Return to Transcripts main page


Countdown to Government Shutdown

Aired April 8, 2011 - 19:00   ET


JOHN KING, HOST: Thanks Wolf and good evening everyone. It is a dramatic and a consequential night here in the nation's capital. In five hours and counting the federal government runs out of authority to spend money. Meaning, the government would have a dramatic shutdown if no agreement can be reached over the next five hours. The negotiations continue tonight on Capitol Hill, and they're being closely watched by the White House.

A number of proposals on the table -- the president would like a deal to fund the government for the next six months, but they're discussing alternatives that could range from a three-day temporary spending plan so that negotiations could continue through the weekend to perhaps a one-week spending plan. Nothing is agreed to, though, as these negotiations continue as a result as of midnight.

A number of significant and important government services from national parks to national health care programs to some even security programs could be cut off. We're going to go straight to the White House first tonight as we continue our coverage, again, negotiators meeting on Capitol Hill being closely watched by the president -- Ed, the president does not want this to happen, but at this moment in time he is essentially on the sidelines.

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: That's right, John. And this may be the only way out at least to get some breathing room right now. I just spoke to a senior Democratic source close to these talks who basically says that one proposal floating around is a three-day extension, keep the government open, try to pass that by midnight, continue the negotiations through the weekend, but get some breathing space.

Now a senior Republican source just told me that, in fact, it could be as long as a week. As you noted, give both sides even more time to get this going. The bottom line is both parties are looking for some way out. The politics of this, obviously, so dicey nobody wants to take the blame for shutting down the government, the possible economic ramifications, other ramifications are enormous as we've been laying out for the last 48, 72 hours.

I think the bottom line in terms of the stakes for this president, what was significant today is he has previously not been as heavily involved in the negotiations. He has obviously gotten more involved in the last 24 hours or so, and for the first time today an actual deadline imposed by the president was ignored by Congress. Late last night he came out and told us -- the president did -- that he wanted a progress report from leaders early today and that he wanted to be able to announce some sort of a deal early on Friday. That has obviously not happened as we've now crossed 7:00 p.m. Eastern Time and so that's why these other ways out, three days or seven days, are being discussed at the very highest levels -- John.

KING: Ed Henry, stand by at the White House. We continue the conversation. We're going to go up to Capitol Hill. As we do so, I'll bring in our senior congressional correspondent Dana Bash, also want to show, if we can in the control roll a live picture of the floor of the United States Senate. They're in what's called morning business.

That essentially keeps the Senate in session. It keeps them talking so that if they get an agreement, they can come to the floor and do business. Let's get back to Dana now. Dana, Ed Henry says there's one proposal for three days. There's another proposal for a week.

The president, of course, would like -- and I think everybody would like if they could work it out to get the entire six months. What that tells you is they don't have a deal. They have a number of ideas, but you have a bunch of politicians all with different political interests saying try this, try this, try this. Where are we?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: They don't have a deal, but they -- sources in both parties do say that they are getting closer, but the fact of the matter is time is running out. And there have been different kinds of short-term stopgap measures that have been drafted and they have Senate Democratic leaders have them at the ready to try to put forward, and they say that they're just not sure what they're going to do because it depends on what happens over the next few hours.

We've seen -- actually seen with our own two eyes the going back and forth between the leadership in Senate Democratic Leader Harry Reid's office and the House speaker's office. The talks do continue. They are feeling like they are getting closer, and they just aren't sure what they're going to do. But the bottom line is they do want to try to keep the government open. They don't want to -- want the government to shut down, but how they're going to go about doing that remains to be seen, depending on what happens on these critical, critical next one or two hours -- John.

KING: Dana, stand by as well. And again as we show you that picture of the United States Senate, what we are told by our sources -- I spoke to a good one a short time ago -- is that they hope -- they hope -- before 8:00 tonight, meaning in this hour, to come to the floor and announce something. They hope that. They have hoped that over the last several days and they're having a breakdown in negotiations.

Part of it is trust. Part of it are significant policy issues not only about how much to cut, but where to cut it. I want to continue the conversation in a moment. But I want to show you at home, if you're wondering why does this matter to me, how big of a deal is this? Well we're going to spend a lot of time this hour showing you exactly what would happen if the government shuts down. How it would affect you.

But I want to pause on just this for one second. Just on this for one second. Imagine this dollar is the federal budget. What they are debating tonight with this shutdown looming is funding for a budget that should have been passed by the Congress last year. The Democrats did not do that before the election, so now they're trying to fund the government through October.

That's the rest of the fiscal year. How much money are they talking about? Right now how much are they debating in terms of the cuts, the dispute back and forth? If this dollar is the entire federal budget, right, the entire federal budget, see that little bit? See that little tiny line? That's what we're debating about.

This in the context of federal spending, again, that's the entire federal budget for the year. Your government could shut down because of an argument over that much. That is what your Congress and your president are disagreeing about tonight. It is that much money in the context of the entire federal budget, and yet, the government could shut down because of this dispute between a Democratic president, a new Republican speaker who has never done this before and a Democratic majority leader who for the first time has to negotiate with this Republican speaker.

