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THE SITUATION ROOM

Interview With Hawaii Senator Brian Schatz; Interview With Delaware Senator Chris Coons; House Passes Historically Unpopular Republican Tax Bill; Train Derailment Investigation; NTSB: Data Recorders Recovered from Derailed Train; U.S. Blames North Korea for World's Bigger Cyberattack. Aired 6-7p ET

Aired December 19, 2017 - 18:00   ET

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


[18:00:10]

WOLF BLITZER, CNN ANCHOR: Happening now, breaking news: last-minute glitch. We're standing by for a Senate vote that was supposed to seal the Republican deal to overhaul the tax code. But, this hour, a surprising curve ball, just as GOP leaders were poised to celebrate a needed victory.

New lows. The president's approval rating falls again, even as he's expected to deliver on a major promise. Tonight, a majority of Americans say, if they had a vote on the tax bill, it would be no.

Attacking the FBI. The bureau's deputy director is hauled in front of a House panel, as Republicans claim bias in the Russia investigation. Is a tense confrontation unfolding behind closed doors tonight?

And North Korea attack. The Trump administration officially blames Kim Jong-un's regime for a global cyber-strike that crippled hundreds of thousands of computers and critical infrastructure. Could a full- scale cyber-war be in the works?

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 tonight, a surprising new snag for Republicans, as they push towards a Senate vote tonight on a sweeping tax reform bill. GOP leaders suddenly realizing that last-minute technical changes are needed in the legislation.

This will require an unexpected second vote by the House of Representatives, where lawmakers approved the centerpiece of the president's agenda just a little while ago, with only Republicans voting yes. The White House still is hoping that President Trump can sign the bill tomorrow. The anticipated win coming as Mr. Trump and the legislation are increasingly unpopular.

Our exclusive CNN poll shows 55 percent of Americans are opposed to the tax overhaul, and the president's approval rating has fallen to 35 percent. That's a new low in our CNN polling. Also tonight, the FBI deputy director, Andrew McCabe, is testifying

before the House Intelligence Committee behind closed doors. This as Republicans press their allegations of bias within the bureau and the special counsel's Russia investigation.

A key Senate Republican, Charles Grassley, telling CNN that he wants McCabe out of the FBI.

And the Trump administration is warning that the entire world is at risk of devastating cyber-attacks by North Korea. The United States is formally blaming Kim Jong-un's regime for a huge cyber-attack this year that crippled hundreds of thousands of computers in homes, businesses, hospitals, and schools around the globe.

We're covering all of that, much more this hour with our guests, including Senator Chris Coons. He's a Democrat on the Foreign Relations and Judiciary Committees. And our correspondents and specialists are also standing by.

First, let's go to our congressional correspondent, Phil Mattingly, with more on the state of play for the tax bill.

Phil, as we wait for the Senate to vote, tell us about this unexpected second vote that is now needed in the House.

PHIL MATTINGLY, CNN CORRESPONDENT: Yes, Wolf, senators on the floor right now taking part in the debate that was supposed to lead to the final vote to clear the tax bill for the president's signature. No longer.

Senate Republicans have run into budget rule problems, that reconciliation, the reason why Republicans are able to pass the bill in the Senate with a simple majority vote, turns out two very specific provisions run afoul of those rules.

Those provisions will now have to be stripped out. That means, Wolf, the bill will be different from what the House passed earlier today and the House will have to consider it again. Now, Democrats are seizing on this issue, saying all this does is underscore the speed with which they have moved and sloppy drafting. It's an error that simply shouldn't occur.

Republicans pushing back, saying this is a minor hitch in a process that is well on its way to completion, something that can be fixed easily. The House saying this is more or less just delaying the inevitable. They fully plan on passing this tomorrow morning.

But, Wolf, a key point here. They wanted this done tomorrow night. The White House wants a big signing ceremony on Wednesday. As of this moment, that will be delayed, at least for a couple of hours, Wolf.

BLITZER: At least for a couple of hours. We will see what happens tomorrow. Phil Mattingly, thank you very much.

Even with new snafu, Republicans believe a major victory on taxes is well within reach. There are now some new questions tonight about whether the overhaul will prove to be a long-term political win, though, for the president and his party.

Let's go to our senior White House correspondent, Jim Acosta.

Jim, Republicans aren't necessarily popping the champagne corks, at least not yet.

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: No, Wolf, it sounds like they will have to keep that champagne on ice for another night, but the Republicans in Congress and the president, they're both cheering what they see as a big policy triumph after the largest rewriting of the nation's tax code in a generation.

But Democrats, they see an opportunity, too, once Americans read the fine print in the bill.

(BEGIN VIDEOTAPE)

ACOSTA (voice-over): It took nearly one year into the Trump administration, but Republicans in Congress are on the verge of giving the president his first big legislative win, passing a tax reform package in the House, mostly along party lines.

