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THE SITUATION ROOM

Trump Rhetoric Endangering Journalists?; Trump Talks 'Pocahontas' in Front of Native Americans; Trump Administration Power Struggle; Interview With New York Congressman Lee Zeldin; GOP Whip: First Senate Tax Bill Vote "Hopefully" Wednesday; Prince Harry & Meghan Markle Talk About Their Engagement; Fears Trump Endangering U.S. Journalists Overseas in New Tweets; Tillerson Refused to Meet with State Department Security Chief; White House: Trump's Position on 'Access Hollywood' Tape Hasn't Changed. Aired 6-7p ET

Aired November 27, 2017 - 18:00   ET

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


[18:00:00]

WOLF BLITZER, CNN ANCHOR: Another Republican senator voices concerns about the GOP tax bill, suggesting he may vote no unless changes are made.

Tonight, President Trump is predicting the bill will pass, even as a new estimate warnings the legislation would hurt the poor.

Acting out. The president's budget director takes charge of a consumer watchdog agency, pushing aside the deputy director who argues that she's the boss. The bitter power struggle is playing out in federal court right now.

No magic words. Senator Al Franken's acknowledges there's nothing he can say to regain the public's trust as he faces an ethics probe into sexual harassment allegations. It's a very tough day back at work for Democrats with Congressman John Conyers also accused of sexual misconduct.

And Trump vs. the truth. Is the president trying to rewrite the history of the infamous "Access Hollywood" videotape? A new report says yes, but the White House is now pushing back even as Mr. Trump launches potentially dangerous new attacks against the news media.

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: Breaking news tonight: A federal court hearing just ended on an exploding power struggle over who should lead a key consumer watchdog agency.

The new lawsuit is challenging President Trump's position to have his budget director also serve as interim head of the Consumer Financial Protection Bureau. Mick Mulvaney, who had been a very harsh critic of the CFPB, took the helm of the bureau today, but the woman who was named acting director by the bureau's previous boss is asking a judge to rule that she's the rightful director.

We're told no decision has been made, not yet.

Also breaking, the Senate Republican whip says the first pivotal vote on the Republican tax bill may happen on Wednesday, this as the legislation faces additional pushback within the president's own Party. Republican Senator Steve Daines announcing just a little while ago he can't support the bill until improvements are made.

Also tonight, President Trump is under fire for his remarks at an event honoring Native American military veterans and heroes. He again used a derogatory nickname for Senator Elizabeth Warren, calling her Pocahontas. The White House defending Mr. Trump tonight, denying the term is a racial slur that would be offensive to Native Americans.

The White House is also responding to a "New York Times" report that President Trump is now suggesting that the infamous "Access Hollywood" videotape may be a fake. A year ago, Mr. Trump publicly apologized for the video and his vulgar comments about women, acknowledging that it was his voice on the tape. Press Secretary Sarah Sanders arguing today that the president's position on the tape has not changed.

This hour, I will talk with Republican Congressman Lee Zeldin, who voted against the tax bill in the House, and our correspondents and specialists are also standing by.

First, let's go to our senior White House correspondent, Jeff Zeleny.

Jeff, there's a lot at stake for the president this week and no shortage of new controversy.

JEFF ZELENY, CNN SENIOR WASHINGTON CORRESPONDENT: Wolf, no shortage indeed.

And we have heard President Trump call Senator Elizabeth Warren Pocahontas several times, of course, as he was running for president. But we have never hear him do so from the Oval Office at a ceremony honoring Navajo World War II veterans.

Wolf, I was in the Oval Office today, and I can tell you silence fell over the room as many of his aides hoped he would talk about tax reform.

(BEGIN VIDEOTAPE)

ZELENY (voice-over): President Trump is dusting off his salesman hat tonight, trying to salvage the Republican tax plan facing a vote in the Senate. It's a critical week for the Trump presidency, with his only major legislative victory hanging in the balance.

QUESTION: How's the tax bill going, sir?

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I think the tax bill is going very well. We had a meeting on it today. It's going to be a tremendous tax cut.

ZELENY: And a critical month ahead for Republicans with the year-end spending bill looming to keep the government open.

TRUMP: I think the tax bill is doing very well and I think the Republicans are going to be very proud of it.

ZELENY: But the White House and Republican leaders are still scrambling to make changes to the $1.5 trillion tax package, in hopes of winning over at least six Senate Republicans who aren't sold on the bill.

Senator Ron Johnson has said he will vote no. Senator Steve Daines is opposed to the bill as it currently stands. Susan Collins, Bob Corker and Jeff Flake are also voicing concerns, with Senator John McCain perhaps the biggest wild card of all.

TRUMP: If we win, we will get some Democratic senators joining us.

