Prospects for a compromise in Washington; Rep. Jim Jordan on Tea Party demands for a deal

This is a rush transcript from "Fox News Sunday," October 13, 2013. This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: Day 13 of the government shutdown -- is the end game near?


WALLACE (voice-over): A revolving door at the White House, as the president and Republicans engage in talks to avert a default and reopen the government.

REP. PAUL RYAN, R - WI, CHAIRMAN, HOUSE BUDGET COMMITTEE: No deal as far as we're concerned.

UNIDENTIFIED MALE:  The president has rejected every offer that we've made. And so we're going to, I guess, wait to see what the Senate comes up with and see if the president comes back to the table.

SEN. HARRY REID, D - NV, MAJORITY LEADER: They're not doing us a favor by reopening the government. They're not doing us a favor by extending the debt ceiling. Those are -- that's part of our jobs.

WALLACE: We'll discuss the prospects for a compromise with Republican Senator Bob Corker and Democrat Joe Manchin. And we'll ask Congressman Jim Jordan whether the Tea Party faction in the House will accept a deal that doesn't stop ObamaCare.

Plus, our Sunday panel featuring George Will and Dana Perino on who is paying the price politically for the continued gridlock.

And our power player of the week.


BARRY BLACK, SENATE CHAPLAIN: I think any objective observer would see a certain insanity in some of the things that have happened during this government shutdown.


WALLACE: The Senate chaplain praying for Congress to end the madness, all right now on "Fox News Sunday."

And hello again from Fox News in Washington.

Negotiations to end the partial government shutdown and avoid default are now focused on the Senate, after President Obama rejected the latest House Republican plan.

We'll talk with key Congressional players in a moment.

But first, if there's no deal -- and that is looking more likely -- what it will mean to the overall economy and your personal finances.

Peter Barnes of Fox Business News is tracking how the markets are handling the uncertainty -- Peter.

PETER BARNES, FOX BUSINESS CORRESPONDENT: Well, Chris, financial markets are bracing for a bumpy ride this week because of Washington's budget battles. Last week, investors cheered reported of talks about ending the government shutdown and raise the national debt ceiling by the deadline this Thursday.

By the end of the week, stocks recovered all of the losses that followed the shutdown on October 1.

But experts remain nervous. Investment manager, David Kotok, said, quote, "Markets rose on hope for a deal, so markets are likely to fall as reality check alters sentiment. This fight is a long way from over."

That's what happened in the budget showdown in 2011. The Dow fell more than 800 points before a deal was reached to avoid a shutdown and increase the debt ceiling, but it fell another 1200 points after that. The nasty fight cost the United States its AAA credit rating for the first time in history.

Still, the economy itself held up OK in hindsight. It chalked up 3 percent growth by the last quarter of 2011, job creation accelerated and stocks rebounded. The pattern was the same in the 1995-'96 government shutdown.

This time around, worried countries and the IMF and the World Bank in Washington for their semi-annual meetings, are pushing Congress and the White House for a deal.


JIM YONG KIM, PRESIDENT, WORLD BANK: More than 50 percent of all exports are to developing countries. So this is not just that it's going to have an impact -- a negative impact in developing countries, it's going to have a direct negative impact on exports in the United States. And so we just urge them to continue talking and come to a solution.


BARNES: U.S. bond markets are closed tomorrow for Columbus Day, but stock markets are open, so buckle your seat belt -- Chris.

WALLACE: Peter, thank you.

And we'll be following how the markets react.

As we said, the Senate is now at the center of budget talks.

And we're joined by two leaders that are trying to find a way to reopen the government and avoid a default.

Democrat Joe Manchin of West Virginia and Republican Bob Corker of Tennessee.

Senators, welcome back to "Fox News Sunday."

As we sit here on Sunday, Senator Corker, where are we?

Is there a dealing in the offing?

Where are we?

CORKER: Well, there was some movement a couple of days ago. And I think things are not moving now. A couple of nights ago, it looked like there maybe was a way to go forward. I think the Senate Democrats have pulled back at the regrets of the White House and now may be trying to look at sort of busting the budget caps that were established back in 2011.

So I think we're in a status quo. I do think we will see our way through this. But the last 24 four hours have not been good.

WALLACE: Let me follow up with you on that. As we've said, the president rejected the House GOP plan. Yesterday, Senator Harry Reid, the Senate Democratic leader, rejected a compromise plan by 12 senators, half Republican, half Democrats.

It sounds like the other side is demanding, Senator Corker, that you reopen the government and you extend the debt limit with no strings attached.


WALLACE: Will Senate Republicans accept that?

CORKER: Well, again, are they going to try to change existing law, which is now where they are, or are they going to agree to leave the budget caps that have been long been established as U.S. law, are they going to leave those in place and set a framework that allows us to deal with the big issues that our nation faces, which is mandatory spending?

I think that...

WALLACE: Let me just quickly...


WALLACE: Explain to folks.


WALLACE: -- because what happened was...


WALLACE: -- as part of the Budget Control Act in 2011, sequester levels were cut. And these were automatic spending cuts.

CORKER: Right.

WALLACE: Then the mar -- the budget has to go -- the overall budget has to go down to a certain level.

The Democrats are now insisting, let's raise the sequester levels...

CORKER: Right.

WALLACE: -- let's relax that.

One of the questions that I know some Republicans are asking is, if ObamaCare was the law of the land and couldn't be tinkered with, why is it that the sequester, which is just as much the law of the land...


WALLACE: -- can be tinkered with?

CORKER: So I agree. I think, you know, look, Republicans started off in a place that was an overreach. And to try to change a law that was central to the president's, you know, agenda was not something that was achievable. A delay, maybe, other kinds of things, maybe.

