>> schieffer: today on "face the nation," an interview with a senate republican leader, mitch mcconnell, who brokered the deal with democrat foz get the government running again and keep the u.s. from going into default. wall street responded with relief and stocks went to record highs just hours after the deal was struck. but how badly about the shutdown hurt the government and was it just another case of kicking the can down the road? >> let's be clear-- there are no winners here. >> this is far less than many of us had hoped for, frankly, but it is far better than what some had sought. >> schieffer: in his only sunday interview we'll ask the senate republican leader what he sees as the next step in this continuing drama.

plus we'll hear from republican senator lindsey graham, who urged republicans not to shut down the government. and democratic senator mark warner will be a key player as the two sides look for answers in the days ahead. we'll get analysis from mark zandi of moody's analytic. stuart rothenberg of the "rothenberg political report." gerald seib of the "wall street journal," and michael gerson of the "washington post." the government is back in business, and compg it all is our business because this is "face the nation." captioning sponsored by cbs from cbs news in washington, "face the nation" with bob schieffer. >> schieffer: and good morning again. we welcome to the broadcast the senate republican leader mitch mcconnell. senator mcconnell, jim baker, the former secretary of state

who led five republican presidential campaigns, described this recent brawl over trying to tie the defunding of obamaed care to shutting down the u.s. government, he described it by recalling the words of a long-ago candidate who lost a senate race in texas who said, "we shot ourselves in the foot, and then reloaded." will you ever let something like this happen again jew know, one of my favorite old kentucky sayings is there's no education in the second kick of the mule. the first kick of the mule occurred back in 1995 when the republican house shut down the government. look, shutting down the government, in my view, is not conservative policy. i don't think a two-week paid vacation for federal employees is conservative policy. a number of us were saying back in july that this strategy could

not and would not work, and of course it didn't. so there will not be another government shutdown. you can count on that. >> schieffer: well, how badly do you think the country was hurt by all of this? >> well, it certainly didn't do the country any good. both a government shutdown and a pending fiscal crisis right on top of it. but, look, we're a big, resilient country. you just pointed out how the stock market bounced back immediately. i was pleased to play a role in keeping us from going to the brink. i think it was important to do the right thing for the country. and we did it. >> schieffer: you know, people here were giving you credit for being the one who was able to get together with the democrats and broker this deal, back in your home state of kentucky, the tea party folks went nuts. i mean, you are going to have a tea party candidate opposing you in the republican primary. they are-- they say they are now more determined than ever to beat you. they even accused you of taking

a kickback. they said in this legislation there is a provision that provides a way to get $2 billion to fund a dam project in kentucky. what is that all about? >> well, as has been widely reported, it was a provision "by the president and the core of engineers and suggested by a senator from tennessee and a senator from california that actually saves the taxpayers $160 million. rarely, in a spending bill, do you have a provision that saves $160 million for the taxpayers. >> schieffer: but did you have anything to do with putting that into this legislation? >> it was put in by senator alexander and senator feinstein, senators from tennessee and california because it saved $160 million for the taxpayers. >> schieffer: you have lobbied for that project before. i mean, it is a kentucky project. >> in past years, yeah, in past

years. it's a dam that-- in-- an important inland waterway passage between the mississippi and ohio. it has been a long-standing project. doesn't just benefit kentucky. it benefits the withhold indland waterway system. it is extremely important to the commerce that slow floes down the central part of the united states, yes. >> schieffer: let me ask you about senator ted cruz. he led this effort to tight funding of obamacare to shutting down the government. he said he is not backing away. he says he will continue to do-- and these are hid words-- "anything he can to stop" what he calls the train wreck that is obamacare? how are you going to deal with that? >> well, i certainly agree with senator cruz that obamacare is indeed a train wreck. a visit to the web site is kind of like a trip to the department of motor vehicles in your state. even if people can access the web site, there's no way to-- to

get quotes. even those who may be fortunate enough to cip sign up are goingo find the premiums are hiring and choices are fewer. one thing all republicans agreed on in 2009 was we thought obama p obamacare was a terrible mistake for the country. we still think that, and we're going to do everything we can in the future to try to repeal it. but that requires a republican senate and a different president. we have a math problem in the senate in getting rifd obamacare. it's the following math problem-- 55 democrat explz 45 republicans. we only control a portion of the government, and so that limits our ability to get rid of this horrible law. >> schieffer: but let me get back to what do you do about senator cruz? how do you deal with him? trent lott, your predecessor, the very conservative republican from mississippi, was asked by the "washington post," and he said, "you gotta roll him. he said we've got to have more