ZELENY: So far, that seems unlikely, but in the Oval Office today while honoring Navajo Indians who fought in World War II, Mr. Trump took a crack at one of his Democratic foes, Senator Elizabeth Warren, who he has branded Pocahontas.

TRUMP: You were here long before any of us were here, although we have a representative in Congress who they say was here a long time ago.

[18:05:07]

They call her Pocahontas.

ZELENY: The culturally insensitive remark may have been lost on those in the Oval Office, but not on Warren.

SEN. ELIZABETH WARREN (D), MASSACHUSETTS: It is deeply unfortunate that the president of the United States cannot even make it through a ceremony honoring these heroes without having to throw out a racial slur.

ZELENY: Later at the White House briefing, Press Secretary Sarah Sanders defended the president and said it wasn't a racial slur. She took aim at Warren, who faced controversy during her Senate race over claiming Native American heritage.

SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: I think that Senator Warren was very offensive when she lied about something specifically to advance her career. I don't understand why no one's asking about that question and why that isn't constantly covered.

ZELENY: All this as the Alabama Senate race still hangs over Washington. The president would not say whether he would campaign in this state.

QUESTION: Mr. President, will you go to Alabama?

ZELENY: Sanders said the president would not go to Alabama, despite embracing Moore's candidacy last week. The controversy has reopened a debate from when the "Access Hollywood" tape surfaced before the election, with Mr. Trump bragging about the assault of women.

TRUMP: And when you're a star, they let you do it.

ZELENY: While briefing apologizing for it at the time...

TRUMP: I said it. I was wrong and I apologize.

ZELENY: ... Trump has been telling people the tape was a fake, "The New York Times" reported, as he explained why he believes Moore's denials from women accusers in Alabama. Sanders pushed back on that today.

HUCKABEE SANDERS: Look, I said that he had already addressed it and that we didn't have any updates to that. I said what he didn't like and what he found troubling were the accounts that are being reported now.

ZELENY (on camera): But what (OFF-MIKE) being reported now that weren't being reported last year? What accounts are you talking about?

HUCKABEE SANDERS: The ones that are current that he's questioning.

(END VIDEOTAPE)

ZELENY: Now, the back and forth over this "Access Hollywood" tape was playing out as a different kind of drama was playing out across Washington at the Consumer Financial Protection Bureau.

There were two bosses that showed up for work there today. A holdover from the Obama administration says she should be the acting director of this agency, but the president has appointed his budget director, Mick Mulvaney, to run the agency in the short-term.

Of course, Republicans have been trying to shut this down for a long time. Now, the White House has said the agency has been unfair to consumers, but, Wolf, they struggled today to come up with much of a list to back that up.

BLITZER: All right, Jeff, thanks very much, Jeff Zeleny at the White House.

Let's get some more on the Republican tax bill as the Senate moves toward a key vote this week.

We're joined by our congressional correspondent, Sunlen Serfaty, up on Capitol Hill.

Senator, another Republican, I take it, has just joined the list of holdouts.

SUNLEN SERFATY, CNN NATIONAL CORRESPONDENT: That's right, Wolf.

Republican Senator Steve Daines from Montana saying that he has concerns about this bill. He wants to see changes made to it before he could potentially support it. This is such a crucial week for the Republicans, pushing forward on this bill.

Republicans and the White House, they are trying to find the votes necessary to score that first legislative win of the Trump administration, but the votes at this moment are not there yet.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: We're going to get this done soon, get it to the president's desk and the president is eagerly looking forward to signing it.

SERFATY (voice-over): Huddling today at the White House as new problems over the bill are emerging. The nonpartisan Congressional Budget Office is out with a new analysis, predicting the bill would increase the deficit by $1.4 trillion over 10 years, and removing Obamacare's individual mandate now included in the bill would decrease the number of people without health insurance by four million in 2019 and 13 million over the next decade.

Republican leaders dismissing the report.

SEN. ORRIN HATCH (R), UTAH: I don't think they're right.

SERFATY: As Democrats are pouncing, seizing on the CBO's prediction that the tax plan would give more cuts and benefits to Americans earning more than $100,000 a year than was originally thought.

SEN. RICHARD DURBIN (D-IL), MINORITY WHIP: The tax breaks for the wealthiest people are permanent. That's just unfair and that's why half the American people are skeptical about this Trump tax plan.

SERFATY: But it's not just Democrats. Many rank-and-file Republicans remain skeptical, too.

A whole handful of Republican senators are still undecided, with concerns over everything from the fast-paced legislative process to repealing the individual mandate and the potential effect on the debt and deficit.

SEN. JAMES LANKFORD (R), OKLAHOMA: I want to make sure that we have a built-in process to be able to -- if the numbers don't come in correctly, to make sure that we do actually provide a way to be able to guard us against debt and deficit. That's currently not in there.

