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Source: Pence "Troubled" by Flynn's Russia Talks; White House: "Nothing Off Table" On New Immigration Order; Trump Says U.S. Will Honor "One China" Despite Doubts; E.U. Official: U.S. "Committed" To Iran Nuke Deal; Conway Apologizes To Trump Over Ivanka Plug; Town Halls Gone Wild: GOP Faces Anger Obamacare. Aired 11-11:30a ET

Aired February 10, 2017 - 11:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

POPPY HARLOW, CNN ANCHOR: OK, Steph.

UNIDENTIFIED FEMALE: I'll try. That will be hard.

HARLOW: Thank you. Have fun. Thank you all for being with us all week. It's been good.

JOHN BERMAN, CNN ANCHOR: It's been awesome. Come back next week.

HARLOW: Bye, guys.

KATE BOLDUAN, CNN ANCHOR: Hello, everyone. I'm Kate Bolduan. President Trump furious after the court rejects his travel ban. Now, new details about his next step.

Plus Flynn under fire, new reports that Trump's national security adviser had talks with Russia about lifting sanctions before taking office. Now the vice president is responding.

Also this --

(VIDEO CLIP)

BOLDUAN: Town halls gone wild as Republicans face angry constituents over repealing Obamacare. We'll see what happened.

And "I am sorry," what Kellyanne Conway said to President Trump about turning the White House into the home shopping network.

But first, this -- troubling new details right now about private conversations between President Trump's national security adviser, Michael Flynn, and a top Russian diplomat.

"The Washington Post" first reported that Flynn discussed U.S. sanctions against Russia with the country's ambassador before Donald Trump took office. Michael Flynn denied that, and Vice President Mike Pence backed him up. Listen to this.

(BEGIN VIDEO CLIP)

MIKE PENCE, VICE PRESIDENT OF THE UNITED STATES: They did not discuss anything having to do with the United States' decision to expel diplomats or impose a censure against Russia.

UNIDENTIFIED MALE: So did they ever have a conversation about sanctions on those days or any other day?

PENCE: They did not have a discussion contemporaneous with U.S. action.

(END VIDEO CLIP)

BOLDUAN: Just this morning a senior White House adviser tells CNN the vice president only knew what Flynn had told him and that Pence wants to get to the bottom of it, that's their words.

Senior diplomatic correspondent, Michelle Kosinski, is following all this from the White House. Michelle, what is the administration saying about this now?

MICHELLE KOSINSKI, CNN SENIOR DIPLOMATIC CORRESPONDENT: Well, I think everybody wants to get to the bottom of this right now. After these strong denials not only from the vice president, but from Flynn himself, repeatedly saying that he did not discuss sanctions with the Russian ambassador.

Now he's saying through the NSC, through the president's National Security Council, that he doesn't have recollection of discussing that with the ambassador. He can't, however, be certain that it didn't come up.

And as you mentioned, from the vice president, now the White House is saying, well, he only knew what Flynn had said, that's why his denial came out. The White House is trying to get to the bottom of this.

But to hear the backing away now from the denials, that he doesn't recall talking about it, but he can't be certain he did it, and it comes in the light of all this reporting out there.

I mean, quoting U.S. officials who had seen what was discussed in those calls because it's under investigation by the intelligence community and the overarching investigation of Russian meddling into the U.S. election. So this is looking like a mess right now and we're going to have to hear more from the White House later.

BOLDUAN: Yes, mixed messages on multiple levels on this. Michelle, thank you so much.

So joining me now to discuss this is CNN global affairs analyst, Tony Blinken, a former deputy secretary of state and former deputy national security adviser under President Obama. Also with me, CNN legal analyst, Paul Callan.

Tony, first to you, Michelle laid it out perfectly. You hear all of this, you think what?

TONY BLINKEN, CNN GLOBAL AFFAIRS ANALYST: Kate, it's very troubling. We don't know what was said or wasn't said and hopefully that will come out. But you know, we have a tradition of one president at a time in this country.

