Neither side blinks as congress and the president face a partial government shutdown, 18 hours remain.
800,000 bureaucrats would be furloughed, the irs and defense department, they and markets await midnight.
The cost of a shutdown -- we measured the political fallout and what is john boehner's future and that of mainstream republicans.
That morning, everyone, go this is" bloomberg surveillance." we will bring you the smart discussion of the shutdown.
We are facing a midnight deadline to pass a budget and it does not look like anyone is negotiating.
Chinese manufacturing index rose less than analysts expected in the month of september.
A surprise weakness from a preliminary estimate that casts some doubt on the strength of the economic rebound in china.
No significant earnings or data in the u.s. it is the last day of the hurt quarter and theimf will release its world economic outlook which is a good snapshot of the german economy.
Let's check in with equities, bonds, currencies -- there are two more things i want to point out.
We also get the crop forecast at 12 p.m. and are keeping our eye on events in washington and the senate is scheduled to reconvene at 2 p.m. eastern time to deal with the funding bill passed over the weekend in the house.
11:15 a.m., president obama will meet with benjamin netanyahu who is in town and has meetings with joe biden and john kerry later in the day.
Then the president will hold a cabinet meeting.
I have a feeling there will be a lot for them to discuss.
And now -- a data check.
It's the donuts from friday kicking in.
At goodies, bonds, currencies, commodities.
The s&p up slightly year to date.
The euro is weaker.
This is a washington-affected data check.
There is a stronger yen which is a good indicator of the shutdown.
A stronger yen, sterling is stronger, dollar index gets weaker.
Here is a chart for the weekend.
There is a political crisis breaking out in italy.
berlusconi told ministers from his party from the government no longer supporting the present prime minister.
The new prime minister will face a confidence vote.
Spreads are higher in europe but particularly in italy this morning.
We scoured the papers for the most important stories.
There is really only one story out there.
Another high-stakes showdown in washington that could lead to the government shutting down for the first time in 17 years.
The deadline is midnight tonight, no signs of copper mines over the weekend.
We did not hear any negotiations in the house and the senate.
The house advanced its bill to delay the affordable care act for a bill and we have gotten word from the senate from harry reid that that bill is dead on arrival.
Global stocks over all have extended weakness from friday we will see that play out today as we go into 2 p.m. when the senate is set to convene which would if congress 10 hours to do something.
The senate is not expected to do anything with the house bills so they will probably pass their own bill and send it back to the house.
Our next front page has to do with the shutdown because the issue in the middle of everything is the president affordable care act.
There is one day left before the health exchanges open to the public.
Open enrollment for individuals begins tomorrow at but the actual coverage does not take place until january 1, 2014. the word is that these online markets will not be fully operational for weeks or months.
They are talking about a soft launch because they have problems and delays that workers are per pair to help americans.
The distinction is what has been delayed our business plans and you were talking about the individual.
I'm talking about individuals in the health exchanges which means going on the computer but the row grams are not complete yet.
-- but the programs are not complete yet.
They need the youth to sign up for this or the whole system does not work.
We will continue with washington.
The government will shut down at midnight tonight unless congress and the white house can reach a deal today.
This is senator ted cruz yesterday -- so far, majority leader harry reid has essentially told the house of representatives and the american people to go jump in the lake.
There is just one take from the right side of the party.
We are following all of the rhetoric on capitol hill.
The shutdown is looking likely.
Is anyone negotiating?
There is no one negotiating right now.
Scrap your plans for that trip to yellowstone because everything points to a government shutdown.
This a be a big deal, bigger than maybe some of the members of congress who are bringing us to this point believe.
Republicans are convinced in the house and the senate that this time it will be different.
Public opinion is on their side because of obamacare and they think there is so much distaste for this love that americans will not take it out on republicans this time and democrats are convinced of the opposite.
Harry reid and the senate democrats have held their ground and urged the white house not to give an inch on this.
They think they will prevail.
Because of thepolling, do not be surprised if maybe there is a one-week extension but it looks like we are headed for a shutdown and that's a preview of what will come from the debt ceiling.
Who are the people to watch?
Does everything rest on john boehner?
Yes, ultimately, but you want to see any house republicans that step forward and see maybe a clean spending bill would not be such a bad thing.
If you see the more moderate rate obligations, they could step forward and say this is the right thing to do and that would be important.
Harry reid has not flinched.
He is a former boxer and this is one fight he expects to win.
Our guest host this hour isstan collander.
He has an encyclopedic expertise on capitol hill and budgets.
This is shut down monday and also with this is matthew dowd.
Let me go to you right away -- who will get the blame if we shut down?
The polls that have come out over the last two weeks say that the democrats have a slight advantage in the course of this.
The question is not who will win.
Everyone will lose when the government shuts down.
No one will think better of either party and republicans will lose more if this continues.
What is the distinction between the debate this monday and what i'm told happens october 17? that is when the government runs out of cash.
The debt ceiling expired months ago.
They have been using a variety of image to take cash out of one pocket and put it in another.
The government will continue to operate on october 17, it just will not have enough to pay its bills every day.
If the shutdown is over at that point, we will have another situation where all the operations will go on but we cannot pay the bills.
Many people will be very unhappy.
Let's say the government shuts down, how does that change the political calculus leading up to the debt ceiling debate?
Would the republicans compromise on that?
One school of thought is you get this fight over the budget and spending over and let people flex their muscles and get this out of their system and then a more adult conversation happens about the debt ceiling.