pushback against these people who come to washington and suddenly announce thaif all the answers. when senator cruz does this again, how will you respond to that? >> look, we've got a big conference with 45. i'd like to have 51. that would make me the majority leader instead of the minority leader. we have a lot of people with different points of view. we had tactical differences about how to get at the repeal of obamacare. the fact that we have some tactical differences doesn't mean we don't all share the same goal. obamacare is the worst piece of legislation passed in the last half century. the single biggest step in the direction of europeanizing our country. we need to get rid of it. if the american people will give us a majority in the senate and new president, that's exactly what we're going to do. >> schieffer: i have to tell you the white house as late as last night was telling me that one of the reasons for all these problems with this web site is édat it has been overwhelmed with people that want this

insurance, and they're saying that they are enrolling people into this program. and that, like all new programs, the glitches will have to be worked out. >> well, let me quote robert gibbses, the president's former press secretary, who said it's excruciatingly embarrassing for the administration. in oregon, no one has signed up. in alaska, seven. they've had three or four years here to get this ready. god only knows how much money they've spent. and it's a failure. you know, the government simply isn't going to be able to get this job done correctly. and even if you were lucky enough, bob, to get on to sign up, you're going to find you've got fewer choices and higher premiums. this is a very bad deal for the american people. >> schieffer: you have primary opposition. you have tea party people who now say you are public enemy number 1. it seems to me, though, this is something that goes beyond mitch

mcconnell and the right side of the republican party in kentucky. are we seeing a war now for the soul of the republican party? >> well, just let me say this about the primary in kentucky-- i've endured millions of dollars of attack ads that have been calling me a right wing fanatic over the years. i think my opponents in the primary are going to have a hard time convincing kentucky primary voters that i'm some kind of liberal. you know, i enjoy the support of the most famous tea party senator in america, rand paul. i'm supported by marco rubio. pat toomey. two other tea party favorites who were elected in 2010. i have the support of mike huckabee and bill bennett. i think they're going stro a hard time convincing kentucky primary voters that mitch mcconnell is some kind of liberal. in fact, we took a poll last month to check that out, and only 2% of kentuckians thought i was a liberal. i think that's a pretty hard

sell. and it's almost certainly going to fail. >> schieffer: what do you want now from president obama? what do you want him to do now? you're facing the same problems that caused this government shutdown. what would you like the president to do now? >> my first choice would be to take advantage of the opportunity present bide divided government. you know divided government has historically done things. i think ronald reagan and tip o'neil doing the last comprehensive tax reform. i think of bill clinton and a republican congress doing welfare reform and actually balancing the budget multiple years in the late 90 pps divided government san opportunity to tackle tough stuff, and we all know the unsustainable growth rate of entitlements is the single biggest challenge confronting america's future. if we don't fix that, we're not going to leave behind for our children the same kind of

country our parents left behind for us. i wish president obama would lead and take advantage of the opportunities presented by divided government. >> schieffer: what are the first steps in doing that? do you want him to call you on the phone? do you want him to set up some kind of a meeting? do you want to let it be settled up there on the hill? because some-- even some democrats say the president has not been active enough in this fight. would you like more contact with him, or is that a waste of time? >> well, we've talked about this. what i'd like for him is to step up to the plate and do it. unfortunately, every discussion we've had about this in the past has had what i would call a ransom attached to it-- $1 trillion in new tax revenues. look, we don't have this problem because we tax too flilgt this country. we have it because we spend too much. we currently have a $17 trillion national debt, and that pals in

comparison to what's coming our way if we don't make the eligibility for entitlements fit the demographices of today and tomorrow. i do expect this kind of presidential leadership in the near future? honestly, no. but let me say what i do expect to come out of the next episode that we have in january and february. we have, as a result of the budget control act, which of the passed in 2011, which the president stiend and was supported on a bipartisan basis, actually reduce government spending for two years nay row for the first time since right after the korean war. it is reducing government spending. our democratic friends want to bust the caps-- in other words, spend more-- and they want to raise taxes. for me, the bottom line, when we reengage early next year, is i don't want to bust the caps. and i don't want to raise spending because we are, in fact, reducing government spending. not as much as we need to, but it is a success. >> schieffer: but wouldn't it be a good idea, maybe, to start

reengaging before early next year to try to lay some groundwork for that? i mean, have you given any thought to calling the president or if he called you, would you take the call? i mean, what happens right now? >> oh, yeah. >> schieffer: what ought to happen right now? >> well, what's happening right now is there is a budget conference with paul ryan and 58 murray. and they're going to see if they can come up with a proposal. look, we interact with the white house whenever they would like to. my preference would still abe big deal. but let me say at a minimum, at a minimum, we ought not to bust the caps that are actually reduce, government spending and we ought not to raise taxes, at a bare minimum, it seems to me, that's the best way to go forward as we go into the discussion that we will have in january and february. >> schieffer: all right, well, senator, i want to thank you very much for coming out and talking to thus morning. we appreciate it. we're going to turn now to two key senators, republican lindsey

