wounded warriors and family members from these conflicts. warriors who have severe injuries, burns, amputations, traumatic brain injury, combat stress, who rely on their disability benefits. we know while we can't replace their disability benefits, we can at least provide them with some means of support to buy necessities, pay their bills, feed their family until this government shutdown ends. >> it's a big pledge for a very good cause. that does it for us. jake tapper "shutdown showdown" continues our coverage. tonight, a cnn special. >> the whole world is watching. >> running in place in the nation's capitol. >> there have been no decisions about what exactly we will do. >> day 15 of the partial government shutdown, one of the most frantic since the crisis began. yet we're right back where we were this morning. a house plan rejected before it was even written. >> this bill that they're sending over here is doomed to failure! >> derailing hope for compromise in the senate and falling apart

all together. >> let's sit down together and get this thing done. >> and breaking tonight, the senate stepping in again. can they salvage a deal before it's too late? we're live with democrat bob casey of pennsylvania as the senate rolls up its sleeves. >> i think that there are lots of republicans and certainly lots of democrats and independents who want to move forward. >> and reaction tonight from a man literally in the middle of all of this. >> i like to look at it as a glass half full right now. >> republican congressman charlie dent says what it will take for his party to sign off on anything. as the united states tick tocks towards possible default america gets a dire warning. >> there's no question we are very close to a very important deadline. and time is of the essence. >> this is "shutdown showdown." good evening, everyone.

welcome to this special hour of cnn "shutdown showdown." i'm jake tapper live in capitol hill where the race to beat the debt ceiling clock somehow has congress right back at the starting line. the senate tonight once again wheeling and dealing to put together a bill that would reopen the government and raise the debt ceiling. they did not wrap up until a little less than an hour ago. under this latest deal, the only obama care-related issue would be income verification for people getting health care subsidies, to make sure they qualify. democrats will also try to appease republicans by nixing a plan that would delay an employee fee for unions. the house twice failed to rally around plans proposed by their leaders. and the credit rating agency fitch put the u.s. on notice today for a possible downgrade of its aaa rating. the agency released a statement "although fitch continues to believe that the debt ceiling will be raised soon, the political brinksmanship and reduced financing flexibility

could increase the risk of australia default." translation? we might downgrade your government's credit rating because of this mess. and that will only drive you deeper into debt. if the downgrade does happen, some analysts predict a catastrophic ripple effect across the u.s. and even global markets. this at the same time that we've learned that rates on treasury bills due this month soared and attracted the least demand since some of our bleakest economic times in 2009. while for some that's enough to make you want to grant money under your mattress, scoop up the kids, hide under a blanket in the basement, there are some house republicans who still seem uninterested. and the shouts coming from economists, left, right and center who are warning about what might happen to the stock market and your retirement savings. house republicans say they don't think missing the dead ceiling deadline will be as bad as analysts predict. >> i just think most folks understand october 17th is not the drop dead date.

there are no payments due for a couple weeks. but it's time to get our act together and move forward on facing the fundamental problem of spending too much money. >> with that sentiment so strong within at least one faction of the house republicans, the question remains even if the senate gets a deal done will house speaker john boehner bring it to the floor for a vote. joining me tonight to discuss the latest one man caught in the middle of the madness, house republican charlie dent of pennsylvania. of course it would not be shutdown showdown without chief political analyst gloria borger and chief congressional correspondent dana bash. congressman, thanks so much for being here. the big question is, assuming that mcconnell and reid are able to come up with a bill that extends the government, opens the government until january, extends the debt ceiling until february and has that income verification, will john boehner bring it up tomorrow? >> i believe that john boehner will likely be in a position where he will have to essentially pass the bill that is negotiated between senators

mcconnell and reid. and i believe the house would first pass it then send it to the senate. >> they wouldn't even wait for the senate to take it up and send it to them? >> for a whole host of product procedural reasons it would be quicker to do it this way. load it up with the agreement just described and then send it back to the senate. and the senate then would vote on >> it one of the big sticking points on this, you've been saying for a long time you wanted to pass a clean government spending bill. one of the big sticking points is, would john boehner bring up a bill that does not enjoy the support of the majority of the republican party? how many republicans, there are 217 republicans or something like that? >> 233. >> i apologize. a 17-vote majority. so how many republicans will vote for the senate bill assuming it is what we think it's going to be? >> there will be fewer republican members voting for the bill than who actually support it. we're going to be seeing a love lot of what i would call hope

