Congress does not represent a majority of the country.  That's what the study is going to tell us.

DAVID GREGORY:

All right, Chuck, thanks very much.  Back here in just a moment.

(* * *COMMERCIALS NOT TRANSCRIBED.* * *)

DAVID GREGORY:

Here now, some of this week's images to remember.

(MUSIC) (“IMAGES TO REMEMBER” SEGMENT)

DAVID GREGORY:

That last image is of the new $100 bill that was rolled out this week, despite the government shutdown.  Interesting fact, the last redesign happened back in '96.  That's right, the same year as the last government shutdown, 17 years ago.  So around the horn here, deal by Thursday?

CHUCK TODD:

Yeah, I think by Wednesday.  They have to.

DAVID GREGORY:

Yeah, me too--

KATHLEEN PARKER:

Yeah.

HAROLD FORD, JR.:

Yes.

JUDY WOODRUFF:

Yes, but after that it's really hard.

KATHLEEN PARKER:

Yeah.

DAVID GREGORY:

Right.

JUDY WOODRUFF:

Something long term.

DAVID GREGORY:

That's the good news.  Deal, and then it gets harder.  That's the ways of Washington.

CHUCK TODD:

The question is does Boehner remain Speaker after that?

DAVID GREGORY:

After that.

CHUCK TODD:

And that's a big--

DAVID GREGORY:

All right.  To be continued.  Thank you all very much.  Appreciate it.  That's all for today.  We'll be back next week.  If it's Sunday, it's Meet the Press.

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