Story and full coverage of the Government Shutdown on the kudlow report. This is the kudlow report, we are live here at 7 00 p. M. Eastern and 4 00 p. M. Pacific. Lets get right to eamon javers for more on the shocking situation that occurred on capitol hill just a few hours ago. Good evening, eamon. Reporter there were moments of terror, an incident that began as you say over at the white house and made its way down here to the Capitol Building. Shots fired here on the west front of the capitol. The scene just behind me now. We got details just within the past hour here now on exactly how this transpired from the United States secret service. Take a listen to those comments. The sedan struck temporary security fencing and one of our Uniformed Division officers at a check point of the white house at 15th street and e street northwest. The vehicle then fled east on pennsylvania avenue. There were multiple crime scenes as a result of the vehicle fleeing. There were multiple shots fired at several different locations. Now, larry, that vehicle was able to get down pennsylvania avenue being chased by police the whole way. They were able to stop the female driver at this location right behind where im standing here on the west front of the capitol. And thats where our eyewitness we talked to a few moments ago was able to describe the scene for us. Take a listen to what he had to say. They cornered the vehicle on the southwest side of the drive there. Police surrounded the vehicle, had their guns drawn, had the passengers door open telling the person to get out. At that point, the sedan slammed into reverse, smacked the cruiser behind it, did a 180 and peeled off on the south side of the capitol and disappeared around there. By that time, the police had us down on the ground, securing area. And then a couple minutes later, we heard a bang on the opposite side of the capital. Capitol. Reporter larry, stunningly all of that incident was captured on video by a camera crew. Take a look at this video, and you can see what the eyewitness was describing. The black sedan surrounded by police, shots ringing out, the sedan making an escape, looping around garfield circle here on the west side of the capitol. Two loops around the circle and up constitution avenue, past the Capitol Building. The chase ultimately ended with the vehicle stopped at second and maryland avenues right over between the capitol and the Supreme Court building, larry. Thats where the suspect in this case, a woman was shot dead. She was pronounced dead at the scene. Were also told that she had a small child, a small girl in the car with her. Thankfully that girl was able to be rescued by Police Officers in the moments just after the crash up on capitol hill, larry, very, very scary moments today. Let me ask one question. I know its early in the game in the investigation, does anybody have any idea what was motivating this crazy woman . We dont have any idea. What Capitol Hill Police and others have told us is theres no so far no evidence of any link to terrorism here. Theyve also said this appears to be an isolated incident. The immediate fear in washington, of course, when you have an event that happens, a security event that happens at the white house and also happens at the Capitol Building is some kind of coordinated attack. Theyre saying this is an isolated incident apparently just involving this woman. But we do know that police are researching her background right now trying to figure out who she knew, why she might have done this and why she put her child in such a dangerous, dangerous situation today, larry. Incredible. All right. Many, many thanks to eamon javers reporting from washington, d. C. Now, we also have big news on the budget battles today. John boehners office says the speaker is determined to prevent a federal default, which he knows would be disastrous for the economy. And markets welcome this statement. But president obama was still in his bashing mode today choosing to score political points in front of a hand picked adoring audience. Listen to what he was saying. And theres one way out of this reckless and damaging republican shutdown, congress has to pass a budget that funds our government with no partisan strings attached. That Speaker John Boehner wont even let the bill get a yes or no vote because he doesnt want to anger the extremists in his party. Thats all. Thats what this whole thing is about. Have you noticed that . Since theyve taken over the house of representatives, we have one of these crises every three months. Have you noticed . All right. Simple question. How do you make a deal with somebody who is out there talking like that . Really just talking trash to the very people hes supposed to be dealing with . Lets talk to our panel. Cohost of msnbcs the cycle. And of course our ace political reporter robert. Heres a guy who was trash talking the republicans and will not negotiate with the republicans. Now i ask you, doesnt this wind up hardening the gop position and actually preventing any deals from getting made . I think it may be hardening the position for the gop. But at the same time, the emerging news right now on capitol hill is that Speaker Boehner is looking to combine the debt limit negotiations with the continuing resolution to fund the government and try to get some kind of grand fiscal package and thats whats really the chatter right now and what may drive a deal. Is that going to take a couple of weeks and is it i know its hard to estimate. But ive also read paul ryan, chairman of the budget committee, are looking for a grand design. But thats going to take a couple weeks to get underway . Thats exactly right. I think, larry, when i talk to congressmen today at the capitol, they believe the shutdown could last three weeks. If they want to make that concession to not default, they want to win something in return. Maybe a repeal of the medical device tax, maybe getting some