Markets, Politicians React to Day 3 of Government Shutdown

Rep. Peter King joins moderate Republicans in questioning GOP leadership strategy.
27:08 | 10/03/13

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Transcript for Markets, Politicians React to Day 3 of Government Shutdown
This is a special group. -- when I'm down -- -- -- -- ABC news digital special report President Obama lobbied the public directly today. Speaking at a construction company in Maryland calling on congress to reopen the government -- and not to mess with the nation's debt ceiling. But Washington still at a standstill as people around the country are feeling the real impact of the shut down now entering victory. -- ABC's Karen -- as Washington now with more Karen. Good afternoon Dan -- the president -- a little further than we've seen him this week he was very fired happening pointed the finger right -- house speaker John Boehner he said if he wanted to -- and they shut down by holding a vote. But he won't because he's beholden to the extremists in his party but of course house speaker John -- keeps blaming the president saying he's the one won't negotiate. 83 the government is no closer to reopening. President Obama -- construction company in Maryland today to highlight the tangible effects of the -- longer this goes on the worse it will be. Last night the president sat down with congressional leaders at the White House but they made no progress. All we're asking for here -- discussions. And. Fairness for the American people under obamacare but the president insists he will not negotiate the health care law or any -- until Republicans reopen the government. Democrats and some moderate Republicans -- -- bear picked in the shut down. Schedules a vote on a clean funding bill with no changes to Obama care speaker. John Boehner. Won't even let the bill get a yes or no vote. Because he doesn't want to anger. The extremists in his part they shut down is already being felt across the nation many government offices were closed or offering limited services. Picking mussels security check until -- -- -- could Social Security cards so to say. -- -- programs like -- which provides nine million women with assistance for their children had been deemed nonessential. How nice post. -- the extract 200 dollars a month. To pay for pharma. And head start estimates that nearly 191000. Low income children might be unable to attend preschool this week because of a lack of funding. And -- there seems to be a lack of urgency in Washington today there are planning a press conferences but there are no meetings no negotiations. And congress is scheduled to head home for the weekend which means it's likely the shutdown will spill over into next week. -- and of course who will be watching those news conferences and carrying them to make sure in fact if something does develop we will be able to have that for you. But you're gonna ask you -- -- activity that did actually happened yesterday in the house passing three piecemeal funding measures essentially. Is that -- -- at the White House the senate is going to be able to support. -- and they're dead on arrival and senate Democrats have been saying that for several days they say. This is not a way to try and get the government back up and running you cannot do it bit by bit. And it -- Harry Reid flat out said Republicans can't take the parts of the government they -- and decide to fund those the White House issued a veto threat in fact. And said the president would not support this because it is all -- nothing get the -- government back up and running where they're not gonna prove anything. -- stalemate indeed ABC's Karen -- in Washington Karen thank you for that. Of course the effects of the -- being felt by Americans and also having some concern on Wall Street because of the debt ceiling debate. On October 17. For more on that want to bring Jeff back finance. As Ross going to be keeping an eye on the Dow right now down about a 181 points below that 151000 mark Jeff 141952. The president. Talking about how dangerous it would be to flirt with that debt ceiling. Debate and interest in analogy I want to take a listen to what he said. It's not something. That raises our debt. What it does is allow the US treasury. The US government. To pay the bills that congress has already racked up. Want to think about this. If you go to a restaurant order a meal eat it maybe have -- -- -- -- to last one. Write me -- and then you look at the tab it's pretty expensive. And you decide I'm not gonna pay the bill. What you're not saving money. You're not being formal. -- -- -- -- -- -- interest in analogy right there what happens if in fact we don't pay those bills. Throughout we don't pay the folks and and that's the real problem here Dan. The president and congress final game of chicken here at the American's expense not they can dress up and all the analogy is they want I'm -- the Republicans come back with one. It amounts of the United States not paying their debt there's this debt ceiling thing is really a crude console. Used in politics Hank Paulson was on CNBC this morning talking about how we need to get rid of congress' right to slow things down. -- tends to be. An agreement with that on Wall Street justice in this go away. The president and Jack -- out this morning talking about the negative impacts both on the economy and stock -- not gets a little weird there when you start bringing stockholders into the equation. Wall Street being used to do -- little of the wet work on both sides of the political aisle. Let me ask you this and -- about -- report that