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North Korea Fires Ballistic Missiles in Defiance of U.N.; U.S. Sent $400 Million Cash to Iran as Prisoners Were Freed; Interview With Illinois Congressman Adam Kinzinger; Trump Calls Campaign 'United,' Sources Say Staffers 'Frustrated'; Clinton Courting Republicans Amid Trump Turmoil. Aired 6-7p ET

Aired August 3, 2016 - 18:00   ET



WOLF BLITZER, CNN ANCHOR: Chris Christie calls Trump's criticisms of the Khan family inappropriate. And a top Republican donor endorses Hillary Clinton. Is Trump becoming increasingly isolated?

Cashing out. New details of a secret U.S. cash delivery to Iran, $400 million sent by cargo plane just the very same day Iran released four detained Americans. Was the White House paying ransom?

And Un-abashed. North Korea's Kim Jong-un defies the United Nations again and fires missiles capable of carrying a nuclear bomb. The move is being condemned as reckless and a serious threat. Is Kim trying to get attention or is he preparing for something bigger?

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN breaking news.

BLITZER: We're following breaking news this hour. Donald Trump is insisting tonight his campaign has never been so united, despite clear signs of chaos that are said to be jolting his White House bid.

CNN is learning Republican Party officials are aghast at the cascading controversies Trump has sparked and are pleading with his top advisers to get him back on track.

Also tonight, new details are emerging of a $400 million payment by the United States to Iran. Pallets of cash in international currencies were delivered to Iran just as the country was releasing four Americans that have been detained. But the White House insists the money was not ransom.

We're following North Korea as well and the growing concern over its launch of two ballistic missiles capable of carrying nuclear warheads. One of them landed in the Sea of Japan. That's country's prime minister is expressing alarm, calling North Korea's action a serious threat in defiance of the United Nations.

We're covering all of that and much more this hour with our guests, including Republican Congressman Adam Kinzinger. And our correspondents and expert analysts, they are also standing by.

But let's begin with the drama engulfing Donald Trump's campaign right now.

CNN's Phil Mattingly is over at Trump Tower in New York.

Phil, we saw a more focused Trump campaigning today. What's the latest?


Inside Trump Tower, inside Trump's campaign headquarters, Wolf, advisers saying they are unified, they are ready for the fight that's coming all the way to November. It's outside where the problem lies. Republicans down in Washington, really across the country increasingly frustrated by the message Donald Trump has attempted to convey over the last couple of days and very concerned about the state of his campaign.


DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: So, I just want to tell you the campaign is doing really well. It's never been so well united.

MATTINGLY (voice-over): Donald Trump and his top advisers pushing back on growing concerns that their campaign is in turmoil.

PAUL MANAFORT, TRUMP CAMPAIGN MANAGER: The turmoil -- and this is another Clinton narrative that has been put out there and that the media is picking up on.

MATTINGLY: Sources close to the campaign tell CNN that top Republicans have been calling for a sit-down meeting, get Trump back on track. Paul Manafort today shot down the idea of any formal intervention.

MANAFORT: The campaign is focused. The campaign is moving forward in a positive way. The only need we have for an intervention is maybe some media types who keep saying things that aren't true.

MATTINGLY: Sources close to the campaign tell CNN senior officials are growing increasingly frustrated with the GOP nominee, as his focus, according to one, has -- quote -- "strayed miles away from his message, from the economy, national security and on Hillary Clinton."

Trump, today, making a concerted back on track and on message.

TRUMP: We let ISIS take the position. It was Hillary Clinton that she should get an award from them as the founder of ISIS. That's what it was. That's what it was. Her weakness. Her weak policies.

MATTINGLY: But it comes after days defined by a feud with the parents of a Muslim American Army captain who died in Iraq heroically saving the lives of other soldiers, as well as fresh intraparty battles.

Newt Gingrich, one of his closest supporters and a finalist to be Trump's running mate, telling "The Washington Post" -- quote -- "The current race is which of these two is the more unacceptable, because right now, neither of them is acceptable. Trump is helping her to win by proving he is more unacceptable than she is."

RNC Chair Reince Priebus described by one adviser as furious after Trump told "The Washington Post" Tuesday, he is "just not quite there yet" in supporting Speaker Paul Ryan's reelection bid," a not-so- subtle jab at Ryan, who told CNN in May:


REP. PAUL RYAN (R-WI), SPEAKER OF THE HOUSE: I'm just not ready to do that at this point. I'm not there right now.

MATTINGLY: Even as Trump holds off, his running mate, Mike Pence, moving to ease the damage with an endorsement of his own.

GOV. MIKE PENCE (R-IN), VICE PRESIDENTIAL CANDIDATE: I strongly support Paul Ryan, strongly endorse his reelection. He is a longtime friend. He is a strong conservative leader.