And if in fact, Mr. Flynn was saying one thing to the Russian ambassador while the Obama administration was doing something else, that undercut our policy and it undercut that tradition. That's dangerous.

Also, there is the possibility based on the report that Mr. Flynn put the vice president in a very difficult position, having him vouch for something that possibly isn't true. So I think the administration on these issues needs to be straight with the American people.

But it also needs to be straight with itself, because if you've got different people saying different things, not knowing who they can trust within their own team, that heads to a very difficult place too.

BOLDUAN: I want to ask a couple of things here, but I want to ask you about the VP caught up in this now. He defended Flynn last month. Now we're hearing that Pence was basically taking Flynn's word for it when he was out in the Sunday shows, is this now a problem for the vice president?

BLINKEN: I think it's a problem for the administration if, again, the vice president was put in a place where he was vouching for something that turned out not to be true. So I think they need to clean that up internally and they also need to lean it clean it up with the American people, tell us what happened.

It does raise deeper questions too. If the reports are accurate, that is, if Mr. Flynn in fact had these conversations, talked about sanctions, somehow conveyed to the Russians that they should ignore the steps that the Obama administration took to take action against Russia for interfering in our election.

[11:05:14]And also for harassing our diplomats, you have to ask why, why would he do that, and what were they trying to get out of it? It's interesting, Kate, because as you remember, after the Obama administration went ahead with those sanctions, normally you would expect Russia to retaliate in kind.

That's been past practice and of course, President Putin said no, I'm not going to do that. And you have to wonder whether in fact he was told, hold off. Don't do anything, because when we, the Trump administration, get in, we're going to revisit this whole thing.

BOLDUAN: There's that, and there's also now just the law, Paul. I want to get your take on this, the Logan Act. A lot of people won't know what it is because it's never been prosecuted, no one's been prosecuted under this. Do you think that Michael Flynn could be the first?

PAUL CALLAN, CNN LEGAL ANALYST: No. And I don't think he will be prosecuted, regardless of what happens. The Logan Act was enacted in 1798 and there's been one prosecution under the Logan Act, which happened in 1803, and they dropped the charges in that case.

Logan, the guy who led to the creation of the act, John Adams was mad because Logan was doing a secret negotiation with the French. Logan went on to become a U.S. senator. So I think the Logan Act has free speech problems. You have a right to talk to people in other countries.

BOLDUAN: Speaking of speech, as an attorney, I want to get your take on the evolving answers that we've heard now from Michael Flynn and those around him. First, when we asked if there were conversations, he said no, sanctions did not come up in these conversations.

Now his spokesperson is saying the following to us, "He has no recollection of discussing sanctions, but he couldn't be certain that the topic never came up." Does that tell you something?

CALLAN: Well, as a lawyer, I hear, I don't have a recollection a lot, when somebody is trying to hide something. So it sounds like his testimony is inconsistent. Frankly, if I were advising him, I'd advise him not to make any further statements.

The Logan Act is still on the books and the Logan Act says if you're not authorized to negotiate for the United States, you can't engage in negotiations.

So if he was saying to the Russians, when we get into office, no sanctions, don't worry about it, he would have been negotiating on behalf of the United States. His best course would be not to say anything.

BOLDUAN: Guys, stand by for just one second. I want to get to this real quick. Now to President Trump's big setback, a federal appeals court unanimously rejecting his request to have the administration's travel ban reinstated, and probably no surprise, the president did not mince words about it.

In a tweet today, calling the ruling "a disgraceful decision." And last night he said this, "See you in court." Let's get over to the White House right now, Jim Acosta is there. So Jim, the message pretty clear from the president that he's not so happy. What's the plan now?

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: I think that's a question at this point, Kate. I think there's a lot of options on the table. As a matter of fact we're being told in the last several minutes by the White House that they are not taking off the table the option of revising that executive order, which would be a pretty big development over here at the White House.