Now, I think the Democrats are on the verge of being one tick too cute. As they see the House possibly in disarray, they now are overreaching.

And I think that what we've got to do is get this back in the middle of the road, act like adults, deal with these issues in an appropriate way.

Joe and I were at a dinner last night -- we're usually in our home states -- with finance ministers from around the world. This is something that is wreaking havoc around the world and will affect economic growth. And I do hope that over the next week, we'll reach a conclusion. And I think we will. But, Chris, own the last 24 hours, there's not been good productivity on this issue.

WALLACE: Let me pick up with you, Senator Manchin, because you were part of this Gang of 12 that tried to come up with...

MANCHIN: Not a gang. We have enough gangs up there. We don't need any more gangs.

WALLACE: It was an agreement -- and Democratic leaders ended up saying that this gives too much to the Republicans.

Which raises the question, do Harry Reid, do President Obama, do they want to compromise or do they want to surrender?

MANCHIN: Well, I don't know what they -- what they want. They haven't detailed that enough for us. Leadership must lead. And basically, we're in a crisis mode right now. We should not be here. There's no way it's acceptable for this government to be shut down. This is self-inflicting pain on millions of people. It's unnecessary.

And now to go out to the brink of a government default, which is catastrophic to our country, to our economy and to the people in this great country, how they can let that happen is beyond me.   We have a group of 12 bipartisan -- that's 12 percent of the Senate -- a core, equally divided, six and six, Democrats and Republicans. And we've got something that has a little bit move for everybody. In a divided government, you can't have it all your way.

WALLACE: But forgive me...


WALLACE: -- because your leader, Harry Reid, said it was too generous to the Republicans, that it -- and rejected it and is a...

MANCHIN: Well, we're waiting to see the leadership come back with something, then, that maybe he believes is more fair. I don't know. We looked at it from the standpoint, they wanted to repeal the medical device tax. We've got a...

WALLACE: That's what the Republicans...

MANCHIN: The Republicans wanted that.


MANCHIN:  They compromised and gave us a delay for two years, which works.

They wanted on oversight as far as people who were signing up for it. The bottom line was is we don't want that to gut the bill and it's not going to gut the bill.

Give ObamaCare a chance to work. If it doesn't work, it will fall on its own. But don't have the underlying motive to just get rid of it. And the social issue, we're talking about finances of our country. A lot of those social issues, I have talked about an energy policy, coal, what role it plays in an economy and the government and the energy that we have.

But that's not the place for it. And everybody wants to bring their social agenda to the table when we really should be fixing the finances of this country.

And that's what Bob and I have been working on.

WALLACE: Senator Corker, Majority Leader Harry Reid, late yesterday, along with other Democratic leaders, went to the White House, in the Oval Office, met with the president to discuss where they stand at this point, in these negotiations. He says he wants a compromise by tomorrow, by Monday.

Any idea what he has in mind?

And what do you think?

Realistically, I know you want -- you want to say, you hope, that it -- what are the chances, real chances, that we would reach Thursday, the debt deadline, without a deal?   CORKER: Well, I've been able to predict these in the past with really perfect results so far. At this point, Chris, I cannot. I do think we will rise to the occasion and deal with this issue. And I do think that -- I think the White House pulled back Senate leadership two nights ago and asked them to step back away. And I think that they're watching what's going to happen on the Republican side for a few hours.

But nothing is going to happen, I don't think, if it's about, again, breaking those spending caps.

So my sense there...

WALLACE: That's the key issue now is -- is whether the sequester...

CORKER: Well, you know, I mean...


CORKER: -- it would be beyond belief, as a country, to have the huge amounts of debt, $17 trillion and growing, and to not only not take gains -- which is what all of us want to do, we want to make our country stronger -- not only not do that, but back off from the disciplines that we put in place back in 2011, which, by the way, is the law of the land.

So my sense is that Democrats will pull back. We'll end up in a place where we're focused on those good government things that we should have been focused on all along.

And that we will move along in an appropriate -- at some point, Chris, this is something that I think that the administration will realize is not -- it's not a game they need to be playing with and we need to get back to, again, the constraints that we have, with a few victories for both sides, and move ahead.

WALLACE: Senator Manchin, the number two Democrat in the Senate, Dick Durbin, says that your side has -- and to use his words, we've got that up on the screen -- several somethings in their back pocket as a way to avoid default, even if you don't get a deal.

Do you have any idea what he's talking about?

MANCHIN: Well, I would assume that they might be referring to the so-called nuclear option, if you have to use that, basically, to keep this country from falling into default. So we go to 51 votes on the Senate side to prevent that from happening.

I would hope we don't get to that. I don't think we need to go to that direction whatsoever. And I think that we can come to agreement.

The bottom line is, if you want to avoid the sequestering numbers, then get a long-term fix. Bob and I both have been looking for a long-term. We both probably agree with all of the Bowles- Simpson, the template of reform and spending and revenue, to a certain extent. We might have differences of what we define that...

WALLACE: But you can't get that done between now and Thursday.

MANCHIN: Oh, we know we can't get that done, but we could move in that direction. If we can come to an agreement, that's what we said. January 31st on the debt ceiling, March 31st on the CR. It gives us the time to work. Put the budget conference in place.

The budget conference, the conferees aren't even meeting. So if they want to fix it and get rid of the number, then sit down and come to an agreement and let the orderly process work.

WALLACE: I've got to throw something else into this...


WALLACE: -- mix, or, as some would say, mess. Even if the White House and the Senate agree, you kind of get something, then, through the House.

Now, when you were proposing your deal, Senator Manchin, which the Senate Democratic leadership said was too generous to Republicans, Paul Ryan, the chairman of the House Budget Committee, said it was a total cave and that it was unacceptable and House Republicans would never pass it because it was a cave to the president.

