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THE SITUATION ROOM

Trump Chief of Staff Kelly: 'I'm Not Quitting, Not Being Fired'; Trump: Can't Keep FEMA & Military in Puerto Rico 'Forever'; 27 Dead, Hundreds Missing As California Wildfires Spread; Hostages Freed From Terrorists, Refuse To Return To U.S.; Trump Acts On Obamacare, Warns Puerto Rico. Aired 5-6p ET

Aired October 12, 2017 - 17:00   ET

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


[17:00:11] WOLF BLITZER, CNN HOST: Happening now, breaking news. Chief frustration. A big surprise this afternoon at the White House. President Trump's chief of staff, retired general John Kelly, unexpectedly stepped into the spotlight. He talked with reporters about his job as well as President Trump's biggest frustrations. Why is General Kelly going public now?

Can't stay "forever." President Trump touches off a fire storm of criticism with a series of tweets warning that first responders, including FEMA and the U.S. military, can't stay in Puerto Rico forever. In a disaster zone where 83 percent of the island's residents still don't have electrical power and more than one-third lack water and sewage service, why is the president making threats?

California burning. Tonight there are new evacuations and new fears as nearly two dozen wildfires burn out of control. The death toll keeps rising. Hundreds are missing, and conditions are getting worse.

And hostages freed. Pakistan's military ends a harrowing ordeal for a U.S. woman, her Canadian husband and their three children. Tonight, after five years in captivity, they're safe and free to return home. But why is the husband refusing to get on a plane to the United States?

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN breaking news.

BLITZER: We're following breaking news over at the White House. During an extremely rare question and answer session with reporters today, the White House chief of staff, John Kelly, said he isn't quitting, he isn't being fired, and he isn't frustrated with his job.

Kelly says he wasn't hired to control President Trump or the president's tweets, but to make sure the president is presented with, quote, "well-thought-out options."

Kelly also revealed North Korea has developed what he calls a pretty good ICBM capability and is developing, his words, a pretty good nuclear reentry vehicle. Americans should be concerned, but he added -- and I'm quoting him once again -- "Let's hope that diplomacy works." We're also following the growing catastrophe out in California, where

nearly two dozen wildfires are burning out of control and the death toll continues to rise. The fires have killed at least 27 people. Hundreds more are missing.

Strong winds could increase the danger and the devastation. There's lots to discuss with the top White House official, President Trump's director of legislative affairs Marc Short, he's here with me in THE SITUATION ROOM. And our correspondents, analysts, and specialists will have full coverage of the day's top stories.

Let's start with our White House correspondent Sara Murray. Sara, the chief of staff, John Kelly, surprised everyone today, tell us more about what he said.

SARA MURRAY, CNN CORRESPONDENT: That's right, Wolf. John Kelly clearly had a little bit to get off his chest today, making it clear to reporters that he's not going anywhere and by the way, it's not his job to babysit the president's Twitter habits.

(BEGIN VIDEOTAPE)

JOHN KELLY, WHITE HOUSE CHIEF OF STAFF: I'm not quitting today.

MURRAY: Retired four-star Marine General John Kelly making his debut in the White House briefing room as chief of staff.

KELLY: I just talked to the president. I don't think I'm being fired today. And I am not so frustrated in this job that I'm thinking of leaving.

MURRAY: And insisting that a White House that often looks chaotic from the outside is in fact running smoothly.

KELLY: I was not sent in to -- or brought in to control him, and you should not measure my effectiveness as a chief of staff by what you think I should be doing, but simply the fact is I can guarantee to you that he is now presented with options, well-thought-out options. Those options are discussed in detail with his team. And then he comes up with the right decision.

MURRAY: As Kelly insisted, his primary role is not to block Trump's Twitter tirades, he also pulled back the curtain on the commander in chief's key frustrations.

KELLY: The Congress has been frustrating to him.

MURRAY: Kelly channeling Trump's exasperation with Congress as Trump aims to use the power of the presidency to overhaul Obamacare. That's after efforts to repeal and replace the legislation hit a dead end on Capitol Hill.

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: I will sign an executive order, taking the first steps to providing millions of Americans with Obamacare leave. MURRAY: Trump unveiling an executive order to expand short-term

insurance plans, study ways to allow small businesses to join together to buy insurance, and broaden employers' abilities to give workers money to buy their own health care.

TRUMP: The competition will be staggering. Insurance companies will be fighting to get every single person signed up. And you will be hopefully negotiating, negotiating, negotiating, and you'll get such low prices for such great care.