came up at a treasury today it that title speaks for itself and I wanna find out exactly your thoughts on this. Of whether it is an actor portrayal what could happen but the title of this report -- the treasury is unprecedented default. Could result in recession comparable to or worse then the 2008 financial crisis worse than 2008. No got no you know this hyperbolic stuff does not help at all I understand. Wanting to go after it this way and of course we don't default as a nation we never have unprecedented means has not happened before. So this hasn't happened before and so it becomes this hypothetical if and scenario where. If we behave in a -- that we haven't -- 230 odd years then bad things will -- well of course but 2008. I am not meaning to diminish the impact of this debt ceiling mess right now -- 2008 all bets are off that was -- horrible horrible period in this country. You should not make that comparison lightly certainly -- hyper politicized way that we're in right now. Let me ask you this thing Jeff about the impact obviously if in fact we were to default the markets -- -- would have a reaction to -- but. -- you and I are gonna have an impact from it. Right and and down that's where it gets pretty serious -- and and you know Wall Street. It comes and goes -- my problem with -- and Treasury Secretary with a statement on -- the comparison to 2008. Is that he comparatively talks about 2011 not much happened fair. And that really is what the markets playing off right now but let me tell you see your point a lot of real people get laid off -- -- A lot of people that day you wouldn't think don't you think of say wall market's impact it will they -- their -- Walters not gonna care about that. The people who will cares Wall Street cuts back those orders Wal-Mart cuts back those orders. It's little vendors is -- -- -- go to work at shops -- and refrigerator magnets the small items Levi's doesn't get hit. The little guy does and that's why this game is so -- seemingly -- me it's why we really need to get rid of this debt selling notion entirely. Is -- the smaller you are the more disenfranchised who are the harder you get hit Wall Street frankly doesn't care as much as mean street should. The outrage really needs the focus further down the food chain because these these exact thing going to the White House to talk. That's gotta go away Republicans Democrats let's focus on the real pain here and -- -- put this behind us. -- unfortunate -- seventeenth deadline is coming up very closely Jeff MacKey thank you stand by force Brister might of course as we've been talking does not shut down day three and there's a lot of talk going on Washington fortunately it is accusations not negotiations to end a stalemate. And in this hour we are joined by congressman Peter King Republican from New York congressman king thank you for your time today we appreciate it. That you have been outspoken in your opposition to your caucuses tactics -- and the question is would you vote now to pass a clean CR. Absolutely. I've I've said that after several days -- would which is why. -- -- night I voted no one -- rule to send bill over to the senate. Was just prolong this almost bridges I would definitely vote for -- -- written -- If you've also other member of your colleagues -- Republican colleagues are ready to vote as well but they would welcome a decision backed by speaker Boehner to bring this to the floor how many votes at this point do you. -- again is not a question me having him and others. 25 to publicly said that they would vote -- yet. And clean CR was -- -- I don't know strings attached to star it would it would definitely pass. The house -- question is John Boehner is under tremendous pressure from the cruise Republicans not to bring it up. So -- we just can't wait for this to be. We're on the floor by the speaker would have to force the action answer way to mimic John -- Darby -- yet. I think its twentieth when he -- say we're gonna vote no on everything until they continue resolutions put on the floor. That's how you get results that's what the crucial problems threaten to -- They they said that to a two weeks ago that they would -- -- the house down. Unless. The we attempted to defund Obama had decided to -- government -- I think is time for -- action. It's it's a blunt question that may be following on that kind of talk tough action but yesterday in a meeting speaker Boehner. Held with your caucus he said quote trust me. Do you trust speaker Boehner. -- -- great respect for John that I trust him that he's doing everything we possibly can I just don't think the -- Republicans are gonna allow him to do. What he wants to do and that's what time's gone by I think we have to we have to force the action -- -- doing that I think we strengthen John -- stand against the -- Republicans. In your colleagues -- you've been speaking with that they share the same feeling. They share the feeling that this is saying that -- -- and what sort of some of them are reluctant to. Force the action right now I and so we have to force action that's the only the only difference is a question of timing -- all we all believe it's absolutely wrong -- happen. Did just a couple of moments ago President Obama was in Maryland at a construction company. Who wanted to highlight the impact the shutdown is having on everyday Americans and he called that a colleague congressman marlin Stutzman and Indiana. I want to play what he said. Well they got exactly what that one. -- they're trying to figure out how to get out of it. Just yesterday at one house Republican said I'm quoting here -- -- make sure. People understand I didn't make this up. One house Republicans said we're not going to be this respected. We have big get something out of this and I don't know what that -- this. That just now the congressman released a statement saying quote yesterday. I carelessly -- represented the ongoing budget debate and speaker Boehner is work on behalf of the American people so congressman king what do Republicans. Want to get out of the shutdown. I ask you don't know if they want to started off by -- -- say they want to defund obamacare and other realized I can't be done. This is sort of a moving target and but only to say -- -- the president if he made a rhetorical point that. And he really -- to perhaps in fact he's head of the Democratic Party and doing a good job as far as that as far as making partisan points. I'm. -- to say there -- wrap this moment now the course of Republicans haven't said that the president United States you cannot. Stay on the sidelines where he is -- do more than just make partisan speeches he should be actively engaged trying to in this. Trying to find ways -- -- -- John Boehner if you will you get this who voted in the house. Politically the president can be right to practice as president of United States is an obligation to become more involved I can imagine. Lyndon Johnson and John Kennedy or Ronald Reagan and Franklin Roosevelt Teddy Roosevelt. Question -- -- district of me as I can imagine just in for extending the sidelines of making the occasional speech they should be heavily heavily engaged in should be heavily heavily engaged. You -- congress -- -- say it as your reaction to what we've been seeing play out over the past really 24 hours. Where is almost -- -- personification about the -- whether it be Boehner shut down whether it be Obama's shut down has the rhetoric gotten too acidic. That there can be -- ago. She -- It's certainly more more difficult to do -- that's the obligation of leadership -- responsibility of leadership whether it's in -- in the house and senate or the White House. And the president is the ultimately. So he's -- reasons why Republicans are responsible why Republicans are demanding too much the fact is as president he -- an obligation to be in the arena. The president should be in the arena he should be an attempt -- resolve this. -- the end it turns out that he believes Republicans are unreasonable that make that case the American people right now he should try to put partisanship aside. We'll leave that to Harry Reid and Nancy Pelosi. He should be didn't in the room -- should be finding a way to end this crisis this is gonna affect everyone it's not good enough the end of today. If the economy does thank the president to say it was Republicans fault but ultimately he's the man at the top he has to find a way to make it work. Congress let me ask is because there was some movement -- the house yesterday inside almost piecemeal funding measures three in faction which. You had voted yes on all three. I don't think it's a good way to do what I actually voted against the -- to begin that process to there was a better idea once they were provoked or voted for them -- absolutely because I think that. Better have some really -- that none at all but as part of an overall strategy and try to reopen the Thai government. He gets very very sketchy when -- open up just -- but -- another part. It's no we don't have a -- government it is very much comes together and work together and to me that's how to be resolved when the vote does come up. Yes whether we should give money to NIH obviously ought to veterans. -- yes we should but it's a it's probably you know the lesser of evils while I was -- -- perspectives. If you -- clear opposition of the Affordable Care Act of obamacare by what process though would you see that repeal. -- -- Vote against -- so we strongly opposed to Obama jazz most people in my district. But what I'm saying is we have to repeal with the -- was passed react do. Has -- in the house in this and that he get a Republican president to sign that we feel it and so -- we can't. -- by the back door we -- -- the front door. The Democrats passed both houses the Supreme Court ruled a constitutional. Obviously the president United States signed that. That he was reelected -- here. So that's how we fight our battles in this country do the politically at the battle at the -- ballot box now that president who reelected and -- law of the land. We have to try to repeal not quite threatened to shut the government down -- as opposed to obamacare is anywhere from it. If congress -- -- you about this that the debt ceiling limit of course is nearing October 17. And there is talk today about a potential bigger deal that would fund the government and raise the limit. Is that a better option at this point. There -- felt we should be done all along I think what John Boehner wanted to do was get the continuing resolution behind us three or four weeks ago. And they go right into a debate over the debt ceiling -- that to -- is a much more legitimate ways to have a real debate about the entire scope of government. Programs that can be. Adjusted and modified cut back on also perhaps you'd have to tax reform and that that -- was -- -- to do what we would have had a good for five weeks to do it now. If he assuming that this continues that this the government shut down -- and next week from time that we going right into the debt ceiling which is a very good very rough time to be very dangerous way to be negotiated. Of the here in the nation's. Credit rating in effect. To be doing that within 345 