SERFATY: Republican leaders are now looking at specific changes they can make to woo individual senators, scrambling behind the scenes to shore up the votes they need, painting it as do or die.

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: Failure is not an option when it comes to the Republican Party cutting taxes.

For every Republican senator, the fate of the party is in our hands, as well as that of the economy.

SERFATY: One headache alleviated today, Senator Rand Paul announcing he will support the bill, saying, "The bill is not perfect, but I have fought for and received major changes for the better, and I plan to vote for this bill as it stands right now."

(END VIDEOTAPE)

[18:10:06]

SERFATY: And with the fate of the tax bill very much still up in the air tonight, members up here on Capitol Hill are facing a very, very lengthy laundry list of action items that they need and want completed before the end of the year, Wolf, not the least of which includes passing a spending bill to avoid a government shutdown by December 8 -- Wolf.

BLITZER: Lots on the agenda in the coming days. Sunlen, thanks very much.

Let's some get more on all of this.

Republican Congressman Lee Zeldin of New York is joining us. He's a member of the Financial Services and Foreign Affairs Committee. He actually voted against the Republican tax bill in the House.

Congressman, thanks for joining us.

REP. LEE ZELDIN (R), NEW YORK: Happy to be with you, Wolf.

BLITZER: So, what are your major concerns right now about the tax bill, besides the repeal of the state and local tax deduction? You hate that because it affects so many people out in Long Island, where you represent that district.

ZELDIN: Yes, that's certainly a big one, because, as you look through the bill as a whole, there are some very good aspects to it as it relates to the corporate side.

On the personal side, I'm crunching numbers for my own constituents, and as you pointed out, where I have a district where about half of my district itemizes. The biggest itemization is the state and local tax deduction.

The Senate bill keeps the medical expense deduction, which is good. It has a mortgage interest deduction cap of $1 million, where the House bill is at half-a-million. The Senate is going to be passing a different bill from the House, so there's going to be an opportunity to bring this bill to a conference committee and hopefully work out some of the changes, because this bill as it currently stands works for many Americans and many states all over the entire country.

But for a state like mine in New York or maybe New Jersey or California or elsewhere, we especially need certain changes to be made in order to make it work for middle-income constituents and others as well.

The pass-through rules and what Senator Johnson has been raising, that's a real issue. That needs to get addressed. There shouldn't be much of a difference between whether you're in a personal service space or if you're a widget maker. You should be treated relatively the same, if not the same.

Leveling the playing field and helping small businesses, that is going to be important as well. Those are a few examples.

BLITZER: Well, what happens if there's not a conference, if the Senate version just goes up for a vote in the House of Representatives? Would you vote for it?

ZELDIN: Well, the bill, as it currently stands, no, I wouldn't, but actually, there are certain aspects of the Senate bill that are worse.

Where there was progress on the House side to have a property tax deduction cap of $10,000, it is not enough progress for me. On the Senate side, they actually propose to fully eliminate it. While there are some good aspects in both bills, and the Senate bill has a few good points I just mentioned that are good for my district, my state and they are good for our country, as the bill currently stands, I would be a no vote on it in the House.

BLITZER: As you know, the Congressional Budget Office, the nonpartisan arm of the investigators up on Capitol Hill, says the bill would add roughly $1.4 trillion to the deficit over the next 10 years.

Do you think budget hawks can vote for this bill in good conscience, knowing how much it's going to increase the national debt?

ZELDIN: Well, I'm talking to many of my colleagues on this. They are very concerned in making sure that the final bill, that the costs just don't spiral out of control.

And if you look at dynamic scoring, you can't take a 35 percent corporate tax rate and assume the same exact effects on businesses, the same effects on our economy, GDP, consumer spending, wage growth, increased jobs, if you have a, say, 20 percent corporate tax rate.

Now, the president originally proposed 15 percent. Now the proposal is 20 percent. Senator Collins in Maine mentioned an idea of possibly having 22 percent. I know that the president and the White House have very much said 20 percent.

But using this as an example is, you have to use dynamic scoring because having -- this is a completely different impact on my district, where I think of one particular company, Amneal Pharmaceuticals. When they wanted to build hundreds of thousands of additional square feet not long ago, they decided to build that overseas, because they calculated their effective tax rate to literally be dozens of points higher if they did it in my district vs. if they did it overseas.

So we lose out on all those jobs, not just on construction, but the long-term jobs on employment. So, the dynamic scoring is going to be very important.

BLITZER: As you know, the Congressional Budget Office, the Joint Committee on Taxation, they say that the Senate bill would increase health care premiums. The number of uninsured would grow in the United States by some 13 million over the next 10 years, four million over the next year or two.

Would that hurt Republicans going into the midterm elections next year?