MATTINGLY: That all comes as Trump has in some ways actively moved to fracture party unity, telling "The Washington Post" that along with Ryan, he also wouldn't support Arizona Senator John McCain.

TRUMP: I'm only thinking about it. I mean, you know, I have never been a big fan of John McCain.

MATTINGLY: And he criticized New Hampshire Senator Kelly Ayotte, who like McCain is up for reelection this November, as weak. Trump tweeting Wednesday morning that there is -- quote -- "great unity in my campaign, perhaps greater than ever before."


MATTINGLY: Wolf, that's a message he reiterated today at his rally in Florida.

And it's worth noting Newt Gingrich has since reiterated his support for Donald Trump, saying he absolutely supports the candidate. One Trump adviser just told me a few minutes ago that Gingrich actually called the campaign and congratulated them on a great rally for Donald Trump.

But the entire issue here underscores that the problems are not necessarily inside Trump's campaign. They may be with the candidate himself, at least according to Republicans who are watching from the outside -- Wolf.

BLITZER: Phil Mattingly over at the Trump Tower in New York, thank you, Phil.

Let's get some more of the Trump campaign with our chief political correspondent, Dana Bash.

Dana, you're getting more information from your sources. What's the latest?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, the latest, I'm actually texting with a top Republican right now asking have things calmed down? The response was a little bit.

I don't think it takes much. What Phil was just reporting about the rally that Donald Trump had today, where he didn't pick any unwinnable fights either on the stage or afterwards around it with any interviews, and he did spend more time than he has in the past going after Hillary Clinton, pointing out that she would be Obama's third term, talking about the big story today about allegedly giving $400 million to Iran about the time they were releasing U.S. citizens.

A small sigh of relief, but for a lot of these Republicans, the bar isn't that high. They just want the candidate to stay focused.

BLITZER: What are you hearing the latest about Reince Priebus, the chairman of the Republican Party?

BASH: I have not heard the two of them have talked yet. My understanding is still that Reince Priebus, the RNC chair, is trying to shake off his anger about the fact that Donald Trump refused to endorse Priebus' very dear friend, the House speaker, not just because they're good friends, but he's the highest ranking Republican official and because Priebus has done so much to try to unite the party behind Donald Trump.

I suspect the two of them will have some kind of conversation, have a little bit of a kumbaya moment. They both have to. They both are in this together, whether they like it or not, particularly for Donald Trump. He is relying heavily, almost entirely on the RNC not just for joint fund-raising, but also for field operations, which is huge when you're talking about getting out the vote.

BLITZER: You have seen these, you have heard these reports that they are even taking a look at the rules, Republican Party leaders, some of them, worried that maybe Donald Trump might drop out.

BASH: This was in and around the time when Donald Trump had been even more mercurial than we had seen him the past.

I'm talking about this just stops 24 hours ago. So, yes, I talked to a couple of Republican officials, one of whom said that he was just kind of working on the what if, because he was worried that Donald Trump was kind of acting out so much that he actually might drop out before the election.

But it doesn't seem as though based on the way things have gone today, that's in the cards, but they're planning.

BLITZER: He looked just as enthusiastic as ever in his rally he just had a little while ago. All right, Dana, thanks very much.

Let's get some more on all of this.

Republican Congressman Adam Kinzinger of Illinois is joining us. Congressman, thanks very much for joining us.


BLITZER: As you know, Congressman, several Republicans, high-profile Republicans, actually came out in support of Hillary this week, including the H.P. executive, Meg Whitman, Representative Richard Hanna from New York, a Republican, Christie adviser Maria Comella.

You have been on the fence. After the last 72 hours or so, are you now willing to say you will or won't vote for Trump?

KINZINGER: Look, I have talked to you a number of times. And I have said, my intention is to get there. I want to get there. I'm not there yet.

I don't see how I get there anymore. I actually went to the convention on Monday hoping that by Thursday, I could at least mildly endorse the Republican front-runner, party unity and all that. Woke up Wednesday morning, saw his comments about Article V NATO, decided to hold off.

And then this spat, this unbelievable spat with a family of a fallen soldier, a fallen soldier who swore to protect and defend the Constitution of the United States, wouldn't even initially say we honor the family for their service. Immediately took it as what it was to him, an affront to him.


Between that, between, of course, blaming George W. Bush for 9/11 and all the other sins we have seen in the past, Donald Trump for me is beginning to cross a lot of red lines of the unforgivable in politics.

And so I'm not going to support Hillary. But in America, we have the right to write somebody in or skip the vote and vote for Mark Kirk in Illinois, for instance. And that's what it's looking like for me today. I just don't see how I get to Donald Trump anymore.

BLITZER: So, who would you write in for president of the United States if you can't vote for either Hillary Clinton or Donald Trump?

KINZINGER: Well, yes, look, we don't have to pick both of them. We don't have to pick among the two of them.