[17:05:09] MURRAY: While Trump touted the expected upsides, some experts warned the plan could increase costs for sick Americans and chip away at protections for people with preexisting conditions.

In another shot to President Obama's legacy, Trump is also expected to move forward tomorrow with decertifying the Iran nuclear deal.

TRUMP: I think it was one of the most incompetently drawn deals I've ever seen; $150 billion given. We got nothing.

MURRAY: While not pulling out of the deal completely, the White House says the president will lay out a strategy to counter Iran's aggression in the Middle East and more closely rally behind allies like Israel and Saudi Arabia, who opposed the deal.

Amid all of this, the White House is still confronting a humanitarian crisis in Puerto Rico. Most of the island remains without power, and many don't have access to water. Still, Trump took to Twitter today to warn that aid to Puerto Rico will have an expiration date: "We cannot keep FEMA, the military, and the first responders, who have been amazing under the most difficult circumstances, in P.R. forever." Leaving his chief of staff to explain what he meant.

KELLY: Our country will stand with those American citizens in Puerto Rico until the job is done, but the tweet about FEMA and DOD, read military, is exactly accurate. They're not going to be there forever. And the whole point is to start the work yourself out of a job and then transition to the rebuilding process.

(END VIDEOTAPE)

MURRAY: So you see the White House there saying the federal government will not be on the ground in Puerto Rico forever, but so far this administration has not laid out a timeline for when they might hope to leave this storm-ravaged island. Nor have they explained why the president felt like this was the appropriate tone to take at a time when so many people there are still suffering, Wolf.

BLITZER: Sara Murray at the White House, thanks very much.

Let's dig deeper on the president's series of tweets warning Puerto Rico there are limits to the amount of federal help residents of the devastated island can expect.

One of the president's tweets says this: "Electric and all infrastructure was disaster before hurricanes. Congress to decide how much to spend. We cannot keep FEMA, the military, and the first responders, who have been amazing under the most difficult circumstances, in Puerto Rico forever."

Let's go to our senior White House correspondent, Jim Acosta. Jim, so what led the president early this morning to post those tweets?

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Right, Wolf. I talked to a source who's familiar with the discussions that go on inside the White House, who says earlier today when the president posted those tweets, saying that the assistance in Puerto Rico can't go on forever, that that was really a tweet aimed at going after the mayor of San Juan, Carmen Yulin Cruz, who has been sort of a thorn of the side of the president ever since that storm hit the island.

But I will tell you, Wolf, I talked to another Republican source who advises this White House, who said look, if you look at these tweets, if you look, for example, at the president when he made that trip down to Puerto Rico and he was videotaped and photographed throwing those paper towels to people in Puerto Rico, according to this Republican source, the optics were just terrible.

Now, I did talk to one other source today, Wolf, who said, you know, "Listen, I think the administration is doing a good job in Puerto Rico. They are doing everything they can to help the people down there." But when I asked this source -- and this is a source who is in contact with the administration about relief efforts in Puerto Rico -- this source said, when I asked the question, "Well, does the president have something against the people of Puerto Rico," this source said, "No, it's worse than that." It is -- it is apparent to this source, and it is a feeling among other people that the source has talked to, Wolf, that the president is not aware, is not in touch with what his own administration is doing. That's a pretty damning criticism.

BLITZER: It certainly is. What about John Kelly, the White House chief of staff? What was he trying to accomplish by making his debut over there in front of reporters in the White House briefing room?

ACOSTA: I talked to a source about this earlier today, about why John Kelly felt compelled to come into the briefing room. As you were saying earlier, Wolf, it's pretty rare to see the White House chief of staff come into the briefing room and talk to reporters.

This source, who is in touch with the people here in the West Wing, essentially said John Kelly felt it was necessary, the White House felt it was necessary for the general to come in here and take these rumors head on that he is thinking about leaving this administration. And that's why you heard him say, right off the bat. He was joking about it, and you heard that -- that thick Boston accent in sort of a deadpan mode there, saying that not only does he think he's not quitting any time soon, but he doesn't think he's going to be fired either.

Now I will say, Wolf, that I thought it was interesting that John Kelly was pressed time and again on this issue of the president's tweets, mainly because of what we saw in reference to Puerto Rico earlier today. John Kelly telling reporters during the briefing today that he's not here to control what the president does. He's here to control the information that comes into the Oval Office.