graham, democrat mark warner of virginia. he'll be a key player and he is with us here in the student. senator warner, let me just start with you. you heard what senator mcconnell said. where do you think this is headed? >> well, bob, i think we need to step back a moment and say we just went through an awful period for our country. >> schieffer: he basically agrees with that. >> listen, the numbers are coming in. $24 billion hit to the economy. we actually increasedly the deficit. you can't start and stop the largest enterprise in the world, the federal government, without adding costs. we actually built in higher interest rates because any time we get close to a potential default, we're going to have higher t. bill pricing. that's been built in. that passes through to mortgage costs, car loans, student loans. what we need to do now is-- i'm an advocate of a big deal, but weitute at least first start and make sure we actually operate the government for a year going forward with a solid budget. and find ways to alleviate some

of the damage also being done by sequestration, which is this automatic spending cuts which lindy and i and a whole group of others say was the stupidest way possible to go about cutting government. >> schieffer: senator graham, you heard your leader. where do you think this is going no? >> i think what would be good for the country is if the budget committee reported out a bill by december 13 that $dthree things-- fund some infrastructure. there's a lot of bipartisan supporter for infrastructure funding for our roads, or bridges and our ports. and the president should give democrats some political cover to reform entitled, and republicans need to be courageous enough to flatten out the tax code. if we did those three things and replaced sequestration we could end this year on a very positive note. >> schieffer: do you think there's any chance something like that could happen? >> with presidential leadership-- well, i think it would take leadership. the public is ready for the congress to behave better. this is a second changs.

it would help us all. 60% of the people in the united states want to fire every one of us. i understand that. but if we could come together and pay for an infrastructure bill-- mark is working on infrastructure system of funding. if the president would give cover to democrats to enact c.p.i. changes that he's already embraced, and people like me would agree to bring in revenue, not by raising taxes by flattening out the tax expoad bring in some repatriated corporate earnings at a lower rate, apply that money to infrastructure, we could replace sequestration andn whole or in part and help us all and the country but it's god to be head with some leadership. >> schieffer: senator graham, what do you think the impact of all this has been on the republican party, your party? >> it's a wake-up call. conservatism san attest t is ane republican party. i think we've learned this was a political gift to the president by the republican party at a time he needed it the most.

the tactic of defunding the government, unless he repealed his signature issue, was as poorly designed as obamaed care itself, almost. i can't imagine president bush agreeing to repeal the bush tax cuts with the democrats have challenged him with the following proposition-- we will fund all the government, mr. president, if you, president bush, would give up on your tax cuts. president obama was never going to give up on his signatory issue. as a party we have to do soul-searching and i hope our house colleagues will follow speaker boehner. the only way the government can shut down is not what ted cruz. senator reid stop moving the goalpost on speaker boehner. to my house republican colleagues, follow speaker boehner. he's a good man. >> schieffer: we're going to come back to both and you senator warner and talk some more about this in one minute. i'm beth...

and i'm michelle. and we own the paper cottage. it's a stationery and gifts store. anything we purchase for the paper cottage goes on our ink card. so you can manage your business expenses and access them online instantly with the game changing app from ink. we didn't get into business to spend time managing receipts, that's why we have ink. we like being in business because we like being creative, we like interacting with people. so you have time to focus on the things you love. ink from chase. so you can. ♪ [ male announcer ] 1.21 gigawatts. today, that's easy. ge is revolutionizing power. supercharging turbines with advanced hardware and innovative software. using data predictively to help power entire cities. so the turbines of today... will power us all... into the future. ♪

senators graham and warner. senator warner, you heard senator graham lay out what he thinks the path is here. he also talks about how badly republicans were hurt. was your party hurt by this? and where do you think this all goes now? >> bob, there were really no winners. i mean, our country took an economic hit. we also took, i think, a confidence hit in terms of the american public. i understand why people are madder than heck at all of us. and we took a hit on the world stage. look when you see china and russia saying let's de-dollarize the world. let's move away from an american-driven economy. so i think-- and lindsey and i, we have a lot of common agreement. we're working on infrastructure together. wyatt to put this in an order of three things. first, we've got to show we can govern. basic governments means we've got to put a budget in place where we go at least for a year without any threat of a fiscal

