Transcripts For CNBC Squawk Box 20131017

Billion in new revenue, new taxes. If you do that by closing loopholes or other ways around. Now, to come to numbers like that, you think it would be more difficult to pull the democrats or more difficult to pull the republicans . A lot of those cuts could be doing things like cutting tax breaks for businesses, and other special interests that are out there. And that is something that i believe plenty of people in the tea party and others might sign on to. I think it would be more difficult to get republicans to come on to that bargain because they have a bright line on taxes. Democrats, as i mentioned a but if youre talking about cutting loopholes and cutting tax breaks that certain people are getting, we have Grover Norquist joining us today. He might not say that what is raising taxes. I expect he would say that is raising taxes. Look, the president said in our interview two weeks ago that tax rates are a thing of the past. Raising tax rates are a thing of the past. That what he wants to do is close loopholes. But the question is what loopholes . Sure. And identifying loopholes is difficult. But republicans have drawn a line against net increases in revenue. Right . So i would expect Grover Norquist would say anything other than dynamic scoring, you know, counting for growth, that any net revenue increase would be off the table. Now, on the democratic side, they dont want to cut medicare and Social Security, and many of the parties were resistant. But the president sets the tone. He would get what he wants from democrats. He gets in his budget change in cpi. He would go some distance there. But i think the challenge is getting past the bright line for republicans and then pulling the democrats along. Erskine bowles, by the way, does favor a lot more tax increases than weve seen so far and thats the point that hes making. Joe. Harwood, so you were right about this. We did get a deal. I always thought there would be a deal. Andrew, i guess, is going to be in cincinnati at a bengals game. Im going to cincinnati. Remind us, andrew, of the terms of that bet because were going to make it happen. So the terms of the bet was i would go to cincinnati to a game with you because i lost. I did not believe that this morning we would have a deal. You wrote that column and and i was wrong, joe. I know you like you would remind me. I was wrong. You were exactly right on i should be your agent. But its true, some men like to watch the world burn and you were hoping everything would hit the fan. But do you remember one thing you said that was very smart, andrew . That was, well, if we really are going to get a deal and the markets know waer going to get a deal, what if the market doesnt sell off and no one gets a chance to get in . Now, look what happens. Weve been up five out of the last six days. Here we are, the deal gets done and were headed down. Bee because were already up to 15. 6 or whatever it was. We never really got a chance to get in and say were going over the cliff. So i commend you. Andrew, pack your mittens for cincinnati because its going to be cold. A late game . Were going to pick a weekend. I wanted it to be minnesota in january. Pick a weekend. Well bring cameras. Im going to have to see that to believe it. By the way, andrew, cincinnati is the perfect city. I can see andrew with giant earmuffs or something. The most conservative city probably in the near midwest and were youre going chafe there. Youre going to get a rash there or something, seriously. You will feel it when you land. It will be good. And tell andrew that the sushi in cincinnati is not quite the same as hes used to in manhattan. You know, they have chili, not sushi. I just have one semi substantive question this morning, which is on the republican side in terms of the dynamic between the different factions in the party, who feels emboldened . Who feels that they lost and how does that play out over the next couple of weeks . Well, clearly, the tea party lost and they lost both to the extent that theyre able to realistically assess what happened, youve been saying statements from republicans. Orren hatch, for example, a long time member of the senate put out a statement yesterday saying a lot of people were sold a bill of goods that something that was impossible to happen was possible and we dont want to let that happen again. We have to be realistic about what they do. Mean what they could have accomplished. Correct. The pocatello of the shutdown strategy. So they got nothing about what they wanted. Right. And that means obama care, theyve anchored so many people in the party who are feeling the effects of the declining poll numbers for republicans, but its still not 100 clear, andrew, whether or not the more mainstream members of the party are going to be able to prevent that faction from steering the rudder of this House Republican caucus. Its sort of up to john boehner, but not really because this is a john, we want a important caucus which doesnt move in one direction. We want these guys to win the u. S. Back. And my question is, are these the people that will win back our trust or youve seen polls that they just dont want to throw up hundreds. They want the entire come tegsz of the congress changed. Some of them senate and house. Are we wasting our time with this group of people or is it going to take an election . That sdendz on what you mean by this group. If everybody had the approach of john boehner, we would not be in this mess. Its that theres a whole lot of people who were elected way after john boehner came to congress who have a much more radical view of their role and what ought to happen to government. Were they weakened in their sdrikzs . This hurt the republican overall. Were they weakened . It is possible that some of them were weak bed, but not likely. Most of those people come from districts that are so lopsided that theyre insulated. Which means its not going to changed. Thats right. Unless the rest of the caucus remember, theres about 107 republicans. 87 republicans voted for it. Theres about 180 republicans in that caucus who dont want those people to be driving the train. We shouldnt do that again. If those people rise up, it could be different. Well, the problem is that they would then have to have a coalition with nancy pelosi. Would they feel would nancy pelosi allow that or would she take the numbers and say theyre fought going to be cutting deals with them . Finding the middle is not just about finding compromise. Its finding compromise between boehner and pelosi. If john boehner was willing to say to those 50 tea party members, youre not calling the tune any more, im going to make deals with nancy pelosi and steny hoyer, with Mitch Mcconnell and harry reid, a lot of stuff could get done. The president was fiddling for a while. I know that strategy paid off at this point. Were asking everyone to rise above here. Theres been transit in from the left in terms of all the stuff that were trying to do. The president would have trouble doing any of this stuff. Three hours and just listen, weve got to get rid of every republican to make sure we get anywhere. Joe. Joe. I know thats where youre going, harwood. No, no. I didnt say that. Ill make you a bet. You have to go see the who is the worst team in the league . Im going to make you go to one of those games. The redskins, maybe. The giants. No. Im getting you season tickets to the giants. You heard me say that if everybody in the congress had the toout attitude of john boehner, we wouldnt be in this mess. I did. And on the cola thing, look, its in the president s budgets. Hes going to be for that. But entitlement reform may take more than just cola. Look, i think that a real genuine attack on the entitlement problem may require Something Like paul ryan proposed, the premium support, where the sut the vouchers, that sort of thing. Anybody who is close to retirement age now, you have to be looking further down the road so people can prepare for the environment and know what to expect. How did we get late . Were not even together and were so late. Because we talk for a living. Im amazed you got to the camera in the time for the top of the show. It wasnt his fault. He got dropped off miles away. I was 15 blocks away and i was in the darkest corner and i could hear crickets and the guy would look over at me and id be like, hi. And i wasnt moving. It was not good. Is that what we discovered that you actually run a four 340 . I was like at a southeast place and i was supposed to be at a northwest place and the capital was between me. You know what i mean . I was on the house side and now im in the senate. That takes a while to walk that maze. Im here. Giovanni bernard. I got this here and im feeling good. Ive got this right here, so here i am. Were here, were ready to go. I can lean back. Lets take a look at some of the markets this morning. We showed you the futures board a moment ago. After the euphoria on wall street, you are seeing the give back this morning. Down by about 105 points. Probably not surprising, given the big build up as it looked like a deal was going to come together yesterday. Right now, wti down by about 55 cents. 101. 74 a barrel. And the tenyear note is yielding 2. 631 . Yields in the longer term notes never really crept up, never got to any of those positions. But it was the shortterm where you saw a lot of activity and that should be at least calmed by all of this news today, as well. The dollar this morning, the yen is at 98. 03. The euro is at 1. 3625. And gold prices right now are up by 25. Wow. Might not have expected that. When we come back this morning, we will talk about that bill. Believe it or not, there was some quirk spending that crept its way into last nights shortterm budget deal. Kind of unbelievable. Well tell you what was in that beside tess deal to avert that debt default. Were watching shares of United Health. The company earning 1. 53 a share from Third Quarter, matching analyst expectations. But its full year forecast fell short of consensus. Squawk box will be right back. This is our daily segment focused on giving Business Leaders a fund up. The deet ceiling limit raising isnt without a quirk. There is a 2. 2 billion deal for a dam project on the ohio river. 450 million for rebuilding projects in floodhit areas of colorado. A death benefit for the family of late senator frank lawsuitenberg. Agencies that fight wildfires could get as much as 636 million. The mine Safety Department gets an increase in the fees it can keep. And a Watchdog Group put the goal of protecting americans priestsy 3. 1 is million. Senator john mccain takes on the spending for the dam projects. These people are like alcoholics. They cant resist taking a drink. Its ridiculous. Its absolutely ridiculous. It shows that there are people in this body who are willing to use any occasion to get an outrageous pork barrel product done at the costs of millions and millions of dollars. Its differesgusting. Any discussion, guys . I read through it and immediately fingers were pointing at mcconnell. Senator feinstein said this was something that was in the works or something and they all wanted it. It doesnt happen by magic, though. I know. I dont know what but they pointed to somebody else instead of mcconnell who wanted it in. Well have mccain on and well give him what their answer was to how it happened. Hell tell us whether its bs or not. Whether you agree with any of these spending issues or not, why would they tack all these issues on. We literally were saying this would be the collapse of the financial system. Why wouldnt you do a clean you know, the call for weeks now has been why wont you pass a clean resolution . This wasnt a clean resolution if you tack on pork barrel spending. But whats pork barrel spending . We dont want flood damage repaired, we dont want but why not athak separately . We spent months talking about the overreach of the nsa. But why does it get tacked on though this . Because its a must pass bill. Here is my point about why this is a waste of time. That is if you really care about the longterm deficit and debt problem of the country, you dont talk about this nickel and dime stuff. What you talk about are those big entitlement programs, farm programs, thats where the money is. One of the biggest problems that we have in politics is that many people out in the country hear reports like this and believe that the problem is actually these dinky programs and understood it is not the real problem, but you have to start somewhere. The optics of this, i agree with mccain that you have to stop with medicare and infrastructure. Its investment, its infrastructure, this is whhavin to do with jobs. Stuff like colorado i think would get passed, anyway. I know with new jersey it was held up for a long time with the new Jersey New York connecticut area. Like that sandy relief. But i think you can have a clean vote on it saying here is what i support and what is what i dont. For people using this stuff, this is how you get into the deep politics to say you supported this, you didnt support this because you cram all this stuff into one bill. The fish have to squirm, birds have to fly. They cant help themselves. Wee cant help ourselves. Were part of the problem. Finding nemo, thats where that came from. I cant believe youre such an enabler, harwood. As a republican, you could easily ba sh them. Andrew, if you care about the problem, focus on the real thing. I went to a town hall meeting with a member of congress in august and he was talking about longterm budget problems. And a guy stood up, retired guy, and said ive heard a lot of is the stuff about change cpi and Social Security. That would really hurt a lot of people in this district on Social Security. Why dont you put a change on the spending instead . Well, guess what . Change cpi is putting a change on the spending. John, i agree with your larger point, but i dont see any problem with going after both. You can fix the small things and the big things. I agree with the larger point that it is not the bigger problem i completely agree with that, thats not where the money is. However, i dont think it means that you dont have to look at the fraud and waste and pork barrel issues. Were not going to have time to get to mark cuban. Andrew was wrong about this, too, harwood. I told him that cuban did nothing wrong with this mama. Com stuff. How are you going to pay off this debt . That was the third story. Lets jump to that story. Lets tell everybody who hadnt