>> this week on "political capital" -- harry reid and chris van hollen talk about the budget deal and 2014. and also the volcker rule. and talking about paul ryan's future. we begin the show with the senate majority leader harry reid. thank you for being with us. you had an agreement on friday so you do not need another all- night session. does this mark the end of this war that has transpired?

republicans say it is due to the rules change. >> the trouble has been over the last few days -- has not been over the last few days, but over the past five years. there's never been a situation where the president has been treated the way he has by congress. it is no wonder that people feel the way they do about congress. we have had untoward abstraction -- obstruction on everything. the culmination was was after five years, that the recognition was after five years. we recognize to could not get a team together. we changed the rules. >> are those permanent? >> it is so important. this way no matter who is president. i do not know how people can complain about the majority. people talk about the filibuster as if it were something that is next to the 10 commandments.

the filibuster is not part of the constitution. it was developed to help get legislation passed. it has been good for the country. who could complain about majority voting? >> with this agreement, you will take up the budget deal, at least the first vote. is that certain to pass? >> i think it would be suicide if republicans did not pass it. here is an agreement that is a landmark agreement. it is not because of the size but for what it does for the congress and the american people. >> and you have the democratic vote? will the caucus vote for it? how confident are you on republicans? >> that is up to them. it would be political suicide. paul ryan has meetings with patty murray.

they did what we always used to do in congress. they both have fixed ideas. they're both good legislators . they do not agree on much, but that is how it used to be. you work together and compromise. >> will the senate confirmed janet yellen? >> yes. toward the end of next week. >> the white house has indicated plans to have stanley fischer, the former head of the central bank of israel, as the new vice chair of the head. good ide >> i do not have the slightest idea. i read about it yesterday. it sounds interesting. i do not know. that is the least of my worries today. let's return to another issue. chairman menendez would like to pass a tougher iranian sanctions bill.

it would be triggered if the interim agreement calls through. john kerry and the white house say it would be a bad idea and hurt negotiations. will there be a vote in the senate in january on an iranian sanctions bill? >> we had a briefing this week. we had kerry and lew. secretary of treasury and secretary of state. it lasted for more than two hours. and menendez was there. they are working to come up with some type of resolution or legislation. he has worked closely at my side of the aisle. senator schumer who has been involved in this. i will wait to see what they come up with. >> would it be more likely to be a resolution than the legislation? >> i do not know. but first understand it is an important issue.

iran has been a real problem for the united states for many -- almost years. 40 we cannot let them get a nuclear weapon. israel is our friend. israel is my friend. i will do everything i can to protect negotiations and also take into consideration that bipartisan legislation is never bad. if we can come up with something that satisfies my people -- menendez and schumer and it is bipartisan -- we will take a look at it gave >> and satisfy john kerry, too. in this country, we have three separate branches of government. >> if kerry says this could impede negotiations, wouldn't that be a concern? >> of course it is a concern. that is why before thanksgiving, we've made sure there wasn't

anything on that. we cannot let it go on forever. we're taking that into consideration. i have talked to the president on this. i have spoken to john kerry on many occasions. >> it has cost democrats. charlie cook says there is a 50/50 chance where republicans could win back the senate. do you think it will cost you the senate? >> maybe cook will be right for once, but i doubt it. >> you think you will take -- keep control of the senate? do you think you'll lose a couple? >> no. they said we will lose last time. we picked up two seats. we have incumbents that are doing well. we have states like kentucky, where we are ahead. nn isorgia, michelle num running extremely well. >> speaking of kentucky, will

you campaign for allison grimes? >> no. i'm a traditionalist. >> would you help her raise money? >> i do not ancient eads my help. she seems to be doing well. >> let me ask about the white house decision to bring back john podesta who was a clinton chief of staff. >> when i was told this was going to happen, he could hear me yell over the phone. i know he did. john podesta will bring political savvy to the white house. i think that is important. he was a wise choice. in addition, they will bring katie byrne as part of the political teen. she will be the personality representing the white house in the senate. she is just wonderful. the two of them will help so much getting good, political