That is the optimistic view.
My sense is that it poisons the well and if the democrats give anything at all in this negotiation over the budget, republicans will and expect at least something in return for an increase in the debt ceiling and it is not clear what that something is.
What is the something in return?
What's amazing about the last week is after you watched agreement on the syrian chemical weapons out of the un and the president talking to iran the first time in 34 years, we are getting more reason than enlightenment out of the middle east and washington, dc which is amazing.
Ultimately, the republicans will crater.
The government will shut down tonight and the numbers will turn badly for them and they will have to pass a clean bill and get it done and they will have to crater on the debt ceiling bill.
In the course of this, it will look bad howard government operates.
I will give you the first word when we come back, stan.
We want to make you smarter about this government shutdown tonight at midnight.
We want to talk about what else is going on outside the beltway and we start with twitter which moves closer to an ipo.
It could make its filing public this week.
Once the paperwork is made public, the company can price and launch an ipo within 21 days.
Twitter disclosed it had made a confidential filing with regulators.
Siemens is slashing jobs, 15,000 positions or four percent of its workforce at, as it tries to catch up to of general electric and profitability.
The massive restructuring as part of an eight billion dollar cost-cutting program.
Apple is now the most valuable brand in the world.
It grabbed the number one spot from coca-cola and annual best global band.
The apple brand is valued at $98 billion, coke had been number one and now it is number three and google came in second.
I wonder where facebook dominates -- ranks?
Coming up, if the government shuts down tonight, which services will be missing tomorrow?
This is our twitter question of the day -- we are just getting started, counting down to midnight.
? good morning, everyone.
We will continue our coverage of the shutdown and washington.
We have an appropriate test at 8:00 a.m., chris van hollen, ranking member of the house budget committee with betty liu.
He is never on script so it will be interesting to see what he has to say.
Apparently, i cannot go to the yellowstone.
Planes will fly and social security checks will be mailed and the fbi will be on duty but at government shuts down at midnight tonight, there are some notable services that will close.
You will not be able to get your passport if it expires.
Of the 2 million federal workers funded under the annual appropriations, about 800,000 would-be furlough.
That's about 4040% and would include half of the dod employees, civilians mainly.
Most of the irs would be furloughed.
That means the agency cannot process taxes or collect debts and national parks including the statue of liberty and ellis island will be close.
Independence hall in philadelphia and passport offices will be closed.
What will be open?
Air traffic controllers will be working as well as the fbi and active military personnel are duty but the pay for them may not go out.
The mail will still be delivered because they are funded by the sale of postage stamps.
Or so we are led to believe.
Social security and medicare benefits will also still go out.
Stan collender is the budget guy.
What portion of our government is affected by the shutdown?
About 1/3. that's the portion that is funded with appropriations.
Medicare and social security will go out automatically because they are mandatory spending.
Interest on the debt will continue to get paid.
If they work out a deal, will it be retroactive to those who have been furloughed?
That's what happened in 95-9 6 but that is doubtful.
That might not happen this time.
You mentioned air-traffic controllers -- we are working away around this.
They don't have to be on.
They are funded with appropriations.
If the president had testicular fortitude, he might shut down the air-traffic controllers.
That's one way to put it.
Who is going to negotiate with whom?
When you have three parties in a negotiation, the president, the administration and the senate that's the problem.
Even though speaker john boehner is the speaker, can he force a deal if he can reach a deal and that's a huge part of his problem.
In the end, i think the party republican sitting on the outside saying they don't want to do it will begin to crater and that's what we will see happen.
It's not clear that the president can cut a deal for democrats.
When john banner has worked with democrats in the past, he has gotten tea party permission to do it.
I'm not sure he will do that this time.
One big question is friday's jobs report.
The labor department has not given a plan in terms of their contingencies.
They will release the jobless claims report.
If the jobs report was prepared and there was a shut down but not released, they might be able to release it because they don't want the data compromise.
D. the commerce department has made clear there will be no release of data.
Construction spending and factory orders for this week and the trade balance for next week are included.
Let's get historical perspective on this -- this takes us back to your early years in texas.
James falolow is writing on this a little bit.
To speak as a democrat, did the republicans not get the message about the election?
They have not gotten that in the course of the last three elections.
I think there is a part of the republican party that represents a strain in the country that is sick and tired of the federal government.
I don't think we can ignore that and we talked about the tea party vote but there is a sense in the american public that they do not trust the federal government to be efficient and effective doing their jobs and i have to say the president is not done a good job selling the american outlook that they -- that the public can be involved in the healthcare industry and that's a huge part of why we are where we are today.
We want to make you smarter about the government shutdown.
Is it midnight tonight?
Unless they can miraculously come to a deal.
That will not happen.
There is a 99% chance.
It can never be 100%. coming up, we will look at the impact on the economy if the government shuts down.
What will the hit be on a fragile economic recovery, coming up next on "bloomberg surveillance," on bloomberg television and streaming on your phone, your tablet, and bloomberg.com.
? this is "bloomberg surveillance." italy's government is literally on the brink of collapse after silvio berlusconi pulled his support from the prime minister.
The prime minister has called for a confidence vote this wednesday to try to save his five-month-old administration.
In china, purchasing manufacturing growth index this month is weaker than initially thought.
From hsbc, the numbers showed mild expansion for factories the low the preliminary estimate made last week.
They say manufacturing growth has slowed.
The texas rangers and tampa bay rays will play each other in a one-game playoff to decide who makes the postseason.