David Gergen, it is that part that is so fascinating. They're new at this. This is the first big test. They will have it over the debt ceiling in a couple of weeks. They will have it over the real budget, the big budget over the next several months, but this is in many ways a first date, and this relationship will be determined. Will they trust each other more? Will they learn to do business more? Can John Boehner operate in this new Tea Party caucus? Can he trust Harry Reid and can he trust the president?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: All very good questions, John, and as you said, this is an evening that's dramatic, consequential, and may I add, embarrassing. It is -- for this country to have that little sliver of the federal budget be what could send us over the brink into a shutdown of government I just think is not only potentially damaging to the economy and American people. I went -- I was in an international conference today with Europeans and Asians, and they're looking at us. What kind of government are you running here? What in the world are you people up to? I think in the --


GERGEN: Yes -- not much of -- and that's what they say and I have to -- I think that it is -- that what this is -- I think it may help John Boehner get along with his caucus better -- to go to your question directly. But I think it's deepened the distrust within Washington.

KING: Well he faces a profound question. He is new at his job as speaker. His DNA over his career has been to be a legislator. He cuts deals. Cuts deals on education policy with Ted Kennedy back in the day, but he is in this new conference right now, Gloria and Jessica, in which he has to make a decision. Who does he want to keep happy right now?

Does he want to keep his conservative caucus that -- I'm not saying they want to shut down the government -- that they're OK shutting the government down for 48 or 72 hours to prove a point that they will have resolve against the Democrats or does he want to speak right now more broadly to the American people. Some of the advice he is getting is that you will need this team of conservatives over the next two years. There's not an election tomorrow. Stand with them now. Repair the damage later.

JESSICA YELLIN, CNN NATIONAL CORRESPONDENT: Well if you are talking about a first date in some ways, the first date is between Boehner and his Tea Party freshmen who are feeling each other out to this moment still, and you can imagine the calculus that John Boehner, Speaker Boehner is making now where if he at least pushes this a little bit, shows that he will push it to the brink, he will win their trust and have them on board when he has these bigger fights coming up next, the debt ceiling and next year's budget.

But on the other hand, no less a conservative than Mike Huckabee today said don't do this. Don't shut down the government over this. Wait for those bigger fights, and if you have to, do it then.

KING: And that's a fascinating dynamic. Mike Huckabee says that. Michele Bachmann, a Tea Party favorite, says she'll probably vote against any deal, but she doesn't think it's worth shutting down the government over this right now. Karl Rove, the architect, if you will, of the Bush administration says don't shut down the government right now. But Gloria, this should be no surprise. The biggest argument seems to be about $300 million in funding through Title 10 that goes to Planned Parenthood.

Now Planned Parenthood says federal law prohibits any federal money being spent on an abortion. But the Republicans say is yes, but you pay the rent and you pay the lights and you pay the staff with that money from the federal government, and so then other money can go to abortions.


KING: And so that's part of the fight. Some people would say why fight that now to the Republicans? Why don't you save that for the big budget fight? But the Republicans --

BORGER: There are pro-life Republicans who are saying that --

KING: But the Republicans also just ran in an election in which the conservatives who won -- this is what they believe in the campaign, and we would not be having this conversation tonight if the Democratic House and the Democratic Senate that was in business before the election had done their job. BORGER: No, absolutely. Are you saying there's plenty of blame to go around here because I would -- I would absolutely agree with that? Of course -- you know of course, but this right now is a decision that John Boehner has to make, and I think, look, he has come out there. He has gone back to the well. He has gone back to the well.

He has pushed the Democrats, declared victory at a certain point because -- because I have not seen the Democrats so on message on the social issue part of this since the 2008 election. When have you ever seen -- the Democrats are taking hits here. They're taking a lot of cuts that they would rather not take, but they're so on message, they're looking pretty good.

KING: Again, if you're watching at home and you just joined us, the deadline is less than five hours away now. Most of the federal government would shut down. Essential services would stay up and running. Essential services, we should repeat, will stay up and running.

However, the troops are not likely to get paid. Other -- some services that you might like would get shut down. I want to go back to Capitol Hill. Dana Bash is with us there. Ed Henry is still at the White House. Dana, I want to listen here. This is John Boehner earlier today. Listen to his language here. Again, he has a message to the American people, but it's also clearly directed at the conservatives in his own caucus, many of those new freshmen Tea Party members Gloria just talked about, about how he will not blink. Listen.


REP. JOHN BOEHNER (R-OH), HOUSE SPEAKER: I'm also hopeful that we'll be able to come to some agreement, but we're not going to roll over and sell out the American people like has been done time and time again here in Washington. When we say we're serious about cutting spending, we're damn serious about it.


KING: Damn serious, his words there. He has decided to plant his flag in this short-term fight, which again in a few weeks will look like a game of tiddly-winks. But he has decided either personally or because of pressure in that room that he needs to plant a flag here.

BASH: He absolutely has because as you have been talking about, he needs to make clear to the people in his conference so many of them are new, 87 new members, that they can trust him. That they can trust that when he says that he is going to fight for spending cuts, that he means it or fight for whatever it is that he means it. And that this really is -- it's not just the first dance that he is having across the rotunda with the Democratic leader, Harry Reid.