I have heard that, as well, from other sources, that there is a concern about the kind and the quality of information that the president receives, but he's not here to control tweets. I talked to a former campaign operative, Trump campaign operative earlier today who said the expectation has always been at some point the president will stop tweeting, that Donald Trump will stop tweeting. Wolf, this source said Donald Trump is never going to stop tweeting.

[17:10:19] BLITZER: No, he certainly has been tweeting for a long time, and you're absolutely right. I don't expect him to ever stop tweeting.

ACOSTA: That's right.

BLITZER: All right. Thanks very much for that.

Jim Acosta, we're joined now by the White House director of legislative affairs, Marc Short.

Marc, thanks very much...

MARC SHORT, WHITE HOUSE DIRECTOR OF LEGISLATIVE AFFAIRS: Thanks for having me, Wolf.

BLITZER: ... for coming into our SITUATION ROOM as opposed to your situation room.

Let's get to some of the substantive issues that you, as the liaison, in effect, to Congress, you have to deal with on a daily basis. The president has often said that, if the Republicans fail to repeal and replace Obamacare -- and so far they have failed to repeal and replace Obamacare -- he would let Obamacare fail on its own.

But today he announced a series of steps that will undermine, according to a lot of experts, Obamacare to begin with. Is his purpose to see Obamacare fail?

SHORT: No, Wolf. The president is not looking to undermine. The president's looking to do is to give the American people more choices and more options. That's hard for us to see how that's a bad thing.

When you actually create more freedom in the process, you create more competition. It will help to lower prices. He understands that right now, the average premiums increase over 100 percent over the last few years. Americans are getting crushed. And he cares about them, and he wants to give them more options. That's what he's trying to do.

BLITZER: Well, the critics and the experts are suggesting, insurance commissioners, health insurance experts, are saying that, if the plan that the president announced today goes through, it will dramatically increase premium costs for those that have serious ailments, for example, and the elderly. SHORT: Right. Wolf, let's look at it this way. Right now if you're

a major employer -- let's say you're General Motors -- and you have tens of thousands of employees, you have employees all across different states for your employees. Why can't you, if you're a franchise owner -- let's say your employees at McDonald's -- be able to band together in associated health plans? It's common sense. It will help to provide lower costs and more competition for people. That's what the administration is looking to do. We're looking to provide relief to Americans who are suffering from Obamacare.

BLITZER: And people with serious medical conditions won't have a dramatic increase as a result of what you announced today?

SHORT: People with those conditions will be able to apply, too, Wolf. There's not going to be any sort of discrimination against any individual.

BLITZER: Even with serious medical conditions?

SHORT: Even with serious medical conditions.

BLITZER: All right. Let's talk about the president keeps saying yes, he has the votes to repeal and replace Obamacare. But clearly, he doesn't have the votes. Otherwise, you would have done it. What is he referring to when he says, "We have the votes"?

SHORT: Well, I think that this year, in some ways, we ran out of time. What happened is, because you're looking to repeal Obamacare under budget reconciliation, that budget window closed on September 30.

What we found with the Graham-Cassidy idea of block granting dollars back to the states, getting Washington, D.C., out of the way of trying to control health care, and letting states have more flexibility in the plans, there became more and more receptivity to it.

But there are a couple members who are worried about the process and felt there weren't enough hearings and questions. Now I'll grant you, Wolf, that over the last several years, we counted 149 congressional hearings on Obamacare. We all share the concern they're having...

BLITZER: When he says, "We have the votes," was that accurate? It's clearly not accurate.

SHORT: Well, we didn't have the votes, but what he's saying is that we now believe, when we get the next chance, that we now have the commitments for the votes. But the reality is that that probably won't be until a 2019 budget is passed some time next spring. So there's a timing gap there.

BLITZER: So the next opportunity to repeal and replace Obamacare would be next spring, the spring of 2018.

SHORT: After another budget is passed.

BLITZER: So several months from now. He signed an executive order today, and we all saw the photo op.

Here's what he once said: "We have a president that can't get anything done ,so he just keeps signing executive orders all over the place." That was Donald Trump in January 2016. He was referring to the executive orders that were often signed by President Obama.

SHORT: Yes. And what I think you've seen this administration do so far is to repeal many of those Obama executive orders that helped to grow our economy. It has unleashed the regulatory burden that many were facing economically.

What this executive order does is it actually creates more freedom and gets government out of the way, as opposed to restricting the types of plans you can have. I think there's a huge difference between those that are looking to impose more regulations on the economy and those that are looking to free up the economy.

BLITZER: But if his criticism of President Obama was he was signing executive orders because he can't get anything done, the current president, President Trump, is signing executive orders because he can't get anything done?