Keep in mind last night the president was tweeting that he's going to take this case to court, I will see you in court is essentially what he said.

Then when I talked to Kellyanne Conway, the counselor to the president, here just outside the west wing in reaction to this decision at the Ninth Circuit, she said they were looking forward to having the merits of this case, as she subscribed them, adjudicated at some higher level, whether it's at the full Ninth Circuit or at the Supreme Court. So that was the bullish posture that this White House was taking last night. So now this morning, what you're hearing from the administration is that they may go back and revise this executive order, that that is a possibility that no options are being essentially taken off the table at this point.

I think that would be essentially a new, I guess, direction for this White House, that they may not take this to court after all, if they revise the executive order, then there's no point in taking the old executive order to court -- Kate.

BOLDUAN: Jim, real quick, that, as you said, would be a big deal, it seems a completely different route than you would ever consider this president doing. He is not one to back down. He is not one to acknowledge they made a mistake, which would be in essence maybe what they would have to do to rewrite this thing.

ACOSTA: Right. And Kate, you and I watched this campaign closely, I was out on the campaign trail. Donald Trump just did not admit mistakes during that campaign. He did not acknowledge errors that were made by him or his campaign team. He's just not like that.

As president, we have not heard that as of yet up to this point. So going back and revising that executive order and the president putting pen to paper and signing a revised executive order that cleans up what was originally put out by this White House would be the closest I've seen to an admission of error from Donald Trump since the beginning of his campaign, I think.

[11:10:08]He is just not that type of person, not cut that way, to go and admit mistakes. And so to revise that executive order, especially on the first big business for this administration, I think that would be significant -- Kate.

BOLDUAN: And so much political capital put into this right now. Jim, great to see you. Thank you so much. A very interesting, potentially a big development, we're watching closely from the White House.

So let's take a closer look now at what happened and what's going to happen next with this travel ban and the challenges. I bring in right now, John Dean, a former White House counsel to President Nixon. John, it's great to have you back. Thanks for coming back in.

JOHN DEAN, FORMER NIXON WHITE HOUSE COUNSEL: Thank you, Kate.

BOLDUAN: So last time we spoke, that was one of the things you suggested actually that the White House should go back and rewrite this executive order so it fits more easily in the bounds of law. I think a lot of folks would find it surprising if that's the route the White House takes, simply, as Jim Acosta was saying, this is not a this president, a man that backs down and admits mistakes.

DEAN: That's generally true, but I notice he did blink recently on his "one china" policy. He apparently decided that the standoff with the president of China wasn't working out when he wasn't getting responses and what have you. So he conceded in a telephone call to the president of China that indeed he would adopt the "on china" policy and forget Taiwan. So he's already showing signs of moderating this never-back-down posture he's taken.

BOLDUAN: Is it about expediency do you think in the end? If they go back and rewrite this, they can get a ban in place in some way faster than if they take this back to the courts do you think?

DEAN: Absolutely can. The ruling in the Ninth Circuit was pretty strong, pretty devastating. They've ruled on all the key issues. They didn't reach definitive decisions because it has to go back to trial level and start all over.

So it will be very protracted, if they keep insisting on this order. So as I said when we chatted last time, I think the only way, smart way is to rewrite this thing, and then they can get on with the policy.

BOLDUAN: So right after this decision came down, the president called it political. Listen to this. He spoke to reporters.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: It's a political decision and we'll see them in court. I look forward to doing it.

UNIDENTIFIED FEMALE: So you believe the judges --

TRUMP: We have a situation where the security of our country is at stake and it's a serious situation. We look forward, as I just said, to seeing them in court.

(END VIDEO CLIP)

BOLDUAN: Politics. Where do you see politics here at play in this decision?

DEAN: There are no politics at play in this decision. This really was a very straight technical ruling on process and I'm not sure that he understands that as president, it's not the same as being a private litigant. He's somebody who has litigated all of his life, has had close to 3500 cases. So he knows the game. He knows you win and you lose. He didn't have a strong case.

