Lagarde, head of the monetary fund. Ill ask her what kind of damage has been done to americas reputation and how that could affect the worlds economy. And former secretary of defense, leon panetta. Is the shutdown hurting our National Security, and what he thinks is different today from the last shutdown in 1996. Policy threats and basically holding the country hostage whether its on a continuing resolution or debt ceiling or raising these kinds of blackmail approaches. Im david gregory. All that ahead on this edition of meet the press for sunday, october 13. From nbc news in washington, the worlds longestrunning television program, this is meet the press. And good sunday morning. Wish there were better news to tell you but congress and plt obama are still crawling to the finish line in the race to end the fiscal crisis with the deadline this coming thursday. The focus is now in the senate. In session today, House Speaker john boehner, and on saturday the talks between the house gop and president obama had broken down. So bottom line, there is no agreement on ending the shutdown of the government or raising the nations debt limit. Joining me now, the assistant majority leader of illinois, dick durbin and the senator of ohio, rob portman. The senate said this on saturday. Let me share it with our audience. I hope there is talking to give some solace to the American People and the world. This is what should pass for progress in congress and washington doing its job . Take solace in the fact that youre just talking . Its a breakthrough. Hard to imagine, but its a breakthrough. Weve reached a point where the House Republicans and their leadership have really stepped to the sidelines. Theyre not part of this at this point. They cant agree among themselves about what they want to have done in this negotiation. The conversation that started yesterday between senator mcconnell, the Republican Senate leader, and senator reid, i think, has the promise of finding a solution. I dont want to be overly op optimist optimistic, but theres a lot at stake. It isnt just the Government Shutdown, and thats laid off 7,000 federal employees and denied basic services. It goes way beyond this, as we know. If in four days we default on our debt for the first time in our history, it is going to have a dramatic negative impact. Senator portman, i want to get beyond talking points, i want to get beyond just pure argument. The American People simply want to know, why cant congress do its job . First of all, congress cant do its job unless democrats are willing to talk, and the reason he said it was a breakthrough is because the president has refused to negotiate. Its unbelievable. This is the first time in history that a president of the United States has said, look, im not even going to talk about it. I served through president s bush 1 and 2, senator portman has served through other president s. Why . You want to deal with the underlying problem, which is the spending problem. Is it both of your positions i think this is an important moment of clarity. Do you both believe its 100 the other sides fault . Heres the point weve reached. We should have been in a budget conference six months ago to discuss these issues. We tried 21 times in the senate to have a budget conference. Thats the question. Is it 100 the republicans fault that were here . If i could say there was fault on both sides, the republicans and the nat wouldnt even allow us to go to a budget conference. Is it 100 the president and democrats fault, senator . With all due respect, when the senate refused to put a budget out, democrats said, we dont need a budget, we can still have these appropriations bills. Which is where we are, dick is right, not having appropriations bills. I would say the bipartisanship over the last few decades have been republicans and democrats alike overpromising and overspending. Theres fault on both sides. Thats why the president and leader of Congress Need to take the responsibility of dealing with the underlying problem and keep the budget caps in place, which, my gosh, we just put them in place two years ago, weve added almost 2 trillion to the debt since then, and now the democrats are saying we want to bust those caps, but second, on the debt limit, we need to make sure were dealing with the underlying problem which is almost a 17 trillion national debt. The president says he wants to do that, so lets Work Together to do it. I want to ask each of you the bottom line question. Do we have an agreement on raising the debt ceiling and ending the Government Shutdown by thursday, and if the answer is yes, senator durbin, what do you have to overcome . What are the realisticing poist points that have to be overcome . Do you think youll have it by thursday and what are the sticking points you have now . Im a hopeful person and i hope we can do it. I hope sensible people prevail, because at this point it isnt just a shutdown and all the damage its caused, but if we default on our debt it will have a dramatic negative impact on the savings account of average americans. Whether or not we will sit down in a budget conference finally and start hammering it out, whether there will be a sequester cut come the first 15 days of the new year, the new calendar year, those are the basic elements that i think we need to work on. Im a yes, by the way. Deal by thursday . Yes. Because you would have overcome what obstacle . Because we would have decided as a congress that we need to avoid going over the debt limit and it will probably be a rather shortterm solution. You know House Republicans in particular, they seem quite unhappy here. They dont want to do a longterm extension raising of the debt ceiling. They want to have a conversation about obama care. In your estimation, should the discussion about obama care be over . Well, first of all, i oppose obama care and think we ought to repeal it and