[18:05:08]

REP. PAUL RYAN (R-WI), SPEAKER OF THE HOUSE: This is a day I have been looking forward to for a long time.

ACOSTA: House Speaker Paul Ryan acknowledged the tax code plan has yet to win over the public, but blames others for that.

RYAN: Look, when you have a sling-fest, a mud-fest on TV, when pundits are slamming each other about this tax bill before it passes, that's what's going to happen.

ACOSTA: A new CNN poll finds that just one-third of Americans favor the tax plan, with two-thirds saying it will benefit the wealthy, instead of the middle class. Most Americans also believe that the president's vast real estate empire will prosper, too, despite his denials.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: This is going to cost me a fortune, this thing, believe me.

ACOSTA (on camera): That was false, right?

SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: No, because on the personal side, this actually could impact the president in a large way.

(CROSSTALK)

ACOSTA: ... balance out, corporate vs. personal, if he's going to come out of ahead?

HUCKABEE SANDERS: I'm not sure if he's done a side by side, but I know that there are a number of provisions that would negatively impact the president personally. And so we contend that those comments are still very consistent.

ACOSTA (voice-over): Part of the problem for the president is that he's breaking promises he made on the campaign trail to make wealthy hedge fund managers pay more.

TRUMP: The hedge fund guys are getting away with murder. They're making a tremendous amount of money. They have to pay taxes.

ACOSTA: But a tax break tailor-made for the hedge fund set, known as carried interest, was saved. GOP leaders don't want to talk about that.

REP. KEVIN BRADY (R), TEXAS: Look, carried interest, we can talk about that for the next hour, if you would like. But for most Americans, they could care less about that.

ACOSTA: Heading into next year's midterm elections, the White House isn't worried about the consequences. The president is betting the tax cuts will add to the gains on Wall Street, touting this year's stock market performance on Twitter. But, as a candidate, Mr. Trump sounded the alarm over what he saw as a market bubble.

TRUMP: Remember the word bubble. You heard it here first. I mean, I don't want to sound rude, but I hope, if it explodes, it's going to be now, rather than two months into another administration.

ACOSTA: Democrats complain Republicans wrote the tax bill under the cover of darkness, accusing some in the GOP like Tennessee Senator Bob Corker of changing their votes after sweeteners were added to the package. Corker rejected that.

SEN. BOB CORKER (R), TENNESSEE: I know that I'm being maligned over totally malicious stuff that's totally been disproven. I know people are having a good time with this. But it's just -- it's just malicious. I'm making this decision because I believe that it is best for the country, period.

ACOSTA: As for the president, he's defending another victory he frequently cites, his decision to tap Neil Gorsuch for the Supreme Court. Mr. Trump is slamming reports that he wanted to rescind his selection of Gorsuch after the judge criticized the president, calling the story fake news, adding, he never even wavered.

But there is one bit of fake news the president may welcome, as in the artificial version of Mr. Trump added to Disney's Hall of Presidents, though this robot appears to be all talk, no tweets.

(END VIDEOTAPE)

ACOSTA: Now, as for the president benefiting from the tax cuts that were just passed in the House, Mr. Trump could settle the issue once and for all and release his tax returns.

The press secretary said the president won't be doing that while he's under an audit. Of course, they have used that excuse time and again. But the fact is, Wolf, the president could release those returns anyway, anytime he wants. There is nothing preventing him from doing it. The IRS would allow him to do it right now, right here on THE SITUATION ROOM, if he wanted to do that, Wolf.

BLITZER: All right, thanks very much, Jim Acosta from the White House. Appreciate it.

Let's get some reaction to all of this from Senator Chris Coons. He's a Democrat on the Judiciary and Foreign Relations Committees.

Senator, thanks for joining us.

SEN. CHRIS COONS (D), DELAWARE: Thank you, Wolf.

BLITZER: First of all, do you believe do Democrats believe this House revote tomorrow morning provides a final opportunity to try and disrupt the passage, the final passage of this tax plan before it goes to the president for his signature?

COONS: Well, Wolf, I expect every Democrat in the Senate will vote against this tax package, both because of the process that got us here and because of the result and the likely impact on the American people.

This did not have to be a one-party-only bill. I worked hard across the aisle to propose alternative paths that would have led us to a significant middle-class tax cut, the sort of thing the president ran on, but that is not what this bill is. This is a huge giveaway to the very wealthiest Americans and the most profitable corporations.

I think there's no doubt that it specifically benefits real estate investors and those who earn their income from real estate. And in many cases, the modest tax cuts for the middle class are temporary and the big tax cuts for shareholders of corporations and for the wealthiest families, those will go on long-term.

BLITZER: I know you oppose the bill, obviously. But there are a lot of people in your home state of Delaware who will see their taxes go down, maybe as early as February.