crise. ... then on top of that, we ought to find common agreement where we can make these investments in infrastructure and replace some of the damage being done on the defense side and on the scregzary side around sequestration. there are smarter ways to cut government than sequestration. i believe that the single biggest thing we could do for our economy, single biggest job creator would be to put together a bigger bargain that includes revenues, that includes entitlement reforms. we all know at the end of the day, republicans are going to have to give on revenues, democrats are going to have to give on entitlement reform. we do, that the confidence building that would take place i believe would do more for job creation than any other program we talked about. >> schieffer: senator graham you talked about what is going on nowrt. do you think speaker boehner will survive this? >> i hope so. i hope people really around john and learn from the tactical mistake they made regarding defunding obamacare. john is ready to do a big deal. they were $150 million a part,

he and president obama. as we go back into the budget negotiations, i hope under paul ryan's leadership and with some presidential leadership we can do what mark just talked about-- an infrastructure bill that would allow to us create jobs. entitlement reform and tax code reform. and john boehner is a willing participant. so is mitch mcconnell. we have a unique opportunity here after this debacle called the shutdown to reengiles the congress and maybe get in better standing. but john boehner, please, follow john. >> schieffer: what about senator ted cruz? i asked senator mcconnell six ways from sunday about how he was going to handle that part of it on-- from hereon in, and he didn't really give me any specifics. has ted cruz hurt your party? >> i think the tactical choice that he embraced hurt our party. ted is a smart guy. but ted cruz can't shut the government down. what shuts the government down is when the house and senate

can't agree on a funding number. and our president has been virtually awol. this idea i won't negotiate, the president of the united states needs to get involved with expwairn senator reid to try to bring us together. the political marketplace will determine ted cruz's future. we helped president obama when he needed our help the most. after this debacle called the shutdown, our party's been hurt. or brand name is at its lowest ever. obamacare got a bump in polling, and we got in the way of a disastrous roll-out. from my point of view, this was a tactical choice that hurt us, but the good news for the republican party is that of the debacle is over, if we don't do it again sphp and obamacare is a continuing debacle. one quick story. a friend of mine owns 52 wendys. he has 40% of his workforce ensured today. under obamacare, if 20% choose insurance his insurance costs will double. that story is repeating itself throughout the economy. obamacare is a debacle that will go into 2014.

the shutdown should be in our rearview mirror as republicans. >> schieffer: i will just respond that the white house says it won't happen that way. i'm sorry, we're out of time. but i want to thank both senators for being here. [ male announcer ] the founder of mercedes-benz once wrote something on a sheet of paper and placed it in his factory for all to see. ♪ four simple words where the meaning has never been lost. the challenge always accepted. and the calling forever answered. ♪ introducing the all-new 2014 s-class. mercedes-benz. the best or nothing. but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions

for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real business. help the gulf when we made recover and learn the gulf, bp from what happened so we could be a better, safer energy company. i can tell you - safety is at the heart of everything we do. we've added cutting-edge technology, like a new deepwater well cap 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.

i have a big meeting when we land, but i am so stuffed up, i can't rest. [ male announcer ] nyquil cold and flu liquid gels don't unstuff your nose. they don't? alka seltzer plus night fights your worst cold symptoms, plus has a decongestant. [ inhales deeply ] oh. what a relief it is. while before we know for sure how much the shutdown cost. best estimates so far it book about $24 billion out of the economy. the furloughed government workers will get their backpay, and they should. but how does my friend who owns the carry-out around the corner from our office get back what it cost him? his business is next door to a federal agency that employs about 700 people. only 28 were declared essential. the rest stayed home. during the shutdown, he had more people behind the counter than in front of it ordering sandwiches. and guess what? he's not too interested in

whether democrats or republicans won the partisan showdown. but he knows who got the short end-- him. there is another part of the cost that won't show up on the accounting books. a big story like the shutdown tend to push things that often matter off the front pages and tv. here's just one that got almost no attention-- a survey out last week showed nearly half the students in our public schools, 48%, come from families so poor, they qualify for free or reduced-price meals. even more disgraceful-- a majority of student now qualify for food subsidies in 17 states across the south and west. i'd like to see our elected officials begin to focus on how we fix things like that. like my friend at the carry-out, i'm losing interest in who wins the partisan games. back in a minute. of project man.

baron of the build-out. you need a permit... to be this awesome. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. (aaron) purrrfect. (vo) meee-ow, business pro. meee-ow. go national. go like a pro. man: [ laughs ] those look like baby steps now.

but they were some pretty good moves. and the best move of all? having the right partner at my side. it's so much better that way. [ male announcer ] have the right partner at your side. consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. go long. lot more "face the nation." so stay with us. ♪ it's a new day health coverage gives us piece of mind. it means i can get the healthcare i need.