yes, vote no. there'll be many democrats voting for the agreement. there will be some republicans voting for an agreement, certainly enough to put it over the top. >> you. >> yes, i will. but there'll be many more who support it but will be voting no. >> so a minority. it will pass with majority democratic support minority republican. you predict? >> that will be my guess. the question is how many republicans will it be closer to 20 or 75. i don't know. >> and just to be clear, they could be voting no because it would be politically dangerous for them to vote yes for something that many conservatives in their districts maybe potential primary challengers think isn't strong enough. >> yeah, dana, we've seen this before. we saw this on the fiscal cliff, hurricane sandy relief, the violence against women act. no budget no pay as it related to the first debt ceiling agreement. you have to have bipartisan coalitions to pass these bills. that's what's going to happen on the c.r. debt ceiling tomorrow or perhaps thursday. >> so can we just talk about your republicans for a moment in the house? >> sure. >> there is going to be a group of people, maybe 40 or so, that are going to vote against this

because it doesn't kill obama care. right? >> right. >> and then there's going to be that group that is afraid to vote against it because they think they're going to get killed if they do, right? so they're different. >> well, there could be some overlap. maybe a lot of overlap. >> there could be some. but tell us a little bit about how john boehner, your friend whom you met with today, is dealing with these two different groups and trying to get to yes here. >> well, the speaker's in a tough -- he's really in a tough bind. we all know that. you mentioned -- somebody mentioned the hastert rule here already. it's very clear -- the speaker knows he has 180 to 200 members of his republican conference who believe in affirmative governance, that they believe they have an obligation to govern and on most occasions will be there on those big issues. the challenge is there are two to three dozen members of the house republican caucus that

don't share that. it only takes two or three dozen to obstruct the will of the majority. >> affirmative sense of governance? >> meaning you have to vote yes. as a member of congress i feel there's certain things i must do. we must pass a budget. we must fund the government. that's our most basic, fundamental responsibility. we have to deal with the debt limit, we have to deal with various issues that are essential to the fun functioning of the government. that's an affirmative sense of governance. i think most of the members have that sense, but some i think kind of have a minority party mentality. and it's much easier to vote no. but you really don't need to be doing that on these big issues. >> how do these other republicans convince 235 republicans to go along with this plan when people like speaker boehner in march said he thought it would be a bad idea. >> let's get real. speaker boehner now still thought it was a bad idea. >> to link defunding obama care to the government spending bill because it was not possible to be achieved. individuals like you. is it just if you don't do this

then when it comes time to vote for speaker again in january 2015 you won't be re-elected speaker, john boehner? how does it play out? >> i think the speaker's position is actually secure. >> was it three weeks ago? >> yes. i just think what happened here is some of the leadership got pulled over by this really poorly thought out tactic led by senator cruz to defund obama care as part of the c.r. now many of us -- i went around my district and said you would end up shutting down the government and you would still be funding the health care law and you might end up losing the sequester in the process. that was my prediction. now the government is shut down and the health care law, obama care is being funded. but i think most of the members of the republican conference understand we have to get some things done, even those who will be voting against the final agreement. i think they understand the speaker's predicament and would still support it. >> i was talking to one of your colleagues who considers himself a moderate republican, i guess like you do, who's really

frustrated, saying, well, i don't understand why the speaker takes the importance of that small minority like you said the couple dozen of the hard-core conservatives over me and you and the majority of the caucus. why is he allowing them to rule? and to what end? because now look where you are. >> right. >> at the end of the day you're going to get exactly what you started calling for a week and a half ago, which is almost a clean bill to fund the government and raise the debt ceiling and they're getting nothing. >> i made it very clear to the house republican leadership that we have to establish bipartisan coalitions to enact must-pass pieces of legislation, that whatever the number is 150 to 200 members who will vote yes, how do you find the balance of democrats? and then marginalize those who can never be counted on ochbt republican side to vote for anything. how do you establish bipartisan coalitions? they said we saw it on several bills this year, we're going to see it again. >> do you think this will be a lesson that maybe they'll listen