Their paychecks are going to be a little bit bigger. They're going to be pretty happy about that. And a lot of your constituents are probably saying, yes, even though rich people, they're going to get some tax breaks, they're going to get some tax breaks as well.

[18:10:05]

COONS: Right.

And, Wolf, as I have said both at home and here, the problem with that is, who's going to end up paying for these tax cuts? The way it's structured, taxes will go up on many of the middle class after five years.

And, more importantly, right up front, Republicans said it was their intention to cut Medicare and Medicaid in order to pay for these tax cuts. We have already got House Republican leadership talking about entitlement cuts in the coming year, in order to be sort of their next step towards fiscal sanity.

I did work hard with Republicans, those who were concerned about the debt and deficit, to propose an alternative path that wouldn't have cost $1.5 trillion. But, ultimately, this turned into a straight party-line vote, Wolf.

BLITZER: As you know, a lot of corporations are based in your home state of Delaware.

COONS: Yes.

BLITZER: Their taxes are going to go down from 35 percent to 21 percent. That's good for Delaware-based corporations, right?

COONS: Well, my hope, Wolf, is that corporations will use those newfound profits or repatriated profits to invest in hiring people and in capital equipment, but there's no indication that they will.

Most will, instead, do stock buybacks or provide dividends or boosts to their senior management. I do think we could have structured this build differently, so that some of the new corporate revenue would end up being invested in infrastructure or being spent more likely on hiring people and on capital.

But this is just a straight corporate rate cut, and corporate leaders and corporate shareholders will do with it what they will.

BLITZER: But people will have more money to spend, whether they're you know, stockholders or corporate leaders. There's going to be a lot more money available if the corporate tax rate will go down, and it will go down from 35 percent to 21 percent.

COONS: That's right, Wolf, there will be more money flooding into corporations and into the wealthiest families in the United States.

And I can only hope that they will make up some of the projected drop in charitable giving and some of the projected needs that we have in terms of increasing skills, investment in infrastructure, and investment in capital equipment. That would be a good outcome. And, frankly, I don't hope that this fails. I hope that this succeeds and that, surprisingly, we will see 4, 5 percent growth in the next couple of years.

But as you said in the opening to this section, most Americans who have been polled on this bill oppose it and most economists who have studied it think it will simply add to the deficit and debt.

BLITZER: Won't it be good, though, for your constituents who have 401(k)s or have pension plans who invest in these big corporations and these big stocks? If they're doing better, your constituents are going to wind up doing better as well, right?

COONS: Well, it is true that those who have 401(k)s have already benefited from the rise in the stock market. It is unusual to do a tax cut of this size and this breadth at a time of near full employment and record corporate profits. Typically, a big tax cut like this is done in order to strengthen an

economy that is failing, not to add on top of it. But if that's what happens, that the total capital markets, the equity markets go up, then it should benefit those who have got 401(k)s, that's right.

BLITZER: And a lot of your constituents do have those kinds of retirement plans. It's going to be signed into law, presumably tomorrow. What will this mean from your perspective for the 2018 midterm elections?

COONS: Well, it depends how the average American feels about this bill once they really learn all the details and all the different provisions.

It was rushed through in a process that made it hard to really follow what was ultimately in the bill once voted on by the Senate, and what was in the bill when it came back from conference. Most surveys that I have seen nationally suggest that a majority of Americans dislike this bill, and they believe that it is designed to benefit the wealthiest, that it will benefit Donald Trump, President Trump, personally, and that it will benefit corporations, but not the middle class, which is what President Trump campaigned on.

We will have to see. We will see the actual impacts and then the American people will judge for themselves.

BLITZER: When the tax reform legislation goes through, what incentive do you believe there will be for the president to accept a deal down the road, a bipartisan deal, on Obamacare cost-sharing subsidies, for example, or to protect the 700,000 or 800,000 dreamers, the DACA legislation?

Do you think he will go ahead and accept those commitments?

COONS: I don't know. I hope that he will.

President Trump, when he announced that he was going to end the DACA, the deferred program, said that he wanted to see some bipartisan legislation to address it. And there have been diligent efforts by a bipartisan group of senators to try to come to a consensus bill that would put in statute, in law the protection that the DACA beneficiaries, about 800,000 of them, previously enjoyed.

[18:15:00]

We have got a lot of other end-of-year issues here, Wolf, that haven't yet been resolved. We have got about nine million American children who benefit from the Children's Health Insurance Program. That ran out three months ago, and states are going to have to begin having to shut down health care benefits through that program.

Community health center funding has run out. That's also something that needs to be extended. And there's a program that helps our intelligence community, the FISA program, that also runs out at the end of this calendar year. There's a lot on our agenda here, Wolf, that hasn't been dealt with,

and as we get to the end of this calendar year, there is a risk that a miscalculation or a failure to negotiate in good faith between the parties could lead to a government shutdown, which I think would be a big mistake.