It's the first dance he is having with his fellow Republicans, and he needs to make it very clear he is going to do his best now because this is just, as you said, tiddly-winks. It's just you know a few billion dollars we're talking about here that they're haggling over, but that's just the beginning of the very, very important long- term fight that he is going to have to fight again over the debt ceiling, over the fact that they have this budget out there that nobody thinks it's going to actually get very far, but, still, they want to fight for some of what's in it that cuts trillions of dollars in spending.

So that absolutely is a dynamic here, but you also have to look at where they -- where they are and where they came from. Big picture here House Republicans passed a bill that cut $61 billion. Democrats wanted to do zero from that. Now where we're told they are is about nearly $40 billion. So they didn't give that much compared to what the Democrats gave. He is still going to lose a lot of Republicans who said they didn't want to give one penny.

KING: We're going to continue the conversation. Before we go to break, I want to go quickly back to the White House and Ed Henry. Ed, we had three times in 24 hours between Wednesday and Thursday the president calling Leader Reid, the Democrat, Speaker Boehner, the Republican down to the White House. We know he spoke separately by telephone to them today. Obviously they have asked him to let the negotiations work this out, but at what point do your sources tell you the president is prepared to start personally banging heads again?

HENRY: He is waiting until we're a little bit further along. As you say, time is running out. What aides have been basically telling us is they feel somewhat that it's in a holding pattern right now, and they are hoping that there's some sort of progress from the Hill. My colleague Dan Lothian though is also hearing the president may give some sort of a speech tonight to try to lay out the stakes to the American people.

That could be either to put more pressure on the leaders or it could be after some sort of a deal comes together to finally say, OK, let's get that behind us. And let's move on to some of these other bigger battles. So that's the other thing to keep a close eye on -- John.

KING: Ed is going to stay with us, Dana, as well, David Gergen, Gloria Borger and Jessica Yellin. (INAUDIBLE) little footnote -- here's an answer to one of my questions I just was asking Ed there. As Ed was speaking an aide to John Boehner now telling CNN that President Obama called the speaker at 6:30 p.m., about 45 minutes ago, to talk about spending cuts, to talk about the negotiations. The aide though says after that phone call, there's still no deal.

Less than five hours until the government shutdown. When we come back, more on the political showdown here in Washington, and a lot more on just how, whether it's environmental protection, criminal prosecutions, diplomacy overseas, how might this affect you?


KING: Under five hours now -- four hours and 44 minutes until the federal government largely shuts down, unless, unless, the Democratic president, the Republican speaker, and the Democratic leader of the Senate can reach agreement tonight. Those negotiations ongoing in the Capitol Dome -- you see it right there on a spring night here in Washington D.C. Many of you probably watching at home saying why do I care? It's politicians bickering. Well if the government shuts down it will impact each and every one of you in different ways.

More of our political conversation in a moment, but let's take a closer look at some of what this would do if the government shuts down. First and foremost, I just want to bring this up because, as David Gergen noted a few moments ago, this is not a night or a time to be terribly proud of your government. This is about a budget that was supposed to be passed last year, funding the government through the end of the fiscal year, meaning through the end of September. So there are six months left in the fiscal year, what have we done for the six months that have already passed?

Well, six different times the Congress and the president have had to agree on Band-Aid budgets, temporary spending plans. One was 64 days. One was 15. Then there was three and then there were 73. All the while they said they would get around to the big picture and finally do this. Nope, 14, now we're ending a 21-day, and the question tonight is will they finally agree to fund the government for six months or will they do another three days or another week or will the government shut down? That's a real possibility.

If it shuts down, how might it impact you? Just an example or two here and we'll have some throughout the hour. Remember, after the earthquake and tsunami in Japan, we know some radioactivity has made its way across the Pacific Ocean. So what would the Environmental Protection Agency do in a shutdown? Toxic sites would still be monitored. Emergency teams would be on call, and the radiation monitoring, very important now, post-Japan, that would continue, we are told, but if you look at the red, those would be the employees at the Environmental Protection Agency that would be furloughed, told to stay home because the government has shut down.

A small percentage doing those emergency functions would come to work. That's just one agency there. Let's close down the EPA and take one more look. Let me just bring this back up just for a second. Remember the percentage; a huge percentage at the EPA would be furloughed, meaning told to stay home. Remember how red that is because it's very different when you bring into play the Department of Justice because of its role in criminal prosecutions. Look the green -- most Department of Justice workers, they would come to work in a shutdown.

Why? Because criminal cases would continue, civil cases mostly would be suspended. Training would be limited. Most of the senior level employees would not come in, but your U.S. attorneys, the people prosecuting criminals out in your state, they would be at work doing their job. That's two places we show you the impact on you. We'll continue it with more as we continue the hour ahead, but let's come back into the political conversation.

What fascinates me here is that the lack of trust is a complicating factor and the lack of new relationships and it's so hard. You have three people in a room really at the height of this -- the president, the speaker, and Leader Reid -- maybe with one or two aides sometimes, and so when you hear, well, they're negotiating a three-day plan. Maybe it's a one-week plan. Maybe it's this. Maybe it's that. A lot of it is people floating things and floating ideas and you're not sure sometimes what's true and what's spin.