judgment. >> is this your assessment of the white house that they had trouble with their congressional, political relations? >> i'm not sure what the calculation has been. as far as i am concerned, we have wonderful people in the white house. we lose one of the all-time best white house staff in the country. pete has reached a retirement age. those two will fill that role. they need someone to replace him. >> do you think obama will have a better sixth year? >> i think he will. first of all, the economy will be better. we do not have to worry about the government closing or default on its debt. maybe we can do good legislation. >> will republicans make an issue of the debt issue in february? >> we talked about them committing suicide. by not passing the budget.

it would be double suicide with that. i do not think they will do either. >> happy holiday to you. thank you for being with us. when we come back, we talked to -- we will talk to representative chris van hollen. ♪

>> welcome back. we're joined by the top house democrat chris van hollen. thank you for being with us. >> great to be back. >> the budget compromise, you were instrumental in it erie it

it was a small deal. you said it was better than the status quo. is this the high water mark on any crystal measures in this congress? >> i hope not. this was a small -- it was a forward moving step, but a small one. i think the jury is still out on where we go from here. it is a good sign that speaker boehner finally stood up to the tea party crowd. they have essentially been running the show in the house of representatives for a year. whether this is a sign of the future or a one off, we do not know. the big test of that will be when we get to the debt ceiling, whether the public is threatened -- whether the house republicans threaten not to pay the bills that are due and try to use that moment to extract concessions. >> and that comes up in february. >> february, possibly early march. the president has said he will not negotiate on the debt ceiling. >> for this simple reason.

the u.s. has to pay its bills on time. these are bills that have already incurred. >> you are furious they did not allow a vote to extend insurance for the jobless. loud -- vowedyou to keep fighting. >> do you have leverage? >> i think we do. it was incredibly disappointing. it was unconscionable that the house would go home without dealing with this measure. on december 28, you'll have 1.3 million americans losing their unemployment compensation. we offered an amendment and were denied a vote. we have got to get the ag bill through the house and the senate. otherwise, prices will spike. the ag bill has 15 billion. -- $15 billion in savings. we're trying to get the savings to offset the sequester. he said no.

this is my personal view -- democrats should say, we will support the ag bill, but you have got to use the savings from that bill to help people with unemployment insurance. i have a lot of concerns of the ag bill. the way it is shaping up. i want to take a look at it. my goodness. we know it has at least $15 billion in savings. let's use that to help people. >> and you think they will vote on that and the food stamps in the ag bill? >> we are pushing hard on food stamps. that will be part of the negotiation on the ad bill what . what we do know is that the minimum savings -- we should have more than this -- but the minimum savings will be $15 billion. that will go a long way to pay for unemployment compensation for americans who are out of work through no fault of their own and are continuing to look for work. i see folks with stacks of job applications a foot-high.

they are still looking. we still have a slow economy. it is improving, but still slow. this is no time to take that support away. it is the right thing to do for those families. the economy gets a boost when they have more money to to pay their rent and groceries. >> it seriously damage the president's poll standing and it has hurt democrats as well. the polls today show the house gop would add to the majority if an election was held now. how permanent is this? >> i think we had a serious problem with the rollout. i do not think it is permanent damage. it was a rocky rollout. we see things improving every day on that front. we know from the states that had their own systems and do them well -- california, new york, kentucky -- >> we see them struggling.

>> they are working to get it done. maryland is still struggling. the underlying policy is sound. we know that by looking at the states where the computer systems are working. i think you will see continued improvement going forward. more more people are signing up. more people have access to affordable care who did not before. you will have a different story. >> one used to work in the house. will that make a difference? will it affect how the white house functions? >> i think it will make a difference. the house democratic leadership, some of us met with bill -- phil yesterday to talk about health care policy issue here . john podesta. is an old pro. i think that will provide some added muscle there.