There's a bunch of people on the ballot. There's a write-in option. I don't agree with Hillary Clinton on a lot of things, most things, probably almost all things. But Donald Trump, I don't know what he stands for in foreign policy.

You look at, for instance, even yesterday doubling down on saying how great it would be to have a fantastic relationship with Putin. And our party, me and other people in the party have said for the last six months how awful it was that Hillary Clinton did this reset with the Russians and how we were taken advantage of. And now you have Vladimir Putin basically pulling out the old KGB playbook on how to manipulate Donald Trump and it appears he's fallen right into it.

BLITZER: Would you say your constituents there in Illinois agree with you?

KINZINGER: Look, this is a tough position for me. My district voted for Donald Trump.

I have a lot of great people that support me that support Donald Trump that are probably a little upset with what I'm doing. And I say this. Look, great people support him. People each have their own reasons, their own decision to decide who they want to vote for.

For me, though, I came into politics as an extension of my service in the military and service to my country. I'm a Republican because I believe that through Republicanism is the best way to defend the United States of America.

But I'm an American before I'm a Republican. And when I see a front- runner -- or actually a nominee now that throws all these Republican principles on their head, that -- a president who has almost unchecked power in foreign policy, who talks about how great Vladimir Putin is, how he doesn't even know that the Russians are in Ukraine, makes fun of the disabled, and the whole litany of things from the Gold Star family on, for me personally -- and I'm not trying to say to other people that you can't support Donald Trump.

I'm saying, for me personally, how can I support that? Because he's crossed so many red lines that a commander in chief or candidate for commander in chief should never cross. It's a tough position for me to be in.

BLITZER: Congressman, you're beginning to sound like what we heard yesterday from President Obama, who said that Donald Trump is unfit to be president of the United States, he's woefully unprepared to be commander in chief. You're sounding very similar to the president of the United States.

KINZINGER: Look, I think, frankly, President Obama was wrong to go into a five-minute diatribe in front of a foreign leader. I'm still an old-school believer that when it comes to things like that, we don't show our differences, even though you can see it all over TV.

But ,look, I think the president has concerns with the tone of Donald Trump. I have serious concerns with the tone of Donald Trump, not as a liberal Democrat, as the president is, but as a conservative Republican that's worried that I'm seeing my party being turned upside down.

When Donald Trump is more interested in bringing in Bernie Sanders voters than he is healing divisions within his own party, that's very concerning to me for the long-term health of the Republican Party.

And, so, look, no matter what the political cost is to me, I'm an American before I'm Republican. I won't be silent. He can tweet all he wants. But I have to do this for my country and for my party.

BLITZER: Could Republicans lose a significant amount of those Senate and House seats in November because of Donald Trump?

KINZINGER: I think there could be a down-ballot effect.

But actually, interestingly, what we're seeing is, in the House and in the Senate, Rob Portman, for instance, in Ohio, Mark Kirk here in Illinois, who is doing very well, they are able to go out and even with this kind of one-off nominee that we have, Donald Trump, with his very interesting perspectives, they are able to say, hey, look, Donald may be one person, but here is what I believe. Here's who I am. You know me.

And my focus right now is to defend the House majority, to strengthen the House majority and to hold the U.S. Senate and to defend conservative Republican principles that I think are under attack. There may be a down-ballot effect. But I actually have been impressed over the last few weeks seeing that it looks like in the polling we are going to be able to hold what we have, at least for the most part.

BLITZER: Congressman Kinzinger, I'm going to ask you to stand by. We have much more to discuss. We just heard you make news. There's no way you see you could support Donald Trump.

Much more on that, other national security issues right after this.



BLITZER: The breaking news this hour, Donald Trump is insisting his campaign has never been so united, despite the chaos of recent days.

Sources are telling CNN GOP officials are pleading with top Trump advisers to get him back on track.

We're back right now with Republican Congressman Adam Kinzinger of Illinois.

He just told us he doesn't see how he can support Donald Trump based in part on his foreign policy concerns.

Last hour, we spoke with Carl Higbie, a former Navy SEAL who supports Donald Trump.

Congressman, Trump is suggesting the voting system here in the United States could be rigged. Could this be seen as some sort of signal that Trump, A, could exit the race or at least give an excuse if he loses?

KINZINGER: Well, yes, I think maybe excuse as he loses. I don't see any way he's getting out of this race. To him, it's now like kind of a thing about just achieving the greatest job in the world.

In fact, his most depressed day may be after he wins and he achieved it. Look, I think it's unprecedented, I think it's wrong for any major nominee of any major party to question our ability to do votes here.

Look, this is not a Third World country. This is not a banana republic. This is not Iran, where 99 percent to 1 vote for somebody. This is the United States of America.