narrator: shop, compare, and select your health coverage at marylandhealthconnection.gov from october through march and you'll choose from more than 80 medical and dental plans, or find out if you now qualify for medicaid. ♪ gotta have it, gonna get it ♪ ♪ at maryandhealthconnection.gov. ♪ narrator: visit marylandhealthconnection.gov or call 1-855-642-8572. >> schieffer: welcome back to

"face the nation." well, after congress reached the last-minute deal to raise the debt ceiling and avoid defaulting on the nation's debt, the stock market took off. the s&p 500 finished with a record high thursday. that was beaten again on friday. but the deal only lasts a few months, and we could find ourselves right back on the brink early next year. so to talk about what that all means we're joined by mark zandi, chief economist of moody's analytic. mark, let me just ask you the basic question-- how much was the economy hurt by this shutdown? >> it was hurt. by my calculation, it cost us about $24 billion in g.d.p., that's the value of all the sthingz we produce. so just to put that into context-- that shaves about a half a percentage point from

growth in the fourth quarter, and i expected the economy to pick up pace but now i think it's unlikely. we're stuck in a slow-growth lackluster kind of environment. >> schieffer: i guess that lead to my second guess, does the reopening now, will it bring money back in somehow? could it be recovered during the holidays? >> we'll get a lot of it back. the shutdown was disruptive to lots of different parts of the economy, to trade, to mortgage lending, to and obviously tourist destinations. a lot of that will come back. i think prevading the entire economy is this uncertainty which i think the effects of that are corrosive have been accumulating and obviously given the nature of the deal that we're going to take this into next year will continue. >> schieffer: and what about just sort of how this is perceived in other countries around the world. does that have an impact on the economy itself and our credibility? >> yeah,kou know, it does. i think global investors forgive

us a lot because it's not clear to them where else they put their money. i mean, you look across want world, would you put your money in europe? china? where would you go? so we're the beneficiary of that. but that only takes us so far and i think global investors are start toking to real doubt-- when senators and congressmen openly question whether weather it's okay to default on the debt or other obligations, i think that makes people not only nervous here but across the glebe and that will cost us in terms of a higher interest rates. >> schieffer: do you think anything changing since standard & poors downgraded. >> in the terms of political brinksmanship, no? this from my perspective was debilitating and disconcerting, particularly because we had people who are lawmakers actually openly debating whether we could-- if not pay on the debt of our treasury, you know, pay social sciewrpt recipients. was this an okay thing? i don't think that kind of

conversation is particularly useful and it makes me more nervous. >> schieffer: you know, when this was happening-- and i asked some of the questions that people answered by saying, "they're just trying to scare the markets and so forecast" when i asked people, "do you really want to let the country go into default?" what do you think would have happened? can anybody know because this is stepping into the unknown. >> you know, bob, my job is to opine about a lot of different things and some things i say with less conviction than others. i can say with a high degree of conviction that if we go down that path it's going to be cataclysmic for our economy and not just a month or year or two. this will extend out for decades. we just can't even contemplate going down that path. in my mind the most important thing to come out of this process is for all of us decide we're not going to do this again. >> schieffer: i think the senator republican leader has convinced himself of that. >> he sound pretty convincing. i think if we get a group of

folks like that in the room and they're all coming to even a reasonable-- we-- in my view, a grand bargain would be great. it would be nice if we goot that, but it's not sms ns. all that is necessary is we have to decide we're not going to shut dun gft down and we're not going to default on our obligation, and if we do, that the underlying economy is pret good shape and that will shine through and we member in a pretty good place. >> schieffer: i want to thank you for coming by this morning. we will be back with our panel of astute analysis. it's a growing trend in business: do more with less with less energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to the environment as over 60,000 trees. that's a trend we can all get behind.

i'm bethand i'm michelle. and we own the paper cottage. it's a stationery and gifts store. anything we purchase for the paper cottage goes on our ink card. so you can manage your business expenses and access them online instantly with the game changing app from ink. we didn't get into business to spend time managing receipts, that's why we have ink. we like being in business because we like being creative, we like interacting with people. so you have time to focus on the things you love. ink from chase. so you can. perspective on all of is this, we turn to our panel. rana faroohar is a managing editor for "time" magazine. gerald seib is the washington bureau chief for the with the journal. michael gerson, columnist for the "washington post," and stuart rothenberg is the braips behind the "rothenberg political report." you're also the body behind the