SHORT: In this case what would require on associate health plans, as you may know, is that was not -- could not be part of the Obamacare repeal effort, because it was something, under Senate rules, would have required 60 votes instead of the 50. And so this is a -- this is an avenue that we have that can afford us the chance.

It doesn't go as far as we'd like. Legislatively, we can go further. But it at least provides some relief for Americans across the country.

BLITZER: Let's get to another very, very sensitive issue: freedom of the press. Something you believe in, I believe in, everyone believes in.

[17:15:03] The president is raising questions about it in that tweet yesterday. He said, "Network news has become so partisan, distorted, and fake that licenses must be challenged and, if appropriate, revoked. Not fair to public."

That led Republican Senator Ben Sasse of Nebraska to respond with this: "Mr. President, are you recanting on the oath you took on January 20 to preserve, protect, and defend the First Amendment?" Pretty strong words from a Republican senator...

SHORT: Sure.

BLITZER: ... who's outraged by this threat that the president is leveling to repeal freedom of the press licenses.

SHORT: Right. I think the president remains committed to the entire Constitution, including the First Amendment, Wolf, but I think there is a frustration that feels like, in many cases, there are alleged sources that come up with information that is pushed out and is, in many cases, we consider fake news. And so I think the president is expressing frustration a lot of

Americans feel, that there is an enormous bias against this administration.

BLITZER: But would you go -- there could be a lot of bias, but that's part of freedom of the press, right? You don't go ahead and suspend a news organization's ability to operate by revoking a license if you don't like what they're reporting.

You can rebut it, you fight it, you say what you say. President Obama, for example, he didn't like what FOX News was reporting, but he never threatened to suspend any license preventing them from reporting.

SHORT: The president's support of the First Amendment has not waned in any bit.

BLITZER: So he should -- he should fix that statement, because it sort of gives ammunition to totalitarians, authoritarians in other countries who can say, "Well, look, we're eliminating freedom of the press in Turkey," let's say, or other countries. "Look at the president of the United States is suggesting."

SHORT: I'll take your advice back to him.

BLITZER: Mention it to him.

SHORT: Yes, sir. I will.

BLITZER: This Puerto Rico tweet from this morning, and it was pretty serious: "We cannot keep FEMA, the military, first responders, who have been amazing under the most difficult circumstances, in Puerto Rico forever." Why? Why all of a sudden did he just -- I mean, less than three weeks into this horrible situation there, why is he raising this threat now?

SHORT: It is -- it is a horrible situation. Category 5 hurricane, winds up to 200 miles an hour and decimated that island. The Trump administration's response has been very quick, and we have been very full in the number of people that are on the ground. Today there's 13,000 first responders, federal first responders...

BLITZER: I totally agree. The first responders, the military, the FEMA people, they are amazing and they're working...

SHORT: OK. Let me...

BLITZER: ... really, really hard. Here's the question, though. Why is the president all of a sudden...

SHORT: Today, today...

BLITZER: ...raising this possibility of pulling him out?

SHORT: I don't think that's what he's raising, Wolf.

BLITZER: He says you can't do it forever.

SHORT: What he's saying is today in the House, we passed a $36 billion aid package to help hurricane relief in Puerto Rico. It's an enormous amount of dollars. I think there's a growing push to say, help fix the problems that existed before the hurricane, and that's not fair to the American taxpayer.

We should help to repair things that were done by natural disaster, but we have to be careful that there is not an extra effort to say, there was a lot of infrastructure problems on the island that existed before the hurricane, and we want the American taxpayer now to come out and bail out those problems.

BLITZER: I guess the criticism is he never threatened the people in Texas or Florida that, "You know what? FEMA can't stay there forever. The U.S. military can't stay there forever." But he did threaten the people of Puerto Rico, three and a half million American citizens, a U.S. territory, in this tweet today.

SHORT: I don't view it as a threat. We have 13,000 people on the ground. We just passed $36 billion in aid. I don't view that as a threat. The president is committed to helping to make sure that we do what is necessary to help to rebuild the island, but there are some elements that preexisted the hurricane that is not fair for the American taxpayer.

BLITZER: I understand. I totally agree with you. The U.S. is doing, you know, a lot for the people of Puerto Rico right now. Presumably, I mean, all these years after Katrina, FEMA still helping the people in Louisiana and New Orleans, as well. You know, it goes on and on and on. The only question is why did he have to say that today?