Now, there are issues where there may be voter discrepancies? Absolutely. Should we go after those? Absolutely. But to say an election is going to be rigged, we cannot -- this is one thing we absolutely cannot do for any political reason is undermine people's confidence in our ability to go to the ballot box to vote to elect our next commander in chief. We have among the best systems here.

We export our way of doing things to countries that are desperate for our example. And I think it was wrong to say it.

BLITZER: You're an Iraq War veteran. Let me ask you a national security question that came up today.

The White House is insisting that the $400 million in cash the U.S. sent to Iran on the very same day four Americans were released from an Iranian prison, they're insisting this was not a ransom payment. Do you believe the U.S. paid ransom for the release of those Americans?

KINZINGER: Yes, absolutely.

Look, the Iranians called it a ransom, $400 million for four people, $100 million a head. This was in non-U.S. cash to skirt around the sanctions. You had shrink-wrapped cash in a cargo plane that showed up in essence the day that these people were released and, in fact, showed up the day before the president announced later that he's decided to release the money. It was decided prior.

I absolutely think this was a ransom. This is an embarrassment for our country. And frankly this puts more American citizens at risk, because now the Iranian who captured another person recently and still have people in custody now look at this and say, OK, the price. Maybe ISIS says this too. The price of an American soul is $100 million. Let's capture a bunch of Americans and we can finance our war operations.

BLITZER: The administration says it was coincidence that the release of these four Americans happened on the exact same day that the $400 million in cash arrived.

KINZINGER: Look, I think somebody would have looked at that. If in fact this wasn't related -- and I think it is -- somebody would have looked at that and said, hey, Mr. President, maybe we ought to delay the cargo plane filled with cash maybe a few weeks or something like that, because, otherwise, this is going to appear as ransom.

So it was ransom. I think there was a deal that was struck that said, hey, look, give us 400 million bucks, we're going to give you your four people. I'm glad these people are home, but we can't violate the principle of not paying ransom for hostages. It puts so many more people at threat.

BLITZER: Congressman Adam Kinzinger, thanks very much for joining us.

KINZINGER: You bet, Wolf. Have a good week.

BLITZER: Thank you.

And just ahead, a campaign seemingly spiraling out of control. Does the Republican Party have any leverage over Donald Trump right now?

Plus, the U.S., as we have just been reporting, pays hundreds of millions of dollars in cash to Iran as detained Americans are released. Why is the White House insisting this was not ransom?



BLITZER: Breaking news this hour, Donald Trump's chaotic presidential campaign is raising some deep concern inside the Republican Party prompting officials to urge his advisers to get him back on track, this according to our sources.

Tonight, Trump is touting unity, even as some leading Republicans are now endorsing Hillary Clinton following days of Trump turmoil.


TRUMP: Don't worry about that baby. I love babies. I love babies. I hear that baby crying, I like it. I like it. What a baby.

Actually, I was only kidding. You can get the baby out of here.


TRUMP: That's all right. Don't worry. I think she really believed me that I love having a baby crying while I'm speaking.

I'm afraid the election is going to be rigged. I have to be honest, because I think my side was rigged, if I didn't win by massive landslides.

The whole thing with voter I.D., identification, I think is real. People are going to walk in, they're going to vote 10 times maybe.

I said to him, is that like the real one or is that a copy? And he said: "That's my real Purple Heart. I have such confidence in you."

And I said, man, that's like -- that's like big stuff. I always wanted to get the Purple Heart. This was much easier.

And I have never been a big fan of John McCain. I just hate the way our veterans have been treated by John and other people. All of a sudden, I was viciously attacked on the stage of the

Democratic National Convention by Mr. Khan. And I responded to that vicious attack.

His wife, if you look at his wife, she was standing there, she had nothing to say. She probably -- maybe she wasn't allowed to have anything to say. You tell me.

I don't regret anything. I said nice things about the son.

Well, I think my whole life has been about handling pressure. I think I have a great temperament for winning.

Listen, even if people don't like me, they have to vote for me. They have no choice. Even if you don't -- and you do like me, I hope.


BLITZER: All right, let's get some more on all of this.

Joining us, our CNN political analyst, the Washington bureau chief for The Daily Beast, Jackie Kucinich, our senior political reporter, Manu Raju, and our CNN politics digital correspondent, Chris Moody. Also joining us, our senior political commentator, the former Obama senior adviser David Axelrod.

David, what's your reaction to that little montage we just showed of Donald Trump, what he's been saying all week? What does it tell you about the campaign and the candidate?

DAVID AXELROD, CNN SENIOR POLITICAL COMMENTATOR: Well, the astonishing thing is, that's just a partial sampling of what's going on for the last five days.

[18:30:03] I've been involved in -- I've covered presidential politics for 40 years now, Wolf. And amazing given how youthful I look, I know, but I've been around it a long time. I've never seen a candidate have a worse five days than this candidate.

And the incredible thing about it is that almost -- it's almost entirely self-inflicted. These are self-inflicted wounds.