to you now? >> they have to. what's that old saying. there's no wisdom to be gained from the second kick of the mule? there sure as hell is no wisdom to be gained by the third or fourth kick of the mule. >> i think we're up to double digits. >> can i clarify you something jake was asking before? are you saying the speaker was somehow dragged into this by other members of the leadership? this wasn't his idea? >> clearly it wasn't his idea. >> but i think the sort of basic question is, he said in march no, i'm not going to do it this way. then suddenly he does it this way. people are scratching their heads. is it to save himself? or you say not? >> no. majority leader cantor, the plan was when we came back in september to basically put the defund obama care into the c.r. and send it over -- >> that's the government spending resolution. >> i'm sorry. basically the short-term government spending regularlusion. send it over to the senate. the senate would have to vote on the defund language first that was rejected as predicted then

vote directly on the continuing resolution. i thought that was a good plan. problem solved. but that wasn't good enough for a few members. and they insisted that the senate had to strip it out and send it back. after the second launch, which was the delay of one-year delay of obama care and the medical device tax, which i'm very concerned about because it's a big issue where i live. when that one failed that was like on saturday night the 28th, i said okay, no more launches. done. now do the clean bill. i was frankly surprised that we were never given an opportunity on september 30th or early on october 1st to vote on the clean bill. that still is a mystery to me as to why that never happened. >> okay. >> so let me ask you another question just about the news you shared at the top of the show, you're saying that speaker boehner you think will take up the compromise that mcconnell and reid are working out and just take it and put it on the floor and it will pass likely with the majority of democrats support and minority of republicans support. i assume this is more than idle speculation, you are somebody who has met with speaker

boehner. this is informed. >> he did not tell me that. but i've been around here long enough to understand how this process is going to work, that the senate for a variety of reasons, timing reasons, i don't think they could really take it up quickly. i don't know if they have an appropriate legislative vehicle to launch back to the house so the house would have to take it up. >> this isn't just conventional wisdom. you're saying you believe this is going to happen because of things people have told you >> yes. >> and there's a rumor in the democratic leadership in the senate, maybe even more than a rumor this is what's going to happen. the initial thinking earlier tonight was that the speaker would send over sort of a vehicle to expedite the process. >> can i ask you? what happens when we're back at this in a few months? >> in january. >> because we're kicking the can down the road. everybody kind of gets that. so do you go through this again? are there any lessons learned here by the folks who say they don't want to govern affirmatively? >> i certainly hope there are lessons learned. one thing i hope happens between

now and the next alarm clock is as an appropriator, i want to see some of the appropriations bills passed and enacted into law. >> can you imagine if congress actually did their job? >> that's what we're supposed to do. >> that would be shocking by the way. >> i think we can get this done, get some appropriation bills done then we don't have to deal with the c.r. again hopefully. but we may have to deal with at least partial c.r. funding for some of the government. i think that's part of it. i hope that many of the members understand too that we have to talk about these issues realistical realistically. i've often said to some of my colleagues, some of the republicans have to stop pretending that mitch mcconnell is the majority leader of the senate and mitt romney is the president and president obama has to stop pretending that nancy pelosi is the speaker and start talking to speaker boehner. we have to have this big reality check and talk about political math, basic numbers you need over 51 votes or 60 votes in the senate to get what you want. we don't simply have them for defunding obama care. >> do do you think this will

give it to them given the public opinion polls? some of the districts aren't suffering at all. ted cruz isn't suffering for this. >> well, i guess a lot of members in both parties come from very safe seats. i happen to come from one that's pretty marginal. i always have. i have to look at the world a little differently than some others do, i guess. but hopefully this experience has taught even those members in very safe seats that no one's that secure. we just can't ignore reality. and pretend that the american public won't notice. >> that's all the time we have. i'm sorry. you hear that music it's like the end of the oscar speech. so thank you so much, republican congressman charlie dent of the great commonwealth of pennsylvania. thanks so much. when we come back, while senate staffers are still working, where does a potential deal stand right now? and are democrats ready to give into any republican demands on any parts of obama care sunny will ask one democratic senator next. and later, threats of a possible credit downgrade if we do hit the debt ceiling. just how disastrous could this be for the economy and for your