So why he's trying to attack another branch is baffling. He's got a sister who is a distinguished federal appellate judge, he helped her get the judgeship, so he knows better than to do what he's doing.

BOLDUAN: We'll see exactly what comes out of the White House today. Could be fascinating in developments in this travel ban and where it goes from here and what it looks like from here on out. John Dean, thank you so much.

DEAN: Thank you, Kate. BOLDUAN: Coming up for us, I'm sorry, Mr. President. Kellyanne Conway apologizing to President Trump for plugging his daughter's brand. What exactly is she apologizing for? And is she still facing trouble?

Plus President Trump's first standoff with China. Who just blinked? That's ahead.

And a flash back to 2009, lawmakers facing angry voters at town halls across the country over Obamacare, with a 2017 twist.

(COMMERCIAL BREAK)

[11:17:50]

BOLDUAN: President Trump is not known to back down, but he just did, it appears. In a phone call with the Chinese leader, Trump committed to honoring the "one China" policy which recognizes Taiwan as part of the mainland.

Why is this news? Well, President Trump has previously suggested that the U.S. position on Taiwan could be up for negotiation. CNN's David McKenzie is live in Beijing for us right now with more on this.

So David, what are you hearing is behind this about-face and what's the reaction?

DAVID MCKENZIE, CNN CORRESPONDENT: Kate, certainly it's an about-face that will create a sense of relief here in China. And I think the reason that President Trump did this is because any kind of relationship between the U.S. and China has to be underpinned by the "one China" policy.

If he had tried to negotiate on this, as one expert told me, that could have led to a war between the U.S. and China. This really is the line in the sand for the Chinese leadership.

So now that this has been established, a long running precedence since 1979, in fact, they can get to those tough discussions on issues like trade, climate change, foreign policy, and security issues.

So President Trump might still be tough with China going forward, but he had to kind of backtrack on this one issue, because otherwise he wouldn't have got anywhere with the Chinese leadership -- Kate.

BOLDUAN: Sure. It appears to have happened this time, that's for sure. David, thank you so much.

Back with me now for more on this is Obama's former deputy national security adviser, Tony Blinken. So Tony, was this a standoff and President Trump blinked? What's your take?

BLINKEN: Well, you know, Kate, he got to the right place. The president now did the right thing, but he got there the wrong way. And a lot of damage was done in the meantime. Picking a fight --

BOLDUAN: You think so? Do you think damage is still done regardless of where they ended up?

BLINKEN: I think so. The president picked a fight on the most important issue to China, Taiwan and the "One China" policy. That policy has served us well, served China well, served Taiwan well over the years. It was inevitable that he would have to back down given the importance of this issue to China.

In so doing, it makes us look weak. Our allies are reassured we're not going to war, but they have to wonder if we're not a paper tiger. It reinforces the point that especially when it comes foreign policy, don't shoot from the lip or from the tip of your finger.

[11:20:11]And especially don't bluff. Big nations don't do that. We can't afford to do it.

BOLDUAN: Tony, we're getting breaking news, the E.U. just came out to say that -- the E.U. is saying this, that the U.S. is committed to fully implementing the Iran nuclear deal. This is after days of meetings between officials from the Obama administration and the E.U. And of course, this comes after just last week, the administration saying that they're putting Iran on notice. How does this all play into that?

BLINKEN: Look, it's very encouraging if it's true. That deal has been very good for us. It's been good for our partners around the world. It's put far into the future the prospect of Iran getting material to make a nuclear weapon and it prohibits Iran from ever getting a nuclear weapon.

So that's manifestly been good for our security and it's encouraging if in fact the administration is now standing behind that deal. So let's see what they actually do going forward.

I think had they not done that, or if they don't do it going forward, the result is actually going to be a fight with our closest partners and allies, who believe in the deal --

BOLDUAN: But Tony, how does this play out because you know, so many Republicans throughout the negotiations for the Iran deal called it a terrible deal. Donald Trump called it a terrible deal. Republicans still think it is a terrible deal. They don't like anything about it. What do you think this means now?