entitlement reform. Theyre looking to get some kind of fiscal package. Larry, roberts a great reporter and ive been reading his stuff with great interest, but i think we have to be careful here. Raising the debt ceiling is not a concession. Its not a concession to the white house, its not a concession to wall street. Although anyone who knows anything about the markets understands how vital this is. And theres a problem here and that the Republican Party by being led by a minority of a minority in the overall scheme of government keeps talking like raising the debt ceiling and doing the responsible thing is a concession. Theyre wrong, the supporters know its wrong and increasingly a lot of executives and financiers are going to make sure they know its wrong. Let me go to you on this point. The president today started up on the debt ceiling, basically using it to trash the republicans and scaring people in the economy. The Treasury Department issued an incredible statement talking about catastrophic problems and its going to be worse than it was in the recession of 2008. Theyre just being negative, theyre just trying to scare. Boehner countered that with his point today. Boehner countered that with a very useful point. But the point im making is this, these guys had a chance a year ago to pass the full faith and credit act from senator pat toomey which wouldve by law on paper protected all treasury interest and principle and guess who opposed it . Obama, guess who second to oppose it . Harry reid . All this nonsense could have been put to rest if theyd taken pat toomeys bill and they wouldnt do it, bob. Thats why i think theyre insincere and trying to cause trouble. Youre right. Theres a false sense of hysteria out there and a lot of it has to do on the president s side. Lets remember one thing here, larry and robert. The president needs to show leadership. He is the head of our executive branch. And one should make the argument he should be negotiating in full faith behind closed doors. 17 years ago when it was bill clinton on the stage, bill clinton had partisan jabs from a public standpoint, but behind the scenes he was negotiating, showing leadership, and behind the scenes he was literally conceding different points. We dont see that with this white house. I was saying, i couldnt disagree more respectfully, robert. If democrats refuse to raise the debt ceiling for unrelated issues saying they want ondemand abortion across the country, theyd be laughed out of the room by the way, they have done that. Go back they exactly have done that. And by the way, its funny you use the abortion issue because that was the issue that was used. By the way, it was used during the Carter Administration and then it was used later on in the bush the papa bush administration. So youre wrong. Youre dead wrong. But the point i want to make is i dont know besides trying to scare people in the economy let me go to bob costa on this, trying to scare people in the economy. The president and the Treasury Department issuing these statements. I heard boehner say its not going to happen. And again i say, if they had used senator pat toomeys amendment last year, that wouldve codified all of these questions that the principal and interest on the federal debt would be serviced on time. These guys are using this for political purposes. Thats all it is, robert. And if you listen to the president s remarks, really at a moment where both sides seeing if the other will blink. Boehner doesnt want to blink and the president doesnt want to blink. Eventually theyll keep sweating it out until this debt limit deadline. And eventually they are going to come to the table. I hear at the white house yesterday, they did Start Talking general terms about some kind of fiscal package to solve both of these impasses. By the way, okay weve got besides this week, two more weeks to go youre saying until we get to the october 17th week. Ari, i didnt want to be rude. But i want to tell you, go back and read theres a great article in the National Review that reviews most of the debt most of these shutdowns came under jimmy carter. A lot under ronald reagan. They had issues like the sandanistas, issues like School Prayer, abortion that were nongermane. So you cant tell me this is john boehner operating. Let me say, yes, there has been jockeying about the debt ceiling from both parties over history. I dont deny that. What i was saying and i standby my historical claim is we have never seen us go this close to defaulting to the point that we have our Credit Rating downgraded, going up to the ninth inning in a way that wall street understandably thinks has no logical reason, no good thing for the country over these kind of issues. Ive got to say weve never seen as a factual matter. We have never seen a downgrade like this which we saw the last time. What did they get out of last time in 2011 . Tremendous spending cut. The president and democrats met them on that. The socalled cr includes everything the tea party asks for through sequestration. And its not enough. Theres a reason why ive got to get out. Ive got to get out. You guys are coming back later in the show. Well pursue this later. Thank you. Stick around, everybody, so well have them back in the end of the show. Now ive got to talk to two distinguished house members to see if we can make a deal, suggest a deal, whatever. Paul tonko, welcome back. And the chair of the republican study committee. Steve, i want to ask you this question. When you hear all the negativism coming out of mr. Obama and his treasury regarding this phony issue of a debt default which no one wants. Its almost, steve, as though obama and company are trying to create a market panic. You know, like 500, 600, 700 points in the marketplace and a run on our bonds. Thats what it sounds like and that is not something any president should ever do. Well, larry, the president showing a severe lack of leadership, but i think if