SHORT: If you have a question about the timing, I -- I don't have a great answer for you in the timing today, Wolf. But I think the reality was, as I mentioned, today in the House there was a $36 billion aid package.

BLITZER: And that goes to Florida, Texas, and Puerto Rico.

SHORT: It is predominantly Puerto Rico, Wolf. I think there will be another supplemental package that will continue to address additional issues in Florida, Texas, and Puerto Rico next month. So there are additional concerns. But today's package is predominantly Puerto Rico.

BLITZER: And the people of Puerto Rico will be grateful for all that assistance. And they're grateful for the assistance right now. My only question was on the timing.

All right, Marc, stand by. We have more to discuss.

We'll take a quick break, resume our conversation with the White House director of legislative affairs right after this.

(COMMERCIAL BREAK)

[17:24:17] BLITZER: We're back with the White House director of legislative affairs, Marc Short.

Marc, in the president's speech last night in Harrisburg, Pennsylvania, he said that the dramatic increase in the stock market since his election last November, and it has been very impressive, the stock market rally, but he then said something that isn't true. That it has reduced the national debt. Just because there's an increase in the stock market, that doesn't mean the $20 trillion national debt is going to be reduced, right?

SHORT: I think we're hopeful that the continued growth in the economy will create more revenues that will lower the debt. That's what the president's trying to communicate. And we believe that also what's needed is tax reform. Because we believe that we can get additional growth in this economy.

What's happened so far with the stock market coming up, I think, is largely a result of the regulations that we've relieved on the economy. Businesses tell that all the time to say it has allowed us to begin to hire more...

[17:25:04] BLITZER: But will a booming stock market -- and it has been very impressive over these past several months -- will a booming stock market reduce the national debt?

SHORT: Well, arguably, Wolf, a booming stock market means that people are continuing to pay more taxes and dividends. So there are additional resources coming into the treasury. So yes.

BLITZER: Because I take a look at the stock market, not just since the president was elected in November, but going back to when President Obama was elected. The Dow Jones was what, 7,000, going to hit 14,000. Now it's at 20. It's been booming now for the past eight, almost nine years, but unfortunately, the national debt has increased throughout that entire period, even though there has been a booming stock market.

SHORT: So, our challenge there, Wolf, is that our country needs to address its spending habit. The booming stock market does help generate more revenue that can help pay down the debt, but we also have to have a national conversation about how we're going to control spending. Because in the last ten years, or the last eight years of the Obama administration, the national debt doubled to $20 trillion. All the presidents, American history before Obama got to ten. It doubled in one administration.

BLITZER: But the market was -- the stock market was booming throughout those -- that doubling of the national debt during the Obama administration.

Let me ask you a question about tax reform, which is your big legislative agenda item right now. If the vote were held today, do you have the votes in the House and the Senate to pass it?

SHORT: That's a question that I can't answer today, because we are still working through the mark-up process. There needs to be final legislation. Our next step in this, Wolf, is we passed a budget. This will be a budget reconciliation vote again. We passed a budget in the House next week. The next big vote will be in the Senate. We need to pass a budget in the Senate, which will pave the way to actually have the mark-up process and coming forward and putting that on there.

BLITZER: Both of those votes in the House and Senate, you just need a simple majority, 50 votes in the Senate, right? You don't need 60 to break a filibuster.

SHORT: That's right. That's correct. We need 50 votes in the Senate.

BLITZER: And some of the conservatives, some of the fiscal conservatives, they worry about this tax reform plan, the tax cuts are going to increase the deficit. There's one study, a non-partisan Tax Policy Center estimates over the next ten years, if your tax cuts go into effect, it will increase the national debt by $2.5 trillion.

SHORT: Yes. We dismiss that study, because frankly, it's made with assumptions they don't know. They filled in the blanks in lots of ways, and it's ridiculous.

But the reality is that our administration feels what's most important right now is to get the economy growing again. The last eight years, we averaged 1.8 percent growth. That is horrific. We have had -- there's been no administration slower since the Great Depression in generating growth for our economy.

So we're looking to have -- to spur the economy. Tax relief will do that, particularly both the middle class and in corporate tax relief.

BLITZER: I want to thank you for joining us, Marc Short.

SHORT: Thanks for having me.

BLITZER: Your big boss wants to join us, he's always had an open invitation to come here, as well. Thanks very much for joining us.

SHORT: Thank you.

BLITZER: Coming up, breaking news on the California wildfires, where the death toll keeps rising and weather conditions are forecast to get worse.