BLINKEN: Well, my hope is two things. One, they've actually looked at the deal and recognized that it's very good for the United States, very good for our partners in the region in terms of our security, and two, they understand that if the administration somehow backs away from the deal or tries to crater it, that's going to create a crisis with our partners, with the Europeans, but also with the Russians and the Chinese --

BOLDUAN: Do you think it's harder to disentangle from a deal that was struck by so many nations?

BLINKEN: That's exactly right, Kate. Because keep in mind, this is not just a deal between the United States and Iran. It's a -- BOLDUAN: Right.

BLINKEN: -- deal among a handful of countries including our closest European partners as well as Russia and China. So if we're the ones who were perceived to have cratered the deal or walked away from it, that's going to put us in a very bad place. It will isolate the United States, not Iran, and again, the substance of this is so important. It's a good deal.

BOLDUAN: Of course, Republicans do disagree with you on that, Tony. But in an important note, this is coming from officials with the E.U., interesting to hear what we hear from the White House and the administration, their reaction to this news coming out but important nonetheless. Tony Blinken, great to see you. Thank you.

BLINKEN: Thanks, Kate.

BOLDUAN: So Kellyanne Conway apologizing to President Trump for plugging Ivanka Trump's brand from the White House. But why is it what his press secretary said has the president reportedly more upset?

Plus safe to say Republican Congressman Jason Chaffetz had not planned on a night like this one, the town hall back home erupting.

(BEGIN VIDEO CLIP)

UNIDENTIFIED CHILD: Do you believe in science? Because I do.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

[11:27:24]

BOLDUAN: CNN is learning top aide to President Trump Kellyanne Conway has apologized to her boss after she plugged Ivanka Trump's clothing line from the White House briefing room on national TV, saying that she's offering a free commercial.

Lawmakers on both sides of the aisle now say that crosses serious ethical lines. But what happens now? Sunlen Serfaty joins us from Washington with more on this. So Sunlen, first off, do we know exactly what Kellyanne Conway is apologizing for?

SUNLEN SERFATY, CNN CORRESPONDENT: Well, it seems here, Kate, that there's little nuance to this. It seems like she's apologizing for the backlash that her comment created, the fact that she was standing in the White House briefing room in her capacity as a White House senior adviser plugging Ivanka Trump's products and saying people should buy them.

And as you mentioned, this really has set off a firestorm of criticism up here on Capitol Hill. Members on both sides calling for an ethics investigation, including notably Jason Chaffetz, who is chairman of the House Oversight Committee. He and the ranking member on that committee wrote a letter to the Office of Government Ethics basically saying this is unacceptable. That they believe it violates the ethics principles for federal employees, and they want to know what the office's recommendation is for any disciplinary action.

Now, Kellyanne Conway says the White House is internally looking into that letter that they sent, but certainly White House aides underscoring this morning to me that Kellyanne Conway did indeed apologize for all the backlash and they say that the president backs her completely.

BOLDUAN: She has the backing of the president still. Sunlen, thank you very much for that. So from that to this -- voters are mad and they're letting their members of Congress know, as Republicans plan out how they are going to get rid of and replace Obamacare.

People are packing town halls across the country, including two last night, one in Utah, where Republican Congressman Jason Chaffetz faced off with the crowd, and another in Tennessee hosted by Congresswoman Diane Black. Take a look at this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Hold on, I'm trying to answer the question.

UNIDENTIFIED FEMALE: We're effectively punishing our sickest people.

UNIDENTIFIED MALE: Easy, easy, please.

UNIDENTIFIED MALE: I have to have coverage in order to make sure that I don't die. You want to take away this coverage and have nothing to replace it with.

UNIDENTIFIED CHILD: Do you believe in science? Because I do.

UNIDENTIFIED MALE: So President Trump nominated -- by far Donald Trump was the better choice, by far.

(END VIDEO CLIP)