MANCHIN: Well, that tells you...


MANCHIN: -- it might be pretty good if both of them are rejecting it...

WALLACE: Well, I...

MANCHIN: -- right from the get-go.

WALLACE: -- I know, but it...


WALLACE: -- but the point is their...

MANCHIN: It might be a point of balance.

WALLACE: OK. But here's a question, Senator Corker.

How can you, if that was too much, how are you going to get something through the House that is even more favorable to the Democrats?

CORKER: Well, I know you've got Jim Jordan coming on in a minute and he'll enlighten you to that end. But, look, at the end of the...

WALLACE: But it's got to be a factor...

CORKER: Yes, no, no...

WALLACE: In your consideration...

CORKER: -- no, it is a factor. At some point, first of all, we had a lot of conversation back and forth. Joe and I were with Eric Cantor last night.

You know, I think at this point, we've got to figure out a way to get something out of the Senate that we think is close enough for the House to accept. There's got to be some evolution, I think, on both sides.

But right now, just to think about it, we haven't gotten anything out of either body. Getting something out of one body would least be progress.

So I agree, this is -- that's why I say, it's not clear to me how this ends, because there is such disarray. And now, again, Republicans overreach, now the Democrats are beginning to overreach.

Hopefully, as we move into this next week and markets are reopening, hopefully, both sides will get back in the middle of the road, do some things again that pull a little rope toward making us stronger fiscally and set the stage for something even better.

WALLACE: Let me just -- before I ask a final question of Senator Manchin, do you think it may take the markets tanking, reacting very negatively, to get you guys off the dime?

CORKER: You know what, I think -- I think that this time, more than last time, I think people more fully understand the impacts and understand that we're in a pretty fragile recovery. I hope that's not what it takes.

There are a lot of folks -- for what it's worth, there are a lot of folks in the Senate that really want a good, solid solution that doesn't gouge either side. And hopefully, that's what's going to prevail.

WALLACE: And finally, Senator Manchin, since the shutdown began, we saw the Park Service shut down the World War II Memorial to veterans. There is, as we see, a demonstration there. There's the so-called Million Vet March today to protest that.

This week -- and I think everybody was horrified by this -- the Pentagon said they could not pay for the death benefits of our fallen soldiers or pay for the families to go to Dover to see the remains returned until Congress ended up passing an emergency bill.

I want to ask you a direct question.

Do you think that this administration, the military has used veterans, has used other groups, has used the cuts politically to make -- to give them pain in order to put pressure on you guys?

MANCHIN: I can't -- there's no way I can accept that any Democrat or any Republican would do that. Public service is public service. We take an oath to basically serve the public and the best that we can.

WALLACE: So how do you explain some of these decisions?

MANCHIN: Well, basically, I don't know from the -- from this, just the whole political process or basically just the bureaucracy of what we're dealing with.

I called Ken Fisher when we had that situation that we found out about...

WALLACE: The head of Fisher House?

MANCHIN: Fisher House. And basically they were the catalyst that came to the table. We've got that corrected now. But I wanted to thank Ken Fisher and the Fisher House for what they have done. They were willing to step to the table and make sure no one missed a payment on that.  But to think target someone would inflict this much pain, this is what's hard for me to believe. I didn't sign up for this type of duty. I didn't sign up for public service to put an undue pain on people. And it's hard for any of us to sit here and accept that.

I have faith in our leadership. I believe that they'll come together in a rational way and fix this problem. We've given some outlines. There's 12 of us working together. That's a pretty good core group to build off of.

The president is rejecting it.

Why don't they look and see how they can improve it?  that's what we're hoping will happen today and tomorrow and we're willing to work with them.

WALLACE: Senate Manchin, Senator Corker, thank you both for coming in.

CORKER: Thank you.

WALLACE: We'll see how the -- the next few days...

MANCHIN: Thank you.

WALLACE: -- shake out.

Thank you, gentlemen.

MANCHIN: Thank you.

CORKER: Thank you.

WALLACE: With the Senate now at the center of talks to end the stalemate, how do House Republicans feel about being left out? Congressman Jim Jordan, one of the leaders of the so-called Tea Party faction in the House, joins us next.


WALLACE: Now that the president has rejected a House Republican plan, there's a question whether the so-called Tea Party faction in the House will accept any deal that comes out of the Senate.

Here to answer that question and more is Ohio Congressman Jim Jordan.

And, Congressman, welcome back to "Fox News Sunday."

Well, as we said, the president has rejected the House GOP plan and the Senate Democrats have rejected an even more generous plan that was being offered by Senate Republicans. I say generous in the sense that it demanded less of the president and gave him -- or tilted more toward the president.

So the question is, do you get the sense that the other side thinks they have you guys on the ropes and that they can force you to cave?

JORDAN:  Well, we get the sense they don't want to -- they don't want to negotiate. We've offered, I think, 11 different bills either funding either all or part of the government. And they haven't even debated them in the Senate, let alone -- let alone passed them.

So here's the key. There are two key principles that I think that drives House Republicans.

The first is, you can't keep spending money you don't have. I mean it's a basic concept. We can't -- we can't keep raising the limit on an already maxed out credit cart. The second principal is this. ObamaCare, the way it's being implemented, is unfair. You can't give special breaks to big business. You can't give a special dispensation to members of Congress and then say to every other American, you've got to go to a Web site that doesn't work to try to sign up for a plan you can't afford and send your information to the IRS, which has already proven they won't treat it confidentially.

So this is about fairness and basic commonsense. And you can't keep spending more than you -- than you take in.

WALLACE: All right, we're going to ObamaCare in a second.

I want to talk about what the Senate Democrats are talking about, the plan that might come out of there.

