Dow Closes Nearly 160 Points Down
TAPPER: Welcome back to THE LEAD. I'm Jake Tapper. We are awaiting remarks from House Speaker John Boehner in just a few minutes. Meanwhile, in our money lead, a dismal day for the stock market. The Dow did a swan dive amid this partial government shutdown in fears of hitting the debt ceiling next week, October 17th to be precise. I want to get to Alison Kosik at the New York Stock Exchange. Alison, I almost hesitate to ask. How low did it go today?</s>ALISON KOSIK, CNN BUSINESS CORRESPONDENT: It went low again today. The Dow falling 159 point, this is on top of falling 136 points yesterday. You know what this is? This is Wall Street yet again firing another warning shot to Washington saying you know what, you're going to get more of this if you don't get your act together, if you don't come up with a solution, not just on the shutdown but the debt ceiling. And the debt ceiling is what's worrying Wall Street the most. So, as far as stocks go, down seems like the path of least resistance. You look at the past, what, 11 sessions, it's been down -- the Dow has actually been down 11 times in the past 14 sessions. Many analysts say expect stocks to stay under pressure until a deal is done. Now, on the other side of this, many really believe that a default is unlikely, that they don't think that congress is going to be that foolish and is going to take it that far. But listen to this, Jake -- if a default happens, there's one analyst who says the S&P; 500 could drop 45 percent. That's astounding. And, remember, many of our investment funds, many of our 401(k)s, they track the S&P; 500. That could be disastrous -- Jake.</s>TAPPER: All right. Alison Kosik with some grim news -- thank you so much. The president in his news conference today made a point to say the private sector agrees with him when it comes to the dangers of hitting the debt ceiling deadline next week.</s>BRIAN MOYNIHAN, CEO, BANK OF AMERICA: It makes absolutely no sense to let it be used as a lever for other things. If you want to change laws on abortion or immigration or you name it, tax laws, whatever, let that be a piece of legislation that people hammer out. But to tie it to something about whether you break the promises of the United States government to people all over the world, as well as its own citizens, just makes no sense. So, it ought to be banned as a weapon. It should be like -- it should be like nuclear bombs. I mean, basically, too horrible to use.</s>TAPPER: Let's bring in matt miller, senior adviser in the Office of Management and Budget during the Clinton administration. He's now a senior fellow at the Center for American Progress. And here in Washington, Doug Holtz-Eakin, former director of the Congressional Budget Office. He's now president of right leaning policy group, the American Action Forum. Doug, I want to start with you. Some Republicans are out there arguing that the October 17th deadline is being exaggerated. Take a listen.</s>SEN. TOM COBURN (R), OKLAHOMA: I would dispel the rumor that is going around that you hear on every newscast that if we don't raise the debt ceiling, we will default on our debt. We won't.</s>SEN. RAND PAUL (R), KENTUCKY: I think it's irresponsible of the president and his men to even talk about default. There's no reason for us to default. We bring in $250 billion in taxes every month. Our interest payment is $20 billion. Tell me why we would ever default.</s>TAPPER: Doug, what's your take on that? Knowing you a little, I find it hard to believe you would agree with that.</s>DOUGLAS HOLTZ-EAKIN, FORMER DIRECTOR, CONGRESSIONAL BUDGET OFFICE: And I don't. The bottom line is semantics aside, failure to raise the debt ceiling leads to very bad economic outcomes and chaos in the financial markets. The Treasury may or may not be able to prioritize interest payments, pay them first. Most people say they can't. You can't put the software in place in time. But past that, the politics are ugly. We'll pay the Chinese but we won't pay our senior citizens Social Security, and the confidence effects are horrible. I mean, if an international lender looks at a country and says you know, you can make interest payments but you're not paying for your highway bills, you're not paying for Social Security, you're paying for your Medicare -- they're not going to lend you more money. Interest rates are going to go up. We're going to have trouble.</s>TAPPER: This is a major talking point in the Republican Party now, that it's not that big a deal.</s>HOLTZ-EAKIN: We don't know and we shouldn't want to find out. This is something that I think is extremely dangerous. Shutdown never historically has been a big deal. Messing with the debt limit is something I don't want to try.</s>TAPPER: Matt, I want to get your response to this talk from Republicans. You just heard Senator Coburn and Senator Rand Paul talking about not that big a deal to default or hit that ceiling.</s>MATT MILLER, OPINION WRITER, WASHINGTON POST: I think that's crazy. I think Doug and I agree, even if the Treasury were able to prioritize payments, which it's not clear they can do, it would mean a dramatic cut in the rest of the government which would throw us into a major recession or worse. And so, the idea that we would even be talking about this is nuts. However, I do think we're here because the Republicans learned from 2011 that Obama, when he caved in 2011, could be pushed to the edge and would cut a deal, and that's why I'm worried that we're really going to be in real peril in the next 10 days or so because Obama rightly realizes he cannot allow this again. That's why he calls it extortion. But the Republican rump group, Tea Party caucus, thinks that's what he said last time and we got exactly what we wanted, a big deal on spending cuts over 10 years. I think that's a formula for potential unintended, awful consequences.</s>TAPPER: Doug?</s>HOLTZ-EAKIN: I think it's very important to recognize the economic consequences are severe and that's why these initial negotiating positions, that's what they are on both sides, really don't mean that much. What matters is getting a deal done, getting it done before the 17th, before drop-dead date, and the sooner the president, Senator Reid and the leader, Speaker Boehner, get together on a deal, the better for the economy.</s>MILLER: But the other --</s>TAPPER: Go ahead, Matt.</s>MILLER: The other problem is, there's a good chance that we'll end up with a series of stopgap measures, so we'll end up in this kind of endless fiscal cliff where the Congress says all right, you know, we're up against October 17th, let's buy another month. Then let's buy another six weeks. And I think in the eyes of the world, we will look like a totally ungovernable democracy again because both sides have reached a point where because of 2011, because Obama caved, he can't do it again and the GOP wants to call that bluff. It's a dangerous moment.</s>HOLTZ-EAKIN: This kind of speculation, I don't think, helps. We don't know the end game. What we do know is the president showed some flexibility today, said he might be open to a short-term deal. He's negotiating.</s>TAPPER: We're going to go to House speaker John Boehner. I'm sorry.</s>HOLTZ-EAKIN: And let's see how it goes.