I said a long time ago, presidential campaigns are like MRIs for the soul and, whoever you are, people find out. And I think the thing that Republican leaders now fear is that this isn't a problem of organization. This is a problem with the way the candidate's mind is organized, and there may be nothing they can do about it.

BLITZER: You said nothing? You don't think they can fix this?

AXELROD: Well, I think it's very, very tough. Because these are -- believe me, nobody in his campaign told him to sit down with "The Washington Post" and give this sort of free-association interview that he gave the other day for 50 minutes, a news organization that he had kicked out of his press conferences. Nobody told him to throw the baby out. Nobody -- these are things that he is doing on his own. Clearly, he's not listening to the people around him. And if he

doesn't listen, I don't know what you can do about that.

BLITZER: Manu, as you know, it's been a rough week for Donald Trump. The Republican Party chairman, Reince Priebus is supposedly -- he used the word "frustrated." He's furious about what's going -- what, if anything, though, can he do to fix this?

RAJU: Virtually nothing at this point, Wolf, I mean, other than give him advice. But as David noted, Donald Trump is one to ignore advice by his -- of his closest advisors.

You know, if Reince Priebus wanted to stop Donald Trump, he would have done that at the Republican convention. I talked to a number of Republicans in establishment circles today, and they said, look, that was his opportunity to do something. And at that point, he clearly sided with Donald Trump and tried to push the camp down of those "never Trump" agitators.

But what is incredibly frustrating to Republicans, there's a suite of issues right now that they could hit Hillary Clinton on and have some mileage on: over the e-mail controversy, over James Comey's testimony, over these payments of -- a quarter million dollars in payments to Iran, a number of issues. But Donald Trump has not chosen to do that. They hope that he will reverse course soon.

BLITZER: Yesterday in that interview with "The Washington Post," Jackie, Trump said he's not yet ready to endorse the House speaker, Paul Ryan, in his re-election bid. Today, on the other hand, the vice-presidential nominee said he strongly endorses his good friend, Paul Ryan. Seems to be a disconnect there.

KUCINICH: There's one of three things happening here. First, maybe they're just bad messaging, right? Or Mike Pence is trying to give establishment Republicans and thinking Republicans someone to vote for, someone to look at and say, "Look at him. He's on message. He's talking about what we want."

Or the third possibility is Mike Pence is trying to keep his brand intact so, if this whole presidential race doesn't work out, he has his brand to fall back on and to go forward with, instead of tying himself forever to whatever free association Donald Trump is discussing that day.

BLITZER: We've heard all these reports, Chris, about this so-called intervention that some of Donald Trump's advisors are going to be talking to him and trying to convince him to move on, not do all this freelance kind of stuff.

Newt Gingrich suggested in his own interview with "The Washington Post" today that what Trump is doing is unacceptable. So who does he have left in his corner that's really with him?

CHRIS MOODY, CNN POLITICS DIGITAL CORRESPONDENT: It's really interesting you mentioned Gingrich, because he's clearly still with him. Actually, after he did that interview, he walked it all back. Or at least said he was misinterpreted. He sent out a tweet saying, "Media has widely misinterpreted my critique of the bad week for Trump. Trump is vastly better than Hillary for president." And then there's several more tweets after that.

But Donald Trump is doing himself no favors. Look, the Republican establishment figures like Paul Ryan or Mitch McConnell put themselves out on a limb for him when they endorsed him. They obviously were reluctant to do so. And then for him to say that he's not going to help them in their primary race or even he also told the "Washington Post" that he was going to start super PACs to oppose Republicans he just dislikes. These are not going to be helpful for him when he's going to need people to stand up for him over the next few months.

BLITZER: And David Axelrod, over the past few days, Trump has also floated the idea that the whole election system is going to be rigged against him. When he says that, is he trying to soften the blow in case he loses, or is he possibly laying the groundwork for dropping out? You've seen those reports.

AXELROD: It's hard for me to imagine that he -- that he would drop out. Of course, he said this throughout the process. Whenever things don't go his way, he suggests that the process is rigged. He believes that any process that doesn't yield him as the result is rigged, and that's been a consistent theme of his. And it's one of the things that ties him to some of his supporters, who believe the overall system is rigged.

But the problem for Donald Trump is, he hasn't grown his supporters. He has -- he got 13 million votes in the primary. He's got to 65 million to win a general election. None of what he's doing is growing his support right now.

BLITZER: Everyone stand by. We're getting new information about how Hillary Clinton is trying to capitalize on this moment. Much more right after this.


[18:39:50] BLITZER: Hillary Clinton is welcoming support for some high-profile Republicans who are defecting as turmoil seems to engulf Donald Trump's campaign. Our senior Washington correspondent, Jeff Zeleny, has more.

Jeff, this is exactly what the Clinton campaign was hoping for.