Also, a U.S. woman, her Canadian husband and their three children are freed after five long years of captivity along the Pakistan, Afghanistan border. Why is the husband, though, now refusing to get on a plane to the United States?

(COMMERCIAL BREAK)

[17:32:53] BLITZER: Breaking news from the White House, the Chief of Staff John Kelly took to the briefing room today insisting he's not preparing to step down, denying reports that President Trump wants to fire him. Now, he chastised the news media for recent stories about turmoil in the west-wing of the White House, telling reporters to find better sources.

Let's discuss this and a lot more political news with all of our experts, our specialists, our correspondents. And Zeke Emanuel, the President announced some new plans today to deal with the President's Affordable Care Act. He signed a new executive order on making it available, making insurance available over state lines, letting groups get together. What's going to be the impact?

DR. ZEKE EMANUEL, CNN CONTRIBUTOR AND OBAMACARE ARCHITECT: Well, first of all, he actually didn't sign an executive order that made that happen. He signed an executive order asking the labor department to change regulations. The idea is a bad idea because these so-called "association health plans" that work for trade groups or autodealerships and franchises is purely works if it steals off young, healthy people, gives them a better deal, reduces the amount of benefits that they cover and leaves everyone else, middle-aged people, people with pre-existing conditions in the market, they face higher premiums.

So, a few people benefit, but a lot of people get hurt and it will certainly undermine the exchanges which as I understand it is part of the President's objective. He can no longer say that the exchanges are collapsing on their own. As a matter of fact, they're doing quite well this year and there's no counting next year that's going to not have an exchange. It'll be if the exchanges become unstable, it'll be Donald Trump who actually actively encouraged that.

BLITZER: Well, do you think he's trying to make the Affordable Care Act collapse?

EMANUEL: Well, he has said that he would like to see the exchanges collapse. I think that's a bad policy. It means that millions of people will no longer be able to get insurance. He has been advised by Rand Paul on this association health plan.

[17:34:57] Ironically, when Kentucky tried this in the mid-1990s, it was a disaster. Yes, a few young healthy people did get insurance, a lot of people were left with much higher premiums. And these association health plans tend to be less regulated. And so, a lot of scam artists come and leave people with unpaid medical bills, there's a long history at Sunkist at the Indiana construction trust of these kinds of scams happening. This is a very bad policy all the way around, and I do think it's driven by -- we got to do something to show our base that we're undermining Obamacare.

The real problem with the health care system is affordability, the President has been advised, I've given him many ideas about how to make it more affordable, he himself wants to actually control drug prices. Why don't we focus on what was really good for the American population instead of just pandering to a base with bad policies?

BLITZER: Well, Dana, as you know, repeal and replace failed, so what is the President trying to do?

DANA BASH, CNN CHIEF POLITICAL CORRESPONDENT: Well, I think Zeke is right, there's no question he's trying to show the base that he's doing something, and in this particular case, even though there are statistics and there's evidence that in the past, this kind of thing has done some damage, there are also a lot of conservatives out there who think that the way that they can do this now is much better for the marketplace. I mean, the notion of allowing people to buy insurance across state lines particularly small businesses has been something that conservatives have been pushing for years and years and years.

And, Wolf, during the Republican Primary process, it was actually something maybe the one thing that the President talked about in terms of health care policy. What he wanted to do to replace Obamacare. So, you know, whether or not it works, what the consequences are, we will see, but I will tell you that just in terms of the raw politics of this, this is what conservatives applaud.

CHRIS CILLIZZA, CNN POLITICS EDITOR AT LARGE: That, and another thing, putting aside the policy what Dana is exactly right about. Conservatives applaud rolling back things identified with Barack Obama. I mean, it's not super complicated. Donald Trump ran in many ways as, I will undue what this President has done, immigration, and failed terrorism, North Korea, Iran -- I mean, across the board, what he offered and I think to the extent he has executed on anything, what he's executed against is this idea of I was elected as the anti-Obama, I'm going to fulfill that because that will help me get re-elected. And that's making good on the promises I made.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: But they shouldn't repeal Obamacare.

CILLIZZA: But they couldn't do it legislatively. Right.

BORGER: Yes. And that was --

EMANUEL: But one of the --

BLITZER: How do you see this unfolding -- hold on a second, Zeke, I want to let Gloria weigh in. Go ahead.

BORGER: Well, I don't -- you know, we have to see how it unfolds. They couldn't repeal Obamacare. They're still going to try and do it to -- in some way, shape, or form.