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welcome back. if you notice the clock on the lower right of your screen, we're under one day away from when the obama administration says the u.s. will smack the debt ceiling. all attention is now on the senate and the hope that senators mitch mcconnell and harry reid can hammer out a deal that a deeply divided house

could rally behind in some way. here to tell us more about the deal, senator bob casey from the great commonwealth of pennsylvania he just came from the senate floor along with gloria borger and dana bash. senator good to see you again. >> good to be with you. >> an all pennsylvania evening here. so congressman dent from your state said that he thinks, based on informed conversations, that tomorrow what will happen is whenever mcconnell and reid are done with their compromise, boehner will take it and put it on the floor of the house and it will be an open vote even though it looks like the majority of the republican party in the house will not support it but it will still pass with democratic votes. >> i don't know that for certain. but i hope what's arrived at as a strategic pathway that we get there in short order. we don't have enough time obviously to do things the way they're normally done. we've got 24-hour window or even less. so i hope that's the case. but the good news here i think,

i could sense this tonight having been in the senate, that majority leader reid and the republican leader mitch mcconnell spent many hours today. and as soon as the house had the fuss that they weren't going to vote they both went back into action so to speak sitting down and working together. so it's good news that they've met that long. i don't think the agreement is completed, but we hope it's an agreement that can open the government, make sure we pay our bill and don't default. that's very significant. and then getting on a track to have negotiations for short and long-term budget issues. >> i heard senate democrats complaining about the fact they thought today was a lost day, mcconnell and reid were dealing coming up with a compromise. then boehner said stop doing that. i have things i want to do here in the house. boehner and his leadership team twice tried to introduce legislation to the house republican caucus, twice were

rejected at the end of the day mcconnell and reid start dealing again. but it's a lost day. >> yeah. i'm an optimist by nature. so went i heard the good news that the two senate leaders had spent that much time together prior to that time period i was optimistic thought was moving in the right direction. ways a lot more optimistic before noon than after noon. but it seems like it's back on track now. so that's good news. >> what was so amazing is that speaker boehner, it seemed as though the reason why he tried to bring up one last bill that the house republicans put together was to hand one last olive branch to conservatives. and they took the olive branch and kind of stuffed it back in his face. they were the ones who wouldn't allow this to come up. they were the reason why he had to pull the bill in a really tough way, an embarrassing way tonight. and i'm just curious sort of going forward, i know maybe i'm taking it a couple steps forward. but do you think that given all the animosity and the tough situation that we've been in that he is a negotiating partner

that harry reid can have going forward? there are big big issues that still need to be dealt with. >> i think there does come a time when it's so late in the game and consequences are so high that people can rise above some of the disagreements and even rise above pressures that normally they would succumb to or be more reactive to. so we're hoping for for that. and i think it's critically important for the country. i mean, the consequences of default are bone crushing for the country. we cannot allow it to happen. so i think at least you're getting that kind of consensus now. >> do you think you're going to make this deadline or just going to tell everybody you're going to cut the deal so the markets don't tank and say we're optimistic but actually let it slide? >> well, fortunately for the country, there are people working on the procedural pathway here that know a lot more about senate and house procedure than i do. >> you think they have a way they can get a --

>> i don't think you'd see the kind of effort you've seen in the last 12 hours if there wasn't a pathway. >> i want to ask you this. because what's been striking to me that is you guys are usually pretty nice to each other in your caucuses. i mean, republicans and democrats may disagree. but in your own caucus whether it's the democrats or the republicans, you kind of treat each other nicely. we heard last week about a republican caucus in which ted cruz, almost every republican member of the senate stood up who was there and criticized him and said, why are you running ads against me in my state? if i lose you're never going to get another republican senator in my state. have you seen evidence of this? and does it sort of surprise you as you watch it from the other side of the aisle? >> i've only heard about it. >> what have you heard? tell us. >> no. just a lot of division, a lot of ack acrimony. and that's one of the problems here. until that is resolved, we're going to continue to i think have these kind of problems.