the "rothenberg political report." >> i am ( laughter ) >> schieffer: rana you just heard what mark zandi just said. what's your take on that? >> my opinion is very similar to his. i think that this round of fighting has been particularly debilitating. i think what was really interesting is right after we got a deal, the price of gold actually rose. now gold is a safety asset. that's what people go into when they're worried and that to me was the markets telling us we don't want another kicking of the can down the road. we don't want to be here again in a few weeks. we want some certainty about the future and about what our economy is going to be like, i think business c.e.o.s particularly want that. they've cut off spending. they're not investing right now. they're waiting it see whose exphapped that will continue for another quarter or two. >> schieffer: gerry. >> one of the things you saw in the crise is consumer confidence took a plunge, and that has significance in the real economy, not just in the washington economy. and i think it's not because people are waiting for washington to settle the budget per se. i think they're acting on a

sense of insecurity because they think things are sort of vaguely out of control. and i think that's one of the prices that's going to be paid here. one of the problems you have to think about is that is true heading into the holiday buying season. i don't know if there's a direct correlation between what am i going to buy at wal-mart for my kids and what's going on in washington, but there's some relationship, and where there is insecurity in the land already, washington keeps reinforcing the economic insecurity, and that can't be good. >> schieffer: michael, you're now hearing some in the business community say they may back candidates in republican primaries against some of these tea party people who have been holding out the big club over the so-called establishment republicans. where do you see this going politically? >> well, i think that you've seen an epic disaster on the republican side. self-inflicted. most republicans realize that. except for the group that was decisive in the crisis itself.

this was a significant escalation of tea party strategy. it was not just directed against the leaders-- mcconnell and boehner. it was directed against conservatives who disagreed with their strategy, who were attacked in radio ads. that is a little of bitterness we haven't seen. the reason it's a long-term problem as well, though, is balls boehner really is not in control of of an effective majority of some issues in the house of representatives. gingrich in 'nirks at least he could have a strategy. he could pursue tactics. boehner, because a significant portion of his conference is not on board, is limited in faz ability to pursue strategy. >> schieffer: well -- >> bosh the problem with this is that, that strategy by karl rove and others in the business community, only gives ammunition to the folks at the grass roots. sure, there's a tea party in washington. there are a few dozen of them. but the problem for the republicans right now are republican grass-roots voters.

they're angry. they don't accept the institution, the legitimacy of the leaders. and so, anything that looks like an organized effort by the-- quote, unquote-- establishment to defeat the grass-roots conservatives is going to be a problem. >> schieffer: but, you know, you have an organized thing going against people like mitch mcconnell. these pacs, tea party-supported pacs have run about $400,000 worth of ads already against mitch mcconnell who is the republican leader in the senate. they run about the same number of ads against lindsey graham. you just saw-- >> accept theiment at the grass roots is a little different than sentiment in washington, d.c. and at thes grass roots, the republicans, the conservatives, are angry-- at least the people who vote in primaries are really angry. so it's-- it's hard to motivate establishment support at the grass roots. there is some of that, particularly in the business community. but the republicans face a problem at the grass roots. >> schieffer: go ahead. >> one thing i think is interesting, too, in the business community, a lot of

things that business wants these days are actually sort of left leaning-- infrastructure spending, investment in k-12 education, which poses another sort of interesting challenge for the right. >> schieffer: gerry? >> i was going to stay, i think stu is right in the sense people in the tea party movement is not mad at obamaed care because the exchanges don't work. they think it's a metaphor for everything that scares them about government intrusion in their lives. it is almost a symbol of what they fear most. which is that washington is going to come get me. and that's very basic and it's very tea party and it's got nothing to do with sort of the debate about how well it works here. >> schieffer: let me just add one thing about obamacare, which senator warner, as he was leaving, what he wanted to say and we just wanted-- we ran out of time-- he says and the white house is saying the same thing-- that despite all the glitches, despite all the bad publicity about this start, when you look at what's happening at the state exchanges and you look across the country, that about a half

million people have begun the process to enroll. now, mind you, this thing is not very pretty the way it's unfurled. but they are really wanting everybody ton that. >> i would say, though, when you look at the economics of this, the worst outcome is a partially working system. because if you persevere and you really need health care and you go on and on and get to the site, you're getting people who need health care in the system. the goal of a health system is to get millions of people who don't need health care in a system. that's the way insurance works. that's called adverse selection. that's the real fear here is a year from now is the system is not working properly, how will the economics of that system work? >> schieffer: i want to go back to this situation in the republican party. is there a war now? is this a war for the soul of the republican party? >> absolute. unquestionably. it's impossible to argue against that. at the grass-roots levels and senate races, a number of