Senate Democrats are demanding that the debt limit be extended for a longer period of time, not even -- you guys were talking about November. They -- the Gang of 12 was talking about January. They want it extended longer. And they want the sequester spending cuts -- and this seems to be the real heart of the problem now -- rolled back, that they're not going to have to live under the sequester spending cuts for a prolonged period of time.

You shake your head.


WALLACE: If that comes out of the Senate, will the House pass it?

JORDAN: We'll break the spending caps?


JORDAN: I don't -- I don't see any way that you -- you'd see Republicans go for that. And, frankly, this idea that we're going to have a debt ceiling where we don't address the underlying problem, the underlying problem being we've got a $17 trillion debt. We have a debt bigger than our entire annual economy.

If you don't address the underlying problem, then -- then we're doing what -- what -- the cliche that always get used in this town and always gets done in this town, we're just kicking the can down the road.

WALLACE: So it -- a direct yes or no. You're saying what will the House do if that's the plan...


WALLACE: -- that comes out of the Senate?

JORDAN: I don't think you're going to see House Republicans -- I mean we -- we are best when we stay united on -- on basic principles of less government, less spending, keeping taxes low. You're going to see us stay united, that we are not going to increase spending. We're -- the sequester has been one of the -- one of the good things that has -- that has happened. It's one of the few things we have done where we've actually controlled spending somewhat in this town.

WALLACE: OK, but let me ask you two direct questions.

If you say you're not willing to accept that, are you prepared to let this go past the deadline on Thursday, when the secretary of the Treasury says that we're going to go into default?

JORDAN: Chris, we -- we have...

WALLACE: I'm not asking you whether you think it's a default or not, I'm -- what I'm asking is, are you prepared to let this go past Thursday?

JORDAN: No one wanted a shutdown. We offered 11 different bills to fund all our private government...

WALLACE: Yes, but things...

JORDAN: -- and no one...

WALLACE: -- have changed.

JORDAN: -- no -- exactly, because we've offered 11 -- we have compromised and given them all kinds of reasonable pieces of legislation that Harry Reid won't even debate, let alone pass. And no one wants to default.

What we want to do is -- is stick to some basic principles of addressing the underlying problem, is we keep spending more money than we have. And if we continue to do that, we're going make it difficult for our kids and our grandkids, for future generations to enjoy this amazing thing we call America.

WALLACE: But, sir -- direct -- answer my direct question. I understand your principle.

Are you prepared to refuse to sign -- make a deal and to let this go past Thursday?

JORDAN: You're -- you're asking the wrong -- you should be asking Harry Reid this and Barack Obama this.

WALLACE: Well, if they were here...


WALLACE: -- I would.

JORDAN: Yes, well, I -- we...

WALLACE: I'm asking you.

JORDAN: And -- and what I'm saying is, we are preparing to do what needs to be done to address the underlying problems in this country.

WALLACE: But you won't raise the debt limit if it doesn't do that?

JORDAN: Well, we won't -- we won't -- we -- we're not going to break the sequester cap. We think that that is -- that's one thing where we save the Americans -- the taxpayers some money here. We think that's important savings that we've achieved.

WALLACE: OK, which raises the other question, the one that...

JORDAN: Unless -- unless we get the kind of mandatory changes, long-term changes in mandatory spending that actually put us on a path to balance and help address the underlying problem. If you -- you can't keep raising the limit on a credit card if you're not going to address the problem long-term.

WALLACE: It is -- I understand that.

He's the other question. You said Republicans won't go for it. There's another way this could happen. If House Speaker Boehner puts this on the floor in the House and it passes, overwhelmingly with Democratic votes, and then a few Republicans, but overwhelmingly with Democratic votes, will he be removed?

JORDAN: I mean, I don't think (INAUDIBLE) the speaker's -- look, over the last several weeks, you've seen our caucus very united -- 230 some votes for all these bills I've talked about. I don't think you're going to see that -- that -- that, um, -- don't think you'll see that happening.

WALLACE: If he did it, what would happen to Boehner?

JORDAN: Well, I mean, who knows?

That's -- we're -- I don't -- I don't think that's -- that's not even being talked about. We're focused on the principles that I've described. We're focused on addressing the underlying debt problem. And we're also focused -- and this -- the -- I've watched the previous segment -- we're also focused on ObamaCare. It is unfair the way this is being implemented.

WALLACE: All right, let me take -- let me ask you about that. There's a widespread feeling in Washington -- maybe right, maybe wrong, but the feeling in Washington is you're going to have to accept, in the House, something that you hate because, quite frankly, the perception is that you misplayed your hands on ObamaCare.

I want to put up a couple of polls.

According to a Wall Street Journal poll this week, 53 percent now have a negative view of the GOP. That's the worst rating since The Wall Street Journal  started polling in 1989.

And support for ObamaCare has actually gone up in the last month from 31 percent to 38 percent, despite all the massive problems with the rollout. And the feeling is it's because of the disgust with the shutdown.

JORDAN: Correct.

WALLACE: Congressman Jordan, rightly or wrongly, forget ObamaCare, politically, has your strategy of linking ObamaCare to all these things, has it backfired big time?

JORDAN: Well, look, we need to delay this law, plain and simple. And you can look at the polls and whatever. But we were elected to stand for certain principles. The vast majority of the American people still know this law doesn't work. The president knows this law doesn't work. We've had 13 days where this thing has been rolled out and it's been a disaster.

And I always point to this -- why is it OK, Chris, for big corporations not to be subject to the plain letter of the law, why is it OK for members of Congress to get a special break under the law, but for that single mom working at a small business, now she has to be subjected to trying to deal with Obama -- and maybe she's now gone down to 29 hours a week because of Obama -- why is that fair?

This -- this is a fundamental...