billion period so yeah I think that's where this debate should be that's what instructions that can be tickets or find some way. To even get temporary relief from the debt ceiling set aside time for real negotiations covered the -- or. Congressman Peter King from New York congressman thank you for your time I certainly think negotiated. Thank -- just a few moments ago senate majority leader Harry Reid held a news conference about the latest. Going on in Washington DC about the negotiation back and forth with Republicans. Let's play a little bit about what he said. We're very simple message today for -- and now. -- -- -- -- -- irresponsible reckless game to just real from the government. He singlehandedly is keeping the government shot. Some recent stories -- even suggested that. The speakers keeping government shut down because I hurt his feelings. That's true. I'm sorry. And her true feelings. But we shouldn't take it out on hundreds of thousands. Of Americans work. And they're really suffer. I can only imagine what leaders around the world must think I met yesterday with the very briefly had a little White House to spent a lot of time. With the Greek Prime Minister. Idea had talking on the phone before is looking forward to visit. I didn't singing -- -- kind of embarrassed timing of Greek Greek government's having a lot of problems. Going on our problems. -- we should be. Dysfunctional government there's no reason -- -- other than one man. That speaker -- You can't perform most basic functions of government because he -- have the courage to stand up to that small band of -- Marcus. I know that that's not the path. -- he preferred I know that because we met. The first week we came back in September. And he told me that what he wanted is a clean CR. And then nine need number now we said this before we didn't like -- me number. We don't like it. But we negotiated that was our compromise. The exact bill that -- now refusal of house vote on that was our negotiation. I didn't twist his arm he twisted my little bit to get that number. It's not a number that. Patty Murray liked that wasn't her budget number but that was a compromise. Now he refused to let his own party vote. Because he's afraid to stand up to something here originally agreed to who's stopping you from having this vote. A very small band of people. Now what do they want. We're not going to be disrespected. And I -- on the floor this morning unified -- this respected Marlins that's what I'm sorry. When I'm going to be disrespectful. We have to get something -- this analyst of this this is where speakers. I don't know what that even hands. That's we'll be anyway. All they have to do was -- the house work its -- Please see -- would pass the house with a bipartisan majority no question about that Paulie has to do is let them vote. At a senate majority leader Harry reached couple moments ago. I want to bring in Jeff MacKey from Yahoo! finance because obviously the -- having a real impact -- undue what -- -- but also the markets as well let's take a look at where the Dow is that. Down about a 167 points 141009 -- 65. Jeff knee jerk reaction to this or is Wall Street bracing for. A new normal. This is not a new normal Wall Street again would really like his debt -- thing to just go away conceptually this is a -- where it's terrible way to run a government. Tomorrow -- and it gets the more concerned Wall Street Kitts and really again a Wall Street in Vegas don't care at a bankers financiers of people who are big enough wealthy enough to -- a lot of shares of America you know what. They're gonna see through this closer look past as a one time thing more protracted it gets the bigger the risk is but for now. We've had some real -- here Jack who took -- shot the president we've we've seen a lot of and -- going on and that's what you're seeing and Wall Street is concerned. That it becomes more protracted and and -- we heard this morning -- to bring in yet another data point from The National Retail Federation. They're expecting a decent Christmas it's going to be okay. Again that horrible if that scenario as long as the government doesn't shut down -- we'll have an OK Christmas so put the over under at its mid October late October at which point Wall Street -- starting genuinely concerned. Right now were well within the -- -- parameter. Just let me ask you about this when the president meets with some of the heads of financial institutions Jamie -- caught into the White House what kind of a reaction -- this Wall Street -- -- bat. Pretty cynical reaction to be honest it adds I think that it's fine I think that. Really the people that that Wall Street as a whole would rather see other folks around Wal-Mart or target to see where the economy is really going as the president doesn't need financial tips from Lloyd Blankfein Jamie -- those guys. The government really needs to focus on exactly what role we think the bank should have stopped complicating things by by having all these settlement discussions with various charges criminal and civil against these banks. And then having those banks don't advise the government on what to do let's get the -- we get the people down. The better -- this will be and the last cynical the reaction will be but as it was that struck people as kind of distasteful photo -- All right Jeff MacKey through Yahoo! finance Jeff thank you for your time and your insights -- What -- about it Sean Walsh at the capitol there where we just heard a short time ago judge from my congressman Peter king and -- -- -- -- he's not quite sure what his colleagues. -- -- -- of this shutdown. Right