They both won yesterday to finish at 91 wins and 71 losses and the tiebreaker is tonight in arlington, texas and the winner plays the cleveland indians.
Apparently that's a big deal.
Back in our youth, that was not this way.
One teammate and the other five or six teams did not make it so this is way cool.
They also introduced the wildcard.
Rex are the teams more competitive?
That's a very sophisticated question.
I'm a real aficionado.
You would also mention tv revenues, right?
Stan collender cutting to the chase.
This is my morning must read -- i always thought wall street was a challenge for people who wanted to be challenged and compensated.
The best and the brightest are not heading to washington, dc where they could use them.
It is a changing world.
We will do derivative finance.
Goldman sachs says they are doing gods work.
Coming up, $1.5 billion is the cost of a 95-96 government shutdown.
It was barely the amount of gdp so what will it be next -- this time?
? this is "bloomberg surveillance." the u.s. government is heading toward a shut down at midnight tonight and u.s. equity futures are going toward a lower start.
This is a government shutdown data check and you can see it in equities.
It is under the 1700 level on the s&p 500. the euro is weaker which has to do more with on -- political unrest in europe.
Nymex crude is under $102. we have a strong yen.
You see that in the stock market as congress apples over the budget.
Alanzentner -- alan zentner is with us.
How damaging will this be to our fragile recovery?
It depends how long the shutdown lasts.
Usually they are one-three days but we had a longer 117 years ago.
It does not sound like a direct impact to gdp.
There is indirect effects.
What if the government workers don't get paid?
They might not get paid this time.
Talk about forcing an issue for consumer confidence.
I hope that does not happen going into an election year.
Midterm elections will not be influenced well by people who don't get paid.
We have passed scenarios to look at.
Paul krugman wrote today -- it is different this time.
We don't have the booming economy of the 1990s. everything is different when you have a sub our recovery with two percent growth.
You feel it more.
I think this is a much broader issue than just a government shutdown.
We have so much policy uncertainty.
At the end of the year, we have hundreds of tax provisions that may or may not expire so there is a lot of uncertainty.
Our regular tax policy environment is very uncertain.
What kind of work have you done to assess the impact of the debt ceiling not getting resolved my worry is that if we don't get a resolution -- if we don't get a continuing resolution and we shut down, that would set market expectations for the debt ceiling -- so far, we have been lucky that financial markets have been complacent and i think they know best -- they will no longer be.
Matt dowd, she looks at gdp a lot but fourth-quarter gdp will come out in february.
That gets us into the 2014 elections.
Are either of these rds prepared for a near recession economic report?
I think where we are headed next year is a complete mixed bag in election.
I think democrats will likely pick up some seats in the house but because the way things are redistricting, it is hard for them to win the house.
We will have a house that is more dysfunctional after next year and the senate were republicans will likely to cap seats at not take it over.
That it is the likely scenario which only makes washington more dysfunctional in the course of the next presidential election.
How do you do your job?
Do you just throughout your forecast and say we have to wait?
This is what keeps us employed.
We complain about political uncertainty but these are the kinds of things that keep us all employed.
How do ceo's do their job?
That gets at the core of the matter.
Whether it is for how solar businesses, certainty is a necessary component to a strong economy.
Businesses cannot line ahead of they don't know what taxes are expiring, what funding will be there, what government contracts might or might not come through.
It makes it difficult to operate.
We can see it has been depressing with investments over the last two years.
The american public cannot ignore that the federal government is becoming more and more unnecessary.
That is why you see the market baked -- baking and dysfunction.
Businesses are now baking in dysfunction in washington which is a problem for any politician.
If people start ignoring them.
In your budget world as the budget guy, does congress use gdp forecasts?
they look at election polling and turnout forecasts.
Gdp is only one thing which is a small component of what they do.
What matt just forecast, and i would agree, is a congress in 2015-2016 that could be more dysfunctional.
On the ceo question -- this is the new normal.
We have to get over the idea that we will go back to the way it was and there will be a two- year deal in place.
One thing ceos will get a four is taking some risks in this environment.
I wonder what role the private sector plays in influencing washington to get something going.
Nothing initially on the shut down.
There will be a lot of businesses that will go back to washington and say you major points.
In 1996, when the shutdown lasted almost three weeks, number of contractors started to say we are going to lay people off and that's when the politics changed.
Are you saying there's no way the big money donors to the political campaigns in these lawmakers will allow the senators and representatives to take this government -- to take the debt ceiling into a default scenario?
You cannot use the phrase " no way" anymore.
Members of congress run certain districts and republicans are not as worried about this as they were back in 1990 five.
They have a constituency now that is much more powerful than companies and corporations.
Let's bring it back to ellen zentner.
I believe there is a jobs report on friday.
Should we care?
We will care if it does not get released.
You said it will get released.
The labor department has not given its contingency plan so we are not sure.
Technically, what the bls has said his there will be no releases except for the initial jobless claims report.
That's probably because that date closes on saturday and that of oblique reduce it monday before the shutdown.
The jobs report, they work until the day before the thing is released.
I would assume that if we get a shut down, you can assume a day by day delay for days of shutdown.
Is this an exclusive that i get a vacation day on friday?
The first friday of the month will be the first time.
There is some confusion as to which data will be released.
We have private data sources, more now, those will still release date is so ism and adp, other indicators will be released.
We will get a snapshot of the labor market we just would not get the end all, be all payroll report which is the mother of all reports and that will cause a lot of volatility and gdp may not speak to congressman.