you look at what hes doing. This goes back to november. He has wanted to create all of these crises of the moment and he tries to scare people, tries to threaten things like default, which is incredibly irresponsible so he can get everything he wants. And hes made it clear, pass my bill, one bill, no negotiation or nothing. All or nothing, thats not how we work. Weve passed eight different bills to fund all parts of government including a number that has broad bipartisan support and yet they said, no, theyll kill everything. Even the bill that funds Cancer Patients and our veterans unless they get everything they want. We passed language to take default off the table as you said with the full faith and credit act. Thats the incredible thing. It would have solved any of this speculation. But john boehner, in my opinion, Speaker Boehner did a good job today rebutting all this default nonsense. But let me ask you this, what do you want . Tell me simple, clear, what do you want in the cr that would end the shutdown . I think we should do a clean cr. I think were way into the 11th hour. We need to move quickly here to avoid a credit default, a full faith and credit of this country should not be challenged and downgraded. Its important for us to keep that strong and to reopen government to make certain that we can move quickly here. Its causing a huge loss every day that we have these workers furloughed and that services are not rendered out there to American Families and businesses. So what i would like to see is a clean cr. We have given already as was stated earlier by a comment made in this segment of your show, we have already given. We have given sequestration, the cuts associated with sequestration and weve given that lowest number, which is the House Republicans number in the process. By the way, i acknowledge that. Weve had a number of guests on. I was even on msnbc, heaven forbid, last night. I acknowledged the numbers are pretty good. Youve held the numbers. But let me move on, you want essentially a clean bill. Steve scalise, what do you want the continuing resolution bill to look like . Give me your top two or three. Lets first keep in mind that the sequestration was an idea that barack obama himself proposed two years ago but signed into law. Thats the law of the land from two years ago. Obviously we have some serious issues with the president S Health Care law as most americans do. And so weve said, look, we want to address the problems and make everybody live by the same rules that the law says you have to live by that the president s exempted his friends thats the vitter amendment . But also weve passed no exemptions to obama care, is that right . Right. And weve also passed a number of other proposals over to the senate they said no way, its my way or the highway. We havent taken just one position where its all or nothing, weve said here are a number of issues including bills to say make sure we fund our veterans, cancer treatment, and they said no to that unless they get everything they want. I think what you need here is regular order to do a full budget. We say get the clean cr done, and by the way, sequestration was something the president moved on the table because of the request earlier by the republicans in the house of representatives. They like that concept. So they cant walk away from it now. It was a give, it was a concession. And we also think that with a clean cr, if we can get this done, it buys us time from november and december, name the conferees, weve been begging to have names to go to the table, do the budget in regular order under subcommittees, committees, report to the floor, thats the best way to do the business. This goes back to the days of thomas jefferson. Regular order. I knew Tom Jefferson very well. So you want a clean cr. Steve, ill give you equal time. Youve already mentioned the vitter amendment not to exempt government from the obama care bill. Whats your next what other addon would you like . Weve offered a number of ideas. In fact, one of the things we want to do is try to get spending under control in washington. When paul talks about the sequestration agreement, he acts as if the president didnt get anything. He got the increase on the debt ceiling two years ago. He negotiated as all have negotiated and ultrama timately have another negotiation now. The president cannot just continue to say im not going to do anything unless i get everything and aisle going to bash republicans because the country doesnt want the partisanship. Lets get at the table and get the agreement. We can get all this done. We need cooperation from the president and harry reid. You dont repeal a law as part of a concession. I wish wed have you both back as a blueprint. Id love to have you both back. Now, right now, big drop for stocks today. Its obvious markets are worried about the shutdown and the debt ceiling fight. Question, did the president realize what would happen when he said this . Wall streets been pretty calm about this. The reaction i would say generally speaking has been washington fighting, washington posturing, yada yada yada. I think this time is different. I think they should be concerned. All right. This times different. They are concerned. Anyway, well keep you updated on any new developments in todays incredible capitol hill shooting incident. And finally as always, dont forget free market capitalism is the best path to prosperity. Yes, of course, we have to defend american debt. But it would be nice if we had less of it. Im kudlow and well be right back. 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 the kudlow report. Here with this market flash. The dow finished down 136 points. It closed below 15,000 for the first time in about a month here. The nasdaq and s p 500 also down big by about a percent. Now this is more than just about the shutdown. Obviously the capitol hill incident spooked investors, but the dow downright out of the g