read the papers yet, mark cuban, he was found not guilty of Insider Trading in dallas yesterday. He lashed out at the cases lead prosecutor saying that the government tried to bully him. Joe, youve been following this slowsly isnt it happened. And i dont remember all the details, but i told andrew he did absolutely nothing. Andrew is like this ambulance chases. No, no, no. You come from a legal family. Everybody is culpable for something with you. Youve got your magnetic business cards andrew just not let me make one thing clear. Andrew does not get mavericks tickets for this because he might actually enjoy that. Thank you. Mark cuban, good on mark cuban for fighting and standing up to what ultimately turned out to be bogus charges. I also tell you i had not in truth read enough about the case to fully understand it. What i thought was shocking was that the governments main witness refused to show up in court and would only show up by video. I said that yesterday. He was coming from canada. He wouldnt come into the country. That sa difficult case to prove because was he even under oath . I read in one account that he wasnt under oath. In this case, shame on the government. Shame on the s. E. C. Make sure you get a speeding ticket, go to the court because the cops a lot of times dont show up. Which means you werent speeding, right, joe . A friend of mine got off that way. Bhab what andrew gets from this outcome is he has to hang around for mark cuban a long time. We like mark. Hes a good guest coming in. Hell of a dancer. The u. S. Equity futures this morning have been weaker. But, again, this comes after Massive Gains yesterday when it looks like a deal was close to getting done. Right now, dow futures down by 87 points below fair value. When kwoem back, well talk about the market invocations of last nights last minute budget deal. Plus, how washington can win back the confidence of the American Public. We will ask congressman jim himes and mo brooks. Senator ron johnson will be joining us, too. Squawk box will be coming right back. The American Dream is of a better future, a confident retirement. Those dreams, theres just no way were going to let them die. Like they helped millions of others. By listening. Planning. Working one on one. Thats what Ameriprise Financial does. Thats what they can do with you. Thats how ameriprise puts more within reach. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Welcome back to squawk box. Over the last few weeks, Corporate America and the Financial Markets have been almost solely focused on the situation here in washington. Ceos and investors have been hanging on every word coming out of the capital wral. As our viewers know, cnbc has been leading the charge to rise above. A call to all politicians to put aside part is anship and do whats best for the nation. Now, washington has kicked the can down the road for a couple of months. This is a temporary reprieve. Washingtons reputation has been shredded. Approval ratings are at historic lows. It is time to come together and do something meaningful. We hear at cnbc are calling for a brand bargain. This morning, we are announcing a new call to washington. Its called win us back. This is wig back business, win back america. We promised to do our best to move past the talking points and get real answers from the nations leaders. Joining us now, Marie Cavanaugh and mark. We knew we had put things in jeopardy with all the back and forth maneuverings over the last few weeks. Where does the s p stand in items of the rating . Developments have been in line with expectations for the debt ceiling to be raised before that new financing has, in fact, happened. The readings are on the stable outlook. In our opinion, the aa plus rating is lower than the aaa that we had until 2011. Predominantly because of the extreme brinkmanship. I guess that leads to the question of what does the United States government have to do to win back that aaa rating . In the last three weeks, many of the credit strengths of the United States are constraints in our opinion. Thats the case for most governments. And then the other factor is that its very high. Its stabilizing our opinion of the next few years, but then well begin upward without additional fiscal measures. Chuck, most guys have very different opinions about how we should progress from here, what the philosophy is. They have legitimate differences and some of them say theres no way to find compromise. Is there no way to find compromise without giving up what their principles are . Maybe, but that will be a small compromise, becky. And thats essentially what weve whittled expectations down to. I think at this point the democrats looking at this new Budget Committee might be satisfied with a couple of years of partial relief on the sequester and forget about a grand bargain. Did marie, by the way, say that we had a strategy . If thats what she said, thats news to me. Marie . I think i was referring to the fact that in the United States, and unlike in most governments, 127, the spending decisions and the funding decisions are separate. And until that creates the difficult situation where weve seen over the past few weeks that we also also in 2011. Understood. I was teasing. Its just that the at a moment like this when we take it right up to the last hour, even thinking about the idea that theres a strategy behind this is jarring. Marie, what we have seen is the deficit improve. Thats happened as businesses started to come back, growth is coming back and tax revenues have climbed. If thats the case, those revenues continue to climb because the economy is improving. Will that developly lead s p to bring back the aaa rating . Certainly the economy has very much been a strong point. We estimate that the shutdown has probably weakened growth in the Fourth Quarter of about 0. 6 . There is, of course, uncertainty because theres been the beginning of 2014 some of these issues will have to be dealt with again. I mean, and hopefully between now and then so it doesnt go as close to the end as it has this time. How important do you think it is to get a grand bargain. Would it be okay if we take that to the next couple of years . It probably will. This market has been fed since 2009 by climbing walls of worry. So if we get continuing resolutions to fund the government through the end of this election cycle, that would be okay. But, you know, the president has an opportunity to be, you know, down right clintonesque here. He has republicans where he wants them, he has all the leverage. Theyre within 1 trillion of basically declaring a victory of the Simpson Bowles challenge. Im for holing out light for a deal. Does that mean you think the president has an opportunity, does that mean you think he can be magnanimous, but does that mean giving up everything he wants and not getting anything from the republicans . No, but so far weve had about 1. 9 trillion spending cuts without the sequester which would load on to that. Were squeezing that onethird of the budget thats controlled with 600 billion in taxes. Hes proposed some, but he needs to lead democrats in that direction. What you laid out is a small deal, though. Its baby grand bargain, lets call it, was dialing back the sequester. I think americans would just assume let the sequester stand. That gets you a lot of budget cuts even though its messy. Ta is their leverage. I think youre going to have demonization of those essentially of those who would defend those post sequester levels going forward. Remember, becky, a lot of republicans also want to relieve parts of the sequester. Theyre focused on different parts, but the reason republicans couldnt pass a transportation bill this summer was because it didnt spend enough for republican members. So there is a bipartisan desire for relief from sequester and shifting to entitlements. But, the factors have all hinged on what you talked about. The president has an opportunity. You think he needs to be magnanimous and make this offer so we dont see a repeat of what happened this year. I think he it would be helpful if he led in a way that bill clinton did after he essentially vanquished newt gingrich. Does that mean making those offers xhr what republicans want to see without the rhetoric that has come many times. The first leg of the challenge, but for the next leg of challenge, he needs to be involved as a leader. And if he does that, is it possible for him to get new revenue of any size . Well, thats one of those threshold issues, but i think there are ways to do it. Even the diet cola, the coast of living adjustment would generate about 200 billion in additional revenues. Well see. Chuck, thank you very much for coming in today. Marie, we appreciate your time. Coming up, Congress Finally coming up with a budget deal, but really it only postpones the same debate for a couple of months. Were going to try to craft a grand bargain starting with two congressmen when we run. vo you are a business pro. Maestro of project management. Baron of the buildout. 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 fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Welcome back to squawk box. Congress has agreed to a temporary fix on the budget. But without a longterm budget. Joining us right now, congressman jim himes and conchman mo brooks. Thanks for being here. No problem. Im going to go to you, mo, first because you voted against this last night. I want to know in truth if you were the deciding vote, right, so this is not a symbolic issue, if you were the deciding vote and were prepared to lets go into default last evening . Well, theres a good way and a bad way to reopen the government and to raise the debt ceiling. What happened last night was the absolute most, most irresponsible way of doing it. In effect what we have done is raise americas debt burden by 500 billion from may of this year through february next year. What did we get for it . We postponed the fight on the continuing resolution for two to three months and postponed the fight on raising the debt ceiling again for three to four months. Thats a really bad bargain in anybodys book. Now, if i had the deciding vote, i would have said no and i would have done something responsible. I would have addressed the underlying cause of the problem which are the deficits of isnt there a practical issue here, right . This whole nest the past couple of weeks by some estimates cost 24 billion in Economic Activity in this country. And you didnt get what you wanted. Was it worth it . Well, the 24 billion, which is conjecture, but nonetheless lets assume is true that pales in campaignsor to the adverse effect on america in our country from the insolvency in bankruptcy which is where were headed. You guys are going to have to get along in the future. When you sat down you introduced yourself to him and i said do you guys know each other and you said no. How is this possible . How is it that you guys are ever going to get how are we going to have both sides get along if people arent spending time together . Its a real issue. Theres 435 of us and we are so busy that we dont have an opportunity to get to know each other as much as we should. If i could have dinner with mo tonight ill buy you said. What you said this morning just wasnt true. Voting to raise the debt ceiling in 2340 way increased the United States debt. By the way, if you want to work a budget that determines the rate at which money kos in and gout out, im all for that. It was the republicans that refuse to go to a budget conference and we would have those conversations. The fundamental issue is not that were not palling around more. The fundamental issue is that youve got two fairly different vigdzs for what the federal got should look like. But the question becomes how do we move forward and how do we avoid being in this exact same place six weeks, eight weeks from now . As friendly as we might be, this place is driven by fairly commercial and personal considerations, right . And one of the things thats going to change the weather three months from now, february or january, whenever this comes up again, is that the Majority Party in the house and the senators in the you know, ted cruz and those guys, they got the opposite of everything that they thought they might get. Their own popularity ratings, the disapproval rating for the Republican Party is the lowest its been in our history. Obama care has gone up in the polls. They dont want to go through that again. Lets be clear, the big losers in this are the American People. Thanks to this debt ceiling increase that was just impose dollars on the American People, dallas hidden tax to the tune of roughly 1,600 for every man, woman and child to extend the debate in two to three months. America will be weaker because of that additional half trillion dollars in debt burden that were going to be suffering from and but you seem to have been prepared to go over the edge, right . Well, no. I didnt want to. I wanted the financially responsible people like myself to get the financially irresponsible people to do the right thing to address the but barring that and given the fact considerings you were still willing to go. And, of course, the debt ceiling has nothing to do with the deficit. That is the only way in the world that we can get those who are financially irresponsible to address these issues. We have suffering from five consecutive years of deficits averaging over 5 trillion a year. Greece has unemployment now because of this, theyre further down this debt path of 27 . Is that where you want to take america . Some do. Obama care, is that on the table for you . Pardon . Is that on the table for you in the next three months . That is a subpart of the bigger problem. The bigger part is we have had these deficits that are out of control. Lets look at cnbc. How long could you guys stay in business if year after year after year 30 of what you spend was borrowed money . Youd be bankrupt. The same principal is true tore your country. The debt ceiling, of course, has absolutely nothing to do with the deficit and the republicans have been trying to sell this idea that if you raise the debt ceiling, you increase debt. That is absolutely not true and most americans understand that. We have to run. Its about like giving someone crack cocaine and wondering why theyre ill once they take it. We do have to buy both of you lunch to get together because im a little worried that were going to be having this conversation in a couple of months. I want to thank both of you, congressmen, for