JEFF ZELENY, CNN SENIOR WASHINGTON CORRESPONDENT: It is indeed, Wolf. And as Republicans are consumed by the drama surrounding Donald Trump's campaign, Hillary Clinton is trying to capitalize on it. She's been watching with interest, even reaching out directly to some of those Republicans who are furious with Trump and his string of controversies.

Now, it's far from a groundswell. The list of Republicans signing up with Clinton is growing, and those are just the ones willing to go public.


ZELENY (voice-over): Hillary Clinton is blazing through battleground states, campaigning in Colorado. But her eye is on the spectacle surrounding Donald Trump.

DONALD TRUMP (R), PRESIDENTIAL NOMINEE: I always wanted to get the Purple Heart. This was much easier.

ZELENY: She's trying to lure away furious and frustrated Republicans.

HILLARY CLINTON (D), PRESIDENTIAL NOMINEE: I will be a president for Democrats, Republicans, independents.

ZELENY: Her biggest catch so far...

MEG WHITMAN, HEWLETT-PACKARD CEO: Thank you guys very much.

ZELENY: ... Meg Whitman, a top GOP funder and Hewlett-Packard executive. Clinton asked for her support a month ago. She's now saying yes.

In a statement, Whitman says, "To vote Republican out of party loyalty alone would be to endorse a candidacy that I believe has exploited anger, grievance, xenophobia and racial division. Donald Trump's demagoguery has undermined the fabric of our national character." Whitman is urging other Republicans to reject Trump, joining several other GOP defectors, including retiring Congressman Richard Hanna and former top aides to Jeb Bush and Chris Christie.

The Clinton campaign is carefully tracking the fallout.

JOEL BENENSON, CLINTON CAMPAIGN CHIEF STRATEGIST: What we see is the party nominee unraveling on an almost daily basis, behaving more erratically.

ZELENY: As Republicans wince and worry about Trump's words, she's using them against him in this new campaign ad today, hitting Trump hard on outsourcing.

DAVID LETTERMAN, FORMER HOST, CBS'S "THE LATE SHOW WITH DAVID LETTERMAN": Has a line of clothing. Now, where were these made?

TRUMP: These were made -- I don't know where they were made, but they were made someplace.

LETTERMAN: Where are the shirts made?

TRUMP: Bangladesh.

LETTERMAN: Bangladesh.

TRUMP: That's good. We employ people in Bangladesh.

LETTERMAN: Ties? Where are the ties made? These are beautiful ties.

TRUMP: They are great ties. LETTERMAN: The ties are made in where? China. The ties are made in China.

ZELENY: In Colorado today, she held up a signature Trump tie to drive home her point.

CLINTON: I really would like him to explain why he paid Chinese workers to make Trump ties. This is one of them. It's got his name on it, of course. And instead of deciding to make those ties right here in Colorado with a company like Knotty.

ZELENY: It's part of her one-two punch against Trump on the economy.

CLINTON: If he wants to make America great again, he should start by making things in America.

ZELENY: Her new commercials are bankrolled by her muscular fundraising. She raised nearly $9 million alone in the 24 hours after delivering her convention speech. It's part of her biggest month of fundraising yet: $90 million in July.


ZELENY: Now as for those campaign contributions, her $90 million fundraising in July is only slightly more than Trump, who said today he brought in a combined $82 million in July.

But tonight, Wolf, the Clinton campaign is aggressively targeting Republicans, searching for other names to add to this roster with Meg Whitman and former Mayor Michael Bloomberg. Secretary Clinton is making some of those phone calls herself.

BLITZER: I'm sure she is. Jeff Zeleny, thanks very much.

Let's get back to our panel. David Axelrod, it looks like Hillary Clinton is making some serious hay from the Trump campaign's disarray by touting these endorsements, especially Meg Whitman most recently. Will the voters -- will the voters, though, really care?

AXELROD: Well, look, there are 96 days left, so it's always hard to judge these things in the moment. Things look very bad for Donald Trump right now. There's still a lot of time left. There will be a lot of twists and turns in the road.

But here's the danger. He is underperforming dramatically among particularly college-educated whites and college-educated white Republicans, the very people who respond to folks like Meg Whitman, who was the Republican candidate for governor in California, Michael Bloomberg and others. So what these people are doing is giving a permission structure to those Republicans who have deep concerns about Donald Trump and are looking for permission, as it were, to take the leap away from the Republican nominee. And if that sets in, he has a very serious problem.

BLITZER: Chris Moody, how does Hillary Clinton capitalize on trying to recruit this Republican support without antagonizing some of her Democratic base?

MOODY: When it comes to the policy, she doesn't have to do very much, because Donald Trump is doing quite a lot for her. A lot of these Republicans are not supporting her because they're enthusiastic about her college affordability plan. It's because they're fed up from what they've seen from their own party nominee, particularly in the aftermath of the Republican National Convention and what he said about the Khan family. They can't put their name on that candidacy anymore. And so they're either choosing not to vote at all, write-in or go with Hillary Clinton.