replace it, and i think most americans agree with that. But we can minimize the damage in this process by doing certain things that were consistent with the original obama care like making people verify their income when they go on exchanges. Were dealing with a 40hour work week so when people arent taking in 30 hours and below parttime work. But no, i think we ought to focus on these spending issues, we can and should. I dont think there will be a longterm solution in the next few days, but i think well figure out a way to put off the discussion and i hope we do it in the next few days. If you get past a crisis point and sairy, well, lets ge into a bigger discussion about the budget. You are on Simpson Bowles, you are on the supercommittee. It wasnt that successful. Right, and where is there a reason to be hopeful that congress can get to something meaningful here . This may be harrassy, but i think Simpson Bowles got it right. Put everything on the table. We know ten years from now medicare is not sustainable financially. We have to do something. Why wait ten years to see that reality . We know Social Security has 20 years, or perhaps less . What are we going to do about it today in a small way that it will have that longevity . We have a tax code that takes 1. 23 trillion out of the treasury each year, and in that we cannot find some savings, closing some loopholes, quote, raising some revenue . Of course we can. Let me just raise this issue about obama care because i want to come back to that. One of the issues is that for conservatives this has been such a huge issue. Even though laws have been passed and upheld by the court, no, there is a basis to try to replace it, to get rid of it. Then you have dr. Ben carson who won the straw poll by voters here in washington. This is what he said on friday. I want to get your response. I have to tell you, you know, obama care is really, i think, the worst thing that has happened in this nation since slavery. And it is slavery, in a way. He was second in the straw poll. How much damage does that do to your position that obama care should be repealed . Is that overstatement thats counterproductive . Well, hes a doctor who feels passionately about this issue, obviously. He can speak for himself, but let me go back to what dick said. Is that something that is a senior republican, you think, is helpful to the debate about obama care . I think what would be helpful is if we sat down and figured out how to make this less damaging to American Families and our American Economy because it is a huge problem. By the way, its not just a glitch in terms of the rollout, its a breakdown, having tried myself to get on yesterday. I feel sorry for the New York Times researcher i heard about this morning who spent 11 days trying to get on and ended up with a blank screen. There are huge problems with it, lets be honest, and we ought to be sure we can minimize the damage. Does secretary sebelius keep her job . Absolutely. Understand, weve been off to a rocky start for sure because 15 Million People wanted to get on. Why . Because 40 or 50 million americans dont have any insurance. This is their first chance, many of them, to ever have health insurance. Theyre desperate for an Affordable Health insurance policy. We havent had much help when it comes to funding the startup of obama care. Senator roberts, your colleague in the senate, said secretary sebelius, head of health and human services, should resign. I dont think that will solve the problem, unfortunately. I think its much deeper than that. I think the law is fundamentally flawed. I think this rollout is a disaster, not just a glitch. But i want to Say Something positive here about my colleague here. He has been willing and hes shown political courage to do so to talk about these issues. I think this morning if we can leave with anything it is that this is an opportunity over the next couple days, but really over the next couple months, because i think well probably push this down the road a little bit, to deal with the underlying problem. And that is the fact that we have these historic levels of debt and deficit that are hurting the economy today. Its like a wet blanket on the economy today. Thats why, in my view, were not getting the robust recovery were hoping for, but it is a war for future generations. We keep building up this debt and deficit, and dick is right, we have to deal with part of the budget that is not being talked about, which is twothirds of the budget in the Fastest Growing part, and if we dont do that, we will have failed. If we do do that, we will surprise the American People and do the right thing. I have to leave it right there because im out of time. Thank you, senators. I know youre out of work which is why youre here today, and i thank you very much. Lets bring on leon panetta. He served as white house chief of staff, cia director and most recently secretary of defense. Id name more but were running out of time in the program. Thanks for returning. How are you . Is part of the problem in washington that you have two sides who arent really interested in negotiating but digging in and saying, look, this is truly 100 the other sides fault . Look, there is a lot of politics and sound bite wars going on in this town, and i understand that. Ive been part of the political process. But ultimately, i think, both sides are really pretty much at the same place. You know, once you get past some of the rhetoric and some of the extremes, the fact is Everybody Knows weve got to extend the debt limit in order to avoid that catastrophe. Everybody knows weve got to end this crazy shutdown of the federal government thats taken place, stop hurting the American People. And everybody wants to get into negotiations. What you just heard is a good example where republicans and democrats have to engage in the broader negotiations on the budget. On entitlements, all the health care entitlements, on Discretionary Spending and on tax reform. But we talk about it like its a revelation, an epiphany. Even these two senators say, we agree on this, we have to get back to this. With the last shutdown in 1996, this is what you said then. If theres anything weve learned over the last few months is that the policy of threats and basically holding the country hostage, whether its on a continuing resolution or a debt ceiling or raising these kinds of blackmail approaches to try to get their agenda adopted has not worked. Its been a disaster. 