Businesses may try to speak to congressman but what speaks to them is a rollover in the stock market and that will force the issue each time.
And we could see that.
If we don't get guidance from the right kind of data.
You could see the market force the politicians and.
Great to talk to you today ,ellen zentner.
This is our twitter question -- does it affect the redskins?
The tickets are paid for in advance.
You can tweet us, we want to hear from you.
Coming up, why you should expect to pay higher taxes on your home.
That is coming up on "bloomberg surveillance," on bloomberg television and streaming on your phone, your tablet, and bloomberg.com.
. ? ? ? this is "bloomberg surveillance." house prices in the uk posted the biggest increase in more than six years this month.
The average value rose by 5/10 of a percent and prices rose even more in london.
Demand is surging there in part to government lands to help her sack it -- prospective homeowners.
Mark cuban and the securities and exchange commission square off today on an inside trading case.
It involves half a million shares of mama.com.
The sec is alleging that the owner got a tip on a lower value on the sale.
At the box office this weekend " cloudy with a chance of meatballs2" was the top box office.
For your oscar consideration.
I watched motion ice hockey movies.
Anyone with children will have to buy the slow motion.
We are shutdown-free for 1.5 minutes.
This is our single best chart.
You cannot get that far away from government shutdown.
This is on on the homeowners burden, property taxes.
It shows the growth in home prices in white and the rise in property taxes which is yellow.
Property taxes never felt year over year as far back as 1920 but that changed in 2006 when home prices began falling.
We saw local governments were faced with lower home prices and homeowners were appealing and winning their tax assessments for it the government compensated for lower home values by raising tax rates in 2011. based on the recovery in home prices so far, local property taxes could be growing as much as seven percent annually.
This goes straight to people's pocket books.
We forget this.
Matt dowd has not been right in 14 years, i'm kidding.
Our guests nail these things.
I like how he ties it in with politics through the economics.
It comes down to your pocketbook.
And the fact that incomes are not rising the way home prices are.
People cannot take the cash out of their homes.
Is this a shut down-free photo?
We will start in the oval office when president obama was speaking with the iranian president.
They spoke by telephone about a potential deal over the iranian nuclear program.
It's an action shot of the president.
It looks like yours.
Matt dowd is here.
Does the president have a better case talking to the president of iran than to members of congress?
He seems to be able to have a longer conversation and get more accomplished.
It is an ironic situation with what's going on in syria and what has happened in iran and the israeli prime minister is here to talk about all of this.
The president is having more success in foreign policy these days than he is in domestic holocene.
In the end, elections are determined by policy so he will have to get his house in order.
A president who has trouble with domestic politics tends to pay attention to foreign policy.
That is the resolute desk.
That is the desk ronald reagan used.
It is made from timber.
Let's move on because we've got another shot of tourists in london forced to hand in a ship after a duck boat erupted into flames.
They were rescued by police.
Coming up and a moment, we will continue to discuss the politics behind the government shut down we are heading into at midnight tonight -- the man who really runs congress wants to kill the president's health care law and no one elected him.
We are not talking about the house speaker.
It could be the most powerful republican out there.
You will meet him next.
? this is "bloomberg surveillance." direct tv will start financing independent movies.
It has struck a deal with the start up movie studio, a-24. it will help the studio acquire independent films for the right to show them exclusively before they hit the theaters.
Toshiba is cutting 50% of staff in its money-losing television unit, about 3000 jobs and toshiba will stop production as two of its three factories.
It's tv unit has lost money for the last two years as sales in europe and japan slump.
Investors in amc networks are looking for an encore now that " breaking bad" has ended.
The show's creator is working on a spin off.
He sounded optimistic in an interview saying that we are in good shape.
Are any of you guys fans?
We can't talk about it.
It's all over twitter.
The dragons did not do it in " breaking bad." you are confusing your shows.
What about dragons?
This is an ongoing joke, " game of thrones." what will our national all it takes look like on october 1 after the shut down?
Members of the house and senate are sniping at each other.
Will a shut down unite or divide the parties.
? john boehner has served for 22 years and never has he faced a challenge as he does this monday.
Sarah love this article on john boehner.
This will make you smarter about republican minutia in washington.
Josh green joins us from washington.
Who will get blamed for the shut down?
I think it's likely republicans will get blamed since they are the ones that are forcing the issue.
What is happening now is the kind of epic shakeout effects of a civil war that has been going on within the republican party for a while.
It is especially intense since the 2012 election.
You basically have half the party that took the lesson from the election and said we need to moderate and broaden our appeal and bring in immigrants, hispanics, young people, minorities, and another set said no, we need to double down on conservatism.
Right now, that is the component of the party that is winning.
What i loved about your pieces it is not about john boehner, it is about jim demoimint who is calling the shots and he's not in the senate anymore.
He left the senate in january to become the president of the heritage foundation, a conservative and tank.
It is probably the leader among a group of conservative organizations that have been pushing this de-fiund obamacare effort.
Jim demint and ted cruz toured around the country whipping up grassroots conservatives to put pressure on gop legislators to defund the law.
It is their unwillingness to back off that demand that will force the government probably to shut down tonight.
Stancollender is with us -- are the powerful republican committees of the house powerful?
The committees and the house are not powerful.
They used to be when you and i grow up a they are not now.
This is a caucus situation, something way above the committee.
Right now, john weiner is not in control of his own caucus.