YELLIN: And they also have very different pressures on them. I mean, if you look at the polling, the American public overwhelmingly wants government to stay open, but if you look at that within Republicans, a majority of Republicans say it is worthwhile, new Gallup poll, it is worthwhile to shut down government for a few days just to make your points known and to stick to your priorities, so John Boehner walks in with that number no doubt in his head, whereas the rest of them have very different figures in their head, and in a political year going into 2012 elections you cannot take those political calculus's out of it.

BORGER: And this is also -- we talk about the test for John Boehner. This is also a test for the president. And I think what we're seeing in Barack Obama is he's trying to be the adult in the room, as he keeps telling us over and over again and telling the children to sit down at the table until they get their homework done, right? And he likes that role. It's very clear, but at a certain point the president is going to be called upon to lead and say, OK, we've got to make this decision here and this is -- you know the Republicans only run one House of Congress.

KING: And yet, David, it's a tough one for the president, too. I talked about John Boehner. Who do you choose in the short term? Keeping peace with your conservative caucus or trying to prove to the middle of America, independent voters who made him the speaker -- by the margin he is the speaker -- that don't worry, I'm not going to shut down the government. That's a tough choice for John Boehner.

The president faces a tough one, too, in the sense that he doesn't want to disrupt the economy. He thinks that would, "A", hurt the country, and, "B", hurt his re-election chances potentially, but at the same time if you are a Democratic president and you remember the Bill Clinton example, yes, the polls show the American people would blame everybody equally, but he has the bully pulpit. He believes politically he can win this one.

GERGEN: Yes, John, but he's -- you know, I think he is paying a price in part for a conclusion that they reached in the White House. He personally reached it. After the November elections of this last year he decided that he had become too much the legislator in chief, that he was too engaged with Congress over the health care bill and everything like that, and he wanted to get above the fray more generally and get back to where he is more comfortable, and as a result of that, I think he pulled back.

He pulled back so far that he didn't force these negotiations and force them to conclusions long ago. Normally we're accustomed to presidents, you know, who like to be down in the arena. That's where they want to be. That's why they get elected president. They enjoy the Teddy Roosevelt and the man in the arena kind of thing. He is not comfortable --

BORGER: LBJ -- not LBJ --

GERGEN: LBJ -- yes, LBJ would have had these people in a room and said --


GERGEN: -- you are locked up in here until you get a damn agreement and you ain't coming out of here. And I'll maybe send them food and maybe I won't.

BORGER: And here's --


BORGER: By the way, but he would also say --


KING: Maybe he'd serve a little scotch. He'd try to loosen up --


KING: -- with a little scotch.

BORGER: But he'd also say here's what it is, by the way. Here's what I won't give on.

GERGEN: That's right.

BORGER: Here's what I will give on.


BORGER: And --

KING: It is interesting. We don't know the president's red lines or at least we don't know not all of the president's red lines --

BORGER: Right.

KING: -- which makes it interesting.

GERGEN: I don't think the White House staff knows what the red lines are.

KING: Oh -- we'll see how this one works out. I want to show you -- I think Dana Bash is still with us on Capitol Hill. If so, I want to show you first a photograph just released by Speaker Boehner's office. We told you a few moments ago the president called the speaker almost an hour ago now, about 50 minutes ago now to get an update on the negotiations. There is no deal, but here's what's very important here, and, Dana, help me out. The speaker's office released this photo showing him on the phone with the president -- message to the American people I do not want to shut the government down. I'm trying.

BASH: Oh, there's no question about it. I mean it's actually interesting because that it has in large part been the speaker's office that has wanted the White House to stay a little bit at arm's length publicly because it was better for them to deal here on Capitol Hill with the Democrats, but there's no question about it. I mean, as he said today, I think he said something like I've said until I'm blue in the face I do not want the government to shut down.

It's not only because of the fact that he knows the consequences, but he knows and he has -- he said this privately I think more than once to his caucus we were told by several sources who were there, I know what happens. I know what it's like. I know the political ramifications for Republicans because he was there when Republicans got the blame, you know, from here to eternity for the last shutdown in the mid 90's and then President Clinton was the one who benefited from it.

So he absolutely knows the problems here. And that is why, although both sides, John say that at this late hour they continue to work on this long-term bill to fund the government for the rest of this fiscal year. That is their focus. Both sides say that they have in their back pocket the possibility and probability, I would say, of passing something to keep the government running so it doesn't shut down at midnight.

KING: All right, as you can see Ed Henry standing by at the White House. We have David, Gloria and Jessica here with me. Dana is on Capitol Hill. We'll continue to track these negotiations and we are told their hope is -- their hope is -- emphasis is hope -- that by the top of the hour to have some announcement. They are hoping to have a six-month budget for the rest of the fiscal year.

As Dana noted, other alternatives in their back pocket, but if they don't resolve it -- you see the clock right there -- federal government will shut down at midnight tonight. When we come back a new member -- a Democratic side of the House -- a new member of the Republican side of the House -- why can't your government do its job? That's next?


KING: Federal government shuts down -- you see it right there -- about four and a half hours unless a budget deal is reached tonight. Negotiations under that Capitol Dome you just saw. Let's bring in two members of the House and talk to them about this stalemate. Congresswoman Karen Bass, a Democrat from California and a member of the House Budget Committee. Congressman Allen West is a Republican from Florida who is a member of the House Armed Services Committee and the House Tea Party caucus.

