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Trump vs. Bannon; Paul Manafort Sues Justice Department; Interview With Virginia Senator Mark Warner. Aired 6-7 ET

Aired January 3, 2018 - 18:00   ET

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


[18:00:08]

WOLF BLITZER, CNN ANCHOR: Happening now, breaking news: Treasonous. That's what Steve Bannon is calling the decision by Donald Trump Jr. and others to meet with Russians at Trump Tower.

The president's former chief strategist unloading in a stunning new book, dishing dirt on the White House, the Trump family and the Russia investigation.

In it for himself. The president is firing back, portraying Bannon as self-serving and downright crazy. Mr. Trump's anger is clear, but are his attempts to disown one of his most prominent former advisers believable?

Taking Mueller to court. Former Trump campaign chairman Paul Manafort is suing the special counsel, challenging Robert Mueller's authority to charge him with crimes unrelated to the 2016 Trump campaign. Does Manafort have a case?

And defending the dossier. The leaders of the firm behind a former spy's investigation of Trump-Russia ties says the evidence uncovered was shocking. Why are Republicans rejecting their plea to make their congressional testimony public?

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, an all-out war between the president of the United States and his former chief strategist, Steve Bannon, who has turned on the Trumps in an explosive new book.

According to published excerpts, Bannon calls the infamous Trump Tower Russia meeting treasonous. He predicts Donald Trump Jr. will crack like an egg under the scrutiny of the Russia investigation. He alleges the special counsel's probe is all about money laundering.

Tonight, the president is firing back in a scathing official White House statement, claiming Bannon has -- quote -- "lost his mind."

Mr. Trump insists Bannon has nothing to do with him or his presidency, even though he was one of his closest and most powerful advisers. The White House says the president is furious and is disgusted by Bannon's claims, dismissing the entire book as "trashy tabloid fiction."

It claims in very specific detail that Mr. Trump didn't want or expect to win the White House and that even members of his inner circle thought he was unqualified for the job.

Also breaking tonight, former Trump campaign Paul Manafort is suing the special counsel and the Justice Department over the Russia probe. He's challenging Robert Mueller's authority to charge him with alleged crimes that have nothing to do with the 2016 campaign.

I will get reaction this hour from the vice chairman of the Senate Intelligence Committee, Senator Mark Warner. And our correspondents and specials are also standing by.

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

Jim, this Trump-Bannon grudge match is truly extraordinary. So are so many of the claims in this new book on the Trump presidency.

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Absolutely, Wolf.

The new year is starting off with a bang here at the White House, as a new war of words between President Trump and his former strategist, Steve Bannon, their disagreement could not be more crucial to the future of the administration, that is, whether or not the president's own son had committed treason during the campaign.

But the president is apparently furious with Bannon for going after the first family. As one source close to the White House told me, they are holding nothing back here at the White House.

(BEGIN VIDEOTAPE)

ACOSTA (voice-over): The gloves inside Trump world and off and the fists are flying between the president and his former chief strategist Steve Bannon.

In excerpts from a new book, "Fire and Fury" by Michael Wolff published by "New York" magazine and also obtained by "The Guardian," Bannon purportedly weighs in on Donald Trump Jr.'s meeting last year with Russians offering dirt on Hillary Clinton that included campaign chairman Paul Manafort and son-in-law Jared Kushner.

Bannon told the author: "Even if you thought this was not treasonous or on patriotic or bad 'expletive,' and I happen to think it's all of that, you should have called the FBI immediately."

Bannon speculates that the special counsel's office is focusing on money laundering, claiming that federal investigators have a path to Trump that "goes right through Paul Manafort, Don Jr. and Jared Kushner. It's as plain as the hair on your face," adding, "They're going to crack Don Jr. like an egg on national TV."

That's a departure from what Bannon told "60 Minutes" months ago.

STEVE BANNON, FORMER WHITE HOUSE CHIEF STRATEGIST: It's a total and complete farce. Russian collusion is a farce.