WALLACE: Congressman (INAUDIBLE) –

JORDAN: -- this is a hallmark principle about this country, equal treatment under the law.

WALLACE: I understand...

JORDAN: And this bill can't do that.

WALLACE: -- your argument, but the fact is, when Paul Ryan had his op-ed piece in The Wall Street Journal, his way out, it never mentioned ObamaCare. When John Boehner offered the House Republican plan, which would have extended the debt ceiling and have these budget talks, he never mentioned ObamaCare.

It feels like that has left the station.

JORDAN: There's still a lot of members of the House of Representatives who understand that -- that ObamaCare is unfair the way it's been treated. And all of that -- look, I want to repeal it. We know that's not going to happen with this president.

All we've asked for is delay it. Delay it for individual Americans just like you did for members of Congress...

WALLACE: But you're never going to get that through...

JORDAN: -- just like you...

WALLACE: It's just -- I mean -- I mean, I'm not saying you're right or wrong...

JORDAN: That's a -- that is a -- that is such a simple, fair, pro -- a basic argument consistent with what -- what makes our country such a special country, equal treatment under the law.

WALLACE: But does it -- but doesn't it feel to you like -- like the House Republican leadership...


WALLACE: -- has -- has abandoned you?

JORDAN: And that's an indictment on us, making it better. We need to make a better argument. We need -- we need to make a stronger argument with the American people.

But I think that resonates with the American people, if we continue to make that.

WALLACE: So I -- I guess what -- I'm a little bit confused, because what you're basically saying -- I mean here we just talked to two senators who say, you know, we -- we're going to move even more in the direction -- they agree with you, we're not going to relax the spending cuts, that that's -- that's a nonstarter. But they, you know, ObamaCare never came up in that discussion, either. And -- and, you know, the president is pushing them for fewer and fewer concessions and you're demanding something...


WALLACE: -- that it sounds like your House Republicans...

JORDAN: -- Joe Manchin said last week that he thinks the individual mandate should be -- he thinks it should be relaxed for individuals, they should be given equal treatment.

So here's a Democrat senator from the state of West Virginia who agrees that -- that this is being enforced in an unfair -- unfair fashion.

WALLACE: So how -- well, the last question.

How do you -- do you think that the House Republicans, or Congressional Republicans, are taking the hit that everybody else seems to think they've -- they've taken when you see...

JORDAN: Well...

WALLACE: -- this record level of disapproval?

JORDAN: -- no one -- no one likes a shutdown. We understand that.

But I -- I keep coming back to -- to this idea that somehow we're the bad guys because we're standing up for the simple concept of fairness. This is why people elected us, to stand up and say you know what, we should be treated fairly under the law, this law doesn't work. We all know -- we've had 13 days since it's been rolled out. It hasn't worked.

And the other thing that I'm always amazed at, this president can waive the law for big business and for members of Congress, but he can't waive the law during this shutdown for families whose sons gave their lives serving our country and want their death benefit for the -- I mean to me, that's unbelievable.

So this is a simple argument about fairness. And we're going to keep making it.

WALLACE: Congressman Jordan, thank you.

JORDAN: Thank you.

WALLACE: Thanks for joining us.

Always a pleasure to talk with you, sir.
JORDAN: Thank you.

WALLACE: It's going to be an interesting week.

JORDAN: It is.

WALLACE: Up next, our Sunday panel weighs in on the gridlock here in Washington and where they see a path forward.



TED PAULSON, VIETNAM VETERAN: I would like to see the politicians get their acts together. And quit punishing the citizens. This is their problem. Not ours. We elected them to take care of this country, not to play games.


WALLACE: Military supporters gathering today at the World War II Memorial for the so-called million vet march calling on the Obama administration to reopen the nation's war memorials closed in the government shutdown. And it's time now for our Sunday Group. Syndicated columnist and Fox News contributor George Will. Former Democratic Senator Evan Bayh, co-host of "The Five" Dana Perino. And Fox News political analyst Juan Williams. Well, George, the president, as we said, rejected the House GOP plans. And the Democrats have rejected this compromise plan offered by six of his Democratic senators, six Republicans senators. Do you get the sense they have been -- they have all the leverage and they can just demand that Republicans cave?

GEORGE WILL, FOX NEWS CONTRIBUTOR: Only reasonable explanation for the fact that they have moved the goal post. Their iron principle if something so malleable can be called a principle, was they wanted a clean CR and a clean increase of the debt limit. Now they've attached something to it. They want to change the law, the Budget Control Act of 2011 to break the sequester. For years we have been told if only the Republicans would listen to the moderates -- like Susan Collins. So, Susan Collins comes forward and says, let's delay the medical devices tax for which there are bipartisan majorities for complete repeal of them and let's just enforce the Affordable Care Act by having criteria for eligibility for the subsidies. Democrats --


WALLACE: Well, it does seem to be a contradiction, because as I pointed out to the senators, this whole issue has been joined because the president says ObamaCare is the law of the land and you cannot change it. Forgive me, but the sequester is the law of the land, which raises the question, Senator Bayh, is there rampant hypocrisy here?

EVAN BAYH, FORMER U.S. SENATOR, D-IN: Hypocrisy in Washington? Chris, I'm shocked. Well, look, of course this is a negotiation and people are going to press their advantage to get all they can get until the 11th hour, but both sides are going to have to give here, some for the following reasons -- the Republicans are losing the political war, so to save themselves in both the House and the Senate, they're going to have to compromise and Susan Collins has come up with a reasonable approach. Should they have to extend the time? It would actually be good for the country, if he had a longer, kept the government open, and raise the debt ceiling until after the next election to give us some certainty. And they may have to finagle some things on the spending cuts. There are some ways you can do that that are not so terrible. But at the same time, the administration is going to have to give, and Harry is going to have to give some because you can't default the country.