>> this particular case. >> resolved in the republican party. can you talk to us about that and how it plays out on the senate floor in your observation? >> you could see it in plain view the divisions that one particular moment when senator bob corker from tennessee was standing not too far away from senator cruz and actually disagreeing with him on the floor in public. you don't see that very often within a party. but having said all that, i think there's a consensus now among senate republicans that we've got to make sure we don't default and we should open up the government. so those two imperatives alone i think allow us to move forward. >> let's backtrack to this morning when house republicans announced that they had this plan. it would reopen the government for a short amount of time. it would raise the debt ceiling. but it did two things. first of all, it would require all members of the house, senate, the president, vice president, cabinet officials, all of them had to enter the

obama care exchanges with no subsidy, and then also it would repeal the medical device tax which i know a lot of democrats in the senate as well as republicans would agree on. you're for repeal of course. because there's a lot of medical device companies in pennsylvania. so i heard liberal commentators say, that seems like a reasonable counter offer from house republicans. good. maybe this will be done. but immediate lit white house, and i believe harry reid said no. we're not going to do that. ultimately, i guess, that bargaining technique worked to a degree. but i think if you could explain why no was the default there for the president and harry reid when like i said a lot of liberal commentators said that's not so crazy. >> well, i can't speak for how they arrived at it. but do i know that sometimes you're reacting to one part of an agreement or several parts. the part of the proposal that the house was pushing and i think some senate republicans was the so-called extraordinary

measures, that every president should have in place so that when you're getting close to the end of a period of time when the debt ceiling is at risk, or the debt level is at risk, that the treasury department can have those extraordinary measures to go beyond and have maybe even months of time instead of just days or weeks. so the fact that that provision was prominent today i think caused a lot of opposition i think on our side. i would hope that people in both parties would object to that. because you never want to have a president and treasury secretary without options when they're getting closer to a deadline. so i think that was as prominent as anything today in terms of what would trigger opposition. >> interesting. because i didn't really hear that as the issue. senator bob casey of pennsylvania, thank you so much for coming in. we really appreciate >> it thanks for making it a big pennsylvania night. >> it's huge. the entire state is watching. >> i hope we did already.

>> i appreciate it. coming up next, where do john boehner's loyalties lie? as the end game approaches, will the speaker stand up to the demands of the hard liners in his caucus? coming up. ♪ wow...look at you. i've always tried to give it my best shot.

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welcome back to "shutdown showdown". i'm jake tapper here right outside the house and senate congress. you see the clock on the corner of your screen there? 24 hours and change until we hit what the obama administration says is the debt ceiling. on capitol hill tonight it's up to the senate to come up with a plan to avoid default and come up with reopening the government. for most of the day it looked like a plan would come out of

the house. it did not so we're waiting along with our dana bash and gloria borger. the question hovering what is john boehner going to do? you heard charlie dent a republican say that he thinks boehner is going to bite the bullet, take whatever the senate negotiates, put it on the floor of the house and it will pass with mostly democratic support, not republican support. that's not going to be easy for him to do. >> well, it's not going to be easy for him to do. >> politically. >> politically. >> principled-wise it will be. >> right. both of those things are true. but what i think is that it will be a lot easier for him to do after three weeks of fighting. because he has built goodwill. he has built trust among the conservatives because he did fight the good fight, even against as charlie dent was saying like basic math, knowing that the math just doesn't add up, that the senate is still controlled by democrats, that there's still a democrat in the white house. so i think that he still is going to be in pretty good shape with conservatives. but what i'm hearing more of is

