'This Week': Countdown to Default

ABC's Jonathan Karl and Rebecca Jarvis report the latest details on shutdown talks.
3:00 | 10/13/13

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Transcript for 'This Week': Countdown to Default
Good morning. And welcome to "this week." Courting disaster. I don't want to pull anything on the table. I don't want to take anything off the table. With the default deadline just four days away, the government is still shut. Washington stuck. And the any, your money hangs in the bans. Will house republicans rally or revolt? And if we go over the cliff, what happens next? This morning all of the breaking details about the high-stakes negotiations, from congress to the white house. Then, nsa leaker edward snowden resurfaces and hollywood takes on julian assange. This is information the world needs to know. The wikileaks founder responds live from his london hideout. All that, plus the powerhouse roundtable. And that nobel prize stunner here today. All of you are telling us and all of the evidence coming in this week is proving that point. Government now shut down for at least two weeks. Americans face the risk of default. Right now, hopes for a deal to avert that cat strophe rest with two leaders that haven't always been on speaking terms. Starting with abc's chief white house correspondent jonathan karl. Jon, the president's talks with speaker of the house collapsed friday. This senate leader negotiation is the only game in town. Reporter: That's right. It's the only game in town. A game that's not going well. The two men are trying to craft an agreement that would keep the government open and postpone DEFAULT UNTIL NOVEMBER 1st. Republicans have given up almost all of the demands that led to this crisis, major changes to obama care are not even on the table right now. But the talks broke down yesterday, over democratic demands from harry reid to increased spending. Reid wants to end most of those spending cuts that were put in place under the sequester as part of this deal. And george, keep in mind that, as these two men hold the key to whether or not this is solved or not, that these two have seen their relations deteriorate so much that they have barely been on speaking terms. At the same time, senator McCONNELL IS SENDING OUT SIGNS That he wants a deal. Reporter: Going into these TALKS YESTERDAY, McCONNELL Was already preparing for a backlash from the tea party republicans. He gave an interview with a local newspaper in lexington, kentucky, saying that he wants a come-together moment with democrats. As much as I would rather have a republican president and would rather be the majority leader of the senate, I'm willing to work with the government we have -- not the one we wish we had. McCONNELL IS WILLING TO CRAVE IN Most things, but I don't think he's ready to give in to spending cuts. Jon karl, thanks very much. Let's get more on the economic fallout from our business and economic correspondent rebecca jarvis. Any sense of how these latest developments are going to go down? George, more downside than upside potential. What we saw last week, the market cheering on the news that house republicans had put something on the table as far as the debt limit was concerned, even though it was short term the markets like that, now, when you look at the upside, ahead of the october 17th deadline, you have a 1% potential for upside. 1% upside potential in the markets if it looks like a deal is getting done. But the downside potential is much more dramatic. Ahead of the october 17th deadline, we could see the markets drop 2%, even 3%, if it looks like a deal isn't getting done. But, again, george, this isn't what happens AHEAD OF OBJECT 17th. October 17th is d-day. And after that all bets are off? After that, all bets are off. Every bank on wall street has been gaming this out. They have war rooms set up. They're thinking about their exposure to this. We could see a disorderly decline in the markets then, we're talking 500, 600 points of downside as far as the dow is concerned. Rebecca jarvis, thanks very much. Now, from the congress, three very distinct perspectives.

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

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