incumbent senators have primaries, mcconnell, lindy graham, thad corcoran of mississippi. no doubt. and it's going to be a civil war that continues past 2014, probably all the way through 2016. >> schieffer: so where does this dp? >> if i were a republican this is what i would be worried about. this is the number out of the shutdown that would worry me the most. in our polling, the number of independents who said they wanted republicans to control congress after the 2014 elections dropped 20 percentage point in worn month. that's problem. there's a civil war under way. what do the independents who tip the balance, what do they think? the tea party districts, the tea party representatives, they don't have to worry about that. they are soiled and the calls they got from back home said, "hang in there. hang tough." there are a lot of other republicans who don't have that luxly back home. theatre ones i think who need to be worried. >> i think there are deep policy issues at stake. there is the politics of all this, but i think economically in particular republicans need

new answers, fresh answers. supply side, i think is broken. we have a growing inequality air, long-term slow-growth economy. we need new answers and fresh thinking that people can buy into. >> i strongly agree with that. after this last election, there was self-reflection. the r.n.c. issued a report, how do we appeal to young people and minorities? all of that washed away. the real cost for the venezuela the opportunity cost. they have their problems to solve in their appeal to the american people which they're not solved in this internal debate. >> schieffer: you worked for george w. bush, do you think he would be acceptable to the tea party? >> no. ( laughter ). but the problem here is you have people like senator jeff flake. people like toam coburn, these are some of the most conservative members of the senate. they're not acceptable to the tea party. >> schieffer: thad corcoran from mississippi.

>> this is largely an awmplet about strategies and tactics, but it's a bitter argument about strategies and tactics because the critique is these people are compromised. georgetown cocktail parties. they're part of the problem. that is a bit bitter debate going forward. the tea party itself lives increasingly in an ideological bubble with conservative media, with the support of conservative organizations. they don't view it the same way as the party does. >> bob, i was reflecting on my interviews with candidates over the last two sieblgs. i interview house and senate candidates, about 150, 200 a cycle and interviewed a lot of tea party, libertarian candidates, and they would come in and we'd talk about their strategy and what they want to accomplish and i'd ask them why are you running? we want to do away with obamaed care. i'd say you understand that. but understand the president is not going to allow that. the senate will not allow that. what do you really hope to accomplish? we want to do away with obamacare. now reflecting it says something about their understand, of the legislative process and their

role in washington. and they have such a different view. michael's exactly right. this is not about ideology. it's about strategy tactics and understanding the nation of the institution of which they're members. >> one of the things i think people don't sunday how much of the house is made up of members who have only been here a few years. about half of them have only been here since 20 10, the year of revolt against obamaed care and the president himself. that's increasingly true in the senate. i think lifetime folks in that group didn't come here intending to legislator and don't think that much about how does the legislative process work. they're here to run a kind of campaign against things they don't like. over time, people say, well, that sort of smooths out, people figure out how to do legislatively what they want to do. that's not where we're at right now. the congress is not not hand of people who have that kind of experience. >> schieffer: let's talk about the country. ( laughter ). >> okay upon. >> schieffer: there's always the country. what's going to happen here? are they going to be able to come to some understanding?

i think both parties understand they're in a different place than they were before all this happened. but will that be enough, rana, do you think to get people to seriously sit down and try to find a way out of this? >> i would like to think so. i mean, we're in for, as mark was saying earlier, another probably year of a 2% growth economy. people are really struggling. but i think one thing is that the markets have not sent a really strong signal yet. we haven't had a market crash, for example, around all this. and part of that is because the fed is always stepping in because of political dysfunction in washington and pouring more money into the marnghtz the fed is sort of the last man standing that can do something. there's a strange disconnect where you want to almost get a lot of pain-- not that i'm wishing for a market crash-- but you might need pain in order to get people really respond and you have these two things going on at once that can offset each other. >> schieffer: will this be enough, do you think, gerry? >> i was interested that ?airt lindy graham seemed optimistic in a deal getting done.

he is in the minority saying that. there is one thing driving the both parties together, the sequesters. republicans hate them because defense spending will take the entire next of cut next year, $20 billion straight out of defense. they don't like that. democrats don't like it because it's held down discretionary domestic spending so much. and so in that space, i think there's room to do a deal. >> it's what paul ryan in some ways has been proposing in the system, a reasonable voice, saying let's lessen or ease the sequester in exchange for some marginal changes in entitlements that will save money in the long term. that's a realistic deal. the question is what's the market for rationality right now in the congress? and it's pretty thin. >> i would say the shows still a problem, and for republicans, think about this-- after the deal we heard some people say maybe this is the beginning of a period of compromise. we had this tough fight. now maybe everyone will work together. if you're a republican you've already david on a pretty big

