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Lawsuit: FOX Concocted Conspiracy Story on Seth Rich with White House Coordination; GOP Senator Jeff Flake Scolds Fellow Republicans; North Korea Is Trump's Foreign Policy Challenge; DEA Chief Rebukes Trump Comments about Using Force; WaPo: Trump Dictated Son's Misleading Statement of Russia Meeting. Aired 1:30-2p ET

Aired August 01, 2017 - 13:30   ET

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

[13:30:00] ALEX MARQUARDT, SENIOR NATIONAL CORRESPONDENT: He alleged that the motivation behind the article was "to establish that Seth Rich provided WikiLeaks with the DNC e-mails to shift the blame from Russia and help put to bed speculation that President Trump had colluded with Russia in an attempt to influence the outcome of the presidential election." Wheeler says he was asked by a prominent Republican donor named Ed Butowsky to investigate that murder, and quotes attributed to him were completely made up -- Wolf?

WOLF BLITZER, CNN HOST: So, Alex, what's the White House connection to all of this?

MARQUARDT: A couple things. Wheeler says he, along with the donor, Butowsky, met with former press secretary, Sean Spicer, and that Spicer -- that meeting happened back in May -- Spicer asked them to be kept abreast of developments. Then, according to the lawsuit, also a text message from Butowsky to Wheeler that says, "Not to any more pressure but the president just read the article and wants it out immediately. It's now all up to you, but don't feel the pressure."

BLITZER: What's the response? What responses have you heard to all of these really major allegations?

MARQUARDT: Well, so far, silence from the White House. But Butowsky had told CNN that the text message was just a joke, meaning to tell Wheeler he was doing a great job and that the president or someone within the White House would be interested in meeting with him. FOX, which eventually retracted the article back in May, says the piece is still being investigated. They sent along this statement: "The accusation that FOXnews.com published Malia Zimmerman's story to help detract from coverage of the Russia collusion is completely erroneous. The retraction of this story is still being investigated internally and we have no evidence that Rod Wheeler was misquoted by Zimmerman."

As for the family of Seth Rich, still in mourning, they had begged FOX to stop pushing this report. They tell CNN today, "While we can't speak to the evidence that you now have, we are hopeful that this brings an end to what has been the most emotionally difficult time in our lives and an end to the conspiracy theories surrounding our beloved Seth" -- Wolf?

BLITZER: Alex Marquardt. Alex, thanks very much for that report. Still ahead, one Republican Senator has had enough. He's speaking out

against the president right now. Scolding his own party at the same time. A scathing assessment of the GOP, right after the break.

(COMMERCIAL BREAK)

[13:36:37] BLITZER: The GOP is getting a blunt message from a fellow Republican, Senator Jeff Flake, an outspoken critic of the president and many of his policies. The Senator is hitting the airwaves to talk about his brand-new book, entitled "Conscious of a Conservative: A Rejection of Obstructive Politics and a Return to Principle." "Politico" just published an excerpt from the book today. Senator Flake saying, I'm quoting, "Too often we observe the unfolding drama along with the rest of the country passively all but saying someone should do something without seeming to realize that someone is us, and so that unnerving silence in the face of an erratic executive branch is about abdication and those in positions in leadership bear particular responsibility."

Here's what he had to say this morning.

(BEGIN VIDEO CLIP)

SEN. JEFF FLAKE, (R), ARIZONA: I'm concerned the types of policies going forward, protectionism, isolationism, are really not conservative values. And I'm concerned about where the party goes if we embrace those kinds of principles. But also being a conservative means something in terms of demeanor and comportment.

(END VIDEO CLIP)

BLITZER: Senator Flake, by the way, will join Jake Tapper on "The Lead" at 4:00 p.m. Eastern.

For now, let's discuss this with my next two guests, CNN senior political commentator, Rick Santorum, a former Republican Senator from Pennsylvania, a former presidential candidate. Also with us, CNN political commentator, Alice Stewart, also a former communications director for Senator Ted Cruz.

What do you think, Senator? He's really suggesting that your party, the Republican Party, and the president, a Republican president, are in denial?