Both are freshmen members of Congress, so this is, for better or worse, Congressman, Congresswoman, your first go round and how sometimes Washington doesn't seem to quite work well. Congressman West, I want to come to you first because you've heard the narrative from the Democrats in recent days that this deal would be done already except the new Tea Party guys, conservatives like you, who said you were going to come to Washington and dramatically cut spending have a straitjacket on your speaker. Is that right?

REP. ALLEN WEST (R), FLORIDA: Well, I don't think we have a straitjacket on our speaker, and I think that when you look at the epic proportions of the problems we have here in Washington D.C., the past three years we've had deficit spending of 1.42 trillion, 1.29 trillion and now it looks like 1.65 trillion. In the month of February we had $223 billion deficit spending, the shortest month of the year. And we're spending about $4 billion a day --


WEST: -- so the $61 billion number, you know, it really is a raindrop in the ocean when you look at the grand scheme of things.

KING: And if the final number, Congressman, is 38, 39 billion -- stick with Congressman West for a minute -- if it's 39 billion, would you support it and then carry over your other arguments to the real fight, which is the big budget fight that comes next, or would you say, no, not enough?

WEST: Well this is what I'm going to tell you, John. My 22 years in the military, one of my commanding officers taught me a very important lesson. If you can't do some of the small things very well, it's going to be hard to do the bigger things, and if we continue to set the bar low, we're going to continue to jump low, and I think that the American people are expecting a few greater exertions from us up here in Washington D.C. to protect the future of our fiscal ship.

KING: Congresswoman Bass, as a new Democrat and a new member of the Budget Committee I want to start here. Are you embarrassed a little bit that your party didn't do its job last year? Your party controlled the House and the Senate and had a Democratic president. The reason we're having this conversation tonight -- and I know the Democrats are mad at the Republicans and the Republicans are mad at the Democrats, but we would not be having this conversation, we would be debating much bigger issues, much bigger spending issues, if the Democrats had simply done what the Constitution asked them to do and a pass a budget.

REP. KAREN BASS (D), CALIFORNIA: Well let me just tell you, I'm certainly not embarrassed by what was accomplished in the 111th Congress. I think many historic things were. And my understanding, although you know neither Mr. West nor myself were here was that budgets were passed out of the House, but they got stuck in the Senate. But I just have to tell you, though, I might be a new member of Congress, but this feels like Groundhog Day to me because in California every year, we have budget impasses like this because, unfortunately, my colleagues on the other side of the aisle, in addition to arguing over the dollar amount that we should cut, add in policy riders, like whether or not we should pass the federal budget, whether we should hold it up based on providing health care to women.

And so, I think it's really shocking. I'm hoping that that's off the table. And I'm hoping in the next few minutes, we will hear that a deal is reached.

KING: But let me -- let's stay with Congresswoman Bass for a second.

BASS: Yes.

KING: We are four and a half hours away. On a scale of one to 10 -- 10 being a shutdown -- how likely do you think it is that the government will shut down tonight?

BASS: Well, I just have to go in the middle. I do think that four hours is enough time to come to a deal. What I understand is, is that the dollar figure has been agreed to.

But you know one thing that I would ask my Republican colleagues. Why don't you empower your speaker? Why don't you let your speaker go to the White House, make a deal, and understand that whatever deal he comes to, it should be OK? That's what we did in California when I served in that position, and it seems as though he's not being given the authority from his caucus, because every time we hear that a number has been agreed to and then he comes back and it falls apart.

KING: Well, let --

BASS: So, I think they need to empower him.

KING: Let's explore that with Congressman West.

Congressman, you have been somebody -- I'm not going to say you mistrust the leadership, but you have promised to hold their feet to the fire, if you will, on spending issue. Has the speaker come back from a White House meeting or meeting with Leader Reid, and come in and said, "I think I got a pretty good deal here," and then left that room saying, "I guess not, it's not good enough"?

REP. ALLEN WEST (R), FLORIDA: Well, I think what the speaker has come back to say to our house coffers is that he is shooting for the best possible cuts is that he can have as we go into trying to complete the --

KING: Has he tried to sell you anything in the last 48 hours? Has he tried to say I think this is a good deal, we should take it, and found out in the room in private that he can't sell it?

WEST: No, he has not come in and given us any dollar amount or any number figure, and he said that everything pretty much so has been agreed upon with the policy riders. It is now about the spending number.

And I have to go back to, I guess, what Karen just said. You know, we are trying to empower our speaker. And the most important thing is we're trying to empower him to understand. When we talk about the future for our children and grandchildren, if we don't do anything about this fiscal situation in America, even the CBO this last week said we could be heading to fiscal Armageddon.

KING: It's not the only issue, but this abortion rider, denying money to Planned Parenthood through Title 10 has become one of the hiccups, one of the hiccups. There are some indications tonight they might be close to a resolution on that.

But, Congressman West, to you first. There are two ways to look at this. Number one, again, the Democrats could have passed a budget. We wouldn't be having this conversation. You would be maybe adding that to next year's budget.