[18:45:00] And as Mr. Zeleny is reporting, he's making these private overtures to them, and she will continue to do so. But I don't think she has to change anything in her policy.

BLITZER: Two developments, Jackie, came out today, important stories. Much more on these coming up later. But one, the $400 million in cash, the U.S. gave to Iran on the very same day that four Americans were released. Also, the president commuting the sentences of 214 federal prisoners.

Republicans eager to portray the president as being soft on national security as far as the Iran deal, soft on domestic security as far as commuting these sentences. Are these going to be issues the Republicans can exploit?

JACKIE KUCINICH, WASHINGTON BUREAU CHIEF, THE DAILY BEAST: Certainly. I think they have a better opportunity to do that if their own nominee wasn't always in the headlines for saying something controversial, to Chris' point. He's kind of taking -- these are important stories. They are important questions to ask Hillary Clinton because -- particularly because she's tied herself so close to the president.

That said, because Donald Trump keeps on carrying on about things, challenging his own party, for goodness sake, that's going to -- she's going to get a clear pass on these unless they can figure out way to breakthrough their own nominee's words.

BLITZER: You know, you saw Jeff Zeleny's report, that new ad that the Hillary Clinton campaign is using on outsourcing. That Donald Trump made ties in suits, not in the United States.

But look at this, we asked this question in our CNN/ORC poll, who would better handle the economy? Hillary Clinton got 50 percent. Donald Trump got 48. Basically the same reaction. And if it's the economy, stupid, as some of us remember, was the slogan back in 1992, this could be close.

MANU RAJU, CNN SENIOR POLITICAL REPORTER: It could be. And actually, other polls have Trump in the lead on the economy, on both the economy and national security issues. So, it's no surprise why Hillary Clinton is making this more populist appeal, that's design that those key Rust Belt states that the campaigns are targeting aggressively, particularly Ohio, white working class voters, people who have been hurt by the issue of trade and as we know Donald Trump is hardcore anti-trade deals or what he considers bad trade deals and Hillary Clinton has supported NAFTA and other trade deals.

So, this is something that she can use as potentially to combat that.

BLITZER: David Axelrod, what's the winning issue for Hillary Clinton right now?

AXELROD: I'm sorry, Wolf. What's the what?

BLITZER: The winning issue. What's the most important issue she's got to focus in on to win the election?

AXELROD: I don't -- I think the things that she's doing on the economy that Manu mentioned have more to do with stemming the run that Trump has had with white working class Democrats but the issue t will win this election for her is temperament. I honestly think that what's happening now is that people are making a judgment about Donald Trump's temperament and deciding that they are not sure they want a guy as unpredictable, as reactive as he is sitting in the Oval Office with all that power and all those consequences.

At the end of the day, to me, that is where the Clinton campaign is going to drive this election.

BLITZER: So, it's not necessarily the love of Hillary Clinton. It's more the fear of Donald Trump, is that what you're saying?

AXELROD: Well, look, I think you've got two candidates with very high negatives here. Hillary Clinton made some headway in her convention and impacting on that, but at the end of the day, these are comparative races, and particularly when you have candidates with high negatives. So, I do think this contrast is the one that will bear the most fruit for Hillary Clinton.

BLITZER: All right, guys. Thanks very, very much.

This is an important programming note to our viewers. Stay with us for CNN's libertarian town hall. Anderson Cooper will moderate questions to presidential candidate Gary Johnson and his vice presidential running mate William Weld. That all starts 9:00 p.m. Eastern, right here on CNN.

And just ahead, North Korea fires missiles capable of carrying a nuclear weapon. What is Kim Jong-un up to?

Plus, why the U.S. sent $400 million in cash to Iran.


[18:53:30] BLITZER: New defiance tonight by North Korea. The country has launched two nuclear-capable ballistic missile, a move Japan condemns as a reckless, serious threat.

Our Pentagon correspondent Barbara Starr has details.

Barbara, more missile launches from North Korea. What's the assessment? BARBARA STARR, CNN PENTAGON CORRESPONDENT: More missile launches,

Wolf, but this time it is different. They launched two intermediate ballistic missiles off their west coast. One crashed shortly after launch, nothing unusual for the North Koreans.

But the second missile actually flew about 600 miles west -- east, I'm sorry, into the Sea of Japan and it landed just 150 miles off the coast of a Japanese island. Why is this so important? Of course, because if the missile had flown on for just a few more minutes, it might have indeed landed on Japanese territory. As it is, it landed in a portion of the Sea of Japan where the Japanese claim fishing, oil and gas rights.

The Japanese very upset about this. There's been a two-hour meeting tonight of the U.N. Security Council. No understanding, no agreement after that meeting. The problem always is what do you do about this? North Korea, already under heavy sanctions.