BLITZER: You think all of that legislation is going to be passed between now and the end of the year?

COONS: What I'm expecting, Wolf, is that we will, instead, have a clean extension of the current spending bill until January.

And by the end of January, that whole package we just talked through will get taken up, negotiated and passed.

BLITZER: And you would vote for that, a temporary spending bill, to keep at least the government funded until January, is that right?

COONS: If it's a clean bill, yes.

BLITZER: That doesn't include anything else.

You serve on the Senate Foreign Relations Committee, Senator. If the president embraces everything in his national security strategy document which he released yesterday, that 55-page document that goes at length into all sorts of national security issues, would you be pleased?

And the follow-up question is, in that document, it clearly spells out that Russia was involved in the U.S. presidential elections, even though he didn't say that in his speech. But do you believe that he accepts everything in that document as belonging to him?

COONS: Wolf, that's the real challenge of the president's remarks yesterday. There was a real tension between the national security strategy document that was released, which I have not read in full -- I have only gotten an executive summary of it -- and the remarks that President Trump made in releasing it.

He made remarks that were very much more campaign-like, more typical of his nationalistic and isolationist stance during the campaign. But it's really at variance. It really differs with what was released in print.

As you referenced, the national security strategy in print recognizes that Russia is an aggressive -- is an adversary, is an aggressive foreign power, and that it has interfered in elections across a number of Western democracies, including our own.

President Trump has not said that. That is not something that he has said is a major challenge in the U.S.-Russia relationship. The national security strategy also, for example, talks about China as a revisionist power that is seeking to grow its influence in the Indo- Pacific at our expense. Yet one of Trump's first steps was to withdraw from the Trans-Pacific Partnership, which was principally designed in order to strengthen the United States' role in the Pacific and to diminish China's future opportunities for trade.

So, there's a number of ways in which the rhetoric doesn't meet the reality. It is my hope that the printed security strategy reflects the direction of the Trump administration will go.

BLITZER: Senator Coons, thanks so much for joining us.

COONS: Thank you, Wolf.

BLITZER: Just ahead, could there be any more last-minute surprises as we stand by for a tax bill vote in the Senate and that unexpected second vote that is now needed in the House of Representatives?

And what kind of pressure is the deputy FBI director facing from Republicans behind closed doors? Andrew McCabe, he is in the hot seat in the Russia investigation tonight.

(COMMERCIAL BREAK)

[18:23:15]

BLITZER: Breaking news tonight, a new snag for Republicans as they try to push landmark tax reform legislation across the finish line. The Senate is nearing a vote tonight, but it turns out that that will not necessarily be the final vote.

The House of Representatives will have to hold a second vote, because some technical changes to the legislation are now needed.

Joining us now, Democratic Senator Brian Schatz of Hawaii.

Senator, thanks so much for joining us.

SEN. BRIAN SCHATZ (D), HAWAII: Thank you.

BLITZER: Will the revote in the House have any impact, do you believe, on the passing of this tax reform bill?

SCHATZ: I doubt it. I think the vote will come down exactly the same, but it's an indicator of how rushed this is.

They didn't even consult with the Senate. They didn't consult with the parliamentarian to make sure that it complies with the rules that they're using to avoid working with Democrats. They're doing something called reconciliation, which allows them to do this on a party-line vote, but they're in such a rush that they made several mistakes, and so we're actually going to have to excise those offending provisions.

And then they going to have to take a revote. But to me, it's emblematic of what happens when you take major legislation, conceive of it in the dark, and rush it through. Lots and lots of things are going to come out, not just over the next days, but months and years. We're going to learn how awful this tax bill is.

BLITZER: So tell us how you're going to explain to your constituents out there in Hawaii why you're voting against a tax cut for them?

SCHATZ: It's not a tax cut for them.

You know, for people making $30,000 or less, very shortly, they will see a 10 percent increase. Most of the benefit goes to the very wealthiest individuals and also to corporations. And, you know, the message from the 2016 election, I thought, was that there was this populist uprising.

[18:25:00]

And it is shocking to me, really shocking, that they took $1.5 trillion worth of deficit spending and still couldn't find enough money to do a straightforward middle-class tax cut.

Listen, it's not that hard to do a middle-class tax cut if you're deficit-financing it. They freed up $1.5 trillion, and they still couldn't do a straightforward middle-class tax cut. And my constituents are very strongly against this bill.

Obviously, some people will see some tax relief, but the vast majority of people understand that this is essentially a wealth transfer from people who work for a living to people who already have wealth.

BLITZER: But a lot of the folks in your state are going to benefit if they have 401(k)s and corporations are going to have to pay less tax, going from 35 percent to 21 percent. Won't that be a benefit for people who rely on their retirement plans, their 401(k) plans or have pension plans and the pensions invest in these big kind of investments?

SCHATZ: Listen, I think you can find winners and losers in each tax provision, and you're describing who may benefit.