[18:15:02]

ZELDIN: Well, I think on this particular aspect, remember, going back to the health care debate, the number was higher.

The repeal of the individual mandate in large part a lot of the people who have coverage now who wouldn't have coverage after you repeal the mandate, as the CBO said, is a result of people choosing not to purchase insurance.

So that is a personal decision that they will be making as a result of repealing the mandate. For individuals who might be going to the voting booth, say, next November, it's not that they are losing their coverage because the government took it away from them. They may not have coverage because they decide not to purchase a health insurance policy that they don't want.

So that I think is one of the lesser controversial aspects of this health care debate is the repeal of the individual mandate, as far as those CBO numbers go.

(CROSSTALK)

BLITZER: A political question for you. As you know, both Newsday and Axios, they have reported that Steve Bannon, the president's former top strategic adviser, is going to be headlining a fund-raiser for you in New York in December. Is that true?

ZELDIN: That is.

BLITZER: And you're comfortable with Steve Bannon coming to New York and getting involved, raising money for your reelection?

ZELDIN: Well, listen, there's a lot about his background that doesn't get talked about and he's gotten a bad rap in many respects.

For someone who gets accused of being -- I have heard him just today, people sending me messages, calling him a Nazi or a Nazi sympathizer. This is someone who passionately speaks to me about the need to combat the rising BDS movement that is taking place on college campuses and also abroad.

Strengthening our relationship with friends like Israel, which has included the need to pass the Taylor Force Act, moving the embassy in Jerusalem, or treating our adversaries as our adversaries.

So, for someone who doesn't -- maybe he can do a better job defending himself. He is a seven-year Navy vet, a Blue star father. His daughter went to West Point, was in Iraq with the 101st. I could go on. I agree with him in some respects. I might disagree with him in other respects, but there's certainly a lot about his background that just -- a lot of people just don't know. BLITZER: Some of your moderate Republican colleagues, they're

pointing out he wants to get rid of Mitch McConnell as the Senate majority leader, the Republican leader in the Senate, and he supports Roy Moore to be the next Republican senator from Alabama.

Are you comfortable with that?

ZELDIN: Well, first off, I believe that Roy Moore should step aside. That's my personal opinion. I have been outspoken on that front.

As far as Senator McConnell goes, right now, he's working on trying to get a tax bill passed in his chamber. There's a lot on the plate for Congress. Getting a tax bill done is part of it. There's the debate with regards to debt limit, government funding, DACA, flood insurance reauthorization, FAA reauthorization.

The list goes on. So I think what really should be deciding, whether it's now or any point in the future, who's going to be leading the chambers, it's going to be based off of the ability to deliver on these challenges that are ahead, and that should be the determining factor, because when I'm elected to go to Washington, I'm there to represent the 1st Congressional District of New York, my home state, my country.

If you're elected to lead an entire chamber, that's a great privilege, it's a great honor. It certainly comes with a lot of -- a big target on your back as well. The most important aspect in leadership is being able to get those big wins done for the American public, and there's still a lot of work ahead between now and the end of this Congress at the end of December 2018.

BLITZER: Congressman Lee Zeldin, thanks for joining us.

ZELDIN: Thank you, Wolf.

BLITZER: Just ahead, a series of new attacks on the news media by President Trump. Are they putting reporters at risk?

(COMMERCIAL BREAK)

[18:23:31]

BLITZER: Breaking tonight, the White House is defending the latest insult by President Trump. He revived his mocking nickname for Senator Elizabeth Warren, calling her Pocahontas at a event honoring Native American military veterans over at the White House, this as the president also is firing off new attacks on the news media.

Brian Todd is joining us right now.

Brian, Mr. Trump is taking his war against the news media to a potentially dangerous new level.

BRIAN TODD, CNN CORRESPONDENT: He is, Wolf.

We don't like ever really reporting on ourselves, but tonight we are in the news, as the president once again aims his Twitter account at CNN and our colleagues at CNN International, in a move that some critics say may now endanger our reporters' lives.

(BEGIN VIDEOTAPE)

TODD (voice-over): President Trump's attacks on the mainstream news media tonight are getting darker and critics say more dangerous.

TRUMP: I call the fake news the enemy of the people and they are. They are the enemy of the people.

TODD: The president, who has made it a habit of calling real journalism fake, tweeted today: "There should be a contest among the news networks, not including FOX, to see which one 'is the most dishonest, corrupt and/or distorted' in its political coverage of your favorite president, me, with the winner getting the fake news trophy."

Trump's assault on the truth comes after this weekend treat in which he said -- quote -- "CNN International is still a major source of fake news, and they represent our nation to the world very poorly. The outside world does not see the truth from them."