are the moderates, which are pretty big in number. the people not a huge, not like they used to be, but biggish, saying what about us? why are you listening to them? what about us, the people who actually want to work with the democrats like charlie dent >> it was interesting. because i thought i heard charlie dent essentially say that the speaker got dragged into this by eric cantor and his southern leadership? >> other members of the leadership. >> other members of the leadership. so it kind of explains it a little bit they think boehner felt in assault coming on his right flank which he's felt for quite some time and did this but didn't expect it to drag on the way it's dragged on as charlie dent explained. >> saying in there right outside of boehner's office i guess a few hours ago, losing all sense of day and time, and watching him before he actually officially killed their own

bill, pull all of these conservative members who are never going to vote for this in one by one watching steve king and congressman massy and others, clearly he or cantor or both of them were saying, come on, guys, you've got to give this to us, and still not getting the votes was so stunning. after all of this. after he put his neck on the line for those conservatives, they wouldn't give him this last hurrah. which as i said before, he base you c basically did for them and they said no thanks. >> there's ingrates, right? but there's nothing he can threaten them with. that's the reality of being a leader now. he didn't create them. they created themselves. he wasn't a part of the tea party. he's an establishment republican. >> he helped a lot of them get elected. >> sure. but they don't kind of owe him in the old way where the speaker could say, okay. it's not that he doesn't have any authority. >> let me just interject one thing, which is this is blowback

from the elimination of earmarks. >> totally. >> exactly. >> we in the press are the worst at it or the best. we bad mouthed pork barrel projects. >> we backed the smobring back rooms. >> they were to cajole, encourage members to behave. there's a carrot and stick. now they don't have it anymore. >> and so he's lost a lot of that authority. bring back those earmarks. and there's no more smoke-filled rooms. these people are playing out the politics of this that used to be in the back room in political ads on television in other people's districts, right? this is also the strings on this, the master puppeer puppet all of this are on k street. conservative groups involved which we don't see.

>> when the heritage action fund which is a pretty powerful grassroots conservative group came out with an alert about 5:00 today saying don't do this? >> don't support the boehner bill. >> nobody needed glasses to read it. it was very quickly after that that the thing went down. i think jake, you're so right. that newt gingrich and other former speakers, danny hastert talking about what went on, it's just different now. the speaker doesn't have that kind of power. a big part of it is the earmarks. >> earmarks is a big part of it. also i think there's the rise of grassroots activists, rise of third party groups. you could go back to the supreme court over there and talk about citizen united and the empowerment of independent groups. there are a lot of things going on that make somebody like speaker boehner not as powerful as he would have been a decade ago. >> you're not speaker for life. you're just not speaker for life anymore. >> if you're john boehner you don't want to be. >> but tip o'neill, the thought

of unseating tip o'neill among democrats would have been unthinkable when i was covering this place. >> in a primary you mean. >> no i mean as speaker. internally nobody would challenge tip o'neill even if he made mistakes. >> one thing i know all of us heard from different members of leadership and different aides was two or three weeks ago, because we all knew boehner was against this plan, even though i'm not trying to absolve him of it but he didn't think it was smart, was our members need to learn that if you touch a pot on top of a stove it's hot and it will burn you. >> don't they know that? >> i asked someone who was smart about this group of republicans, and i said, so do they now think that? and this individual said, well, the core group of three dozen or so, they do not. but the rest of the republican caucus, the rest of the republicans in the house, they have learned that if you touch it you get burned. because republican disapproval numbers are very high and the country right now is very

anxious. >> but they're not career politicians. so if they touch it and they get burned they're like fine i'll go back to my life. i came here to defeat obama care is what i've been told over and over again. that's my job. if i can't do it it's not my job anymore. >> a lot of the people who they were hoping would touch the stove and get burned are not getting burned, they're getting applause. >> absolutely. >> rewards from their constituencies back home because they're so gerrymandered that those are the people who elect them. >> guaranteed ted cruz is not going to be invited to some cocktail parties in this town. guaranteed also he has propelled himself to much likelier a presidential candidate, not nominee but candidate, in 2016. and i think a lot of these tea party republicans, even if they're not happy with what happens tomorrow, are going to have a lot of supporters across the country among the republican conservative grassroots. >> i think this helps ted cruz in texas. i think it might help him raise money in texas.