>> do they not consult enough or reach out enough? >> i think that is right. in the house, there are some who believe the communication is not what it should be. dennis has been making a real effort he took on the chief of since staff position to do that. this brings more firepower. phil has hit the ground running. we talked about the health care rollout and making sure house democrats can anticipate a future problems that may arise. we can work in advance to correct them. everything i have seen, all of the polling from the american people, they want to make this health care reform work. they are opposed to the republican position of repealing it and going back to the status quo. we have to be realistic. if there are problems, we need to address them. that will help more folks get access to affordable health

care. >> thank you. when we return, we find out what is next for the volcker rule. ♪

>> welcome back. we have a big week on wall street. the volcker rule took effect. we turn to bloomberg government

analysts for what it means. will the volcker rule work? how is it going to work? >> it is only going to work out if there is constant vigilance on the part of regulators. there will be so much discretion to the five regulators charge of overseeing it. they have to be in the banks learning about their models and their best practices and how to -- in order to distinguish what is huge bets and what is regular banking practices. >> are there loopholes or legal challenges? >> i believe hundreds of lawyers are trying to figure that out as we speak. the door is open to loopholes. the rules are written so vaguely. it depends on whether regulators try to close out this language and what kind of agreement can be found between regulators and the compliance offices within these banks on what these definitions on regulative trading and hedging actually

mean in practice. >> the economists say the results will be "less liquid markets, higher transaction costs, a weaker financial system, and richer lawyers." that is a critic. >> that is a pretty dire protection. -- prediction. if it means safer banks it could , be worth it from a regulatory perspective. we do not know. my problem with this rule is that there was a major change between the proposed in the final and the limitation of what is called for portfolio hedging. that was never publicly debated. it appeared in the final rule. that is where we do not know what the muster is in this rule. how firmly they come down on what is allowed to make being bank risks safer and what is not allowed? we do not know that. >> i always turn to margaret carlson on my portfolio hedging.

elizabeth warren and others are pushing for tougher regulation. did anything happen? >> we don't know. the volcker rule leaves so much discretion to regulators. that may not appease elizabeth warren who thinks banks are too big to fail. i think that is the next step. this is still an open question. >> thank you. i hope you'll come back. >> i would love to. >> i turn to the columnists now. paul ryan architect of this budget deal that got through the house. does this help or hurt the presidential prospects question that -- his presidential

prospects? >> i'm not sure paul ryan wants to be president. i think vice president took away from his core strength which is the bulky details of budget policy. he likes to do budget stuff. he is very excited about cbo reports. i think his natural role is more a lion of the house or senate than it is in the white house trying to manage all those people. >> megan is our philosopher king. libertarian who does not trust politics. no one runs for vice president who does not want to run for president. you do not go through that. you can be serious about the budget and want to run for president. this week you could see how ryan thinks and how do john boehner thinks. these compromises, if you will, and the people who will get a budget through they think they , will take back the party. boehner's outburst is not angry as it seems. we, the chamber of commerce and the financial community, we are

getting the party back. ryan will be a leader in that party and a candidate. >> my prediction is he will be the next chair of -- but when meansthe house ways and committee, which will take him out of the running. but when you are as young as paul ryan -- >> he is a baby. >> can john podesta make a difference? >> he can make a difference. he and dennis are both serious and somewhat modest. both ride bicycles to work. they are press hounds. i think it will be good. i think the job is bigger than one man. >> i think obama administration has troubles that are bigger. then john podesta can solve. where is the real action happening? it is at hhs and making sure that obamacare works. if that happens and that is not

something that senior white house staffers have much influence over at the point. if it happens, the president is saved. if not, it is irrelevant. >> i agree that the problems are bigger. i have never underestimated anyone as much as john podesta. i think except for jim bakker, he was the best white house chief staffer in modern times. >> he could save obamacare. he goes into the nitty-gritty. >> if it is salvageable. thank you for being with us. thank you for watching. see you next week. >> "political capital" is a production of bloomberg television. ♪

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