But could you look at it this way -- you're coming into a mass at a temporary spending measure. Let's leave the ideological stuff out. Find a spending cut number and move forward. Or -- and do it in a big budget -- or you can say, hey, we just won an election, we ran as conservatives. What do you expect us to do? Every time we get an opportunity, we're going to advocate our positions.

In terms of the prospect of a government shutdown, in less than four and a half hours, what choice would you make when the American people are watching and trying to figure out if their government is going to shut down tonight? Keep the social stuff in or save it for a longer, bigger fight?

WEST: Well, John, the thing is it's not a social stuff for me. It is, once again, about reducing the size and scope of the federal government. Planned Parenthood is $1 billion, supposedly, not for profit organization. The federal government provides about $363.2 million to it. But yet, they continue to report excess profits -- recently in 2008, $110 million.

So, this is about -- let's talk about being good stewards of the American taxpayer dollar. That's what I am focusing on, just the same with NPR. So, I am not looking to take away any women's health services. I really feel that offensive because I've been married for 21 years and I have two teenage daughters.

KING: And, Congresswoman Bass, I want to turn the tables a little bit. I completely respect everybody's right in the system to argue their position, to push their position and sometimes on both sides I would say it's almost equal playing, at least by my count this week. But hyperbole some times goes a bit beyond.

Let me flip the table. Imagine that you were coming in -- the Democrats had just won the majority, and a Republican Congress had defunded Planned Parenthood last time. And you had an opportunity right now as a supporter of that funding to put it back in. Wouldn't you be arguing to put it back in just like the Republicans are arguing to take it out?

BASS: Absolutely I would be arguing to put it back in but --

KING: So, you have no problem. So, philosophically, have you no problem with what they're doing? BASS: Wait a second. I absolutely do, because I don't believe that that's the issue.

What Mr. West just said is about the $387 million that the U.S. pays towards Planned Parenthood. If it's about $387 million, we can find $387 million in a lot of different locations. And it's not about an abortion rider. It's about a rider for women's health. You're talking about mammograms, cervical screening, hypertension, et cetera. That's what happens at Planned Parenthood.

KING: Well, let me come -- that's an excellent point you make. It's $300 million with an "M," somewhere in the ballpark in the $300 million, somewhere in there. So, if that's the point to both of you, and ladies first here as we close the conversation, why can't -- let's take that.

So, it's $38 billion. We -- first you negotiate a number. Then really comes the hard part. What? Because a number means a program. It means somebody's Pell grant. It means maybe a clinic in somebody's neighborhood on the Planned Parenthood issue.

Is there enough or is this the problem -- trust in the system for these people to go off in a room, make the decisions, and then come forward and sell a plan to the American people in a bipartisan way at least for now, and then move on it the big fight?

BASS: Well, I think that that's exactly what we should do. I think when it comes to the bigger issues, whether we are talking about Planned Parenthood, NPR, or whatever, we should deal with those issues in the larger budget. You know, all we're trying to do is solve a six-month problem.

We are in -- I'm in the budget committee -- so, you know we're looking at 2011 and 2012. That's where those bigger issues need to come up. The main issue that we need to be concerned about right now is getting Americans back to work. That should be our main issue.

KING: Congressman, you get the last word.

WEST: Well, I would tell you that this past week, I found a wasteful defense program, and we cut the printing and production by 10 percent.

BASS: That's right. Congratulations on that.

WEST: Absolutely. And it passed unanimously in the House, 393 to zero.

So, if you have 434 or however many additional members from some of the territories that were going into this federal government budget and finding those wasteful programs, think about how much we could save, because over the course of five years, the cut that I found, saves the American taxpayer $180 million.

So, this is my focus. This is what I seek to do up here. And the best way that we're going to be able to set the conditions for long-term sustainable economic growth and job growth is to reduce the size and the impact of this federal government.

KING: Well, I hope there's more civil conversation and more trust in your mutual exchange of ideas as we move on to the big fight as we've had right here.

Congresswoman Bass, Congressman West, keep in touch in the hours ahead as we see what happens.

WEST: Thanks. Absolutely.

KING: And as the conversation is going on, I want to tell you something I just received from the source -- and a caveat with is we're being conditional and careful about everything, but this is from a very good source, very close to negotiations. It sounds like they have resolved the rider, the abortion rider issue. Pending the right spending number, which means no deal until everything is resolved. But that's a sign of progress that they move on that. Also says they hope to be able to announce soon, hopefully by the top of the hour that, we're close enough to continue the negotiations and pass a one- week continuing resolution to keep the government going.

Again, this is from one source, a very good source, very closely involved in the negotiations. However, we've been down this path before. It sounds like progress. We could have a deal by the top of the hour. Stay with us on that.

And when we come back, all these worries about a government shutdown causing anger, fear among military families. Up next: we'll discuss the Pentagon's plan to manage a shutdown.


KING: Coming up in the 8:00 hour here on the East, the live picture there of the United States Capitol. On the Senate floor, Republican Jon Kyl of Arizona, he's the number two Republican. Negotiations are continuing with a midnight deadline here in the East.

Four hours, 18 minutes away, the government -- the United States government runs out of spending authority -- meaning they cannot spend money, and most of the federal government -- much of the federal government would shut down. Vital services are said to continue.