i don't think he'll get a lot of of money from wall street. >> he's got the grassroots. he doesn't need as much. >> that's right. but you kind of can see it shaping up. in iowa, in the iowa caucuses, ted cruz is -- he's probably -- >> i don't know about the wall street thing. he obviously has some very wealthy backers. at the end of the day we'll see if he does anything tomorrow. we'll see if he objects and prevents a unanimous consent from happening. but it's possible. >> and delays this passing. >> it's possible that wall street at the end of the day he just took it as far as he could and now he backs off and wall street is still okay with him. we'll take a quick break. coming up we won't get a real sense of what this all means for your retirement accounts until wall street opens up. shop in the morning. in china the traders are already wide awake. what does beijing think of the chaos on capitol hill? we'll get a live report. [ male announcer ] this store knows how to handle a saturday crowd.

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and a state-of-the-art monitoring center, where experts watch over all drilling activity twenty-four-seven. and we're sharing what we've learned, so we can all produce energy more safely. our commitment has never been stronger. welcome back to our cnn special "shutdown showdown." we're joined by mark paterson, formerly chief of staff at the treasury department. mark, the markets could really be driving the story tomorrow morning. on the other side of the globe you can bet traders overseas are watching the chaos here on the capitol with more than casual interest. so i want to check in before we go to you, mark, with cnn's david mckenzie live from beijing where the markets are already open. it's almost lunchtime in fact. the united states owes china about $1.3 trillion. is there any sign of tremors in the asian markets? >> well, looking at the markets right now, jake, the nikkei,

japanese exchange, up marginally as well as australian exchange. shanghai down, hong kong exchange down. not a lot. really it's a wait and see approach. i think many would say it's the calm before the potential storm. what a storm it would be. $1.3 trillion of ownership china has of u.s. treasury bills. one economist i spoke to today said it would be catastrophic for this region if the u.s. defaults on its debt. he also said this would be ten times worse than the collapse of lehman brothers that kicked off the financial crisis. so very nervous eyes here in asia looking at the situation going on in capitol hill. >> and david, how's the chinese media reacting to the american political breakdown? >> well, you have to also look at the soft power battle between the u.s. and china. one analyst i spoke to today said it's a battle that beijing is currently winning. in a state media editorial, the

mainstay media in china said that quote the u.s. fiscal failure warrants a deamericanization of the world. they're saying it's time to people turned their back on the u.s. dollar, moved towards other currencies and other standard bearer, obviously hinting they should be the ones. reality is that they couldn't do that now. china just doesn't have the currency or the setup to become new u.s. dollar with its own currency. but certainly the fact that the beijing is reveling in the fact that the congress is in this chaos from their perspective means that china is using this opportunity as a p.r. battle. because it owns so much of the u.s. debt, though, a default would be terrible for the economy here. so certainly they don't want that to happen. jake? >> all right, david mckenzie, thank you so much. mark, you just heard david mckenzie's report. is it overstating the case to say if this default were to actually happen it would be ten

times worse than the collapse of lee man brother brothers or is that right? >> we've never had a default before. nobody really knows. most economists believe we'll be very difficult because the financial system is interconnected. most based in some way on the u.s. treasury and u.s. dollar as foundations for the way the whole system works. you don't want to start unraveling that. >> i want to ask you about a statement that our own brianna keilar got from a senior administration official. one things he said trying to encourage this compromise to go on that thursday is important but not a drop dead moment. congress is working on a resolution. we're okay if things start to drag into next week, the house is still intransigent and messes around with another counter proposal that's going nowhere that the wheels come off. why were we told october 17th? >> i would say this about that.