He has been slapped down so hard in the last five months and many issues that it is hard to see.
Is he the speaker of the house on tuesday?
On tuesday he is but he is demonstrating he has an inability to lead his own caucus.
This is not just about 20, 30, 40, 50 irate republicans who don't want to get along.
This is about a constituency outside that they represent.
Jim demint is powerful because there is a large segment of the republican party that no longer wants to accept the federal government involvement in hardly anything.
That is the problem.
To your article and the strategy created by jim demint, using obamacare as the ultimate tool, is this strategy going to work?
Do they have the faith of the american people and the hatred of the american people for the president's health care legislation where they can be successful?
If you look at the polls, obama care is fairly unsuccessful.
Most americans disapprove.
These conservatives have been going for them but the problem is the american people do not want to shut down the government over obamacare.
I think route of lincoln's forcing this issue are almost certain to lose.
In the bigger picture, in terms of this gop civil war, the jim demint strategy is to hobble down and keep forcing these big clashes in the belief that this will force the republican art he generally to on board and move to the right which he thinks will bring about the kind of republican renaissance these guys dream about.
If you are republican -- is jim demint leading them on the path of ronald reagan or on the path to barry goldwater?
Ronald reagan could not win a republican primary today.
Because he's too moderate.
I think that's the answer right there.
Last time there was a shut down, you can see that popularity declined but recovered quickly.
Where is the rest of the republican leadership?
Are they keeping their head down to this blows over?
Paul ryan clearly does not want to be involved.
If john raynor were to leave the speakership -- if john aynor were to leave the speakership, paul ryan might want to step in.
The bet -- the rest of the republican leadership like mitch mcconnell has a tea party challenger this time.
He does not have the ability to negotiate.
You made me smarter today.
Thank you very much.
Stan collender gets lots of mail here.
Josh green, thanks so much and congratulations on the article and matt dowd will continue with us.
We are starting to see the jitters from the political wrangling showing up in the markets.
We are seeing a stronger yen and that is clearly a sign that they are buying some of the perceived currencies.
Euro weakness on the back of political crisis in italy tummy tuck.
Coming up in the next hour, we will go through the politics of economics of a shutdown.
? this is "bloomberg surveillance." 17 hours remain and neither side is budget.
The president and congress face a partial government shutdown.
The great divide in washington.
We check in with both sides of the i/o. no new taxes grover norquist and james hynes, congress moved from connecticut will join us.
The affordable care act is here.
How does blue cross-blue shield actually do obamacare?
This is "bloomberg surveillance ." i'm tom keene.
We are live from world headquarters in new york.
Monday, the final day of september, final day of the third quarter.
Joining me, as always, sara eisen and scarlet fu and we continue with matthew dowd, lumber political analyst and former chief jet -- strategist for bush-cheney 2004. chinese manufacturing index rose last -- less.
No significant earnings or economic data in the u.s. today.
It is the last day of the third quarter.
We will get a report from international monetary fund at 9:00 a.m. releasing the world economic outlook.
That will be very interesting to see -- we started to see a turn in the european data.
12:00 p.m. eastern time the usta will release the crop forecast.
Everybody is watching watching tim today.
The senate is scheduled to convene at 2:00 p.m. eastern time to deal with the funding bill that was passed in the house over the weekend.
11:15 a.m. eastern, president obama will meet with the israeli prime minister and yahoo will also has meetings with joe biden and john kerry and then the president will be holding a cabinet meeting.
Washington heavy morning brief.
Scarlet has companies.
Outside of washington, life goes on and twitter moving closer to an ipo.
It could make a filing for offering public this week aired according to "the wall street journal." once the paperwork is made public they can ipo as soon as 21 days after that early this month it disclosed it made a confidential filing with regulators.
Siemens is slashing jobs.
It will cut 15,000 positions, four percent of the workforce, as it try to catch up with general electric and profitability.
One third of the jobs will be cut in the home market of germany.
Restructuring is part of it 8 billion dollar cost-cutting program.
Apple is now the most valuable brand in the world.
The consumer electronics maker grabbed the number one spot from coca-cola the annual best global brands report from inerbrands.
Valued at 98 billion dollars.
Coke had been number one for all the reviews years.
Google came in second.
Let's talk about the standoff in washington.
Prospects of the government shutdown starting off with a report from julianna goldman and also with us this morning is al hunt, "bloomberg view" columnist and host of political capital with al hunt.
Clearly the president is dealing with foreign policy issues, meeting with the netanyahu.
Do we expect to hear from him about the shutdown?
That is why they planned the cabinet meeting for 4:45 today.
He might say something about what is happening on the budget showdown with the netanyahu meeting but i would expect him to come out pretty strongly with a statement at the cabinet meeting.
One official described it as a prep session.
The various agencies on what to do in the event of a shutdown amid all this week you are going to be hearing the president make a very aggressive case, publicly looking for various opportunities to point fingers at republican saying they are to blame for this, what will be a clean cr, continuing resolution, that only deals with budgetary matters.
He will be talking about the real-life impact and also talking about the looming threat of evil still with the feeling showdown in a few weeks.
Al hunt, i know if the redskins were shutdown it would probably be an advantage.
But with that, we have the idea of who will get blamed, who is most at risk with a shutdown at midnight.
First of all, tom, i call them the washington professional football team now to be erect -- very sensitive of you.
Ask thank you, -- thank you, sir.
The blame year lies overwhelmingly with the republicans that a lot of the issues, on the one hand, on the other hand this one is rather clear-cut.