We are being told by pretty good sources, very good sources -- I'm just being a little flip -- that they're making some progress and that they hope by the top of this hour to have an announcement. The goal is to fund the government for the next six months. It appears, at least right now -- and this has changed over the last day or two -- that they're looking to have a one-week extension and then keep the negotiations going.

But all of this depends on constant, steady progress.

Our senior congressional correspondent Dana Bash has been tracking the ups and downs, the ins and outs for several days.

And, Dana, we've heard this before that we're getting close. And so, even when it comes from a very trusted source, you start looking around saying what might unwind it?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Exactly. And part of the problem that we've had really all day and for the last several days is that you hear different things -- even from people that we trust -- different things from different sides of the aisle.

So, what the big issue from the Democrats point of view, you talked about even the people that have been e-mailing in the last few minutes has still been that so-called policy rider, specifically the one dealing with women's health. And that that is the one outstanding.

Republicans say that they feel that that is pretty much done and that they feel comfortable on that. So, still trying to figure out exactly where they are right now, but the bottom line is that sort of the body language and the sense that we're getting is just what you are hearing as well, John, is that people are feeling better -- they are feeling more confident, and they are getting closer to a deal, and whether or not they're going to actually pass something to keep the government running, that is -- and how long they're going to do that tonight really depends on how good they feel really in the next few minutes -- John.

KING: In the next few minutes, Dana says.

And Dash was speaking, we learned the Senate Majority Leader Harry Reid, he was supposed to speak at 8:00, has now pushed his speech back to 9:00.

Ladies and gentlemen, this is your government at work. And we say it with a smile, and it's not pretty. Let's hope it's making progress even though it's not pretty.

Let's go over and check in at the White House with our senior White House correspondent, Ed Henry.

Ed, you know, Harry Reid speaks at 9:00. Again, if they think they're close to a deal, they could be dotting I's and crossing T's and let the lawyers take a look at it, checking with the White House, that could be a good sign, or --

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: We've been reading tea leaves for days now, you're right. And so is Dana.

I mean, I think the bottom line is, some people have been hearing the White House say, look, we can't do this week by week, continuing resolution, and keep the government open by that any longer, and think, well, maybe the president would not sign a one-week extension if they're really, really close here.

But, in fact, Jay Carney, his spokesman, in recent days, has been saying, look, if there was one more one week budget that was clean, didn't have any of these controversial issues like abortion in there, the president would be willing to sign it with a big caveat, if he is seeing major progress on the broader deal. Now, as you say at this moment, they could get the broader deal and not have to worry about another one-week extension, or they could get something like a one-week extension to just get breathing space here, get past and not shut down the government at midnight, and get the broader deal next week. That's what everyone is certainly hoping for in both sides, and they're holding their breath as we get this information from our sources, John.

KING: Well, let's hope we get one or the other. And the government does not shut down, hopefully, in a little over four hours.

But as we deal with all this, a lot of military personnel and their families are expressing fear and anxiety that their paychecks to the service men and women will stop -- will stop. Yes, they will if the government shuts down at midnight. We're going to explain as clearly as we can what's going happen.

And this information comes straight from the Pentagon. The next payday for troops and families is next Friday. That's April 15th. If there's a shutdown and it's over by next Tuesday, checks should go out as scheduled, no problem.

But what happens if the shutdown lasts longer? And what about other benefits for military personnel and their families are entitled to?

For those answers, let's turn to our CNN Pentagon correspondent Chris Lawrence who is becoming an expert in the budget because of all this -- Chris.

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Yes, John. Basically the word we got just this afternoon from some defense officials here at the Pentagon was, yes, if it gets done by Tuesday, then they can still crunch the numbers in time to get a full check by next Friday. If it drags on a little longer than that, yes, they will get the half check next Friday, but they're not going to have to wait all the way to May 1st to get that back pay. That they're already working on some ways to establish many emergency pay date.

So, say, it gets settled in five, six days from now, they get their half check, they could very well get their back pay maybe three to four days after that. That's the good news.

Where it's not quite so clear is what's called a death gratuity. That means if a service member, man or woman, dies in the line of duty, could be in Afghanistan, could be driving to work here in the Pentagon -- their family gets $100,000 very quickly to cover those emergency costs before a lot of the life insurance and other things kick in. The government and the Pentagon legally could not pay that while the government is shut down. They're already trying to reach out to some of the service agencies, some of the aid groups to try to fill many that gap, just in case.

KING: That is a horrible scenario there. Chris Lawrence staying on top of this from the Pentagon, and we hope this is all worked out. We're told it could be worked out at least on a temporary basis within minutes.

A quick break, and we're back, tracking the latest on the negotiations. David Gergen, Gloria Borger, Jessica Yellin here to help understand the politics and plenty of it.

Stay with us.


KING: Consequential night here in Washington. You see the clock right there just over four hours until a significant shutdown of the federal government, its ability to spend money elapses, lapses at midnight tonight. Here, you see the Capitol dome, that's where the negotiations are continuing.

And just moments ago, CNN had an exclusive conversation with the man who is the key point man for Republicans, the House Speaker John Boehner.