[18:25:02]

Tonight, reporters advocates worry about American journalists working overseas, including reporters working in hostile countries, being targeted more or rounded up as a result of the president's attacks.

FRANK SMYTH, GLOBAL JOURNALIST SECURITY: This kind of language contributes to heightened risk against them, because it gives a green light to despotic regimes around the world, as well as their supporters, to take actions against these journalists and against these news gatherers.

TODD: Regular viewers of CNN International might take a different view from the president's.

UNIDENTIFIED MALE: It's like a potshot, something in the distance. The fighters have opened up. Then there was some big return fire.

TODD: Its journalists often risk their lives to report on world events.

UNIDENTIFIED MALE: There's gunfire all around us.

UNIDENTIFIED FEMALE: Our MRAP takes a direct hit.

TODD: From places that administration officials can't or won't go.

UNIDENTIFIED FEMALE: This is basically what is left of rebel-held Aleppo.

TODD: And sometimes becoming casualties themselves.

UNIDENTIFIED MALE: CNN correspondent Ben Wedeman was hit by a live round during a clash between Israelis and Palestinians. TODD: But Trump hasn't confined his attacks to CNN. He called for

NBC's license to be reviewed after the network aired a report on alleged tensions he had with Secretary of State Rex Tillerson.

He has called "The New York Times" failing and he has accused Amazon founder Jeff Bezos, who also owns "The Washington Post," of -- quote -- "getting away with murder tax-wise."

In August, he attacked a broad range of reporters at a rally in Phoenix.

TRUMP: And they're bad people. And I really think they don't like our country.

TODD: Critics say the president's insults of the free press are especially ironic, given his own penchant for making false claims and embracing disproven conspiracy theories.

SMYTH: This is a president who has espoused his own falsehoods, his own untrue statements concerning President Barack Obama's birthplace, the leader of the birther movement, as part of the allegations that he made that the Obama administration conducted surveillance of him inside the Trump Tower.

(END VIDEOTAPE)

TODD: Tonight, journalist advocates are now worried not just about American reporters, but local reporters in other countries, especially those under dictatorships who could now be rounded up for little or no reason because of all this.

The Committee to Protect Journalists says, last year, a record number of journalists were imprisoned around the world, and the two countries jailing the most reporters, Turkey and China, two nations whose leaders Donald Trump is very friendly with -- Wolf.

BLITZER: All right, Brian, thanks very much, Brian Todd reporting.

Joining us now, Jake Sullivan. He's a former senior adviser to both Hillary Clinton and to Vice President Joe Biden.

Jake, thanks very much for joining us.

JAKE SULLIVAN, FORMER ADVISER TO HILLARY CLINTON: Thanks for having me.

BLITZER: So what impact is the president having on journalists who are risking their lives, so many of them, including a lot of from CNN? What is the impact he's having on press freedom and the safety of these journalists?

SULLIVAN: Well, there's no doubt that American journalists working overseas now in countries that are dangerous, in dictatorships, in war zones are now going to be under greater threat, under greater danger.

BLITZER: Why? Why? SULLIVAN: The president of the United States is basically saying the aegis of the United States, the protective umbrella of the United States no longer applies to them. He doesn't like them.

In a sense, he's providing a hunting license to dictators and despots and others around the world to go after them. And I think that that will come at a great cost to American prestige and credibility.

But it's not just what's going to happen to the journalists. It's what going to happen to American foreign policy as well. The United States relies on a basic set of evidence in order to be able to advance our foreign policy. Take Iran, for example.

We had to convince the world that Iran was actually secretly seeking a nuclear weapon. If we get rid of all truth, if truth doesn't matter anymore, our ability to take that case to the world gets eroded very quickly, and it won't just be journalists who are hurt by that. It will be the security of the American people.

BLITZER: Because what concerns a lot of journalists, and I know this, is that by the president going after the American news media like CNN, other news networks, newspapers, he's sort of giving a license to other despotic leaders around the world to go after their news media and prevent a free press.

SULLIVAN: Look, other leaders have written the playbook on this for many years. Vladimir Putin has backed a campaign to murder journalists in Russia. Erdogan and President Xi in China have rounded up journalists and thrown them in jail.

But what Donald Trump is telling them is, there is not going to be any pressure on them anymore. There won't be a spotlight being shone from the White House, from the office that was occupied by people like Ronald Reagan and others, both Democrats and Republicans, who have previously placed great pressure on those leaders to back off of journalists.

Now it's open season for them. They can pretty much do what they would like. That's what Donald Trump is telling them with his tweets.

BLITZER: Well, what can be done about that?

SULLIVAN: Well, I think, first of all, we have to have our leaders in Congress stand up and say, this is bizarre behavior and it is not the way that American foreign policy or American presidents will conduct themselves in the future.