But Kim Jong-un determined to go his own way, continue his ballistic missile testing. This time, a lot of concern that one of his missiles actually flew so far and came so close to Japan's coastline -- Wolf.

[18:55:00] BLITZER: Very disturbing. Not only Japan and South Korea, but to the U.S., as well.

All right, Barbara. Thank you.

We are also getting new details tonight. They are emerging of a massive payment by the United States to Iran, $400 million in cash delivered by an unmarked cargo plane at the very same time and the exact same day that Iran was releasing four Americans it had detained for a long time.

Our global affairs correspondent Elise Labott is working this important story for us.

Elise, the White House says the cash payment is not a ransom. What are you hearing?

ELISE LABOTT, CNN GLOBAL AFFAIRS CORRESPONDENT: Well, Wolf, they say -- that's right, they say it's not a ransom. It was to resolve a decades-old dispute with Iran, a financial dispute.

But the curious timing does raise questions about a ransom to free the free Americans, and it also raises questions about America's judgment when it comes to Iran and Congress says they want answers.


LABOTT (voice-over): Four Americans, including "Washington Post" reporter Jason Rezaian were freed from an Iranian prison on January 17th. But just as the Americans boarded a Swiss aircraft bound for Germany, another unmarked cargo plane was landing in Iran loaded with pallets of $400 million in cash -- shrink wrapped euros, Swiss francs and other currencies.


LABOTT: While the freed Americans were in the air. President Obama announced a historic nuclear agreement with Iran.

The White House insists the money entering Iran within a few hours of the American prisoners leaving was all a coincidence and there was no quid pro quo.

JOSH EARNEST, WHITE HOUSE PRESS SECRETARY: No. It is not a ransom payment. The United States does not view it that way and it's not accurate to describe it that way.

LABOTT: But that's not how Iranian leaders described it at the time and Republicans armed with these new details of the money transfer as first described in "The Wall Street Journal" are outraged.

REP. ED ROYCE (R), FOREIGN AFFAIRS CHAIRMAN: One of the reasons you don't want to transfer $400 million in unmarked bills in cash to Iran is because it's going to end up in the hands of Hezbollah or it's going to end up in the hands of the other Iranian agents.

LABOTT: While U.S. and Iranian diplomats were secretly negotiating a prisoner exchange, separate teams from both countries were resolving a decades-old Iranian claim before an international tribunal at The Hague. The $400 million, the first payment ending a dispute over a failed arms deal dating back to the shah of Iran.

President Obama announced a settlement in January, the day after the prisoners were freed and the nuclear deal was signed.

OBAMA: Iran will be returned its own funds including appropriate interest, but much less than the amount Iran sought. With the nuclear deal done, prisoners released, the time was right to resolve this dispute, as well.

LABOTT: What the president left out was the first payment was flown into Iran a day earlier, $400 million in currencies, skirting U.S. sanctions that banned transactions with Iran in U.S. dollars.

After the cash-filled plane landed in Iran and Americans were freed, Iranian military commanders boasted the money was a ransom, but the State Department insists the prisoners would have been freed the same day even without the payment.

MARK TONER, DEPUTY STATE DEPARTMENT SPOKESMAN: We believe so because that was worked through a different process and it was concluded successfully.


LABOTT: Now, not only is Congress debating legislation calling for no more payments to Iran, no more cash payments and they're also talking about requiring the White House to make public the details of this settlement.

Now, just last week Iran detained another Iranian American Reza Shahini and two other Americans, Siamak Namazi and his father Baquer, are still in an Iranian prison. The Namazi family is concerned that now Iran will try to extract another cash payment before the Obama administration leaves office, Wolf.

BLITZER: What are your sources telling you, Elise? Did the Obama administration realize how bad the optics would look?

LABOTT: I think they realize how bad the optics would look and some people would have a problem with that. But at the same time, Wolf, officials needed to get creative in dealing with Iran and you had a lot of things dovetailing at once, that nuclear agreement, the discussion on the prisoners and also the settlement, and all of the things seemed to be coming to resolution. So, officials figured this would all resolved any they wanted to get it all done in one fell swoop while they had this goodwill created in the negotiations with Iran, Wolf.

BLITZER: And the State Department deputy spokesman told me earlier today, no restrictions from the U.S. standpoint on how the Iranians spend that money. They can do with it whatever they want -- build schools, highways or if they want to, they can give it to terrorist organizations. No restriction, indeed.

Elise, thank you very, very much.

Stay with us for tonight's libertarian's town hall. Anderson Cooper will moderate questions to presidential candidates Gary Johnson and his running mate William Weld. That's at 9:00 p.m. Eastern, only here on CNN.

Thanks for very watching. I'm Wolf Blitzer.

"Erin Burnett OUTFRONT" starts right now.