BLITZER: In the Spring of 2018, is the next time -- you just heard Mark Schwartz that's not going to happen, another legislative effort until the spring of next year.

BORGER: So, you know, to Chris's point, in the interim, they feel politically they can't just leave it hanging and dangling, that they have to show their base, their voters that they're trying to do something to undo Obamacare. And, you know, Zeke says, it dooms it. And, you know, maybe right. And so, but I think that may be part of the ulterior motive, in fact.

CILLIZZA: It's -- I think you can't overestimate -- Gloria is right. You can't overestimate the extent to which the Republican identity in the age of Obama was built around this idea that Obamacare was bad policy, that was a way in which this is how liberals think government should work, government should be involved in everything, government should do this, do that. That this is the central policy to making a promise like that for eight years and then do nothing. It's unacceptable.

BLITZER: You -- Zeke, you helped craft Obamacare, go ahead.

EMANUEL: So, first of all, remember that the core of Obamacare, the exchanges and the individual mandate was a Republican idea that came out of a Heritage Foundation.

BORGER: Right.

EMANUEL: It was hardly a Democratic idea, we had to actually persuade the Democrats it was a good way of doing it. It's always ironic that the Republicans ran away from it the moment the Democrats said, all right, let's try your ideas.

The second thing I would say is one of the ways I think Donald Trump could actually do better than Obama if he was serious about it, is this cost control and drug regulation pricing? And the crazy thing is, he's playing in the space of the exchanges and access which now many people like and are actually doing OK, he's trying to undo that, instead of solving the affordability problem which everyone in the country agrees is a big problem.

BLITZER: All right. Everybody --

EMANUEL: And which he could -- he could claim big credit for. It seems like it's bad politics and bad policy.

BLITZER: All right, everybody stand by because there's more news coming into THE SITUATION ROOM, including the latest on the catastrophic wildfires in California's Wine Country. 27 people are now dead, hundreds are missing, conditions are getting worse.

[17:39:53] Plus, hostages freed. Pakistani Forces finally liberate a Canadian man and his American family from their terrorist captors. Why are they, though, refusing now to return to the United States?

(COMMERCIAL BREAK)

BLITZER: We're following breaking news out of California where thousands of residents are under a mandatory evacuation orders as deadly destructive wildfires spread across the northern part of the state. CNN's Dan Simon is joining us now from Napa Valley. Dan, give us the very latest where you are and what you're seeing.

[17:44:58] DAN SIMON, CNN CORRESPONDENT: Wolf, we saw quite a bit of active flame today. We are in the hills above the community of Calistoga. Calistoga is well known for its wineries and spas. And of course, firefighters are doing whatever they can to keep that community and others safe.

(BEGIN VIDEOTAPE) SIMON: Across California, more than 8,000 firefighters are working

round the clock to battle multiple blazes raging out of control. More than 190,000 acres have burned. At least 3500 structures destroyed, as 22 wildfires burn across the state, some with little to no containment.

GOV. JERRY BROWN (D), CALIFORNIA: This is one of the biggest, most serious, it's not over.

UNIDENTIFIED MALE: Sheriff's office evacuation advisory.

SIMON: Northern California is bearing the brunt of the damage. Evacuations have been ordered for several parts of the Wine Country, including the counties of Napa and Sonoma. Mandatory evacuations were ordered for the entire city of Calistoga.

MAYOR CHRIS CANNING, CALISTOGA, CALIFORNIA: Your presence in Calistoga is not welcome if you are not a first responder. Your choice to stay and there've been very few of them is a distraction to our first responders. If you're trying to visit Calistoga, you are not welcome.

SIMON: Together, the fire has span roughly 265 square miles, nearly four times the size of Washington, D.C. In the City of Santa Rosa, entire neighborhoods have been reduced to ashes.

UNIDENTIFIED MALE: There's no words. It's a nightmare. It's a real live nightmare.

SIMON: The fire swept through so quickly here, residents say they didn't have time to grab even the most basic belongings.

ERNEST CHAPMAN, SURVIVOR: I didn't grab anything, really. You know, like a laptop right sitting there and stuff that's easy to grab, and I didn't -- I just took off. Seconds could have made difference between life and death, so there was no waiting.

SIMON: Many residents lost everything.

UNIDENTIFIED MALE: Yes, that part of our life is gone. That's what -- that's what hurts the most.

SIMON: It's been four days since the fires began, but officials warn that conditions could still worsen. Low humidity and dry conditions in the area are further complicating the battle to contain the multiple blazes. But the biggest concern, winds. Forecasters warned that winds could reach 30 miles per hour on Thursday and could climb even higher on Friday to 60 miles per hour, spreading the flames and making battling the fires even tougher for already fatigued firefighters.