getting up early and for the work that you guys do. Thank you to both congressmen. Brooks and himes. Over to you. I dont want you to start worrying again, andrew. After that conversation, you have to worry. Well, right at the top of the show you said we were going to ask people to rise above and win us back. Then were going to have a debate between two guys that are and then look what you just did. You totally instigated and you got its all for cable tv. All for cable tv. I hope you feel good about yourself. Anyway, thats an illustration of what were going to deal with. Yep. But what are you going to do . There are differences and both sides have merit necessary some of their arguments and not in their others. Coming up, were going to focus on the senate side. Theyre nicer over here. Theyre more collegial. We have a real gentleman coming up here, our newsmaker senator ron johnon, a job creator, a business owner. Well find out why he voted against the lastminute deal. At a ford dealer with a little q and a for fiona. Tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee, affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Get up to 140 in mailin rebates when you buy four select tires with the Ford Service Credit card. Whered you get that sweater vest . Your ford dealer. Welcome back to washington. Joining us now senator ron johnson. Senator, thanks for being here. I appreciate it. Morning, joe. Would it be overstating it i dont know whose phone that is. Would it be overstating it to call you a tea Party Senator . Well, i actually kind of sprang out of the tea party. I gave a speech at a tea party. And im certainly on board with the fact that americas taxed enough already. And i really came here to basically be the vote to repeal obama care and try to prevent the bankrupting of america. But im really not affiliated with any particular group. I really do view myself as an independent voice. I can talk to you about the strategy of trying to defund obama care and whether it came back and became counterproductive for the Republican Party. Do you acknowledge . I was pretty up front in not supporting that strategy because i didnt think well, it wasnt achievable. Ive done a lot of Strategic Planning in business. It starts with ascertaining and acknowledging reality and setting an achievable goal. Dont set yourself up for failure, set yourself up for success. I think if we had approached it trying to get a oneyear delay. Look at how much of obama care the president s already delayed. I think that might have been achievable. That might have been a responsible thing to do for the public. Im all for getting rid of obama care because i know the harm is going to cause our health care system, our federal budget and our freedoms. But the proof is in the pudding. It was a spectacular failure in terms of that strategy. What we want as i guess its sort of a mantra of ours now. We want business and the u. S. The country itself, the people in the country to maximize our earnings power. To maximize and create jobs. Maybe obama care, some people in your view that hurts our goal. So does shutdown and so does acrimony. The federal government harms Economic Growth. Well, this latest episode. I dont know how many people. Youve got a burden of 1. 8 trillion. Thats what we are burdening our job creators with from the federal government regulations. Throw on top of that the tax rates and our uncompetitive natu nature. Paying a tax rate in excess of 40 . In the next three months or however long we have, what do people like you need to give up . And what do people like on the other side the president and what do they need we all end up in the same place where fewer people are unemployed. More people want to work and have lets first give up the threat of shutdowns forever. We should. Langford in the house. I call it no more shutdowns ever. What all it does, itll fund the government. If you p dont pass appropriation bills at current levels. If you cant come up with a spending bill within 120 days, drops the funding 1 . Its that kind of fiscal control. That kind of fiscal discipline you have to impose on this dysfunctional place called the federal government. How about the debt ceiling . What can we do about it . It seems stupid. It never works and the only reason to use it is to say were not going to raise it unless you do this and then we end up in the same position. Well, unfortunately in this place, you need some sort of action forcing moments and the debt ceiling. Is this ever not going to be raised . What we should be doing, we should be facing reality. We should be actually looking at real information defining the extent of the problem. And what im putting forward is the solutions menu. Lets start saying, you know, not that im proposing this, but what would happen if we start recognizing people arent dying at 62, theyre living which is a good thing, to 80. We havent adjusted that yet. Lets start putting the value of those types of solution proposals so policy makers know the value of their options. Youve got not unfunded but the deficit will be 107 trillion. Even tom friedman wrote a piece. Its unsustainable and we have to look at those numbers. Theres nothing left for you. That is the real shame of, you know, obviously the democrats have no problem in increasing the debt burden thank you and thanks for stopping by. Thank you for welcoming us down here. Anyway, coming up, two very different opinions on the nations debt crisis and how to craft a bargain. And were going to talk to geithners former chief of staff mark patterson. You can see him on the top and Grover Norquist. Squawk box will be right back. My mantra . Always go the extra mile. 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Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. Ask your doctor about the only underarm low t treatment, axiron. The Government Back in business and the u. S. Default avoided. Will we be doing this again in a few months . What will it take to get a grand bargain and fix the problems for good . Senators rob portman and angus king will join us. The question is, will lawmakers seize the opportunity to win back the trust of voters . We are rising above and asking lawmakers how they plan to win back the faith of business as squawk box begins right now. Good morning, everybody. Welcome back to the special edition of squawk box where we are live from our nations capital, im becky quick along with john harwood. Joe kernan at the Senate Rotunda this morning and Andrew Ross Sorkin made his way to the house of representatives. Covering it all from washington after lawmakers passed a bill to reopen the government and raise the debt ceiling. The futures this morning have been a little bit weaker but thats because we saw so much euphoria yesterday. This morning, you could see the dow futures down by 81 points, s p futures off by over three points. Andrew . Okay, becky. And the big question now, where do we go from here . For the past few weeks, Corporate America and the Financial Markets have been solely focused on the situation in washington. Ceos and investors have been hanging on every word coming in the capital. Many say the dysfunction has paralyzed the business of business. Trying to lead the charge on rising above, a call to all politicians to put aside partisanship and do whats best for the nation. Now washington has kicked the can down the road for a couple of months more. The reputation has been shredded. Approval ratings at an historic low. Its time to come together and do something meaningful. We need a grand bargain. And this morning, were announcing a new call to washington. Its called win us back. Win back business, win back america. Thats the theme we hope to follow this morning. We hope to do our best to ask the tough questions, move past the talking points and get real answers from our nations leaders. Becky, over to you. Andrew, thank you. For more on last nights vote and where we go from here, mark patterson. The senior fellow at the center for American Progress and we have Grover Norquist, the founder of americans for tax reform. Gentlemen, thank you both for joining us this morning. Grover, i know you had some tough words for some of the House Republicans who were not in favor of this. What was your message . Well, there was an effort to think that, gee, the house of representatives run by republicans could force the Democratic Senate and democratic president to give up on obama care. And the answer to that is, no, you cant, you need more votes in the senate and a different president to get rid of obama care or reform it. So they forgot their arithmetic. Now we move forward to where the president s going to want to undo his sequester. And he didnt have the votes for that. The republicans started some republicans with an unreasonable demand, meaning you couldnt do it mathematically. This was a pragmatic approach. Youre looking at and thinking there was no upside from this. The votes werent there to the Republican House cannot force the Democratic Senate to do anything and vice versa. So whoevers trying to change the status quo is in a difficult position because we have divided government. Mark, were now at a position where weve reset the clock. I guess i wonder what happens next. Whats the path that you see to some sort of grand bargain or at least a baby grand. Well, i hope first of all, i hope theres a lessoned learned here. You cannot use the threat of default. I say this as a treasury alum. You cannot use the threat of default to achieve policy outcomes unrelated. And i hope that lesson has been learned. Unfortunately, i dont think it quite has. By setting the deadline again so quickly, right back in february with the same argument, i think that there is some hope on the part of people who want to set it that soon that we can do this over again and maybe the outcome will be different. Maybe next time theyll be able to extract i hope thats been learned. I think you dont think the president has succeeded in his goal of sort of breaking that pattern . I hope so. And i imagine if the same group tries to run this play again in february, the worlds going to say youve got to be kidding me. I think the worlds going to say if thats the case. Both sides have said they wanted to undertake serious negotiations without the debt limit holding over their head. My question is, what do those negotiations look like . And what are we shooting for . The idea theres this desire to have negotiations and come to a grand compromise absent an action forcing event like a debt ceiling or cr, it hasnt happened before with this administration. Youve had it in lots of previous administrations, but not this administration. The president doesnt talk to republicans until hes up against the debt ceiling. So to argue why dont we do it under different circumstances means never doing it. And the republicans do want certain things. I want to make sure the sequester, the president s sequester those numbers are maintained. The president wants a tax increase. I dont want to go back and look at who has been to blame. I think you could blame either side over the last several years. I think what we do need to look at is what happens next. And if were talking about a serious negotiation, i think both sides have to give. I think were in a fortunate position between the sequester and rising tax revenues, were in a fortunate situation where we have tackled a lot of the immediate deficit. I think the longterm entitlements are the bigger question. And what would republicans, grover, be willing to give for that . My question is, if you need some sort of revenue raised, i know you look at that as taxes, what if its closing loopholes for cuts at this point to businesses or other special interests theyre receiving right now, tax breaks. Taxes are too high. Economic growth right now sucks. You dont hit it again with more taxes. The republicans have laid out a clear plan. Paul ryan wrote about it in the wall street journal. We need longterm reductions in the unfunded liabilities on entitlements. The president and the democrats want more spending today. They think the sequester is stifling their spending. We can give them some spending today for significant reform in the future. That is something youre willing to give on. Thats on the table, taxes are not on the table but spending but if if theres no tax revenue on the table, youre not going to have a grand bargain . Are you willing to accept that . If the president only wants tax increases and doesnt want to reform entitlements, hes been saying in his budget. Without tax increases . Well, with tax increases. Tax increases are not on the table. The president said when i interviewed him two weeks ago, tax rate increases are a thing of the past, only revenue. I was on with one of our anchors last night and said, well, grover couldnt disagree with closing some tax loopholes to raise some revenue but sounds like you do. Look, if you take deductions and credits and trade them and give them the appropriators to spend, youve killed tax reform in the future, which is perhaps the president s goal. He hasnt done tax reform in all the time hes been in office, hes never put something forward. So what we need to do is take deductions and credits and use it for tax reform. Our corporate rates 35 , that is very damaging to us internationally, europes at 25 . Mark, what does that tell you about prospects for a bargain . Look, i think theyre always going to be very difficult. Thats why they havent been successful so far. But the only way you can do this is in the ordinary course of business and ill Say Something radical, i think the group of very smart women senators who helped forge this deal may actually help us make some progress on this because having worked around a lot of men in the government for a long time, sometimes they are not so good at reaching an agreement. Im not im kind of optimistic about this. I think this conference is probably going to have trouble reaching an agreement by december 13th, thats a short deadline. But the only way to do it is to go back out. And the president has shown a lot of flexibility on the spending side, been willing to do things unpopular in his party. But revenues do have to be part of the picture. We still are collecting relatively small share of revenues, share of gdp. And we have a lot of needs. We have a big complex country with a lot of needs. Grover, let me ask you this, the argument that youre laying out makes me almost suspect you would rather see tax reform before you get anything towards working toward entitlement because youre worried about Corporate Taxes already being too high. If you saw a tax reform that brought Corporate Taxes down but closed loopholes like Simpson Bowles laid out, would you be in favor of a plan like that . Well, tax reform that is tax reform. Its not a trojan horse it could be revenue neutral but means a lot of people right now a lot of companies but overall revenue neutral, thats exactly what the house ways and means committee. What the president has supported, but grovers saying no additional to the government. Democrats in return for medicare and Social Security cuts. Every time you walk into a negotiation with the administration, they want more taxes. When they did the supercommittee, they wanted 1. 