But I will tell you that the vast majority of people, middle-income, fixed-income individuals in the state of Hawaii are going to be hurt by this state and local deduction provision, which disallows them from deducting state and location taxes. So, essentially, they're going to pay their property tax and their state income tax, and then they're going to get taxed on that.

People in Hawaii and people across the country understand what an awful bill this is. And, you know, there's something more foundational here going on, which is that the tax code is an expression of what America cares about and what America values. And in this bill, we are telling people that we value work less than we value already being rich.

Now, there's nothing wrong with somebody who's been successful, but to the extent that passive income now is taxed at a lower rate than people who actually earn their money the old-fashioned way, by working for it, that's a reflection of values, and I think that's why people are so concerned about us entering into a new gilded age.

BLITZER: What incentive is there now for Republicans and President Trump, for that matter, Senator, to make a deal on Obamacare cost- sharing subsidies, as many of them promised, some of those Republican senators on the fence, or on DACA, the dreamers, who 700,000 or 800,000, who are here in the United States? They were promised that there would be a deal on that as well.

But what incentive is there once the president signs this into law?

SCHATZ: Well, I think, on cost-sharing subsidies, there are a number of Republican senators who understand that, without it, premiums are going to go up.

Now, repealing the individual mandate is estimated to cause a 10 percent increase in premiums. So they have an incentive to do at least something in the space of health care, because they are now going to be responsible for whatever happens in terms of premium increases.

I also think that there's a growing group of House members and Senate Republicans who are quietly trying to work on a bipartisan fix on DACA. We don't know where we're going to end up. I don't think it's going to get done in the next 48 to 72 hours, but I remain hopeful that we are going to find some space for bipartisanship in that area in the early part of next year.

BLITZER: Yes, you have got to pass it in the Senate, but it's also got to pass in the House of Representatives, where it could be more problematic.

Senator Schatz, thanks so much for joining us.

SCHATZ: Thank you.

BLITZER: Just ahead, will the Senate vote on a tax bill as planned? A late snafu unfolds in the House. We're watching all of this unfold, as well as growing public disapproval of the Republican plan.

And the FBI deputy director now facing House investigators, as Republicans accuse the bureau and the special counsel's team of bias. What will it mean for the Russia probe?

(COMMERCIAL BREAK)

BLITZER: We're following the breaking news, a surprise delay in the expected passage of the Republican tax bill. We're standing by for a Senate vote tonight, but the House of Representatives will have to revote on the measure tomorrow, after some technical provisions were discovered to violate rules.

[18:33:06] Let's dig deeper with our correspondents and specialists. And Matt, very quickly, is this going to make much of a difference? The revote tomorrow morning? The president will still get the legislation he wants. He'll sign it into law and that will be that?

MATT VISER, DEPUTY WASHINGTON BUREAU CHIEF, "BOSTON GLOBE": Yes, I mean, there's not going to be any changes in votes here. It's more of an embarrassment, thing, for House Republicans and Senate Republicans. And it reinforces the idea that this was a rushed thing. That they didn't check with the Senate parliamentarian before the House voted.

It also reinforces the partisan nature of this. Because the whole reason they're having to jump through these hopes is to cross that 50- vote threshold with all Republican votes. But in the end, it won't matter. Paul Ryan will get another chance to hammer that gavel tomorrow and get that vote for the House.

BLITZER: You would have thought they had have crossed all the "T's" and dotted all the "I's," a 570-page piece of legislation.

Ron Brownstein, the legislation, though, the bill not very popular.

RON BROWNSTEIN, CNN SENIOR POLITICAL ANALYST: Right.

BLITZER: Our new CNN poll says 33 percent favor the GOP tax reform plan, 55 percent oppose, 11 percent unsure. What's your analysis of that?

BROWNSTEIN: It's just -- it's hard to overstate how unusual this is, where we are. I mean, Ronald Reagan got two dozen Republican senators to vote for his tax cut in 1981 -- Democratic senators, excuse me. George W. Bush got a dozen. Barack -- Donald Trump has not been able to get a single Democratic senator to vote for this, even though ten are up in states that he won.

In polling, this is not only significantly less popular than earlier tax cuts like the 1981 and 2001 ones, like I just mentioned, it's also less popular than the 1993 Bill Clinton tax increase. And it's significantly less popular than the Affordable Care Act was, when it was passed. When it was averaging at around 42, 43 percent support. This is in the low 30s, consistently.

So, this is, I think, clearly a policy success for the Republicans. It is something that Republican presidents want to do. As I said, Reagan and Bush, both cut taxes in their first years. But it is an enormous political gamble. There is no question about that. And just as the ACA was a big factor in the 2012 election that propelled the Republicans to the majority, they still have not surrendered in the House. I think there are going to be Republicans, particularly in white-collar districts, who are going to face some very difficult questions about the impact of this bill.