RICK SANTORUM, CNN SENIOR POLITICAL COMMENTATOR: Well, I would say he makes two criticisms. Number one, on the style of this president. And the fact that Republicans should speak out against that. I think a lot of Republicans have spoken out. Certainly, I have here at CNN and many others, about the demeanor of this president. The way he conducts himself at times. The use of Twitter. Which is fine, but at times, intemperate. And I think a lot of Republican leaders chastised president for doing that. Could there be more? Probably. I mean, some of these things that the president is doing are rather vexing and should be called out.

The other aspect he talks about is policy. Talking about nationalism, economic populism. Well I'm an economic populist. And I think I'm conservative. And I think we've gone too much to more of a libertarian approach, where just cut taxes, everybody will be fine. I don't adopt that. And I don't think that's -- that's a good battle among conservatives. I think what President Trump has done is given voice to a lot of conservatives, like myself and others, who feel like, you know, were she to look out for the little guy, and that Republican policies on the economy can't just be about improving shareholder value and growing the economy but it also has to make sure that everybody grows with the economy. So that's a good debate. I think Trump has been right on, on that, so I don't necessarily see that as a problem.

BLITZER: And he does lay out a bunch of proposals in his new book. Talking about Senator Flake. He says, speak out. This is advice to fellow Republicans. "Speak out. If Trump plays to the base, ignore populist protectionist policies on issue as like free trade. Stand up for institutions like the Senate filibuster," which requires 60 votes on various issues.

The president has tweeted as recently at yesterday, "End that. 51 should be for everything."

ALICE STEWART, CNN POLITICAL COMMENTATOR: Well, I think he makes some very good points.

BLITZER: Who's he?

STEWART: Senator Flake.

[13:40:09] BLITZER: Yes.

STEWART: With regards to ginning up in-fighting within the Republican Party in order to sell his book. And, yes, there is a conservative and a more moderate wing of the Republican Party. And we're seeing disagreements with regard to how to repeal and replace Obamacare based on that. But I think he also needs to not just speak about this, but his actions haven't really followed up on this. He had the opportunity to speak up on some of the president's nominees, that he disagrees with policies on, however he approved the confirmation of these nominees.

One thing he did say I thought was really important in his op-ed that he wrote today was in regard to principles. He said when our principles are malleable, they're no longer principles and what's the point of victory. I think it's important to put this aside the partisan bickering within the GOP and remember why we elected Donald Trump as president and work together for change.

BLITZER: One line from the article from the book that jumped out at me, "Who could blame the people who felt abandoned and ignored by the major parties for reaching in despair for a candidate who offered over simplified answers to infinitely complex questions and managed to entertain them in the process."

SANTORUM: Well, I mean, if there's some truth to that? I think, yes. Clearly, Donald Trump was a different kettle of fish and a very frustrated electorate. And I think Jeff hammered in on that. The job, the job supposed to happen in Washington, is take these simple platitudes in many respects on health care, for example, as Alice mentioned, and turn it into actual action. That's short in supply. You can complain that the president is -- is not leading with details, but I can also complain that the Congress hasn't been able to come up with something that fulfills the promise that they made in their election.

BLITZER: Quickly, Alice. Senator Flake, is he an isolated, lone type of guy among the Republicans in Congress? Or do you think there are a lot more like him but not necessarily the inclination or guts to speak out like he is?

STEWART: I think there are a lot of people that share some of his ideas. At the same time, we all recognize, we're Republicans and have to work together. Donald Trump clearly tapped into an electorate that no one else was able to tap into and realized it's about jobs, about creating the economy and national security. And at the end of the day, we're all on the same team and we can sit there and have disagreements, you know, off-camera. At the end of the day, we have to work together to get the Republican policies worked on and passed.

BLITZER: Good luck.

All right, guys, thanks very, very much, Alice Stewart, Rick Santorum, joining us.

As President Trump deals with domestic discontent, he's also faced with a frightening foreign policy problem. Talking about North Korea. Raising the stakes with a missile launch and very worrisome submarine activity. What is the U.S. going to do about that? That question and more questions may be what Sarah Huckabee Sanders may face today at a press briefing that's supposed to begin right at the top of the hour. CNN will have live coverage.