WALLACE: Harry Reid?

BAYH: ... because you can't default the country.

WALLACE: So, well, at this point, they seem to think that, you know, they've got the leverage, and is there a danger, that they as Bob Corker said, they overstepped?

BAYH: There is a danger, and with each passing day that danger grows. I think but the most likely outcome here is that the Senate eventually comes up with some sort of compromise, it goes over to the House. The House in all likelihood will just have to accept it. In spite of what the congressman you had on before said enough. The Democrats will (inaudible) fought enough, Republicans will vote for the pass, it will be like the fiscal cliff we faced at the end of last year. The alternative, Chris, is what you raised: and that would be a TARP like situation, where the House says just can't take what the Senate gave to us, they vote it down, the stock market plunges and then they come back and say well, I guess we had to, and they ultimately pass it with damage to the economy in the meantime.

WALLACE: I mean, Dana, just to review the (inaudible) here. The Senate moderates if you will, came up with a plan, Paul Ryan, who's not the most right wing member of the House said that this was a total cave to the president and unacceptable. Harry Reid rejected it because he said that it was a cave to the Republicans and he wants something more tilted toward the president. If they come up with something like that, how does it ever get through the House? We just heard Jim Jordan.

DANA PERINO, CO-HOST, "THE FIVE": I think it's incredible that I got on Friday when I was going to come here on Sunday that we were really talking about well, we see this clear path to a resolution and that by Thursday, October 17, that thing will be solved. And then as of yesterday, and then this morning, you realize, actually, they took several steps backwards. The people who have wanted the government to live within its means and they have wanted some things from the Republicans out of it are going to be dissatisfied with anything that they get. So, never be able to reach that level of satisfaction, but the markets, Chris that actually is where you might see the House and Senate have to at least do something, because up until now the markets have pretty much shrugged off the shutdown. But any of the signals that they're picking up over today -- over the next couple of days, means that the tricks that they think that they can use over the next several days will not be enough to prevent an actual collapse. So I think we are actually below ground zero at this one.

WALLACE: Juan? That's a bad place, below ground zero.


PERINO: Or hot.

WILLIAMS: This is the Halloween season, I think we're in a house of horrors here. But I think that the smart move for the Democrats here, Chris, would be to come out as the adults in the room, the pragmatists. And I think the danger is this overreach that you heard referred to earlier. That they -- the Democrats and President Obama have to be very careful not to put themselves in the posture of playing politics and taking advantage of the fact that they are right now winning the political war to punish the Republicans. Republicans are imploding and what they have, and I think is really key, it's not just the markets, it's the business community that needs to reassert itself inside the Republican Party so that people like Susan Collins, people even like potentially John Boehner could see that there's some political powers from money that comes forth to Republican moderates in this fight and that people want him to be reasonable and not simply listen to the far right wing that right now is dominating the Republican Party and driving them over the cliff.

WALLACE: George, I'll ask you, I don't know of anybody else who's come up with it. What's the sweet spot now? What is a deal that both sides could accept and honestly, do you think they'll be able to make it before Thursday in the deadline?

WILL: Second question, I have no idea. But this much I do know. I said before the Democrats had moved the goal posts by adding -- breaking the sequester. That's not just moving the goal post, that's a poison pill. If you want to bring the Republicans together, all of them, just tell them they have to break the sequester. Now, the problem is the sequester, which inhibits domestic discretionary spending, is what Democrats care most about. It's not ObamaCare, it's getting the spending rolling again and Republicans will never agree to that.

WALLACE: Let me just again -- because this all gets a little technical. The sequester was part of the Budget Control Act as part of the breakdown when we had the near default in 2011, and set automatic spending cuts. Again, something that everybody hoped wouldn't happen, but it did happen, because the super committee didn't arrive at a deal, so there are automatic spending cuts that are part of the law and if you extend the debt ceiling under the sequester -- rather, the government's funding under the sequester cuts, then that just means that those cuts continue longer and that Democrats felt like that.

BAYH: Chris, you asked for the sweet spot. Here it is. And a lot of it revolves around Susan Collins proposal. They medical device tax repealed passed that the Senate 79 to 21, it passed out of the House with about 17 or 18 Democrats voting for it, too. It will be good for the economy, there's bipartisan support.

WALLACE: And not even a repeal of the Medical Device Act, this would be simply a two-year delay.

BAYH: Two-year delay, clearly, a permanent repeal would give more certainty to the business community, that would be better, but at least it's a step in the right direction. Confirming the eligibility of people who will be getting the subsidies in ObamaCare, who can be against preventing fraud? So, the Republicans will get both of those things. What the Democrats would get would be a little bit longer extension, so we can have more certainty for the economy, God willing, through the next election so businesses can invest and hire. So Democrats will get that. With regard to the sequester, it is true that the spending levels will go down in January, but they're supposed to go back up again a year later. So you could move some of that spending from a year later forward. In the agate the spending would be the same, but the democrats would get a little bit more right now. That's going to create a lot of heartburn for the Republicans, particularly Mitch McConnell in Kentucky, but if they can finesse that ...

WALLACE: Where he's facing a tough re-election.

BAYH: Yes. If he can you finesse that some way, you've got a deal.

WALLACE: So, let me ask you, we're going to go down in the time we have left. Is there a deal before Thursday or not?

WILLIAMS: It does not look like there's a deal right now. I mean to me, why doesn't Boehner, he says that, you know, the votes aren't there. Call it up in the House, but I don't think he has that power right now, which is why I'm hoping. By the way, George, the sequester that at the Democrats budget proposed, included keeping the current spending levels, including this sequester. So, I don't think it's ...

WALLACE: Yeah, but not like until December.


WILLIAMS: Yeah, no, but (inaudible), that's what the government ...