BLITZER: What does it mean, Rebecca, for the Trump presidency?

REBECCA BERG, CNN POLITICAL ANALYST: Well, I think, on its own, obviously, Wolf, it's a huge policy coup for Donald Trump, and for Republicans more broadly. It shows that Republicans, given power in Washington, can get something done. And that was a big part of the momentum behind this Republican push to get this passed in Congress today.

But I think, also, if you look at this more broadly, it tells us a lot about what we can expect moving forward. And particularly, how unpopular this bill was, that it was only passed on a partisan basis, I think, tells us that the president doesn't really have the sort of political capital, the juice, you could say, to push through tough legislation in the future.

And so if there is a bill that he's wanting to do on a bipartisan basis, like infrastructure spending, for example, he might not be able to make some of those big bipartisan deals that he's been wanting to make.

BLITZER: All right, everybody, stand by. Samantha, we're going to get to you in a moment. Got to take a quick break. There are new developments unfolding, including a speech by Donald Trump Jr. That's causing some waves out there right now. We'll have a significant clip, right after this.

(COMMERCIAL BREAK)

[18:41:18] BLITZER: There's more breaking news we're following. The FBI deputy director, Andrew McCabe, testified today before the House Intelligence Committee's Russia investigation, testifying behind closed doors. At the same time a key Republican senator is calling for McCabe to be fired over alleged bias and conflict of interest.

We're back with our panel and Samantha, let me play a clip. This is Donald Trump Jr., speaking just a little while ago, West Palm Beach, before a group of conservative college student activists. I'm going to play the clip, and then we'll all discuss.

(BEGIN VIDEO CLIP)

DONALD TRUMP JR., DONALD TRUMP'S SON: Imagine what would happen if we rolled back the clock to 2008, and a conservative director of the FBI and high-up people in the FBI that were leading all these investigations wrote an e-mail about an insurance policy, the dossier, in the unlikely event that Barack Obama was elected president?

What do you think would happen? Do you think the media would cover that? Yes. Do you think it would be brushed under the rug, like, "Oh, it's nothing, it doesn't mean anything"? There would be revolution in the streets.

So, I'm glad that this is coming out now, because it's -- it is good, because real people have to see this. You know, my father talked about a rigged system throughout the campaign, and people are like, "Oh, what are you talking about?" But it is. And you're seeing it. There is and there are people at the highest levels of government that don't want to let America be America.

(END VIDEO CLIP)

BLITZER: All right, let me get your -- you worked with the National Security Council during the Obama administration. What's your reaction when you hear that?

SAMANTHA VINOGRAD, CNN NATIONAL SECURITY ANALYST: My reaction is that yet again he is politicizing national security work in the FBI. Perhaps it's a purposeful misunderstanding, but the FBI is not a partisan organization. People that work at the FBI sign up to serve their country regardless of who the president is. And by politicizing the FBI, frankly, he's doing Russia's job for them.

We know from the director of national intelligence that Vladimir Putin launched an influence and messaging strategy to undermine confidence in our democratic institutions. By making these kinds of comments and by saying that there's a sick system or a rigged system, he's playing right into Putin's hands and making our institutions look weak.

BLITZER: What do you think, Matt?

VISER: The "don't let America be America" was kind of a striking comment, at the end, to me. But what is most striking is that the president's son is out there talking at all on some of this.

VINOGRAD: During an ongoing investigation.

VISER: During an ongoing investigation. Just last week, he was for eight or nine hours, talking behind closed doors with congressional investigators. So I think the idea of him going out and, you know, making politicized comments is, you know -- maybe if you're his lawyers, is probably an unwise idea.

BLITZER: Yes, I'm sure his lawyers are not necessarily happy. Go ahead, Ron.

BROWNSTEIN: What I was going to say, what it reminded me of the most, actually, was Steve Bannon's speech the night before the election in Alabama, about Roy Moore. Where he essentially argued that anybody raising questions about the character or ethics of Moore or Trump are not really going after them, they're going after you. They're trying to silence you, the voters, who are supporting them, and it's elites trying to overturn your enhanced influence in national elections.

And it's another version of that argument, trying to delegitimize any, you know, independent inquiry into these kinds of matters by asserting that those doing it are partisan. It works with a portion of the electorate, but clearly not a majority of the electorate.

And when you look at, you know, where the president is on questions like honesty and trust and belief about what happened in Russia and whether he is fairly cooperating, this is an argument that, like many things the Republicans are doing, including the tax bill, is more about speaking to a narrow base than it is about expanding that base.

BLITZER: But he says that -- and Ron makes a fair point, Rebecca. When Donald Trump Jr. -- Donald Trump Jr. says, "There are people at the highest level of government that don't want to let America be America." Those are -- that's a very, very strange and powerful indictment of people at the highest level of the federal government.