17 years ago, the same thing is being said now. David, im really surprised that the lessons that were learned 17 years ago, that you dont shut the government down, you dont hurt the American People, that that lesson obviously was not learned and its been repeated. You dont win in this town politically by hurting the American People. And thats what were doing. Were hurting kids, were hurting families, were hurting individuals that are losing their pay, not paying their mortgages. I mean, why would you allow a small minority who cant get their way to basically take out their vengeance on their fellow citizens . Thats what happened. Youre talking about House Republicans, but the president also knew that this day was coming. He also knew what the deadline was and he appears to have made a calculation having just been reelected that, hey, im going to preserve for future president s an ability not to negotiate over the debt ceiling, even though as senator portman pointed out, previous president s have negotiated on this. Thats why we introduced the idea of having to raise the debt ceiling. Does the president bear responsibility . You are a democrat, you work for him, but out of government you can take a step back. Does he also bear responsibility by playing around with default by pushing it this far . Ive been 3,000 miles from washington. I have to tell you, the American People are angry, theyre frustrated, theyre mad. They think that this town has gone nuts in the way theyre dealing with it, and i think both sides will bear some responsibility for that. But i think the president has also indicated hes willing to negotiate on the key issues. The republicans want to negotiate on the key issues. For goodness sakes, thats where this ball game has to wind up. It has to wind up in the broader discussion about how do you reduce the deficit, how do you end this crazy sequester . Because the fact is we are paying a heavy price right now for what is happening to this country. America is being weakened, and thats the last thing that ought to happen. Members swear an oath to protect and defend the constitution against all enemies, foreign and domestic. What theyre doing by the shutdown, by this threat on the debt limit, is weakening america and sending a message to the world that the United States cant govern. Thats a lousy message for the world to hear. When sequester was passed, before it was passed, you warned, as defense secretary, of grave consequences for americas military readiness. There is some who look at that and say, that was an overstatement. That yes, sequester cuts have hurt. But as you sit here now out of office, out of the your job as defense secretary, do you believe america is critically unprepared for a National Security threat that can be met . I think our readiness has been badly damaged. Weve got 12 combat squadrons that have been grounded. Half of the air force is not combat ready. Weve got ships that are not being deployed. Weve got training rotations that have been canceled. Weve got 800,000 federal employees that have been furloughed under sequester and that are now taking a hit on the shutdown. All of this is impacting on our readiness and our ability to be able to handle a major crisis outside of afghanistan. The president Just Launched two special operations here to fight terrorists. If thats the number one goal, he seems to have been quite capable of launching that in this past week. The s. E. A. L. S and their operations and our ability to use special forces in these kinds of attacks, yes. But let me tell you something. On the broader crisis such as the middle east, we are going to be impacting on our readiness and our ability to respond to a crisis in that part of the world. All right. Secretary panetta, i appreciate your time this morning here as well. We will take a break. Coming up, washingtons dysfunction is on full display as world financial leaders are gathering in washington this weekend. My interview with head of the International Monetary fund, christine lagarde, where she says this could cause massive disruption. Were we know why were here. To chart a greener path in the air and in our factories. To find cleaner, more efficient ways to power flight. And harness our technology for new energy solutions. [ female announcer ] around the globe, the people of boeing are working together, to build a better tomorrow. Thats why were here. Thats why were here. The pursuit of a better tomorrow is something we all share. But who can help you find your own path . Who can build you a plan, not just a pie chart . Who can help keep your investments on course, whatever lies ahead . That someone is a Morgan Stanley financial advisor. And were ready to work for you. Against the back drop of a possible u. S. Default, the world financial leaders are in washington this weekend for the International Monetary funds annual meeting. They serve as the financial watchdog and rescue agency. Last night i sat down with the head of the imf, christine lagarde, in this exclusive interview. As we sit here, there is no deal. The American Government is barelying toward inin inin ini default. How concerning is this to you . Its very concerning. I spent the last three days with 300 finance ministers and banks from across the world, and the world was doing better. There was recovery in th