We need to send -- remind people around the world that Donald Trump is not going to be president forever and that America hasn't given up on these basic notions.

[18:30:12] If Republicans and Democrats came together on the Hill, and former presidents and others step forward, I think it would make a big difference. People could see this is about Donald Trump; this is not about the United States. BLITZER: Let's get to some other issues involving the State

Department right now. "The New York Times" is reporting that the secretary of state, Rex Tillerson, has repeatedly turned down meetings with the State Department's security chief, this despite the fact that after Benghazi, the security chief was supposed to have open access to the secretary of state, unrestricted access. How concerning is this to you?

SULLIVAN: It's very strange. It makes absolutely no sense. And Secretary of State Tillerson should explain himself. There is now a law that requires secretary of state to meet with the head of diplomatic security, the State Department security chief, when the security chief requests the meeting.

In this case, what happened was the security chief repeatedly said, "Mr. Secretary, I need to see you. There's important information you need to know." Eventually he said, "This is urgent," and finally he had to actually invoke the law in order to get a five-minute meeting with the secretary of state. That doesn't make any sense.

And for Republicans who claim that Hillary Clinton was negligent about security requests that never made it to the seventh floor, that never got to her desk, they should be horrified that direct requests to the secretary from diplomatic security are going unheeded and unanswered.

BLITZER: There are reports, and you've seen them, that many career diplomats, career foreign service officers, are either leaving the State Department or being pushed out of the State Department. How concerned are you about that?

SULLIVAN: Well, just to put this in perspective, at the highest ranks of the diplomatic service, our best and most experienced diplomats, the rough equivalent of three and four-star generals. We're down to half as many as we had when Trump took over. And that is at the design of the secretary of state and the president. They are working overtime to hollow out the ranks of our senior diplomats, and this is going to take many years to rebuild.

When you talk about the exercise of American power abroad, advancing America's security, prosperity and values, you rely on diplomacy to be able to do that, and the tool of American power is being blunted every day. And again, this is something Secretary of State Tillerson should be held accountable for.

BLITZER: Jake Sullivan, thanks for coming in.

SULLIVAN: Thanks for having me.

BLITZER: Appreciate it.

Just ahead, we're going to talk more about the insult the president apparently couldn't hold back in front of Native Americans veterans.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: You were here long before any of us were here, although we have a representative in Congress who they say was here a long time ago. They call her Pocahontas.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

[18:37:32] BLITZER: Tonight the White House is disputing that President Trump is using a racial slur when he calls Senator Elizabeth Warren "Pocahontas." But it's hard to dispute that Mr. Trump's decision to use the term in front of a Native American group over at the White House was, at the very least, thoughtless and needless and insensitive to the military veterans he was honoring today.

Let's bring in our political team. The optics, David, were sort of awkward to put it mildly.

DAVID SWERDLICK, CNN POLITICAL ANALYST: To put it mildly, Wolf. Look, when this comes up at an event that's meant to honor American Indian veterans, what it suggests, very strongly, is that the president is willing to use this solemn event as a setup for an old joke that also involves a racial slur about American Indians. It's -- it's out of character for anyone but particularly the president of the United States.

This issue is going to come up, and Senator Warren will have to have a better answer for this whole issue if she runs for president, but until that time, the point of bringing it up, there is no point in bringing it up.

BLITZER: He's often, Bianna, called Elizabeth Warren "Pocahontas," but today in the Oval Office honoring these World War II heroes, these Native Americans, it -- the White House says it's not a racial slur. What do you make of that?

BIANNA GOLODRYGA, YAHOO! NEWS: Well, you don't have to ask me. You can ask a fellow Republican, Tom Cole, who's one of two Native Americans serving in the House who in the past has called the phrase pejorative and has urged the president not to use it.

And look, I mean, here's an event honoring war heroes who, they're the ones walking away with the greatest disservice. Instead of more Americans talking about the sacrifice they made and the thousands of lives, if not more, that they saved in the Pacific, we're talking about whether or not the president continues to use a racial slur that many Republicans, Native Americans, in fact, believe is a racial slur.

And it goes to show you where the president's head was at the time, too. Because it does appear that he was thinking about Elizabeth Warren, maybe the fight that was going over in Washington, as well, at the consumer protection -- financial protection bureau, and instead of what these men did and the sacrifice they made. And that's the real disservice.

BLITZER: What did you think, Gloria?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Look, I think he doesn't understand the office he occupies, period.

SWERDLICK: Right.

BORGER: He is the president of the United States. He was talking to heroes, and instead of being graceful throughout, in his extemporaneous remarks, he couldn't get beyond himself. He does this time and time again. It's all about him. It's all about his political fights. It's all about his tweets, et cetera, et cetera.