deal. are you ready to cave on immigration reform or a big budget deal? >> immigration is one we hadn't mentioned until stu just did. remember, that was going to be the big deal. republicans said we have to get in front of the immigration debate. that was the beginning of the year message from republicans. well, that's kind of been washed out. i personally find it very hard to imagine in this poise atmosphere the two parties doing an immigration deal. >> and that's something again business would like to see. >> schieffer: this is kind of interesting to hr of hear both you of, rana and gerry, and you're very close to the business community and their point of view. is business cooling on the republican party here? >> i think so. i think-- you know, the republican party used to be the party of optimism. you know, it used to be the bullish party. it's really not anymore. and i think that getting mamo-jo back is going to be very, very important to regain confidence of business and coming up with a real agenda that works for all business in america pup know, you need infrastructure

spending. you need a rethinking of education. and that's real hard policy work. and that's hard politics. >> i don't think they're breaking from the republican party. i think they're breaking from what they see as a tea party domination or potential tea party domination of the republican party. they're not running toward president obama and the democrats by any means. but you saw the chamber of commerce say in the end, republicans should vote for the deal that ended the shutdown. meanwhile, the conservative tea party groups were saying the opposite. theil straights the split. it's which kind of republican party. >> schieffer: could there abe third party come out of this, stu? is there some sense maybe the tea party people will just say there's noct here for us in the republican party? >> well, i never say never anymore. ( laughter ) i've seen it all, and there's something else will come around the corner. having said that-- institutionally, it's very difficult to get a third party, just the name of our winner-take-all districts and the fund-raising and personal loiment of loyalty. i think it's possible we might have a kind of brief fracture in the republican party.

i can see a cycle where we have a number of independents who are-- or conservative independents running. something more dramatic would have to happen in terms of legislation and how we run elections before-- >> schieffer: do the think the republicans might lose the house next time? could they? >> let's do numbers again. we have 24 republican districts at significant risk-- 24 districts at risk. 12 significant, 12 marginal. some of those marginal races could move into real risk, and some races that are off the board could move. what i've said six months ago was not plausible to say the house is at risk. now it might be. give me two or three months and i'll tell you whether i think it is at risk. >> i think getting 17 seats is an uphill battle for democrats in the way our districts are die jerry mannederd and our current system. i don't see the signs right now of a wave election. you know, what you might see.

but, you know, it's early. we'll see how this works out. and of course it will unfold early next year again. if republicans repeat silly tactics like this, they're on a downward path. if they take a different path, i think they'll have a different outcome. >> schieffer: and thi this is being said by someone who worked for george bush, not part of the barack obama team that's here. thank you all very much for being with us this morning. very interesting. i learned a lot. and we'll be right back with our "face the nation" flashed back. ,,,,,,,,,,,,

>> schieffer: as washington recovers from a crisis of its own making, it is worth remembering the 51st anniversary of the very real cuban missile crise. our "face the nation" flashback. >> a cbs news special report-- anatomy of a crisis. >> schieffer: it was october 1962, the height of the cold war, and a u.s. spy plane discovered russian nuclear missiles on the iestled cuba.

>> the purpose of these bases can be noon other than to provide a nuclear strike capability against the western hemisphere. >> schieffer: in a televised address, president kennedy announced a naval blockade on all shipments to the island and demanded the soviet union withdraw the missiles. >> this she's offensive military preparations continue, thus increasing the threat to the hemisphere, further action will be justified. >> schieffer: americans prepared for nuclear war, and the american military went to the highest alert. >> 90 miles away on public beaches in key west, a startling reminder that we meant what we said-- rockets, where days before there had been nothing but sun and sand. this is just part of the florida build-up that must have appeared so menacing to chiewsh chef and fidel castro. >> schieffer: the u.s. stood its ground working through back

channels to facilitate an end to the standoff. on october 27, soa soviet premie sent word to the white house russia would remove the missiles if the united states agreed not to invade cuba. the crisis was averted. it was unimaginable that just a year later, president kennedy would be gunned down during the campaign trip to dallas. back in a minute. i know what you're thinking... transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're ready for real business.

help the gulf when we made recover and learn the gulf, bp from what happened so we could be a better, safer energy company. i can tell you - safety is at the heart of everything we do. we've added cutting-edge technology, like a new deepwater well cap 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.

for us. we want to thank you for being with us this morning. we hope you will stay with cbs. we hope you will catch "cbs this morning" tomorrow morning with charlie exproaz norah o'donnell and gail king. they'll have the very latest. that's it for us. see you later. captioning sponsored by cbs captioned by media access group at wgbh access.wgbh.org ,,,,,,,,