4 trillion in tax increases to fix the 1. 2 trillion problem. Reid is saying now he doesnt want to do tax reform unless at least its 1 trillion in higher revenue. Its not just it is president s problem. Harry reid wants 1 trillion as the ransom for fixing the see why i said a baby bargain is all we can do. A baby bargain. Youre a pragmatic guy. That was your problem with the republicans who held out on this and were going to vote no on this. Would you would you agree or concede the point that, look, i dont want any new taxes, but if i want to get a deal done in this town, i may have to take something i dont want in order to get something i do want and Something Like entitlements and corporate reform reform of the Corporate Tax code, if those were things you could get, is that more important than drawing a line in the sand. Works the other way around. You only get tax reform in this town when you take tax increases off the table. 1986. If tax increases are on the table, you dont get tax reform. In a negotiation sometimes you have to give something to get something. Is there something youd be willing to give on that line . At least cut republicans a break who would want to vote down that line. If john boehner thinks he gets the john boehner ran for office repeatedly promising he would not do an overall tax increase. As have 219 members of the house to start with. Sure. But as the first george bush learned, sometimes you have to change your opinion on those things. Well, bush is the example of what not to do. He raised taxes and was promised 2 of spending restraint for every dollar tax increase. They got no spending cuts, spending went up. If you also the beginning of the process that brought the deficit down. The bush tax deal in 1990 and following on the clinton economic program. I would argue the republicans taking the house and the senate and stopping all of the Spending Plans and the democrats for six years. Were never going to agree on grover, would you give an inch and say maybe theres some business position you would be willing to give on. I think its a good idea to look at all deductions and credits to reduce rates and get corporate rates down and individual rates down. We need tax reform. That should be revenue neutral and would you be willing to give on the revenue neutral side . If it raised taxes slightly along the line . Every time weve gone down that path, we didnt get the spending restraint were promised. We know that doesnt work. 1982, 1990. How many times do we have to walk down an alley and get mugged and say wouldnt you walk down the alley again. The answers no. The democrats dont have the same inflexibility on our side. And, of course, democrats feel whenever they walk into a negotiation with republicans all they want to do is i would say both sides have run into problems on this. Gentlemen, thank you for coming in, sorry we didnt resolve it right now. Next time we will. Lets get in a few corporate headlines this morning, as well. Ibm reported quarterly profit of 3. 99 a share for the second quarter, better than expected. But its revenue of 23. 7 billion. That was more than 1 billion short of the wall street consensus. Also, another stock to watch this morning, United Health, that company out this morning, it matched the estimate of Third Quarter profit of 1. 53 a share. The fullyear forecast short of consensus. Did raise the lowend of the forecast but many investors may be disappointed because United Health has regularly beat analyst estimates in recent years. Also, Lockheed Martin is laying off 600 workers later this month. They will come in the training division. Lockheed said the move is not related to the Government Shutdown but merely challenging Business Environment that exists out there. Joe . Up next, the Government Shutdown left markets hanging without some key economic data. That was another thing we havent really talked about that much. Well have mark zandy joining us to discuss what investors can expect going forward. He would know as the guy that put together adp. And in the next hour, steve israel joins us. During the Government Shutdown, a flood of data was postponed, including the september jobs report. So what can the markets expect now that the government is open for business . Joining us now is mark zandi. I dont know the answer to this, when do we get the numbers . Not sure. Do they dump them on us . I need that data. But i havent heard. Today is the day everyones officially back in business. At the very least, well get the september jobs data, right . All that does is tell you what happened before true. Absolutely. Ill take anything at this point. Weve been getting private sector data thats not too bad. Its helpful. Some of the data from the realtors and the National Retail federation, the adp numbers. What does adp tell you . I think thatll be the best indicator of whats happening in the jobs market. Of course well only have the september data, we wont see the october data for another eight or nine days. You wont get any numbers that feed in as these things happen. Even if i did, i cant chat about it. Ive signed away my first born child, unfortunately. Whats your best guess . I think its done some damage. Particularly in the retailing sector, it just feels a lot softer, if you look at the International Council shopping centers, Retail Federation i mentioned earlier. I heard a lot of economists dont like anecdotes, but thats what you resort to if you dont have data. It feels soft. Feels like consumer i dont know if they pack it in, but they pulled it back. You talk about how business and Financial Markets will interpret what just happened. Are they fully expecting . Would you think theyre fully expecting that when we get to mid january and mid february on the cr and the debt limit that were theyre going to feel the same amount of uncertainty and turbulence that we just experienced . Or do you think they are going to bake in the expectation that were not going to do that again . No, i think they know this isnt going to be easy, i dont think. But i think that by itself is doing damage, as well. Increasingly coming to the view that the reason that the recovery cant engage, cant jump to that higher level of growth is because of the Political Uncertainty thats being created. And its been a mismatch of things throughout the recovery. I wouldnt entirely blame it on shutdowns and debt limits, but thats where it is right now. And as long as this continues, it just doesnt feel like businesses are going to hire. Pick up their hiring or investment. Until that happens, were not going to get 250,000, 350,000 jobs. Do you think a baby grand bargain or small bargain would actually suffice at this point . This is going to sound weird. It would be very nice to get any kind of bargain. But i think its not necessary. Really, to tell you the truth. To stop having standoffs. Yeah, because in current law, if lawmakers went home, did nothing, the deficits will come in, the debts going to stabilize. Not forever. Weve got bigger issues down the road. But for the next five years under reasonable economic assumptions and reasonable because theyre mine. Under those assumptions. And theyre cbolike kind of assumptions, this isnt really going to be an issue. And if washington is that assuming the sequester level stays the same . Yeah, everything exactly the same. Itd be nice to switch the sequester around but keep the same spending levels, same tax rates and revenues, everything exactly the same and washington falls off the front pages, i think this economys going to take off. If i were king for the day, id say lets go home. Mark, do you agree with the point that Larry Summers made in an oped recently that the focus on debt and deficits right now given current circumstances is entirely the wrong focus and we ought to have a focus on Economic Growth . Thats exactly in my view, thats exactly right. We have a deficit debt problem but thats post 2020. Almost entirely related to Health Care Costs and to the longer you wait to attack those problems the more difficult and draconian absolutely. But if the cost of addressing them now is this brinkmanship and taking it to the edge and not going anywhere, then thats in my view, thats much worse. Good for the shortterm, not for the longterm. If youre going to be at the point taking things away from people, the more they can plan for the future. Let me say this, i think if we get stronger growth, and i think we can. I think were on the verge of it if we get rid of this brinkmanship, good things happen. The fiscal situation could look better than we anticipate. Thats what happened in the late 1990s, we got to a surplus and no one anticipated that. Mark, well see you back in studio soon. We want to get those numbers. I want them too. Andrew, over to you. Come up weve got a number of people who voted yes on all of this last night. Rob portman, republican from ohio. Well put him in the yes category. Steve israel, democrat from new york also voting yes last night to end the Government Shutdown and extend the debt ceiling. And then senator angus king, he also supported the bill. We wont call them yes men but theyve got a lot to talk about. Those interviews and much, much more ahead. Squawk box live from washington, d. C. Right after this short break. Time now for todays aflac trivia question, what does the word snollygoster mean . Ready to run your lines . Okay, who helps you focus on your recovery . Yo, yo, yo. Aflac. Wow. [ under his breath ] that was horrible. Pays you cash when youre sick or hurt . [ japanese accent ] aflac. Love it. [ under his breath ] hate it. Helps you focus on getting back to normal . [ as a Southern Belle ] aflac. [ as a cowboy ] aflac. [ sassily ] aflac. Uh huh. [ under his breath ] i am so fired. Youre on in 5, duck. [ male announcer ] when youre sick or hurt, aflac pays you cash. Find out more at aflac. Com. 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And when we return, senator rob medical reportman, republican from ohio, from cincinnati will join us to discuss whats next for the Republican Party and how it plans on winning, squawk box is coming right back after a break. The American Dream is of a better future, a confident retirement. Those dreams, theres just no way were going to let them die. Like they helped millions of others. By listening. Planning. Working one on one. Thats what Ameriprise Financial does. Thats what they can do with you. Thats how ameriprise puts more within reach. Welcome back to squawk box. Live from washington, d. C. This morning. Lets catch up with some of the Morning Headlines and to corporate earnings that came out. The first one being blackstone reported earnings of 56 Cents Per Share for the Third Quarter, beat estimates. They jumped 21 over the prior year. Thats a record of 248 billion. Also, Supermarket Chain supervalu earned 2 cents above estimates. And supervalus results were helped by lower operating costs. Finally, tool maker snapon earned 1. 33 per share. Snapon also beat on the top line. Saying the operating margins improved considerably from the prior hour. John harwood, we have a little bit to talk about for one second here. I know we had this bet going and i know in the 6 00 hour i told you that i lost and im prepared to go to the game and i am in that spirit. But i want you to know a squawk viewer sent in an email to say i may have won because i said that it would go over midnight into the 17th and, in fact, what i forgot to realize is that president obama did not sign it till after midnight. So how do we . We need to do some forensics on that. But more importantly, and this is relevant for your interview youre about to do with rob portman and joes about to do, as well. Right. We just heard Grover Norquist on our air saying under no circumstances any net tax increase, even if you have medicare and Social Security cuts and this is what weve been talking about, if thats the position of the Republican Party, that is ruling out a grand bargain. Lets define that. Do you believe he meant a revenue increase . No, no, any he defines any increase in revenue as a tax increase. Correct. That is to say you cant raise any money even if you close loopholes. Can i break in quickly . Weve got verizon out with earnings. That was 3 cents better than expected. Its an increase of 20 compared with the adjusted Third Quarter, 2012 release. Some comments from lowell mcdams saying theyre focusing on wireless, fios and strategic enterprise. They say its produced consistent performance on a reported basis of 78 cents a share. Verizon wireless, Strong Customer growth. They say they added 1. 1 million retail connections, 927,000 highvalue customers in the Third Quarter. Wireless ebitda margins, 51. 