[18:40:12] And I just think that, you know, very often, almost always, it takes time for a person to grow into the office of the presidency. It's difficult to do that. But he's been there ten months. I think enough time has passed.

BLITZER: Yes, he was honoring these World War II heroes that are all now in their late 80s and 90s. They had come in there to be honored. and I suspect the last thing they wanted to hear was Elizabeth Warren being called "Pocahontas."

REBECCA BERG, CNN POLITICAL ANALYST: Absolutely. Or to be pulled into a political fight. This was an event that rises above politics. These are national heroes, and the president, as he often does, slipped back into campaign rally mode, started using some -- a line that he's used at campaign rallies many times before as we've seen.

But it's also worth considering that Elizabeth Warren could well run for president in 2020.

BORGER: Sure.

BERG: And so he's not only settling old political scores but potentially focusing on new ones in the White House at a time when he was supposed to be honoring these heroes.

BLITZER: Let me get your thoughts, Gloria. Let me start with you on this. Sarah Sanders, the White House press secretary, today seemingly disputing this "New York Times" report that President Trump was casting doubt on the authenticity of the "Access Hollywood" videotape. What was your reaction when you heard that?

BORGER: First of all, when I heard her, I kind of had to go back and then read the transcript of it, because I wasn't quite sure what she was saying.

If you're going to be direct as a press secretary, and I generally think that's the best way to be, it would have been easier for her to say, "Look, the president stands by what he said in his videotaped apology, which was 'I said it. I was wrong, and I apologize.' Period." That is what the president said at the time, "I said it."

But she kind of had to back into it and go through all kinds of contortions, and it's probably because you're not allowed ever to sort of say, "Well, what was published there the president never said," because then somebody is going to find that senator and go to that senator, and that senator is going to say, "Yes, the president actually did say that." So, you know, she just has to spend her time doing these contortions, and it's really -- it's really ridiculous. It's really ridiculous, you know.

BLITZER: Because "The New York Times" did report that the president suggested to one member of Congress, also to an adviser over at the White House that that "Access Hollywood" videotape was not authentic.

SWERDLICK: Yes, just two things to add, Wolf. One, the idea -- he apologized, as Gloria said, the same day the tape was published. This wasn't, like, some lag time. He did it...

BERG: And that's rare.

SWERDLICK: And that is rare for the president.

The only other thing to add to your point, Wolf, about "The New York Times" reporting is that, if in fact, the president is starting to go around telling people that this isn't true or partly not true, he is trying to gas light people. I'm not someone who uses that term. That's exactly what this is, telling people you don't believe your own ears of what you heard on a tape.

BLITZER: Everybody stand by. There's much more that we need to discuss. We'll be right back.

(COMMERCIAL BREAK)

[18:48:11] WOLF BLITZER, CNN HOST: Tonight, we may be only about 48 hours away from the first crucial Senate vote on the Republican tax bill. The Senate majority whip is predicting the measure could come to the floor as early as Wednesday, but multiple Republican lawmakers still aren't necessarily sold on the legislation as it currently stands.

And, Bianna, we just heard from Senator John McCain. He was asked, your thinking on the tax bill evolve since the break, he said, no, it changes every day. Do you like what you're seeing or not? He says, I don't know, it changes every day.

The Republicans could lose too but they can't lose three senators. Otherwise it's over.

BIANNA GOLODRYGA, CNN CONTRIBUTOR: Pretty ominous from McCain as well if you consider where he stood on health care and how that went down for Republicans at the final moment. I mean, look, an issue that the Republicans have is not only that they don't necessarily have the votes now, it's that they have concerns on numerous platforms. Whether it be regarding health care with Susan Collins, whether it'd be deficit hawks, whether it'd be what it does for small businesses.

So, as your producer and I were just discussing, you know, it is sort of a game of whack-a-mole and in the final hours here, these quick fixes over a bill that Republicans were boasting, you know, about having tax reform on the table for the first time in decades not really giving their constituents something to really brag about at this point. So, it becomes a question of is it something they do just to get a win in, or is this a bill that they can actually spend more time on trying to evolve. And a lot of people are wondering why this artificial deadline.

BLITZER: You know, and the Congressional Budget Office, Gloria, now says the Senate Republican tax bill would add $1.4 trillion over the next ten years to the nation's debt. A lot of Republicans --

GLORIA BORGER, CNN CHIEF POLITICAL ANALSYT: Well --

BLITZER: That's a huge issue for them raising the debt.

BORGER: It is a huge issue. Also, that 50 percent more taxpayers are going to pay more by 2027 than they do now. And, you know, this notion which is not really a great message, that the corporate tax cuts remain permanent, but the personal tax cuts expire is not really easy to run on. And that if you keep in this revision, you know, this -- on the ACA, that premiums are going to go up about 10 percent over the next 10 years.