(COMMERCIAL BREAK)

[13:47:01] BLITZER: We're moments away from the White House press briefing. Live coverage of that as soon as it begins.

In the meantime, there are now new concerns involving North Korea. Even as President Trump says the United States will, quote, "handle North Korea."

The U.S. military has noticed what they're calling a highly unusual and unprecedented amount of North Korean submarine activity.

Let's bring in retired rear admiral, John Kirby, our CNN military and diplomatic analyst, and former spokesman for both the Pentagon and the State Department. Also with us, our Pentagon correspondent, Barbara Starr.

Barbara, what's the concern, first of all, over North Korea's submarine activity?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, this is pretty unusual, Wolf. They have a limited submarine capability, but in the last several weeks, they've put them out to sea. They stayed a sea a bit longer than the U.S. has seen them do that in the part. And they appear to be trying to test on land the ability to launch a missile out of a submarine. What does that give them? Well, at the end of the day, if they can do it, and a submarine say out submerged, hidden from the U.S., that would give the North Koreans the ability to survive a U.S. first strike against them. That gives them a huge leap forward in their military capabilities. Something the U.S. Does not want to see happen -- Wolf?

BLITZER: Yes. Another problem right there.

Admiral Kirby, listen to Senator Lindsey Graham, a member of the Senate Armed Services Committee, what he said today about the possibility of a war with North Korea.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM, (R), SOUTH CAROLINA: There is a military option to destroy North Korea's program and North Korea itself. He's not going to allow, President Trump, the ability of this madman to have a missile to hit America. If there's going to be a war to stop him, it will be over there. If thousands die, they're going to die over there and they're not going to die here. And he's told me that to my face.

(END VIDEO CLIP)

BLITZER: What's your reaction to that? Because if there's military action, North Korea has the capability of almost leveling Seoul, a city just south of the Demilitarized Zone, with, what, 15 million people?

REAR ADM. JOHN KIRBY, CNN MILTIARY & DIPLOMATIC ANALYST: I think the Senator is reflecting the extreme sort of worst-case scenario here. Clearly, we have a range of military options. They're not all about all-out war, although the military has to be ready for that. There's a range of other ones. And a couple things to remember about that. One, short of war and used to try to impel different behavior out of the North. Number two, really used, and this is where Secretary Mattis is 100 percent right, to support the diplomatic initiative, which must continue. And there is still room for diplomacy to work.

BLITZER: But China, if you listen to the administration, they're not cooperating.

KIRBY: No, China can do more. There's no question about that. But look, the only thing China wants less than a nuclear armed North is American troops camped out on the river, a united Korean peninsula that is friendly to the United States and to the west. And so they have yet to come to believe it's in their interest to try to restrain the North in any meaningful way. So I think what the administration, which has rightly put a lot of emphasis on China, they need to stop the badgering and the tweeting and the threats, and look for ways to try to negotiate with Beijing about what -- making them change their calculus, what's in their best interest here as far as trying to restrain Kim Jong-Un. [13:50:15] BLITZER: Barbara, what are you hearing over there from

military planners at the Pentagon? We hear all options are on the table, including the military option. Do they really believe there is a military option to stop North Korea from developing these intercontinental ballistic missiles possibly with miniaturized nuclear warheads?

STARR: There's always a military option. You can always stop another country somehow from taking action. But what is the risk? What is the threat to globe stability? How far would the Trump administration and the U.S. military be willing to go? Everything we are hearing is, the Pentagon wants diplomacy to work. Defense Secretary Mattis has been adamant that the war option is absolute catastrophe for the world. So, military commanders, no surprise, they want to see diplomacy work. There is no real realistic military limited strike option, because you can never predict what Kim Jong-Un is going to do. And that's the fundamental problem here. You don't want it to get to a military strike option because, at the moment, it appears to be nothing or all in. And that is why the Pentagon wants to see diplomacy really work here -- Wolf?