WALLACE: OK, anyway, so here's the -- so, yes or no ...

WILLIAMS: No, I don't think there's a deal right now. Because the timeline the spending would ...


WALLACE: You've taken your time. Dana. Deal by Thursday?

PERINO: I think the medical device tax is very weak tea. I think it only helps lobbies, and if there -- if the argument is -- I have been for that repeal. But if you are actually ...

WALLACE: What happened to yes or no?


PERINO: I'm from "The Five." We don't do yes or no on "The Five."

WALLACE: You are not on "The Five."

PERINO: I know. OK. I would say if they can't do something about ObamaCare and if you look at the front page of the "New York Times" today how it was a systematic failure across the board.

WALLACE: You don't think we'll have an agreement by Thursday?

PERINO: No, if there's nothing with ObamaCare, no.

BAYH: 11:59 at night, Thursday night.

WALLACE: Yes. George.

WILL:  Yes, these are splittable differences, with the exception of the sequester.

WALLACE: Wow, that was like herding cats.


WALLACE: We have to take a break here, but when we come back, as if you didn't already know, new polls show just how disgusted voters are with everyone here in Washington.



UNIDENTIFIED MALE: Any objective observer would see ...

WALLACE: Since the shutdown started, (inaudible) suggested, he's given lawmakers a daily scold.

UNIDENTIFIED MALE: A certain insanity in some of the things that have happened.

WALLACE: Stay tuned. Our panel will be right back.



SEN. HARRY REID, D-NV, SENATE MAJORITY LEADER: This is a situation where they did not know what they want. I hope the Republicans decide what they want.

MITCH MCCONNELL, R-KY, SENATE MINORITY LEADER: Let put this hysterical talk of default behind us, and instead start talking about finding solutions to the problems.


WALLACE: The Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell earlier in the week engaged in some of the rhetoric that has Americans just fed up with Washington. And we're back now with the fence. So, let's look at some numbers. Some interesting numbers in the latest Wall Street Journal poll. Just 14 percent of Americans, 14 percent think the country is headed in the right direction, that's a drop of 16 points from last month and matches the low point where we stood during the 2008 financial collapse and 60 percent of Americans say they would like to replace every member of Congress, including their own. George, are we at a tipping point here where folks just say the heck with all of them?

WILL: Well, they say it, but do they mean it? The fact is we've been through this before. The country is suffering apocalypse fatigue at this point. They've been told from -- in the '70s we were going to die of global cooling, now it's global warming. LR (ph) was going to kill us, if we ate apples, but we've heard this over and over again. And I think people are now saying, back off, stand down and they may be answering these polls tactically. They may be saying, let's send the message to the polls. Michael Barone, Fox News contributor who knows more about American politics than is reasonable to know, says Americans often do that. They use the poll to send a message, and the message there's, I think, is pox on both of your houses, but at the end of the day when the dust settles and the smoke clears, we're going to have two parties and we're going to get used to them again.

WALLACE: Well, I want to pick up on that with you, Senator. You're involved with the no labels nonpartisan group. How deep do you sense that the frustration with Washington is and could it be an opening for another force in American politics, perhaps a third party?

BAYH: The frustration is as deep as I have ever seen it, Chris, and the poll numbers clearly reflect that. It almost makes you long for the days of the do nothing Congress. The current Congress is actually taking steps to harm the economy. So, I think what we're likely to have is a period of increased instability, more in tie incumbent elections. It won't be felt in the House so much because of the gerrymander. So many of those districts were locked in. But you'll see it more at the Senate level. Which is not subject to the gerrymander. Will it go so far as to have a third party, if you look at history, that's kind of unlikely. But the polls show that most voters are more open to that now. What I hope is more likely is that frustrated moderates and independents who sit on the side in primaries where really a lot of this dysfunction takes place, the radicals on both sides are the ones who would vote in the primaries. And these members are now responding to that, and they won't compromise because it's viewed as an act of betrayal. If you get more moderates, more independents participating in primaries, then you'll get a more functional government. I hope that's what will happen.

WALLACE: Dana, Barack Obama, whether rightly or wrongly, fairly or unfairly, was elected I think in some measure, he certainly ran on the idea that he was going to end the hyper partisanship of the Bush era and I don't think there's any question it's only gotten worse, what's the answer, how does this end?

PERINO: The sound bite that you played earlier to enter into this panel segment, with Harry Reid and Mitch McConnell. That's actually very tame compared to the other language that's been thrown about from the administration and also from both sides of the ...

WALLACE: Anarchists, terrorists.

PERINO: Yes. Suicide bombers, things like that. And once you get ...

WALLACE: We have heard that from Republicans about other Republicans.

PERINO: Oh, yes, and that's what I was going to say, it might be a throw the bums out election, but, actually, it could be that some of the Republicans find that they all have challenges in their districts. I tried to take a long view of this, we do not have a very warm and charismatic speaker and a leader, I don't mean Speaker Boehner, I just mean in general in the Republican Party. Like Reagan was for the Republicans or Clinton was for the Democrats. Maybe one will emerge. But in the meantime, I think, that this evolution that the Republican Party is going through, it's just going to be somewhat we'd have to watch, but if you look at the last week, and you're on the far right. You think, you know, at least it was worth it, because we have shaken up the status quo. And in many ways, that's what the goal was.


WILLIAMS: I don't think shaking up the status quo was the goal here. I think the problem is that you get people into office who say, you know, when I'm talking to them, they say, oh, you know, when I was elected I was sent to Washington to fight ObamaCare, I was sent to Washington to shake up the status quo. And I think you were sent to Washington to govern, to represent the interest of the American people not some small sector. And right now in the Republican Party. You know, the base of the party is in the south, overwhelmingly white and very, very, very conservative. And all they do is live in a very small bubble including a media bubble and talk to each other. And they are confirmed, and then you get Heritage and you get Freedom Works. And all this ...