So, be careful what you wish for if you're a Republican, because you can pass tax reform, you can rack up a win and then people are going to say, this was your tax reform, and look what it did to me. It didn't deliver as the president promised which is the largest tax cut in American history.

BLITZER: You heard Senator Lindsey Graham say yesterday here on CNN, failure is not an option.

REBECCA BERG, CNN POLITICAL REPORTER: Exactly. And so, even though there are political risks, and I think Gloria hit on a lot of the big ones here for Republicans, there is this very deep belief among Republicans right now, Wolf, that they need to get this done. It's one of the big differences I'm seeing right now between tax reform and the push we saw earlier this year for health care.

With health care, you saw Republicans getting nervous, they understood the political risk. They felt like the risk outweighed the reward for them, politically. This is very different. They believe the reward is going to be bigger than the risk they're taking here. They think they need to show voters they're making --

BLITZER: Can they do it, David?

DAVID SWERDLICK, CNN POLITICAL COMMENTATOR: They can do it but -- I mean, the margins are slim and they just don't have a lot of time. And even though there are people who want this, very few people are convinced, even on the Republican side, that this will actually increase the GDP the way that the White House and the Republican will say it will.

BORGER: So, then you own that.

SWERDLICK: Right. They will own deficit increases, et cetera.

BLITZER: All right, guys. Everybody, stand by. There's more news we're following.

Just ahead, when Harry proposed to Meghan. The British prince and the American actress, they are sharing now their romantic details.

(BEGIN VIDEO CLIP)

PRINCE HARRY, BRITISH PRINCE: She didn't even let me finish. She said "Can I say yes". Then there were hugs and I had the ring in my finger. I was like "Can I give you the ring". She said, oh, yes, the ring.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

[18:56:57] BLITZER: Tonight, a royal engagement is giving new meaning to the special relationship between the United States and Britain. Prince Harry and the American actress, Meghan Markle, are speaking out about their plans to get married. The couple giving a joint interview just hours after their engagement was announced. They opened up about the moment Harry popped the question.

(BEGIN VIDEO CLIP)

PRINCE HARRY: It happened a few weeks ago, earlier this month here at our cottage. Standard, typical night for us.

MEGHAN MARKLE, ACTRESS: Just a cozy night. What were we doing, roasting chicken and having -- trying to roast a chicken.

And it was an amazing surprise. It was so sweet and natural, and very romantic. He got on one knee.

PRINCE HARRY: Of course.

INTERVIEWER: Was it an instant yes from you?

MARKLE: Yes, as a matter of fact I couldn't barely let you finish proposing. Can I say yes now?

PRINCE HARRY: She didn't even let me finish. She said "Can I say yes". Then there were hugs and I had the ring in my finger. I was like "Can I give you the ring". She said, oh, yes, the ring.

It was a really nice moment. Just the two of us. I think I managed to catch her by surprise as well.

MARKLE: Yes.

(END VIDEO CLIP)

BLITZER: The engagement ring that Harry spoke about has very special meaning for both of them. It includes diamonds that belonged to Harry's mother, the late Princess Diana.

(BEGIN VIDEO CLIP)

PRINCE HARRY: The ring is yellow gold, because that's her favorite, the main stone itself is sourced from Botswana, and the little diamonds on the side are from my mother's jewelry collection, to make sure she's with us on this crazy journey together.

And --

MARKLE: It's beautiful, and he designed it, it's incredible.

PRINCE HARRY: Yes.

MARKLE: Yes.

PRINCE HARRY: Make sure it stays on that finger.

MARKLE: Of course.

INTERVIEWER: What does it meaning to you, Meghan, to have those stones on your finger that once belonged to Princess Diana?

MARKLE: I think everything about Harry's thoughtfulness is -- and the inclusion of that, and obviously not being able to meet his mom, it's so important to me to know that she's a part of this with us, and I think in being able to meet his aunts and also to be like Julia -- just different people who are so important to his mom. I'm able to in some way know a part of her through them and, of course, through him.

(END VIDEO CLIP)

BLITZER: This new royal wedding will be held in the spring of next year. Congratulations to the bride and groom. We'll all be looking forward to that wedding date in the spring.

Coming up, an important programming note for our viewers. Tomorrow night, 9:00 p.m. Eastern, there will be a debate -- a debate here on CNN. "The Fight Over Tax Reform". Our own Jake Tapper, Dana Bash will moderate the debate. Among those participating, Senators Bernie Sanders, Ted Cruz, Tim Scott, Maria Cantwell. An important debate tomorrow night, 9:00 p.m. Eastern, only here on CNN.

That's it for me. Thanks very much for watching. I'm Wolf Blitzer in THE SITUATION ROOM.

"ERIN BURNETT OUTFRONT" starts right now.