1 . Smartphones, they say make up more than 67 of verizons retail postpaid Customer Base up from 64 last quarter. And just looking for the fios numbers very quickly. They say verizon added 173,000 new net customers for the internet service. All right. Hey, harwood, thanks. Yes, sir . Harwood, when i hear you say so the president is in a position to be totally intractable on revenues, but i mean we did get a got a huge tax increase and did nothing for entitlements while republicans got nothing. Now, hes going to be able. Youre giving him the total leeway to say no. Its a nonstarter without revenues, yet the republicans are somehow the ones that are saying, hey, wait a second, you already got your tax increase, lets do entitlements now. Both sides seem to why is it the republicans that are being intractable when the president is the one who both sides have to perhaps give up something. Its not a given that revenues have to be raised now. Revenue is the thing that republicans have to give up. Why . Says who . Says the says the people who they want to and the other part and the other part of the divided government says, no, you need to give up, you need to help reform and entitlements without any revenue . All right. Were asking. Lets get to we are describing an insensible position. It doesnt make any sense. So the president has to have his revenue what if he doesnt get his revenues . Grand bargain okay. Both sides have to arrive you cant just there can still be a bargain. All right. I got rob portman here. Let me get to rob portman. Now ive got to read this. Were asking lawmakers to rise above and asking how theyre going to win the faith back of the American People. Rob portman from ohio. How are you going to do it . Are there revenues to be raised . Or does the president have to move how did you draw the short straw and end up here in d. C. Oh, theyre here. Theyre in d. C. Too . Theyre just different i got to come to the rotunda. Im at the collegiate senatorial because i look senatorial. Someone said that once. Heres the deal. This is why my friend john harwood is wrong. There is another way here and its pretty obvious which is that democrats would like to see relief under the sequester. Republicans would like to hold the budget control act which includes the sequester, which, by the way, we enacted into law only two years ago, the president signed, the only thing thats happened since then, weve gone almost 2 trillion more in debt, right . So we want to hold those budget caps, at least. Thats for the discretionary part of the budget. But the way to find relief under sequester, of course, is to look on the mandatory side. So we dont need to raise taxes, i hope, because this economy is incredibly weak. But what we need to do is to substitute some of that sequester with mandatory changes. And, look, this is something the president has talked about in his own budget, he has 700 billion of mandatory changes, reforms. Its the obvious place we ought to go. And it would enable us to do two things. One, to help deal with the problem in spending right now which is that 2 3 of the budget which is not appropriated every year, which is on autopilot and growing, by the way, from 66 to 70 of the budget in the next ten years would actually be able to be reformed. All right. Lets ask dont argue with me, are you with senator portman . Will that satisfy the president if hes able to if it comes from the sequester and getting some stuff back there . Or is he going to insist on an additional revenue, which is really just higher taxes . Or for closing loopholes . For a small deal, yes. I think senator portman is right. I think what were talking about is the difference between going big and doing significant cuts in medicare, Social Security for which the president would and democrats would insist on some net tax revenue. Or going small and doing some sequester relief and doing some sort of entitlement stuff and it would maybe a little bit of medicare, maybe some ag subsidies. Those sorts of things. So, yeah, those are the two options in front of us. But its pretty clear if theres no revenue, theres not going to be a big deal. And what id ask senator portman is are you do you agree, senator, with grover that absolutely under no circumstances, no matter the size of the deal, no revenue, even with tax reform and if like would you vote no under any circumstances and swear on the possibility of becoming Vice President thats never going to happen . Well, john, first of all, im going to be on this budget conference, so im not in the habit of saying what im going to do and dont do until i go into a budget conference and work something out. We do need to deal with the mandatory spending. Second, if you look at what the Congressional Budget Office has told us, this is the Nonpartisan Group we all rely on. Taxes as a percent of the economy, which is how you ought to look at it, next year, will be above the historic average. In fact, over 19 and, by the way, continues to be way over the historic average over the next few decades. So, clearly, the revenue part is not the problem, the problem is the spending part. And thats something that i think everyone should acknowledge because its not me saying it, its not the president saying it, its the Nonpartisan Group. Finally, within this conversation, were going to be talking about nontax revenue, as well. Theres some fees. The fees that are in the president s own budget. You mentioned the farm bill. You also mentioned potential sales of Government Property which ive been pushing as you know. There may be ways to get more revenue. To do it on a tax side at a time when we continue to have this anemic growth. Everybody, i think, acknowledges theres something wrong with this economy. Were not growing as we want to. The unemployment numbers still over 7 and dont put new taxes on the economy now. Instead, do tax reform. Thats what we ought to be focusing on in this conference committee. Do something thats pro growth that actually lowers the rates, broadens the base, doesnt cut taxes but does provide for our businesses and our small businesses. So both the corporate side and individual side to be able to provide a little bit of relief to get this economy moving again. Thats what we should be doing. I think that in combination of substituting the sequester for some entitlement changes and also doing something as a down payment certainly before we raise the debt again would help to get this economy moving and help to get the markets up and bring back prosperity that all of us are looking to do. We cant we i think i just heard a little flexibility. Thats not bad. Why cant we get robs legislation through so we dont play around like this anymore with the shutdown . Yeah, were going to talk more about that. Is that you got bipartisan support for that . Yeah, we do. I have a bipartisan cosponsor. Four or five democrats that support it. Let me explain it briefly. When you get to the end of the fiscal year and you havent done an appropriations bill, you spent what you spent the last. And the notion here is to avoid crisis by crisis, you know, management. Then youve got to deal with the debt ceiling. What should we do with that . Throw that in there too . No. The debt ceiling has been effective over the years. Only when you try to extract something by threatening not to raise it. Its a tough vote because no one wants to raise the debt ceiling. Our constituents understand what it is. Its the credit card being maxed out. If you look back over the last 30 years, the only thing that has worked to reduce spending in this place has been a debate over the debt limit. The 1990 deal, first george bush did, the 1997 deal that bill clinton did with newt gingrich. The budget control act is one that did reduce spending year to year for the First Time Since the 1950s. We keep asking whether the republicans have now learned not to use the debt ceiling as a hostage. And it is possible to learn because the president learned not to do that because he did that once when he voted not to raise the debt ceiling to try to do something. He was able to learn, maybe the republicans can learn. Well, look, when the president voted against the debt ceiling he said he did so because we werent dealing with the underlying problem, the debt and thats what we should get back to doing. He would not do that again. You guys cant do it anymore either. Its the only thing thats worked. Weve got to get this spending under control. If we dont will you host andrew when he comes to cincinnati for the bengals game. Do you think hell get a rash . You know andrew, when he gets to that do you think, it is a very closeminded town. I think he gets maybe one of our local brews, hell be okay. Bratwurst, oktoberfest. Thats right. In return for that, i will host the i will host rob portman on the set when hes elected Vice President. Oh. How happy is he he didnt get dragged into that last ticket . Oh, man. Good to be with you guys again. Hey, becky. Hey, rob. Good to see you. Hope to see you in person next time. Well talk more about Goldman Sachs. Weve been flashing the numbers. Goldman beat by a long shot, 2. 88 versus the 2. 43 the street was looking for. When we come back, well head to the house and hear from congressman steve israel. Check out the futures in the meantime. Under some pressure today, as Kayla Tausche was pointing out earlier, a lot of this because of ibm and the story last night. That is having an impact on the dow down by about 111 points this morning. Squawk box is live from washington and we will be right back. You make a great team. Its been that way since the day you met. But your erectile dysfunction it could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph like needing to go frequently or urgently. Tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. 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[ delavane ] we can go to any country and spend money the way we would in the u. S. When i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. In order to go visit my family, which means a lot to me. At a ford dealer with a little q and a for fiona. Tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee, affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Get up to 140 in mailin rebates when you buy four select tires with the Ford Service Credit card. Whered you get that sweater vest . Your ford dealer. Welcome back to squawk box live from washington, d. C. This morning. Lawmakers ending the shutdown late last night, but the fix only temporary. Congress has a lot of budget negotiating to do to avoid returning to the brink of default. The beginning of next year, steve israel now, chairman of the Democratic Congressional Campaign Committee joins us to discuss how, sir, you are going to hopefully win us back. Weve been talking all morning about how washington can try to win over america which is fed up, frankly, on all sides about all this. Are we going to be back in this soup . Am i going to be talking to you three months from now after some kind of awful situation where Nothing Happened except that we hurt the economy and we hurt the American Public all over again . Not if we end the hyperpartisanship. Not if the republicans end the civil war and decide to meet in the middle. Not if we enter a budget negotiation where everythings on the table, no preconditions, no ransom notes, a broad range of issues on both sides of the budget. I want you, then, this morning, put something on the table. Put something on the table. Okay. Is revenue on the table . Absolutely. As ive said before, no preconditions. The American People have had it with preconditions. Theyve had it with recklessness and irresponsibility. My view is that everything should be on the table. Now, remember, democrats have demonstrated an ability, a willingness to deal with these issues when we passed the budget control act, that reduced spending by over 1 trillion. When it came to t. A. R. P. , we did what had to be done. What are you willing to give up on entitlements . Lets have a negotiation. Now we have a okay. But a template olive branch. One item. Let me give you an example of something that has already worked with respect to entitlements, the Affordable Care act, the Affordable Care act has reduced medical care spending. Andrew, im not going to discount anything. Im also not going to endorse everything. Thats what a negotiation is all about. Would you acknowledge and accept that obama care, at least today is a failure . More than just no. More than just a series of glitches and botched technical computer issues. Obama care is about a month old. Now, remember when we passed the Medicare Part d program in the Bush Administration and a month into it it was falling apart, there was mayhem, there was chaos . People were calling it a failure. I didnt accept it was a failure. We should do the same now. We had the c. O. Of aetna on the program and he said, look, he knew before this got going there were problems. Theyve been doing beta testing and he would forget about the politics and the practical aspect of it, he wouldve pushed it off a year because we were not ready. There are two ways to look at things when things go wrong to the extent you believe that obama care is going wrong. You can say what went wrong and who do we blame . Whats going wrong and how do we fix it . I prefer to fix it. And im not going to let you off this until we give up. I want you to give me one item youll give the republican we had mr. Portman on before. Theres a real issue about the revenue. What can be given and what cant be given . Do you have to get new revenue . You say right now youre prepared to so no new revenue . To balance the budget responsibly, youve got to cut spending and were prepared to do even more than weve done. You also need to generate revenues and were prepared to put on the table a whole bunch of ideas on how to do that. And you also have to grow your way out of a deficit and a debt. And one of the things i want to focus on is how can we make investments and infrastructure again which we all know is one of the most important ways to strengthen an economic recovery and create jobs. So, again, im not like these republicans who say well only negotiate if you accept what we want before we sit down. But the president said he wasnt going to negotiate either . The president said hell negotiate once the government is open and once the republicans avoid default. Thats where we are this morning. Lets end the hyperpartisanship and are you worried therell be no more debt ceilings and no more Government Shutdowns ever again . Say that again. No more shutdowns. I think they should be selfexecuting. We vote to extend the debt ceiling. So we should just take it at that. Congressman, thank you for joining us. Thank you. And youve been up very, very late. Coming up, we have senator angus king. He was skeptical about a shortterm deal yet he voted yes for it last night. Well find out why next on squawk box. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Welcome back, everybody. This morning we are joined onset this morning by senator angus king. Hes from maine. Hes a member of the Bipartisan Group of 12 that turned into about 14 senators for the last go around. Senator, thank you for being here this morning. Weve been trying to look ahead. We now have new deadlines, the clock has been reset. And the question becomes what serious work can get done between now and then . Well, i think the key to the whole deal was the budget conference. Weve been trying to get going since last march, weve got the ryan budget in the house, a budget passed by the senate back in march. And were finally going to go to conference and sit down. This is a usb drive. The most famous usb drive in washington because an outfit called fix the debt created this. Its an interactive excel spread sheet where everybody can punch in their budget choices, 400, 500 choices and see what it actually does. Were actually going to be making decisions on data. Think of that. Thats a novel idea. Were big fans of fix the debt in the campaign here, in fact, we spoke with Erskine Bowles earlier in the week. He laid out this idea, he thinks weve made a lot of progress, obviously, on working on the deficit. Weve still got some ways to go, he thinks, if you can get Something Like 2 trillion in spending cuts and somewhere between 400 billion and 500 billion in new revenue, new taxes along the way you can solve this. And thats doable. Thats doable unless you talk to Grover Norquist who told us this morning, forget it, no new revenue. Grovers not on the budget conference. No, but he does have a huge number of House Republicans who signed on to his pledge and made it clear this morning hes not going to let them out of it. How do you convince them they should come to the table and ignore that pledge . Well, theyve got to come to the table and try to talk and find some solutions. I think a way to do this is to work backwards and say, okay, whats the right percentage of gdp of revenues and expenditures . Get a right number and then you back into it. The average about about 19 . The problem, theyre going to make that hard to hold. Maybe we can bring spending down from 22 to 20 . Then youve got a deal. And the other thing important about this. Its all health care. Right. If you look at the longterm budget projections domestic, discretionary is down as a percentage of gdp. Defense is down as a percentage of gdp. Its all in health care. The question is, are we going to try to deal with that on a country wide basis for everybody, or is the federal government going to say, well, its somebody elses problem, were going to pay and let medicare recipients pay more or Something Like that. What is your read on the willingness of rob portman and other sufficient number of republicans on the hill to engage in that conversation on revenue to make a grand bargain possible or is that party going to draw a line and were looking at a very tiny bargain . Well, you know, its really interesting because the republican budget, the ryan budget has within it a gigantic tax increase which they then turn around and give back as a tax cut. In other words they produce a huge amount of money from tax expenditures, closing exemptions. They put it back into a tax cut. Only a portion of that and this is the Simpson Bowles. A portion goes to deficit reduction and a portion goes to reducing rates. Can you get ours to go there with you . Well, were going to find out. Senator king, wed love to have you back to talk more about this. These are issues that take a long time to talk through. Im going to be on the conference, lets keep in touch. Senator, we appreciate your time and we want to hear more. Still to come in the next hour, well talk more about this with chris van hollen, corker, mccain and heitkamp. Raised the dividend by 10 to 55 cents. Well have more on those numbers right after the break. Jacq squawk box will be right back. [ banker ] sydney needed some Financial Guidance so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. Congress may have reached a deal, but its a temporary fix. Politicians have lost the faith of the American People and taken us to the brink of disaster. Well, cnbc has a message for washington. Win us back. Seize the chance to clean up americas fiscal mess. Negotiate a grand bargain to get us back on track and win us back. The clock is ticking. Welcome back to a special edition of squawk box. Im joe kernan. Coming to you from the Russell Senate Office Building. I briefly visited that area of d. C. Earlier today at 5 00 a. M. And becky quick at cnbcs Washington Bureau with john harwood. Andrew, do you have other there are other people all around this rotunda, its a big circle. I think every News Organization its very crowded here. We got it too. Weve got some people. We have an exclusive going on right now on this rotunda, i think. Youre at the delta house, im over at the who is that . You, john . Yeah. How come you got the Upper Chamber and andrew got the lower chamber. I think it speaks for itself, dont you to some extent, john, in terms of, you know, the gravity and the seriousness joes the statesman. Andrews theres food fights going on over there. You tell me this is like animal house. And you know im not so good with animal house. No, youre not. Talking about animal house, Congress Approved a deal to avoid an historic debt default. But the solution is really only a temporary measure. Throughout the next hour, well speak to elected officials about the budget challenges still ahead. And well ask them to put partisan politics aside and negotiate a grand bargain. Were going to ask them how they plan to win back the faith of the American People after what can only be described as an ugly and embarrassing episode, frankly better suited for a Grade School Playground than the chamber of congress. This hour will be chris van hollen, also senators Heidi Heitkamp and bob corker. And then we have senator john mccain. Beckys got a recap of the Quarterly Results from three dow components that reported earlier this morning. Goldman sachs reporting Third Quarter earnings that were well above estimates. Came in with 288 versus the 243 the street was looking for. The revenue number fell short and thats putting a little pressure on that stock. Its down by about 2. 4 despite the fact the company came out and increased the dividend to 55 cents from 50 cents, a 10 increase. Lloyd blankfein says it reflects slow client activity. But says clients are prepared to act on significant transactions. And he believes, as longer term budgets are resolved, we could see the basis of a more sustained recovery. Goldman is raising that dividend by 10 . Verizons earnings beat the street by 3 cents, revenue slightly above. That stock up by about 2. 6 this morning. And United Health reported earnings of 1. 53 a share. That matched the estimates but the fullyear forecast is short of consensus and that stock down by about 2. 9 . The big dow component mover this morning is ibm. Its shares are down sharply. Came out with earnings after the bell last night. Earnings were above expectations. But it was the revenue line that was a big disappointment. It was about 1 billion shy of what the street had been expecting. That stock is down by about 7 . And thats been a huge drag on the futures picture this morning. Take a look at whats been happening with the markets. Youll see the dow futures down by 11 points. A lot of that coming from ibm. But also some of this coming just as the euphoria wears off. We knew the deal was coming we saw the markets run a rally up and see big gains. Hey, becky, carl warren he told us yesterday he had information he couldnt talk about. But he said hed buy more if it he wasnt buying more he bought a little. He was going to buy more. Down yeah, he said hed love to buy more at 170, i think. That was the number that sticks out with me too. And, yeah, i wish we had him here today. You said it yesterday. I know. In the meantime, well talk more politics, politicians approved a temporary deal to end the Government Shutdown but without a grand bargain on the budget, the same fundamental divide on spending and deficits could take us back to the brink early next year. The ranking democrat on the house Budget Committee. How, sir, are we going to avoid having this same conversation in three months . Thats a good question. Two things. First, everybody who comes to the negotiating table should agree theyre not going to use the club of the threat of Government Shutdown or default again to try to get their way. We should have a normal budget negotiation. Two do you have any expectation thats going to be the case . Well, i would hope some would learn their lesson from this situation. We went through 18 days of unnecessary pain for absolutely no gain. Was the lesson that the republicans shouldnt have pursued obama care and that was something that just shouldnt have been the discussion . Or was the lesson in terms of who has the power over real conversation about the budget . I think the lesson was you dont try and get your way in a negotiation by threatening the full faith and credit of the United States. The House Republicans have a budget, the Senate Democrats have a budget, president has a budget. Were going to negotiate about our budgets. If at some point in time, one of the parties says, you know what, im not getting my way at the negotiating table, im going to threaten the full faith and credit of the United States. And in exchange for that, for me laying off that threat, youve got to give me Something Else at the bargaining table. Thats not going to work. Lets talk about the practical issues here. We had Grover Norquist on the program earlier. He said no new revenues. Youre going to have breakfast with paul ryan this morning. The republican position is youve got the revenues already, right . That you got the tax increases already. Its now your time to give at least on that issue. Is that you may think thats a horrible place to start. But may be the place where the conversation begins. Well, it really cannot you dont begin a negotiation by saying you refuse to talk about certain things. And if theyre going to take that position, it is going to be hard to move forward. Look, they want to begin time in january of this year. The reality is, these efforts began with the budget control act. At that time, we caught 1. 2 trillion, spending caps in place, already achieving savings. And the sequester is another 1. 2 trillion on top of that which wed like to replace. My point, andrew, is everybody can start the clock when they want. But if you look at the budget control act, weve done a lot more in cuts than in revenue. Lets not relitigate the past. As we said, our theme this morning is win back america. And there are people frustrated, by the way on both sides. The republicans may have appeared to have lost, but there are other people just as upset with you and the president. What are you willing to give this morning . Something tangible to begin the conversation so there at least feels like theres a compromise because sure. In all truth last night, you won with very little compromise. Look, were not talking about any wins or loss last night. What happened last night was establishing the principle, you cant get what you want by threatening to club the u. S. Economy. Heres my view. Weve got a framework for this. Youve got Simpson Bowles, right, thats an example of democrats and republicans coming together. All of those models take what we call a balanced approach. A combination of looking not as Discretionary Spending but mandatory spending, cuts and revenue. And your democratic peers are willing to go along with some of the real entitlement cuts that are part of Simpson Bowles . Well, if you look at Simpson Bowles, they achieved some savings in the mandatory area through some reforms. Now, we can build on the reforms in the Affordable Care act, remember. We can accelerate many of the efforts through coordination of care, do things with the dual eligibles. We can improve the bundling of payments. These are things you can do to save money by trying to switch the incentives to a pay for quality instead of pay for quantity. These are all savings that can be achieved without hurting the beneficiaries. Do you think your side of the aisle will feel emboldened by what happened . I think we want a solution. Weve been trying to go to the budget negotiating table since march. We tried 20 times in the senate to get budget negotiators appointed. So im really glad that now when we leave here this morning, im going to sit down with paul ryan and patty murray and Jeff Sessions and hopefully well kick off a real negotiation where people arent threatening from the beginning to use certain clubs and where theyre not taking off the table. Right. You sit down in negotiations and say, hey, guess what, im not going to talk about revenue. What if i were to say im not going to talk about mandatory spending. So, yeah, if were going to have a real talk, people are going to have to be prepared to look at the bipartisan models we have in front of us. Joes over at the senate. I think youve got a question for us. Yeah, were going to get the senate and house together. Andrew, i sent you an email. I like your questioning. But, congressman, i had one question about Simpson Bowles. Since were trying to hold everyones feet to the fire, what in your view caused the president and the white house and democrats to let Simpson Bowles totally die on the vine with no interest whatsoever when it was the president s commission. Now youre talking about it like its something that makes sense because it you know, it bolsters your argument about revenue increases. And yet, there was no interest in pursuing it after it came back because there was a lot of things in there that the president didnt like. Its not the republicans that let that die. Well, joe, i beg to disagree with you a little bit here. First of all, if you look at the budget, simpson and bowles have both said that the president s budget and his approach is a lot closer to their framework than the ryan republican budget in the house. So did everybody embrace every detail of Simpson Bowles . Absolutely not. But what they set as a framework. And if people are not willing to start with the framework, then we are going to be in trouble. Hopefully we wont be. I mean, remember, Simpson Bowles, every House Republican member on the Simpson Bowles commission, every one voted against it. Hopefully there was a it was the president s commission. He did not say, okay, here are the findings, lets start this, lets roll our sleeves up and lets get this done. And you know, the different republicans had different reasons, ryan voted against it because it included obama care. But you chris, can you at least acknowledge that the president once it came back, his commission, he didnt like it and didnt want to go forward with it. Am i really overstating it . Well, i think what is true is that nobody, nobody liked every specific recommendation in Simpson Bowles. But the president had to do it, the president had to be the guy who said lets try to do this. What the president did, joe, was put together a budget and hes got one in front of the congress right now thats 1. 