PERINO: That's not true-


WILLIAMS: And it's just not healthy.

WALLACE: You don't think that's true with Democrats?

WILLIAMS: To some extent it is, but at the moment, as you witness what's going on here, there are people inside the Democratic Party who say we need a deal. We need to get something done and we don't see that right now coming from the heart and the soul of the Republican Party.

PERINO: Juan, Democrats and the liberals live in the biggest mainstream media bubble ever created in the history of the universe. And so, if you look at Republicans across many of the states governors, or state legislators, Republicans are actually doing what a really good work, they just nationally they're taking a hit on their reputation.

WALLACE: George, I've lived in Washington for a long time. You've lived in Washington even longer. You know, there's a lot of talk now and it picked up on what Senator Bayh talked about. About gerrymandering, that you have these -- these districts where the pull is all to the extreme. They're either solidly Republican, solidly Democrat. The only thing you have to fear is the primary fight from somebody who's even more liberal or more conservative, depending on the party. Is it something as simple and technical as that or is there something more in the culture that we live in today?

WILL: It's not that simple. The fact is we have a very polarizing president. I'm not criticizing him for this -- he's a progressive, he exists to enlarge the power of government as an engine of the redistribution of wealth and opportunity, that's his agenda. He's not interested in a grand bargain, he's not interested in compromising, he doesn't think he needs to. For all the talk about the Republican Party's dysfunction, would someone tell me what the president's second term agenda is? We're in nine months. What is it immigration? It's not going to happen. Gun control? What is this man's agenda for the remaining three and a half years of his term?

BAYH: Chris, there's an experiment in California they're trying. It's the unified primary where all the Democrats and Republicans run together. We're going to have to watch that and see what that leads to. It could lead to more moderates on both sides, winning the general election, and deal with some of these problems of gerrymander. That's not to address the Senate, though. What's happened in the Senate, is you have large sums of outside money that come in to enforce political orthodoxy. It happened to Dick Lugar in Indiana, $6 million came in, only 18 percent of Republicans -- against him, only 18 percent of Republicans voted, he went down. So, you can't deal with the money, so what the answer is, more people getting out and vote who are tired of the dysfunction, who want to have more sensible people. They have got to vote particularly in primaries.

WALLACE: Dana, and we only have about 30 seconds left. What I'm hearing from all of this is it's not going to change any time soon.

PERINO: Well, I don't think that anyone on the left or the right thinks that more moderates is actually the answer. I think that they ... WALLACE: But the American people do. PERINO: They might, but will they come out to vote in 2014? I doubt it.

WALLACE: They will actually (inaudible), especially in the primaries. Thank you panel, see you next week. And remember our discussion continues every Sunday on panel plus, you can find it right here on our Website., and make sure to follow us on Twitter at Fox News Sunday.

Up next, our power player of the week praying for the U.S. Senate.

(COMMERCIAL BREAK) WALLACE: As we have discussed, most Americans are sick and tired of the never ending stalemate here in Washington. But one man has the perfect platform to deliver that message directly to some of our leaders. Here's our power player of the week.

(BEGIN VIDEOTAPE) BARRY BLACK, U.S. SENATE CHAPLAIN: We're headed on a very reckless course. And it's time to abandon that course.

WALLACE: Barry black is chaplain of the Senate.

BLACK: Let us pray.

WALLACE: Who opens each session with a prayer. Since the shutdown started, it's been suggested, he's giving lawmakers a daily scold.

BLACK: Deliver us from the hypocrisy, that stubborn pride, the collateral damage of this government shutdown.

WALLACE (on camera): Stubborn pride, blunders, is that what you see?

BLACK: Yes. I think any objective observer would see a certain insanity in some of the things that have happened during this government shutdown.

WALLACE (voice over): His prayers have attracted such attention on Capitol Hill, the House, which has its own chaplain invited him to give the invocation there one day.

BLACK: The eternal God ...

WALLACE: He thinks his message is getting through.

BLACK: I have had senators who've told me that I'm thinking differently about the way I'm voting because of something you said?

WALLACE (on camera): So, then why is the shutdown continuing?

BLACK: Well, you don't make a U-turn in an aircraft carrier, you know, very, very quickly.

WALLACE (voice over): We first met Chaplain Black two years ago just after another near default. He runs four Bible study groups, which has been canceled during the government shutdown.

An access pastor to the senators, stuff and their families, 7,000 people.

BLACK: The Apostle Paul in Philippians, chapter four, said there are saints in Caesar's household.

WALLACE: Black grew up in a Baltimore housing project. His mother earned $6 a day as a maid. She gave her kids five cents for each verse of scripture they could recite until Barry Black was ready to recite the entire Book of Genesis for memory. (on camera): But what her reaction was ...

BLACK: Time out.

WALLACE (voice over): He spent 27 years in the service becoming chief of Navy chaplains before coming to the Senate in 2003. Now his destiny is to help our leaders step back from the brink. Stop playing what he calls a dangerous game.

(on camera): In a spiritual sense what will it take for our leaders to get together and solve this?

BLACK: It's going to take humility. There's a proverb that says pride goes before destruction and a hearty spirit before a fault. So, making a commitment to being stewards, to being servants and that's going to involve humility.


WALLACE: Humility in the Senate. Good luck. Chaplain Black was elected to his post when Republican controlled the Senate, but he's stayed on with the Democrats in charge. In these days of gridlock, he's apparently one of the few things the Senate can agree on. And that's it for today. Have a great week. And we'll see you next "Fox News Sunday."

Content and Programming Copyright 2013 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2013 CQ-Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.