the date, the 17th is the date after which treasury can no longer guarantee it can make all payments. the treasury department has never said it has no cash on that date. they have said they'll probably have about $30 billion in cash available on that day, plus whatever comes in over the transom. >> tax payments. >> so it is possible for the treasury to limp along. that's fumes for the treasury department, okay? on a $3.6 trillion budget, $30 billion is like you and i having $3 in our checkbook when we have a lot of checks outstanding. we wouldn't want to do that and the government shouldn't do that, either. the problem that could come is during that period when we have no ability to borrow, something would mhappen called rollover risk. people that hold treasuries now might decide to cash out of them and take their monies elsewhere. >> 100 million a week. >> you're familiar with this. i wouldn't understate it. nobody knows, if investors are

spooked they might decide to take their money elsewhere. if they did that, the crisis would be immediate. it's an immediate lights out moment. because the treasury does not have an extra $100 billion laying around in a vault somewhere to pay off a treasury auction. >> isn't the issue also that even if it's not an actual practical problem it's perception? >> absolutely. >> and i was talking to some republicans here, some of whom don't believe this data is true. but what they do believe thoughts perception that it is true is enough to roil the markets here in the united states and around the world and that is very dangerous. >> again, i think people get confused about what the date means. the date just means we can't borrow anymore after that date. but the problem is the cash we have is not enough to sustain the government for any length of time. the government is naked. sort of like if all your credit was cut off at home and you could get no ability to borrow and the bank suddenly said by the way we want you to pay off

your entire car right now. you have nowhere to turn to get that cash. that's when the car company comes and seizes your car. that's when other bad things start happening to you. >> can i ask you this question? assume the government, let me be an optimist for a change, assume the government reopens, we get through the debt ceiling crisis whether on the 17th or a couple days later. can you at all estimate how much this has cost the american people? >> not yet. >> but like can you give us an idea of how you calculate it? >> i assume it will be in the billions. you've already seen over the last week the cost of treasury borrowing rising day-by-day. that has a cost. that means bigger deficits. that's what happens when treasury borrowing costs go up. i can't quantify it at this point. but i think what you're going to see it will be significant. >> republicans argue that short-term pain for what they would hope long-term gain, take some hits now in order to solve the bigger problems that will

ultimately really hurt the economy. entitlements and things. >> but i'm optimistic, too. i think there will be a degree. i think the senate will pass something. i think pursuant to what your previous guests said the house will pass it and probably with more than democratic votes or not. good in the short term. the problem is we're doing this until february. we have to do this whole thing over again. so people have got to learn a lesson from this. this will be the second time if this goes as everybody expects, this will be the second time that congress raised the debt limit and was unsuccessful in extracting a big demand out of president obama. because he laid down a marker on this before the last one and he said i'm not going to negotiate and they drop their demand for dollar per dollar spending cuts. the price they asked for was the senate pass a budget resolution. if they do it here and this bill passes virtually clean, maybe f fly specks on it but virtually clean, the lesson ought to be you can't keep doing this over and over again. unhealthy for the country. >> appreciate your coming.

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we're just about at that point where we can stop counting hours and start counting minutes until the debt ceiling deadline. what does tomorrow hold as the clock continues to tick down? stay with us.

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humana. jbut when it comes to investing, things i prefer to do on my own. to become your partner in health. i just think it's better to work with someone. someone you feel you can really partner with. unfortunately, i've found that some brokerage firms don't always encourage that kind of relationship. that's why i stopped working at the old brokerage, and started working for charles schwab. avo: what kind of financial consultant are you looking for? talk to us today. welcome back to the special hour of cnn coverage "shutdown showdown." i'm jake tapper live on capitol hill. still with us chief political analyst gloria borger and chief congressional correspondent dana bash. dana, optimistically reviewing the day we've had. >> am i allowed to be optimistic

at this point? >> it does seem as though congressman charlie dent republican of pennsylvania seems confident that speaker boehner will take a compromise from the senate, introduce it and it will pass with democratic majority support. >> if that doesn't happen and there's another hocus pocus they do, the big picture, what he said and what i was told by other members of the house republican leadership is that john boehner will now bite the bullet. he's going to put this on the floor, whatever the "this" is and it is unlike to -- maybe it won't get the majority of republicans but be in a bipartisan way, something he hasn't been willing to do for three weeks. >> 15 seconds, gloria. >> two weeks plus later where are we? we're kind of back where we started. and there's no defunding of obama care. the huge issue that was on the table vaporized. >> vaporized. what you get is more security to make sure that people who receive obama care subsidies are actually at the income level they