REBECCA BERG, CNN POLITICAL REPORTER: It is. And it's also an insult to the civil servants working in government, in the intelligence community and otherwise, who are sacrificing for this country, who are in these jobs, oftentimes they're nonpartisan jobs, they're career civil servants, working on behalf of the U.S. government.

Their whole job is to try to help the country. And so, it's sort of an insult to hear that from the president's son if you are one of those people working at the State Department, working at Treasury, who has been there for multiple administrations, doesn't really care about the political side, but you think you're doing something good on behalf of your country.

BLITZER: Well, you've heard, Samantha, the president, not the president's son, but the president himself question the U.S. intelligence community, question the law enforcement community and the FBI. He's raised serious questions about these basic institutions of the federal government.

SAMANTHA VINOGRAD, CNN NATIONAL SECURITY ANALYST: He's questioned the credibility of Jim Clapper, John Brennan. I mean, these are people that have served, like myself, under Republicans and Democrats. And to your point, we didn't sign up to serve Barack Obama. We signed up to serve our country.

And again, to come back to how this plays in the national security space, this is what Russia wants. If you read the DNI report, it says over and over again that Vladimir Putin wants to undermine our institutions. We now have a situation where the president himself and the president's son are doing exactly that. They're undermining the credibility of the FBI, the intelligence community, and in other ways, the State Department when they undercut Secretary Tillerson.

BLITZER: These are serious, serious condemnations.

MATT VISER, DEPUTY WASHINGTON BUREAU CHIEF, BOSTON GLOBE: The other aspect of this is, you know, Republicans right now want to be talking about taxes. You know? Ron alluded to this earlier about the political challenges of that, but they want to sell this, and they want to sell their victory. And you know, Donald Trump Jr. is sort of reintroducing Russia into the dialogue about President Trump. So, it's a topic that is not great for them.

BLITZER: You know, Ron, Senator Grassley is the chairman of the Judiciary Committee. He says he wants the deputy FBI Director Andrew McCabe out of the FBI. Do you think that's a position that's welcomed by the White House?

RON BROWNSTEIN, CNN SENIOR POLITICAL ANALYST: It may be welcomed by the White House, but I think Republicans are really heading for a real fissure over this whole question of how belligerent you can be toward the Mueller investigation, because on the one hand, you know, all the way through, I think most Republicans have recognized that if the president moves to try to terminate this investigation or fire the special counsel, that that would intensify the electoral wave that seems to be bearing down on them after Virginia, New Jersey, and Alabama.

On the other hand, you've had more House Republicans, sort of the Fox News and talk radio commentator, and now in his own way, all giving credence to the idea that the FBI is biased against the president. And I think the risk for them is that he may over -- the president may overread the kind of space that they are giving him and go in a direction that ultimately, I think, most Republicans still understand would be an enormous risk to them in the 2018 election.

So, it's striking to me that we haven't seen more voices in the GOP kind of trying to pull back from this ledge, because most of the momentum keeps going towards more confrontation, even though the president's lawyers and the president himself says he's not now considering a dismissal.

BLITZER: All right. Everybody, stick around. There's more news we're following, more breaking news. What federal investigators are now revealing tonight about that deadly Amtrak derailment.

And now, the U.S. is blaming North Korea for the world's biggest cyber attack. How will Washington retaliate against the Kim Jong-un regime?

(COMMERCIAL BREAK)

[18:53:40] BLITZER: Breaking news tonight. New information just out about that deadly Amtrak train derailment in Washington state.

Let's go to our senior national correspondent Kyung Lah. She's on the scene for us, about 50 miles south of Seattle.

Kyung, the National Transportation Safety Board has recovered the train's data recorders. What are you learning?

KYUNG LAH, CNN SENIOR NATIONAL CORRESPONDENT: Both of the event data recorders in the front and rear of the train. They have recovered both of them, Wolf. And they also in this news conference that wrapped up a short time ago, said that the emergency brake was automatically activated, meaning that the crew did not hit the emergency brake.

But in this early part of the investigation, the NTSB saying they still cannot answer the question of why this happened.

(BEGINN VIDEOTAPE)

LAH (voice-over): Cranes slowly lift the first of the mangled Amtrak passenger cars off the track and highway.

TRAVIS PHELPS, WASHINGTON STATE DOT: This is very careful, delicate operation. We've got some weather in the area today, wind and rain. That can complicate these big moves.

LAH: One by one, moving to nearby Joint Base Lewis McCord, where investigators hope to learn why, on its very first run on a new passenger route, the train sped at 80 miles per hour. Much faster than the posted 30-mile-per-hour speed limit for the curved section of track.

Investigators already recovered the train's rear black box. And they also know this. [18:55:00] Life saving technology called Positive Train Control, was

not activated on this brand-new passenger rail line. PTC forces speeding trains to automatically slow down.