8 trillion in deficit reduction including the replacement of the sequester. And he does put some very tough stuff on the table. Yes, but congressman, just to reiterate that point and go back to it. The beauty of Simpson Bowles is that it took a lot of really difficult decisions and it had things that everyone hated in it. Instead of saying im going to take these parts that are really good in it and put this in here, you had to adopt it in its entirety. Weve lost that opportunity and i realize were moving on. But if the fix the Debt Campaign that simpson and bowles are still a part of come up with a new plan, could you take that plan or a similar plan like it or set up another commission which i think is silly to start over from scratch when you have a Strong Committee thats been put forth. Could you take that plan and agree that we take that instead of writing our own version of it that looks something similar to it. You need to take something that has things you hate in it. Well, obviously, compromise involves give and take. Right . In addition to getting the things you want, there are going to be things you dont want. Thats the nature of compromise. Which is why its a little bit disturbing to hear our republican colleagues say, hey, were happy to go to the negotiating table but were going to take off the table from the start, revenue. Were not saying we wont talk about these things. Congressman, its john harwood. Quick question before we go, is it your read there is no realistic possibility of getting revenue out of republicans in congress and therefore were looking at a small bargain . Well, john, we just dont know yet. But that is clearly what theyre saying. Look, the speaker was on National Television not long ago saying, hey, we want to sit down on the table, just cant talk about revenue. And, again, if thats the position they take, it is going to be difficult. Because on the one hand, theyre saying, rightly so, they care about the deficits and debt. And on the other hand, theyre saying well, they dont care enough about it to close a single tax break for the purpose of reducing the deficit and debt. And we dont think thats a reasonable starting point. I dont think most americans think thats a reasonable starting point. Is it that much different than saying there absolutely has to be revenue in it . If one side say there has to be revenue and the other side says there cannot be any revenue, how are those two sides different . Seems were back where we started again. I dont see both sides seem to be staking out untenable positions, congressman. We have not gone to the table saying we will not talk about cuts to mandatory spending that we wont look at reforms in parts of the spending side of the budget. Were not saying that. And yet theyre saying theyre opposed to any tax reform that generates any revenue out of that process from the start. Now, maybe that will change. Because it does seem to be that if we want to move the ball forward, everyones got to come to the table with the spirit of compromise. Real quick, role of the president in these negotiations. I dont know anybody who has been satisfied with the role he played in this conversation because he basically took himself out of it. What do you think he should be doing . Well, i disagree with the premise. Because what the president said is i want to sit down at the table. Just take away the clubs, right . All the president was saying is you dont get to get your way by threatening you think were going to see him play a major leadership role in this discussion . I think the president s going to be front and center. Absolutely. Okay. We will see. I think he will be. And i think his budget, again, it includes a mix of policies that, you know, everyone should be talking about. Thank you for joining us this morning. Thank you. Appreciate it. Joe, over to you, sir. Coming up, senators from both sides of the aisle will join me here in the Russell Senate Office Building in washington. Republican bob corker will talk about the agreement that ended the shutdown and this great threemonth period we have right ahead of this to look forward to. And still to come this hour, senator john mccain. Its a great show. Stay with us. Five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. 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Were all glad that, you know, were not going to hurt the American Public any more. And i think it does if one person was e unable to find work because of this selfinflicted wounds, weve got to stop with this. Its three months is only three months. Whats going to happen . Well, presumably, people will get to work now for the first time. Weve got a budget conference committee, well see what happens. I think the signals are great today with the two chairman sitting down and actually having coffee. Weve got a long road ahead. And i think the most important thing is that we put the interest of the public and the american taxpayers ahead of political interests. And we can get this done. Everybody thinks theyre doing that. Thats the problem. And we want everyone to try to at one point were asking each side to move away from their positions but then, again, when we think about it, senator, we understand both sides think theyre doing whats right for the American Public. Thats why its so hard to find some common ground. Well, you know, what i see around here a lot, joe, is theres a lot of great locker room talk. Youre talking about us in the media, arent you . Well, no, no, no. Theres a lot of locker room talk. People talk really, really dont do it. Even though its cable. Signing a bill that actually has these tough things on it, its hard to find the folks with you. Let me tell you what weve been talking about here. Grover norquist was on, said absolutely no revenue even if its closing loopholes. How do we get somewhere toward entitlement reform if one side says absolutely no revenue and the other side says i wont talk unless there is revenue . Were right back where we started. We got here by people drawing red lines. Were not going to do this unless i get what i want. Everything should be on the table. Thats where we should be should no revenue be on the table with the president . No, i think everything thats the red line then you guys already got some people said you got a lot of revenue. Let me tell you, there isnt anyone in this town who hasnt been talking about tax reform as a method forward to close loopholes, to try do what you can. We all know that nominal rate and the Corporate Income tax area is too high. I think that the actual practical rate comes down quite a bit but the nominal rate sends the wrong message. Theres commonality, common ground. And if we can sit together and do some housing reform, sit down together and decide what were going to do sit down on squawk box together. What do you say . How are you going to do it . Revenue . Raise some more revenue . First of all, you know, we just had revenue and no spending reductions at the end of the first year. And theres all kinds of ways to have revenue. Democrats say you have to take it back to the budget. But theres dynamic scoring. You can actually do some things with the way the tax code is that really isnt raising rates but generates a lot of revenue. I think there are a lot of things that can be looked at. For what its worth, i dont think theres going to be a, quote, big deal in january. I think what we need to begin to do is to look at mandatory reforms and look at those relative to the discretionary cuts that we have in the budget control act. I think one of the victories in this last process was we kept those budget control act ceilings. And its the First Time Since 1955 and 1956 weve had two years in a row with Less Government spending. Now what we need to do is look at what weve done with the budget control act and make it more intelligent. I think thats what the real focus is going to be over the next 90 days. Your head guy in the senate, harry reid. I watched him two, three weeks ago. He was scaring me he was so adamant, so tough, he turned into a gentle kindly old he was picking his words. He came around, mcconnell came around a little. Heres my question, though, the president doesnt seem to like republicans very much and really doesnt seem to want to get in to these negotiations with people that i dont think on the other hand, theres people that really dont want to say yes to the president on anything on the republican side of things. Is there going to be any lessening of the personal acrimony . I want to walk that back a little bit. Youve been with the president a number of times. Invited there to talk about the problems, talk about how were going to move forward. So look, joe, i theres maybe theres a little bit of an opportunity over the next 90 days. And i want to say this, look, i actually wrote a bill and put my name on it, okay. With entitlement reforms. It was a balanced approach, i did it a year ago, a year ago right now, as a matter of fact. And, look, im willing to get out there and do the tough things. I just hope we can find some partners that are willing to go rise above and talk and actually put their name on a bill that will solve our nations problems. Im willing to do it. Lamar alexander has done it. There are few people in the senate that will actually sit down and put their name on a bill. Thats what im looking for. And i think that will help us move this debate along. As far as the white house goes, i do think there is possibly a little bit of an opening to look at some mandatory change. Its the president showed some ill have to give him some credit, last april in his budget where he put mandatory reforms in place. The real place for discussion is going to be, again, substituting some of those mandatory forms for the discretionary cuts so that if you look at the and still with the same amount of reductions in spending and if you look at the second ten and third ten, youve done something great for our nation. I think thats where most of the focus is going to be. Senator is fargo in your state or the other one . No, fargos in north dakota. North dakota . Can you do that for me . Oh, yeah. Are you going to barf from this . Oh, yeah. Thank you very much. I think you two guys are part of what we need. Anyway. Okay. Thanks, joe, great conversation. Coming up, well ask senator john mccain about the budget and congress. Plus, weve got the closely watched weekly jobless claims number. Well bring you the number and the Market Reaction coming back from d. C. In a moment. Thats whe of your future. Your retirement. Ameriprise advisors can help you like theyve helped millions of others. Listening, planning, working one on one. To help you retire your way. With confidence. Thats what Ameriprise Financial does. Thats what they can do with you. Ameriprise financial. More within reach. Thats what they can do with you. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Welcome back to squawk box, everybody. We are seconds away from the weekly jobless claims. Rick santelli from the cme in chicago. Normally i try to toss it to you as the buzzer comes. I dont have a clock today that will give me the countdown clock. This is coming after the number last week. A lot of the numbers have been messed up, including last weeks number which had problems from the california reports that had come in. I dont know what the odds are we get a clean number this time around but, rick, ill go ahead and send this over to you. Well get those numbers in a moment. Yeah, i think the odds are pretty low we get a clean number. Initial jobless claims for the current week, 358,000, thats a drop from 373,000 that was originally reported. That 374,000. Continuing claims dipped to 2. 859, well call it 2. 86. The big news, of course, is that the yield curve is steepening a bit, but its steepening with rates moving down the intermediate part of the curve, for example, the fiveyear note. If it was to close at current levels, lowest close from about the third week in july. Weve seen that about, ub, very often. About as often as we actually, you know, raise the debt ceiling. It always happens. To that end, i know youre talking to all the wonderful people that are navigating our almost 20 trillion debt. So back over to you. Rick, thank you, i did notice one headline that came through from the labor department. Apparently 70,000 furloughed federal workers filed for the jobless claims. They may get paychecks and benefits, but im sure theyll send the benefits back. Does that work out that way . You get benefits and get to keep them . In many areas, thats what im hearing, yes. We will have much more from washington. Well be hearing from republican senator john mccain on the budget agreement in congress. Stick around, squawk box will be right back. [ banker ] sydney needed some Financial Guidance so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you open an account. Welcome back to squawk box, live from washington, d. C. Late last night, politicians approved a temporary deal to end the Government Shutdown. But without a big grand bargain on the budget, we could be back doing the same thing again early next year. Joining us now from arizona, john mccain. Senator, great to have you here. Thank you. Thanks for joining us. Im glad youre down here in the city of satan. I dont know. I can feel right when i get into the county, i feel a little bit i feel like spending some money. Maybe taking a shower. Its not mine. Exactly. When we were talking off camera, a likelihood of a repeat people have learned. People have learned. And when it happened in 95, didnt happen again for a long time. Until everybody forgot how devastating this is. Im glad the government workers are back and im sorry what was done to them. But what has been done to the civilian sector, the people who work for the concessioners in the grand canyon. We had to fly food up there. Its so harmful. I had this old line that were down to we in congress, were down to blood relatives and paid staffers, you know. I got a call from my 101yearold mother yesterday, were losing blood relatives. Youre losing those. God bless her. How do we get there then . Am i assuming a grand bargain is not going to happen . Im assuming it probably wont happen because its been tried so many times with all different gimmicks, you know, select committees, super committee, numbers you want to fill in. Why dont we try to the regular process . We have a Budget Committee, the house