You don't play games with the government shutdown and with the faith and credit of the united states like this.
The democrat in 2007 tried to cut off funding with the iraqi war, a legitimate fight as the fight over obamacare funding is legitimate today but you do not do it at the peril of government functioning or the u.s. credit.
I think there are a bunch of jihadist in the republican party.
But the big winner on the republican side is ted cruz.
We may think he is irresponsible, we may think it is bad policy or all sorts of things, but out there in the country they just absolutely -- the grassroots we -- republicans love them.
Strong opinions from al hunt.
You are an independent.
Do you agree that there are jihadist in the republican party?
Like the term redskins i would not use the term jihadist to refer to members of the republican party.
There are some firebrands and some who think copper mines is a dirty word in this.
I agree with al that in the short-term at least ted cruz, his filibuster, or the stoppage, was successful in that he has a fundraising base now, he is highly popular.
Ted cruz will not be the republican nominee for president in 2016. i don't think the republicans of that insane in order to do that.
But right now, ted cruz is one of the most popular members of the republican party.
Julianna, what is the action plan for the president?
Can he be a winner?
They think they have the upper hand and they feel he good heading into the shutdown, but their biggest concern is deal -- is still the debt ceiling.
That's why there is going to be said of a different pace on how you see the president responding here then we have seen impact showdowns, because they really need to pace themselves for the bigger rice is on hand.
There is no real agreement in the white house on whether or not this the strength of their hand and weakens republicans' hand heading into the debt ceiling.
One group that says, yes, this does put us in a better position to avoid a big showdown, something that really does risk the credit of the united states with the debt ceiling on october 17. then you have another group that says, look, we don't know what the republican caucus is going to come up with.
We can't count on them.
I want to ask you -- because when we look at where president obama stance, he is a second term president just as president clinton was when we have the event of a shutdown.
The president this time around is not even negotiating.
Who is his newt gingrich in this case?
That is the problem, to start with.
It was the first clinton term that actually set up his reelection very nicely.
19 96. the problem is there is no one to negotiate with.
Several democrats yesterday -- yesterday said the de facto speaker of the house is ted cruz.
John boehner would be a perfect person to negotiate but he does not really have negotiating authority.
I agree with julianna, that republicans will get most of the blanket here's the danger for obama in the long run.
We have a story out today that this -- if this goes a month, it could cost a point in a have a gdp and difficult for several months, we could go back into recession.
Whether republicans caused it -- democrats are not going to gain than this.
Republicans may lose.
Democrats are only going to lose less.
As we go forward -- as i said earlier -- washington becomes more and more irrelevant and the american public -- out, the foundation for this very is very goldwater 1964. what would senator goldwater think of this moment in u.s. history?
I think very goldwater would be a raving liberal in the gop today.
I am not sure -- last year at the convention, ronald reagan socialist, that is the way some tea party people would be ronald reagan.
There is a difference between now and 1995 or 1996. back then they knew it was going to be hardball politics.
Newt gingrich thought he could beat bill clinton and he actually got rolled at that time, but everybody went into it knowing there were risks.
This time a lot of republicans going in this are celebrating, they want the government to shut down.
They don't care about the political ramifications.
Winning the blame on the white house bid here with senator rand paul on "face the nation" on whether blame goes.
He is saying 100% of obamacare the highway.
The president is the one saying i will set down government if you don't give me everything i want on obamacare.
That, to me, is the president being intransigent and unwilling to cover mice.
Clearly republicans are spinning this as the president's fault, not willing to negotiate on the unpopular affordable care act.
This is a signature of his presidency that goes into effect on tuesday.
The timing here is just stunning.
Sara eisen, talking to one senior administration official last night saying the president is in no mood to negotiate with hostage takers.
They just see no point in the president negotiating over pro forma business.
These past showdowns you have seen past congressional leadership, to the white house and making statements on the white house lawn and you do not see it this time.
They say there is no point in negotiate some larger fiscal data.
We are not -- are not talking about tax reform or entitlement reform in the context of a six- month bill to fund the government.
Thank you so much, as always, for your perspective.
We will continue coverage through the day on bloomberg television them on radio, on the government shutdown.
We want to hear from you.
Our twitter question -- what impact will the government shutdown have on the economy and you personally?
Coming up, get ready for health-care reform.
The health exchanges go live tuesday.
A key provision taking impact.
We will look at the effect on the economy and on you.
We will talk to the ceo of boss and consult the -- boston consulting group.
? good morning, everyone.
I'm tom keene.
This man is now to our guest host, matthew dowd, bloomberg political analyst.
We are locked into a cycle of gridlock and antennae seen warfare.
How does the united states escape the cycle of bad political behavior?
Sounds like some tv show from another time and place.
This is serious.
Not a tv show.
How do we get out of this idiocy?
Tom, i think there is a fundamental problem going on.
If you look at the history of democracies in a world, the only succeed when people feel like makin unified and come together and make decisions -- world war ii is one example.
Even if there is conflict.
Places where democracies have not succeeded in part to the middle east and other places, where you have tribal warfare were people do not come together.
We are now in a situation where we are a tribal country.
People on the left and right to refuse to come together.
That is a huge problem in this trillion dollar economy.
Your 2007 a book "applebee's america" talk about the tribe out there.
Great election, two-term president, how do the democrats set up for 2014? i think democrats are in position to win some seats in the house, retain the senate but lose seats in the senate.