Let's check back in with our senior congressional correspondent, Dana Bash.

And, Dana, we keep getting hints of progress. Does speaker see it that way?

BASH: Progress, but no deal. I just want to give you a sense of what's happening. I'm here talking to you. I'm in the Capitol. Down behind me, that's actually where the speaker's office is. And we have -- we're blessed to have an incredible team here, including Deirdre Walsh and Ted Barrett, our producers, and they actually had an exclusive conversation with John Boehner.

Asked if there was a deal, he said, quote, "Not yet." And they asked, if there isn't a deal, will you actually pass something short- term to keep the government running? And his answer was: only if there is a deal, only if there is a deal.

So, there you have it from the speaker. There's no deal yet. That was not what he discussed with the president. And he says he's reluctant to do anything short-term unless there actually is a deal first. That as the clock is ticking.

KING: We have a war of wills going on tonight as the clock approaches 8:00 here in East, four hours until a shutdown.

David Gergen, you've been in the Oval Office, when you're having moments like this. The speaker says no short-term, meaning another week, we're told, is the most likely scenario if there's no deal. What he means is, no week unless there's 99 percent there. And he can go in to his caucus and say, I know we didn't want to do it temporary, but we're going to resolve this within a few days. We have to do this, the responsible thing to do -- everybody is holding out.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: They are holding out. What he does not want is a simple plain vanilla extension but no cuts. That's what the Senate Democratic position is. What he's clearly looking for, he wants a deal in principle, because once you get the deal, it still takes a few days to go through the process of passing the deal. You know, all sorts of things have to happen in the House. You've got to wait for senators -- senators can object, and that sort of thing.

So, what he's looking for a week to allow the passage of a deal. He doesn't want to sign on just to a week's extension, plain vanilla.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Yes. I mean, it sounds like, though, just piecing it all together from your source, my sources, everyone, is that they saved -- they seem to be trying to get the kind of social issues thing off the table because that has been a real problem, a political problem for the Republicans. And the Republicans want to talk about the money now and make it, right, an issue of money.

I mean, I heard from the Democratic pollster just on my BlackBerry now who said I can't believe that Republicans have made this Planned Parenthood thing such a large issue because it hurts them with young voters, suburban women, and independent voters by a two to one margin. Don't want this to be about Planned Parenthood.

KING: If it plays out, and, Jesse, come in on that point, I just want to show the numbers, as this plays out, because the Democrats wanted to go public with this today. They wanted to go public talking about Planned Parenthood today.

Here's why: in 2008, the Democrats had a huge advantage. These are House races -- huge advantage, 14 points among women voters. In 2010, when Republicans made those big gains, look at that, statistical dead heat. If Republicans can keep this, they're in great shape going into the next year, which happens to be a presidential year. The Democrats are highlighting these issues, Jess, because they want to get back to that.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: I'll just say this simply -- these are Planned Parenthood's numbers, but they will tell you that one out of five women in this country has gone to us one of their clinics for something, to get free care in some way. And those women might not be in favor of abortion rights, but they might have some care and concern about Planned Parenthood.

It is playing with fire potentially to take that away from women, these voters, who could ultimately decide the election.

KING: I think the risk also, as Congressman West made the point, that he's not trying to make it about social issues, he's thinking about money. You can have an argument, and it's a tough argument in Washington right now, about: should the government fund this, should the government fund that, but that's the issue.

GERGEN: You know, Congressman West said it was over $300 million a year. The CNN reports, internal reports, show us less than $100 million a year for Planned Parenthood and a big chunk actually is for Medicaid. That money is not going to be saved. They're going to go to other clinics.

So, I think -- I think Gloria is right about this. The Democrats have clearly scored points on this issue, the social issues. But I have to tell you to balance it off, if the question is after tonight, which party is better at controlling spending, I think Republicans have made points this week on the spending side.

KING: All right. Quick break, we got to work it in before we get to the top of the hour.

We'll be right back again. The clock ticking, a possible government shutdown midnight tonight. We're told there's hints of a deal, but no deal yet.


KING: Coming up at the top of the hour, four hours until a shutdown of the federal government unless a deal can be brokered tonight.

Our senior White House correspondent Ed Henry watching this.

And, Ed, the president has them over there several times. The fact that he has not called them over tonight, to me, is a sign that the source accounts that they're making some progress are true and the president is leading them, hoping to get to the finish line.

HENRY: That's right. In the last couple of days, we've seen the president trying to push this along, getting more heavily involved than he was throughout this whole situation. But right now, what could possibly be the worst thing for him to do would be to interfere if they're actually making progress and I think your read is exactly perfect.

KING: Ed Henry, standing by as all this plays out. Again, four hours and 30 seconds now to a shutdown of the federal government unless they could negotiate a deal tonight. I'm told tonight, they are hoping to reach agreement, if they can't get the whole six months, on a one week temporary extension because they believe they're getting that close, a one week temporary extension is the leading proposal right now. But it's not a deal until everybody signs on -- the president, the Republican speaker of the House, the Democratic leader of the Senate.

Tough times, consequential times, a lot of your federal government may not be there in the morning.

Stay with us right here on CNN in the hours ahead. We're tracking this story as closely as we can.

"IN THE ARENA" starts right now.