you heard Peter king and and he is joined it with other Republicans who to say that -- are against obamacare Michael. All the other Republicans here but. That they want a clean continuing resolution to open this government back up. And the number that he just said to you guys with 25 BBC news count I should say it's only the eighteenth but still he's trying to get support -- as an -- As he made very clear -- to you it's not because he is in favor of obamacare but. He wants to -- reopening the government. The fact the matter is that is much as we don't want to look at it there are politics. Heavily so in this entire debate. If you compare what you're hearing from Republicans -- to what we just heard from senate majority leader Harry Reid just before we talk to -- I they really much more unified. Well I think that there are some Republicans who are seeing the polls and there -- Rightly worried that they could be getting more of the blame for this politically. Whether -- between fourteen or 2016 or you know there's a Virginia governor's race even this year and so. Those are some the Republicans -- me see the writing on the wall are joining. But there are plenty of other Republicans who feel that the only way to win politically -- -- we may not want to be -- -- -- this because this is such a serious situation but is too. We -- on this fight. But as -- Steve. More likely that despite -- government shut down he became combining with the October 17 deadline where -- It's the possibility of default is that anybody win and who if the Republicans get blamed. -- some polls are showing now could that really hurt the party speech here next year and 2016 politically. Well and that's interaction wanted you teed that up partly because I wanted to ask you about that because on Tuesday there really wasn't much talked about the possibility. Of the debt ceiling being tied to these discussions about a shutdown and impasse but is that -- is growing louder on Capitol Hill. -- ABC news has learned that was mentioned in private meaning that John Boehner speaker -- had yesterday with. Republican colleagues and does seem more likely -- that will happen. But it. It doesn't make either situation the government shut down for the possibility of -- any easier they're very very serious situation. And the idea that the united seats in America could default. Things up. Should be very scary for all Americans including -- lawmakers. Just let me ask you about this that when the president went to Maryland this morning and -- of a construction company trying to highlight some of the impacts of this budget -- -- has. On small businesses on everyday Americans. What is the Republican response to this did they feel as if they're gonna have to make that kind of a public message -- well. What they have been they had a conference call this morning -- pointing out the difficulties of what had signed up for the health care exchange is taking -- it launched two days ago in. HHS have said before that there is going to be some -- and there have been some people that. There's been -- -- people calling in to meet people. Accessing the website at that its profits several times and -- people can sign -- their highlighting business instances of but they believed that. Letting Obama care of both real and possibly feeling which Republicans if they -- could benefit from they feel like god is not what they want to do they want to kill it now even though. That and affordable care obviously is three years old. Health care -- launched -- ago and obviously the Supreme Court also. A role in its favor they still feel right now -- the time ten that they that this is the fight the want to be having. And less than before its negotiation about this and that we touched on the politics of this and it may be the ugly word that a lot of people don't wanna hear about -- -- Want to get back to work that want to get their paychecks they just want the government up and running. By the people that they've put in in congress. But there it but there have been some political moments that have been made -- and some could argue the facts of the White House they have done that this morning outside the construction company and now. With that World War II memorial with those very visual pictures with. The honor flights -- the veterans of World War II veterans that made their way to that memorial. -- and some members of congress have been using that to illustrate their point to get the government up and running. Right and you saw they even today the RNC in this conference caught they had they. Being -- yesterday offered to pay the funds to keep that open to keep the cards there. And -- they want to turn that into political fight to make it seem like the Democrats are keeping these World War II veterans out and it really shows. Where the level of -- Discussion is where obviously. No -- keeping these veterans that we saw them coming yesterday. But -- all monuments here they're close because of the government shut down and so. He had to -- incredibly. Heated topic he. He saw those those veterans having to go through the barricades began in and it's just another example of really how have things have gotten here that. This is the latest -- it and it's pretty unbelievable. -- Walsh at the capitol -- thank you so much thank you we appreciate that complete coverage and abcnews.com. On now this day three of the government shut down. For now I'm -- -- New York this ABC news digital special report.

This transcript has been automatically generated and may not be 100% accurate.

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