BLITZER: Let's not forget there are about 30,000 U.S. military personnel along the Demilitarized Zone, and who knows how many other Americans are in South Korea right now as well.

Barbara Starr, John Kirby, thanks very much.

Take a look at this. Live pictures from the White House. The briefing is set to begin in a few minutes. Live coverage of that coming up.

(COMMERCIAL BREAK)

[13:56:01] BLITZER: Once again, live pictures coming in from the White House, the press briefing with Sarah Huckabee Sanders about to begin. We'll have live coverage of that. Stand by.

First, though, some breaking news we're following. The acting head of DEA, the drug enforcement agency, speaking out about comments President Trump made last Friday when he addressed an audience full of police officers who suggested to them that they not go easy on suspects in custody.

Here's part of what the president said.

(BEGIN VIDEOTAPE)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Like when you guys put somebody in the car and you're protecting their head, you know, the way you put your hand over, like don't hit their head, and they've just killed somebody, don't hit their head. I said you can take the hand away, OK?

(END VIDEO CLIP)

BLITZER: We're now learning that the head of the drug enforcement administration sent an e-mail to employees rebuking those comments by the president of the United States.

Our justice correspondent, even Perez, is with us.

What do with we know about the content of that e-mail?

EVAN PEREZ, CNN JUSTICE CORRESPODNENT: Chuck Rosenberg, the acting head of the DEA, sent that e-mail to his agents and employees on Saturday, the day after the president made those remarks. Obviously, there's been a lot of pushback on those remarks from the president.

I'll read a part of what Chuck Rosenberg wrote to his agents and employees. And he said, "The president in his remarks condoned police misconduct regarding the treatment of individuals placed under arrest by law enforcement." He goes on to say that he's not looking to advance any political, personal or partisan agenda, but he says, quote, "I write because we have an obligation to speak out when something is wrong. That's what law enforcement officers do."

Obviously, the reaction to what the president said has been kind of varied. The White House says that the president was simply joking. And I got to tell you, I've talked to law enforcement officers in the last few days, and some of them do say that they think the president was simply kidding. Other people, especially in the leadership ranks, take it a lot more seriously, Wolf. Given what we've gone through in the last couple of years with police misconduct issues, the protests, the Black Lives Matter issues, I think there is a lot of sensitivity, especially among the leaders, that you can't say certain things because it seems to trivialize this issue.

BLITZER: There have been a lot of statements coming out after his speech saying, we're going to treat everyone, no matter how bad they are, with respect.

Evan, thanks very much for that.

That's it for me. I'll be back 5:00 p.m. Eastern in "THE SITUATION ROOM.

For our international viewers, "AMANPOUR" is coming up next.

For our viewers in North America, "NEWSROOM" with Brooke Baldwin starts right now.

BROOKE BALDWIN, CNN ANCHOR: Here we go. We're live. I'm Brooke Baldwin. You're watching CNN.

We are moments away from a consequential White House briefing as the president of the United States faces new questions about what he knew, when he knew it, and what he did. Actions that could open him up to new legal scrutiny in Bob Mueller's special Russia investigation.

This is all coming from the "The Washington Post" today. They are reporting that President Trump personally dictated his son's misleading statement, the very first ones released about what happened during this now infamous Trump Tower meeting with a Russian lawyer. Don Jr's initial statement to "The New York Times" went like this, quote, "We primarily discussed a program about the adoption of Russian children that was active and popular with American families years ago, and was since ended by the Russian government. But it was not a campaign issue at the time and there was no follow-up."

Well, obviously, that was, at best, completely misleading and not truthful. Why? Because Don Jr's own e-mails showed that he went to the meeting for information that could damage Hillary Clinton and, thus, help his father's campaign, information sold to him as coming from the Russian government.

Let's begin with one of the reporters who broke this story from "The Washington Post" today. She is Carol Leonnig, the national reporter there.

Carol, thank you so much for being with me.

CAROL LEONNIG, NATIONAL REPORTER, THE WASHINGTON POST: Glad to be here.

BALDWIN: So a lot of takeaways. First, you know, it seems to me, from your piece, that all parties involved --