The problem is you have this blue tribe of democrats who are basically much more left of center on social issues and much more left of center on financial issues and then you have the red tribe for small government, for slow taxes and a more conservative on social issues.
The interesting thing is the majority of the country is in the middle but no one represents them anymore.
That is what you have a situation in washington.
weiner with -- mr.
Boehner would like to reach in the middle.
Will the republicans will able to do that?
They have primaries and they are worried about primaries.
What you have to look for is can a republican nominee emerge in 2015 or 2016 that can represent the middle and speak to the middle.
That is the million or billion dollar question.
Secretary clinton on the cover of "new york magazine" this week in new york city.
Who is on the cover of "republican magazine"? is there a lead candidate?
You have people like ted cruz, rand paul, chris christie, other governing like scott walker, the government -- and the governor of ohio.
There is no lead candidate.
Not necessarily a bad thing because they can emerge strong.
But it is a problem for republicans.
Matt dowd with his perspective.
Coming up, the fourth congressional district of connecticut.
Connor smith from the bedroom community of new york city on the jim hinesmes will join us on the shutdown.
? twitter, all -- what is it on?
Has to be on the shutdown.
What impact will it have on you?
All of you around the nation and even around the world, we need to hear from you.
What impact will a government shutdown have?
I will have to cancel my trip to yellowstone.
You and yellowstone.
All right, this is "bloomberg surveillance." i'm sara eisen with tom keene and scarlet fu and our guest toes as matthew dowd, political analyst said's government on the brink of a lapse after silvio berlusconi pulled his support this weekend for prime minister enrico letta.
He was angered by the government failure to stop an increase in the value added tax.
Letta has now called for a confidence vote in parliament is wednesday to try to save his administration.
The purchasing managers index in china showed growth is far weaker than initially thought.
The ages ecb board showed mild expansive for factories well below the pulmonary estimate -- hsbc board showed mild expansive.
In the u.s., and sports, the texas rangers and tampa bay rays will play each other in a one- game playoff to decide who makes the post season.
The tie-break happens tonight in arlington, texas.
The winner plays the cleveland indians in a one-game playoff on wednesday.
And those are your top news headlines.
That is the bpo.
What is so great about this is, if someone stumbles they can put in three starting pitchers in one game.
Which is cool.
We've got to talk about health care because key parts of the affordable care act are scheduled to take effect tomorrow even if the government shuts down.
By next year, almost every american will be required to have some form of health insurance and can buy it on health care exchanges.
I does what it is all about.
The debate continues.
Will it help or hurt?
Will we be able to afford the affordable care act?
The chief executive officer of boston consulting group is perfect to discuss this.
He is qualified, he worked in process development at practical -- at procter & gamble many years past.
Many years ago.
We look at all the people we could get on the show today and we just said, it's got to be richard lesser.
Affordable care act is about process.
What would you advise to your health care customers to make this process help?
I think to keep in mind the changes we are putting into the economy are massive with the health care reform act.
The good part about it is, obviously it opens up care to a lot of people who are not receiving it today.
Legislation being put forward is really complex.
Challenges in the years ahead will be to make it work.
Wrinkly, right now, that is one of the challenges because in this environment, continuing to improve the legislation and make it work that it will be tough to do.
How do you consult on complexity?
Just as simple as saying we got to be simple or do you actually manage a complex process?
Whether in a company or government setting, the challenge on complexity is, yes, the goals need to be sharp and clear, and then you need to understand what are the key elements to get there.
I think right now when you take on something like health care, you are touching so many parts of the american economy, and in order to do that, it's got to be refined over time and improved.
Republicans hated clearly and that is why we are heading to a shutdown situation tonight.
They are banking on the fact that americans hate it as well and they can point to that in this fight they are having to defund the government.
Is it true?
The interesting thing is each side is making a at actually in the course of this and implementation.
Republicans are betting the polls are right and the american public does not like it and will not sign up for it and will not engage in it.
Democrats and the white house is making the that that republicans and the country is not so angered -- anchored in their distaste, they gone -- go one the exchanges of the savings they will begin to like it.
So each is making a bet.
One says republicans are anchored and other saying they are not so much the cost savings will not change them.
Its implementation is key, we hear anecdotally there are a lot of software problems with people going online to sign up.
The software more important or public awareness?
I think right now is public awareness.
I think many don't understand the legislation and what they are signing up for.
And so, right now, it is just getting the public to be aware of it.
I think over time, the ease with which they can do it, the ease with which they can understand what they sign up for and their ability to make changes and improvements will kick in and then we will see -- the technical glitches could cause a snafu.
And right now they are still running to get it up and running.
I don't think they necessarily right now have to worry about technical glitches because i agree, i don't think every american has the idea that they can type in health care.gov and can it out tomorrow.
The white house is trying to get it done -- the real deadline is the beginning of the year when it actually goes into effect and people can start saving money.
Very quickly, you have been abroad and looked at emerging markets.
How does the rest of the world perceive us as we go to shut down?
I think as the rest of the world looks at the u.s. as really the best position to economy for the the years ahead.
Housing is back in balance.
I think they just don't understand with relative to much of the developed world, relatively bright prospects, our government can be taking us right to the brink, first related to the government shut down and then potentially to the debt ceiling.
Richlesser, -- rich lesser, thank you so much.
Boston consulting group.
We will talk about the man who persuaded hundreds of republican lawmakers to sign his no tax pledges.
Now he is looking moderate.