(END VIDEOTAPE)

SIMON: And you can see remnants of the fire burning there on the hillside, Wolf, the list of those reported missing continues to fluctuate, but right now, that number is 285, hopefully, that number will be paired down as more people report that their loved ones have been found safe, but it is a scary number. Officials do expect the death toll to go up. Right now that number is 27. Wolf?

BLITZER: All right, Dan Simon on the scene for us. Dan, be careful over there, we'll say in close touch. Coming up, a Canadian man, his American wife, and their three children, young kids, they're now free after years of captivity by terrorist forces in Pakistan, but so far, the family is refusing to return home. We're going to bring you the very latest.

(COMMERCIAL BREAK)

[17:52:49] BLITZER: Five long years of captivity have come to a dramatic end for a family of hostages held terrorist force in Pakistan. But their ordeal isn't over yet. The husband, the Canadian, is refusing to return to the United States with his American wife and children. Our Pentagon Correspondent Barbara Starr is tracking this story for us. Barbara, give us the late-breaking developments.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Wolf, it is indeed very good news for this hostage family but, very quickly, this is a story that is getting complicated.

(BEGIN VIDEOTAPE)

STARR: American citizen Caitlan Coleman, her Canadian husband, Joshua Boyle, and three small children born in captivity, freed by Pakistani forces after being held five years by the Haqqani terror network.

CAITLAN COLEMAN, RESCUED AMERICAN HOSTAGE: A five-year hostage taking is too long.

STARR: A proof-of-life video released last year showed the family in grim circumstances. The rescue happened in the tribal region along the border with Afghanistan.

JOHN KELLY, WHITE HOUSE CHIEF OF STAFF: We've been watching for the family.

STARR: The first hint of the release coming from President Trump Wednesday night.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Something happened today where a country that totally disrespected us called with some very, very important news.

STARR: The mission to get them back began with U.S. intelligence assets tracking the family. The U.S. then alerted Pakistan that the hostages were being moved into the country's mountainous northwest tribal region. Pakistani intelligence and military units moved on the information, stopping the vehicle and securing a perimeter around it. In a phone call to his parents, Josh said they were in a vehicle when gunfire broke out. Caitlan heard the captors say, kill the prisoners. When they were finally retrieved, all five of their captors were dead. Josh said he was slightly injured by shrapnel. But after the rescue, Josh refused to board a U.S. C-130 aircraft that had been sent to pick them up. A U.S. official told CNN that Josh expressed concern he could face arrest. There is no indication that will happen.

KELLY: We had arrangements to transport them back to the United States or to Canada, anywhere they wanted to go, medical treatment along the way. A lot of these, of course, would be psychological treatment. They've been essentially living in a whole for five years.

[17:55:08] STARR: Boyle had previously been married to the sister of Omar Khadr, a Canadian citizen who was held at Guantanamo Bay until he was returned to Canada in 2012.

PETER BERGEN, CNN NATIONAL SECURITY ANALYST: Joshua Boyle was married into this Canadian family that was fairly notorious in Canada for its link to Jihadism but there's no evidence that has any bearing on what transpired either with the kidnapping itself or rescue operation.

(END VIDEOTAPE)

STARR: And the Taliban continue to hold three other western hostages, two Americans and an Australian. Wolf?

BLITZER: All right, Barbara, thanks very much. Coming up, more on the breaking news over at the White House, President Trump resorting to executive order to fight Obamacare and taking to Twitter to warn Puerto Ricans that there are limits to federal help.

(COMMERCIAL BREAK)

BLITZER: Happening now, breaking news, not quitting. President Trump's Chief of Staff John Kelly says he isn't quitting and isn't being fired, at least not now. And he denies reports that he was brought in to control the President, adding that the news media is one of the President's biggest frustrations.

Hope diplomacy works, the White House Chief of Staff says Americans should be concerned about North Korea's ability to reach the United States with an intercontinental ballistic missile. And he warns that the Kim Jong-un's regime's quest for nuclear weapons is making critical advancements, adding -- and I'm quoting him now, "Let's hope that diplomacy works."

Raging fires, there are new deaths confirmed tonight in Northern California where the wildfire disaster is now the deadliest of its kind to strike the state in decades. More winds is forecasted, more evacuations are being ordered, and the smoke is so bad, flights are being canceled as far away as San Francisco.