passes a budget, the Senate Passes a budget. Then they confer and they come out with a budget. Why dont we try that for once and i think that all look, we all know that republicans who are punished the most by this. Democrats were too, everybodys numbers went down. And so theres reasons for them not to want to do this again, as well. You can work with this president , you think. We can work with him. I think so. Ive worked with him on reform and other issues. Youve noticed a shift in hes willing to talk to republicans as a legacy . Yes, this president like all president s who have a second term look at their legacy. Part of that has been he has an outreach, invited republicans to dinner. I cant tell you how many meetings ive gone to on this, quote, grand bargain idea which have all failed. At least theres been an effort, which there certainly wasnt for the first four years. There was not. John harwood hello, john. Hey, senator, how are you . I know that you have expressed and Lindsey Graham and a few other republicans, some willingness to consider the kind of budget deal that would involve entitlements and tax revenue. We had earlier on our show Grover Norquist who said absolutely not, not a penny of additional revenue. Isnt it the case or you tell me if its the case, whose position is going to prevail in this on your side of the aisle, yours or grovers . Well, first of all, you know, grover and i are friends and weve known each other for many years and i respect him and all that, but when its Something Like ethanol subsidies, which ive opposed forever, these outrageous provisions put in by special interests, those are indefensible, john. Ill go to the floor, go anywhere and attack some of these provisions that have been put in by special interests here in washington and say we ought to repeal them rather than wait till, quote, tax reform which is some huge holy grail out there that we will probably never find. So all i can say is i was offended when we made some of those tax loopholes and ill be damn glad to close them. Do you i guess because youre in the news so much, the last minute they need look, all the democrats want infrastructure, whats wrong with a little what did you call it . Disgusting to put the mcconnell im not against infrastructure. Im for a process where we authorize, we have hearings, we say, okay, how badly do we need this dam versus that highway or that bridge or whatever it is. And then we go through the normal process of authorizing and votes and then we give money. When its snuck in in Something Like this, it makes me just cringe. Why do it . It leaves a bad taste in your mouth. And it seems like business as usual and nobodys learning anything. We have done a great job in eliminating a lot of the pork barrel spending that used to be rampant around here. In fact, it was corruption and a lot left in it. Whats the next step . I think is the Budget Committees to meet. Okay. Remember, for four years, the democrats in the senate refused to pass a budget and then they did and a handful of republicans here and in the senate refused to appoint conferees so we could go to a budget conference. Now were going to go to a budget conference. Ive been a member of all these, quote, gangs, not all of them, but many of them, and theyre ad hoc meetings and gatherings because the normal process hasnt worked. Lets go back to getting the normal process to work. Andrew . Senator, real quick, the role of john boehner, hes staked out the middle ground but often times some of his critics say he has let some of the real right wing of his party, you know, take over. Do you think he plays it a little harder next time . I think that the American People are going to demand we not do this again, which i think would strengthen John Boehners hand. He is dependent upon the votes of all of his conference. I admire john boehner and appreciate his work but i think he was put in a very untenable position. Look, when youve got 74 of the american disapproving of republicans, even everybody but most hard right extremists realize weve got to do things different. And one things for openers is start giving a positive message to the American People and what were going to do for them. Remember the shutdown in 95. Lets give them a new contract. Something that says, look, were going to be for this, not that were going to shut down the government and stop everything. Americans dont like government, but we showed them again we dont like it shut down. Senator, thank you. I have a tax refund check that because of the Government Shutdown maybe you could give it to my campaign. Could you check and say now the governments open anyway, ill talk to him about this, guys. Put that in the bill that i get my tax refund. Joe, senator, thank you very much. When we come back, well get the reaction in bond and equities to the budget agreement of washington. Mohammed elerian will join us. Well talk to him right after this. vo you are a business pro. Maestro of project management. Baron of the buildout. 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 fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Congress passing a temporary budget fix to reopen the government, will it restore market confidence . Joining us now is mohammed elelarian. We have a deal, how much damage was done . So we will find out. But i think quite a bit. So the what is great. We have a deal, weve removed the tail risk. The how is less friendly. We didnt get there because of some great compromise, we got there because both parties were exhausted and the damage being created was large. And the how matters going forward, our own sense, becky, we are in a repeated game where political dysfunction is an issue for markets and the strength of the u. S. Economy isnt there to overcome the head winds from washington. Yeah, this morning we do see the futures are under a little bit of pressure. Part of that is because you had a big runup ahead of this, exuberance yesterday as it looked like a deal was coming on. Dow futures down 130 points. A lot of this is because what were hearing from individual companies too. Disappointment in the market from ibm last night with the revenue number coming in light. So, the real economy and what weve been talking about here, are they merging to be the same story at this point, mohammed . Theyre going to come together. The real economy is a new normal economy at 2 to 2. 5 . Which means that companies to continue to impress are going to have to cut costs even more because the revenue line isnt going to do it for them. And, unfortunately, theres a limit to how much you can cut costs. So that issue is there for companies. The Global Economy is less dynamic, especially the emerging markets. So we need to look inside. And the irony, becky, is that this economy is able to heal and grow faster if only these head winds were to get out of the way, if you like. Mohammed, on that point, mark zandi was on this set a while ago and said forget grand bargain, even forget small bargain, if washington does nothing but preserve the cuts that have been made so far, fund the government, keep the government open, the economy will take off. Doesnt need anything else from washington except for the absence of crisis. Do you agree with that . So if they had passed something that goes beyond january or february, a big window as opposed to a short dated window, i would agree with mark. The problem is, the windows very small and the problem is, the fundamental issue and you debate it every day on the set of squawk. The fundamental issue which is different views of the size and scope of government hasnt been addressed. So what were looking at is a very shortdated window with the big issue not addressed. If you like, this is a ceasefire. Neither a truce nor some sort of agreement. A ceasefire among two exhausted parties and theyre going to rest up and concern has come december, january, february, were going to have more shenanigans. Well, the idea, though, if you could just get a longer term deal even if its not a grand deal. His point is you could get back to growth levels above 3 . Does that sound plausible . Above 3 is hard. If you simply look at what you require from that. And you require three things. You require a better fiscal monetary mix, which we wont get under his scenario. You require dealing with the structural issues, which requires congress, which we wont get and require dealing with the remaining debt overhang. So i dont think we get over 3 but at least we get to a more solid 2. 5 than what were looking at right now. Meantime, with this reset of the clocks with this timeout as we should call it, what are you watching to see what impacts the bond market the most. Is it anything that comes out of the fed at this point . So this is going to keep the fed more accommodative for longer, right . The fed now has to worry about two things. One, the damage done to the economy and, two, it will think, should we buy more insurance for the economy ahead of yet another round of political brinkmanship . So look for the fed to be more accommodating than it would have been otherwise. That is very friendly for the front end of the curve in particular. You think they taper as early as march . Its hard to tell, but i dont think they taper before janet yellen takes over as chair of the fed. Right. Im thinking her First Official meeting shes in charge i believe is in march and thats why people have pinned their hopes to that. I guess the big question is when we start getting numbers and when theyre reflective of whats happening in the economy. Basically, this is a big pause for at least another couple of months. Correct. So the fed business pause for another couple of months . Correct. So the fed will be on the sideline and they will pivot between Balance Sheet operations and Forward Guidance but this notion of taper is less probable now, given whats happened. Mohamed, thank you. All appreciate talking to you. Thank you. Coming up from washington to wall street, jim cramer is going to join us to look at the reaction to the budget deal in congress. Reached a deal but its a temporary fix. Politicians have lost the faith of the American People and taken us to the brink of disaster. Well, cnbc has a message for washington, win us back, seize the chance to clean up americas fiscal mess, negotiate a grand bargain to get us back on track and win us back. The clock is ticking. Clients are always learning more to make their money do more. ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Welcome back to squawk box. Weve been live all morning from washington, d. C. Right now were going to get down to the New York Stock Exchange to see what jim cramer thinks of all of whats happened over the past 24 hours and what it means to the market. Jim, the market is now going in the other direction. Is that a function of the fact that were just back in the same place or feels like we may be back in the same place in a couple months . Andrew, im watching you guys. I think the market is reflecting what youre saying in washington, which is this is not a great deal and nothings changed and all weve done is push things back. It reflects indecision. All it did is preserve the Social Security checks coming out. Because of that were back in a world when i listen to quarters, i dont have anything good to say. Verizon really good, ibm horrendous. Its hit or miss. What did you make of goldmans announcement this morning . One of the things that shocked me maybe it shouldnt have been surprising just how little client business there was and what that says about the confidence that businesses all over the country and the world are doing right now. It does seem like theres a stop. I say anything involving fixed income, just stick a fork in it. But if thats the case, then we should see this quarter be better because goldman expense control was excellent. Im not recommending Goldman Sachs because that was really a dramatic dropoff in business. Maybe theres some normalcy running. Again, go back to what you guys are doing there. If i was frozen and not doing anything, i would think maybe i got a month and then i have to stop again. Thats what the nonmove did. So individual stocks . Look, i go through verizon. Not only is verizon fabulous, but the next quarter will be great. American express saw absolutely no slowdown whatsoever. It is hit or miss. You go through a scan disc and business is really good. Ibm may be benchmark bad, benchmark bad. Ebay saying business has stopped. Is the ibm business long term . How are you looking at ibm realistically . We had Warren Buffett on, he said he would buy this stock at this price. Sold to you, warren. That was a horrendous quarter. If you didnt have a big tax break, it would have been even more worse. The company is 40 decline in hardware in china . I mean, in china . I could sell hardware there. I could open a Stanley Works there. I know hardware is computer but, gees, that quarter was so difficult and so bad that you would open rebellion on the conference call. This is ibm for heaven sakes. Jim, we picked the wrong day to quit sniffing dude. Wrong time to taper. We cannot taper. You see the bonds . Theyre in there buying right now. Wells fargo, big layoffs in mortgages. They have to save the housing market. I saw downgrades in housing. Housing is bad. If in three months we have to taper, we cant do this again. Tapers off the table, right . Taper, thats like the playoffs. Taper . Taper . These guys cant even make the playoffs. They have to buy bonds left and right. Housing just got finished. Sink below. Bny mellon combines Investment Management investment servicing, giving us unique insights which help us attract the industrys brightest minds who create powerful strategies for a countrys investments which are used to build new schools to build more bright minds. Invested in the world. Bny mellon. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. A lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Thank up for joining us for this special edition of squawk box. John, its been great having you here. Thank you for joining us for the show, the entirety. Washington says youre welcome america. See you back here tomorrow. Right now its time for stresq on the street im going to wait till the midnight hour good thursday morning. Im Carl Quintanilla with jim cramer, david faber at the New York Stock Exchange. We dodged that bullet with a shortterm debt deal in congress. The president did sign it early this morning but the future is reacting. Ibm, ebay, goldman, all suggesting a weak