How the gop can win the fight -- the moderate grover norquist.
Whether he approves of his heart -- hard-line position on obamacare.
Coming up on bloomberg television, streaming on your tablet, bloomberg radio and bloomberg.com.
? this is "bloomberg surveillance." i'm scarlet fu, as always joined by tom and sara.
We start with warren buffett, set for a windfall thanks to his stake in goldman sachs.
Archer hathaway will get more than $2 million of goldman stock through warrants -- he may receive as many as 13 million goldman shares thanks to an agreement.
Steve schwarzman says selling blackrock around two days ago was a "heroic mistake." it followed a disagreement between him and larry fink.
Under larry fink blackrock is today's biggest money management.
Schwartzman runs blackstone, the largest manager of alternative investments.
He made the comment in a bloomberg radio interview which will air sunday.
Mark human and the sec will square off on an insider trading case -- mark cuban.
It's related to sales of internet search company momma.co m there he learned of an echoed offering that could lower the stock price of the company.
Less than 17 hours remain before many parts of the u.s. government closer business without congress passing a budget.
Congressman james himes is a democrat from connecticut fourth congressional district.
The house of representatives and wants to delay the affordable care act, at least the republicans.
Is there any way to overt the government shut down at this point?
Well, there is one way to avert it, which is speaker john boehner taking the decision to move away from the more aggressive tea party wing of the caucus and to tell them we are not going to shut down the government, we are not two weeks from now going to risk of default on our debt.
We will do the right thing and pat -- passed the budget keep it open and, by the way, we will negotiate these issues.
We will negotiate the budget or elements of obamacare but we will not do it threatening the government shut down or default on debt.
You mentioned the word negotiate, which is so critical here.
Is there anything but democrats could negotiate with when it comes to the president health care legislation?
Is there any room for negotiation on obamacare?
Of course, there is.
The president himself has given a waiver on the business mandate of the regulation that says all businesses with more than 50 employees must cover their employees or pay a penalty.
There are issues with, for example, people who work our time who had health insurance and may find it jeopardize.
Yeah, like any other big law, as it rolls out we are discovering it has some very good things and a lot of americans will see it tomorrow with the exchange -- when the exchanges open, but we also cover things that need to be adjusted and the president is more than happy to enter into negotiations and discussions but it will not include the word repeal.
All eyes on the republicans right now.
What should we look for from the house democrats?
Well, unfortunately when you are the minority party in the house, at times like this you feel a little bit like the bystander.
Because really all the action in the house of representatives is between the more establishment old school republicans represented by john boehner, speaker of the house, and frankly 40 or 50 tea partiers saying to shut it down.
[inaudible] that is really where the action is.
Those on the democratic side will continue to point out we don't need to shut down the government, we don't need to risk default.
We are happy to negotiate a budget.
We were in the process of doing that before the authorities started up.
What should the president do?
I think the president at this point needs to reiterate the idea that he is willing to negotiate budgets.
We are not done for the long term.
The most recent congrats to -- congressional budget office report said we are in good shape in the medium term but in the long term with issues to address, such as the long-term solvency of terribly important programs like social security.
We are just not going to negotiate with -- on the table.
Jim himes from the fourth congressional district of connecticut.
What i thought was interesting from the congressman was saying, yes, we are willing to negotiate on this major bill, the major law on obamacare, but not with a gun to our head.
Do you get that sense from other democrats?
I think they are saying they are willing to negotiate -- and the reality is, and republicans understand that that is why they are trying to hold the line off things that they think is absolutely crucial -- is they know that because democrats have the senate and the presidency of the united states, if they were even -- even to negotiate something separate in the zone obamacare, it would either get defeated in the senate or be towed by the president of the united states.
So, the idea that actual changes could happen obamacare separate from this are actually slim to none.
As we look at how the markets have responded, there is a lot of complacency and people talking about stocks being near record highs but we have seen stocks fall off ahead of this big shutdown deadline taking place later on tonight, midnight.
Futures are down by three quarters of a percent.
Global stocks are in retreat overall.
"bloomberg surveillance" on bloomberg television, bloomberg radio, all our interviews on bloomberg tv plus and radio plus.
All of our coverage through the day on the shutdown in washington.
We get you started this morning.
Sara eisen with me.
As gullible as well.
Matthew dowd, a terrific perspective.
-- scarlet fu as well.
It has been a fruitful conversation on the economics, politics, and the impact.
No new taxes?
Of course, that was the gop mantra for decades and now there is a new pledge in washington and republicans are divided.
Some want a deal, and republicans lost elections last time they shut down the government.
Is this time different?
Over norquist is joining us.
He has shaped republican -- for decades.
He is in d.c.. the approach to defund or delay obamacare, is this the right strategy, to threaten a government shutdown?
Of course, remember, there are two people at the table.
The president opened the whole discussion of a continuing resolution and debt ceiling.
He said he would close down the government if he did not get a massive tax increase to spend more money than the sequester.
That has been the president's negotiating position since this began months ago.
So, you could also say that a handful of republicans in the house and a couple in the senate have said, well, we will close the government down if we don't get significant changes to obamacare.
The reason why the congressman kept saying the democrats willing to negotiate, obama willing to negotiate -- obama has not been weeding -- meeting with republican congressmen or senators over the last five years.
The reason why everything is put on the continuing resolutions -- since the democrats do not do budgets, they have not passed one out of the senate in years -- the house has been passing the budgets and the democratic senate has not since before they lost control of the house, and t