BELLA DINH-ZARR, NTSB SPOKESWOMAN: We're going to find out exactly whether PTC or positive train control would have prevented this accident. It's a great disappointment that Positive Train Control has not been implemented in every single railroad across the country because it can prevent these exact types of accidents, which are overspeed derailments.

LAH: Positive Train Control won't be the only safety question.

MAYOR DON ANDERSON, LAKEWOOD, WASHINGTON: I'm an advocate for safety. I'm not so concerned about the cost, if you can't afford to do it, the best way through our community, I would rather not have it there.

LAH: Lakewood Mayor Don Anderson and his city council fought to stop the train line citing safety concerns. $180 million in federal stimulus money spurred Washington state to move the passenger line from the sparsely inhabited coastline directly through towns like Lakewood and over Interstate 5. Anderson warned just two weeks ago that disaster could be coming.

ANDERSON: Come back when there is that accident, and try to justify not putting in those safety enhancements.

LAH (on camera): Maybe you didn't predict this exact thing, but to have seen it coming.

ANDERSON: You know, there's certain degree of guilt associated with it. Maybe we gave up too soon.

LAH: You feel guilty?

ANDERSON: Not intellectually, but emotionally, we don't like to lose. And maybe if we had won, things would have been different.

(END VIDEOTAPE)

LAH: Now, the NTSB added that the Positive Train Control was in the process of being installed, but was not functional -- Wolf.

BLITZER: Kyung Lah reporting for us. Kyung, thanks very much.

Other news we're following, new developments in a global cyber attack. CNN's Brian Todd is here with us.

Brian, the United States now declaring that North Korea is to blame.

BRIAN TODD, CNN CORRESPONDENT: They are, Wolf. You know, this cyber attack called "WannaCry" was devastating, and it even put lives at immediate risk.

Tonight, U.S. officials tell us they're hoping this public shaming of North Korea will put more pressure on Kim Jong-un's regime and get countries like China and Russia to apply pressure as well.

(BEGIN VIDEOTAPE)

TODD (voice-over): It is the biggest cyberattack the world has ever seen. Hundreds of thousands of computers around the world in about 150 countries rendered useless. Businesses, homes, and hospitals were hit, holding critical systems hostage.

Even parts of Britain's national health service were crippled, putting lives at risk. Tonight, the U.S. government is publicly placing the blame for that cyber assault uniquely dubbed "WannaCry" squarely on Kim Jong-un's army of hackers.

THOMAS BOSSERT, ASSISTANT TO THE PRESIDENT FOR HOMELAND SECURITY: It was directed by the government of North Korea. We're also comfortable in saying that there were actors on their behalf, intermediaries carrying out this attack and that they carried out those types of attacks on behalf of North Korean government in the past.

TODD: Sources tell CNN British intelligence officials and Microsoft had previously concluded that groups associated with the North Korean regime were responsible for the "WannaCry" hack which occurred in May, but today was the first time the U.S. publicly singled out the Kim regime.

DANIEL RUSSEL, ASIA SOCIETY POLICY INSTITUTE: North Korea is in the extortion business. It's in the intimidation business. And frankly, it's in the larceny business.

TODD: Experts say the North Korean attack was unique for a foreign government because it was ransomware, designed to shut down computers until users paid ransom money to unlock their screens. But tonight, officials say in the "WannaCry" hack, the attackers botched the ransom technology and didn't make much money.

BOSSERT: Once word got out that paying didn't unlock your computer, the payments stopped.

TODD: Still, the disruption was widespread and costly, carried out by a cyber war team that experts say has become dangerously proficient.

Kim Jong-un is believed to have an army of more than 6,000 hackers, most of them from North Korea's top intelligence agency. The best of them work for an elite unit called Bureau 121, the same unit as believed to have sacked Sony Pictures and has infiltrated systems in other countries.

JASON HEALEY, COLUMBIA UNIVERSITY: They're causing disruption of banks, ATM machines in South Korea. They're attacking the finance sector and affecting SWIFT, one of the main ways that we move money around to do financial heists.

TODD: Financial heists designed not just to disrupt the West but to generate real money for the Kim regime.

RUSSEL: That money has been used in turn by the regime for its nefarious purposes, for the nuclear program, for the missile program.

TODD: Publicly, White House officials say they don't have many options for retaliating against the Kim regime for the "WannaCry" attack.

BOSSERT: President Trump has used pretty much every lever you can use short of starving the people of North Korea to death.

(END VIDEOTAPE)

TODD: But behind the scenes, White House officials tell us they are taking steps to hinder North Korea's hacking capabilities. Experts tell us that could mean U.S. cyber command is launching their own offensive to disrupt Kim's hackers -- Wolf.

BLITZER: Very disturbing. Brian Todd reporting. Thanks very much.

That's it for me. Thanks for watching.

"ERIN BURNETT OUTFRONT" starts right now.