ACOSTA: In a statement, the president questions Bannon's sanity, saying: "Steve Bannon has nothing to do with me or my presidency. When he was fired, he not only lost his job. He lost his mind. Steve was rarely in a one-on-one meeting with me and only pretends to have had influence to fool people with no access and no clue whom he helped write phony books.

"Steve pretends to be at war with the media, which he calls the opposition party, yet he spent his time at the White House leaking false information to the media to make himself seem far more important than he was. It's the only thing he does well."

[18:05:00]

Press Secretary Sarah Sanders piled on, offering the president's reaction.

SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: I think furious, disgusted would probably certainly fit when you make such outrageous claims and completely false claims against the president, his administration and his family.

ACOSTA: Writing in "New York" magazine, Wolff explains Mr. Trump and his team were shocked they won on election night and that the candidate's wife, Melania, was distraught.

Don Jr. told a friend that his father, or DJT, as he calls him, "looked as if he had seen a ghost. Melania was in tears and not of joy."

The first lady's office slammed that account, saying in a statement: "The book is clearly going to be sold in the bargain fiction section."

The book about the Trump White House illustrates how the feud between the president and Bannon has escalated since the former chief strategist was fired last summer.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I like Mr. Bannon. He's a friend of mine. But Mr. Bannon came on very late. You know that. I went through 17 senators, governors, and I won all the primaries.

ACOSTA: Even Don Jr. is weighing in, tweeting: "Wow, just looked at the comments section on Breitbart. Wow. When Bannon has lost Breitbart, he's left with, um, nothing."

The drama detailed in the book has somehow overshadowed a stunning tweet from the president on North Korea, who said: "North Korea leader Kim Jong-un just stated that the nuclear button is on his desk at all times. Will someone from his depleted and food-starved regime please inform him that I too have a nuclear button, but it's a much bigger and more powerful one than his and my button works."

Former Vice President Joe Biden told CNN that kind of rhetoric is reckless. JOSEPH BIDEN, FORMER VICE PRESIDENT OF THE UNITED STATES: Look, the only war that is worse than one that is intended is one that is unintended. This is not a game. This is not about, can I puff my chest out?

(END VIDEOTAPE)

ACOSTA: As for North Korea, White House Press Secretary Sarah Sanders said it's a "fact' that the president's nuclear button is bigger than Kim Jong-un's.

But the fact is U.S. officials have said for years there is no actual nuclear button, there is a system in place that launches the nation's nuclear arsenal. Sanders made that comment shortly before she told reporters that people are entitled to their own opinions, but not their own facts.

But in that case, Wolf, she had her facts wrong -- Wolf.

BLITZER: All right, Jim, thank you, Jim Acosta at the White House.

Now to the breaking news in the Russia investigation. The indicted former Trump campaign chairman, Paul Manafort, is challenging the authority of the special counsel, Robert Mueller, in a new lawsuit.

Let's bring in our justice correspondent, Jessica Schneider.

Jessica, there's new talk of broader efforts on the part of Republicans to push back on the Russia probe.

JESSICA SCHNEIDER, CNN CORRESPONDENT: Yes, there is, Wolf.

This really seems to be Manafort sending a message here with this lawsuit. He's arguing that the special counsel should not have carte blanche to prosecute alleged crimes that do not specifically relate to the 2016 election.

Manafort has been charged with money laundering and other crimes that actually stem from his lobbying work in Ukraine. Now, of course, special counsel Mueller's mandate was to investigate Russian meddling and any matters that arise from the investigation. But Manafort's lawsuit says that that mandate is just too broad.

This lawsuit comes at the same time that the founders of the research firm Fusion GPS have written a biting opinion piece blasting Republican critics of their controversial Steele dossier and pressing lawmakers to dig deeper into the president's finances.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Tonight, the founders of Fusion GPS say lawmakers' Russia probes aren't on the right track and they're urging congressional investigators to focus on bank records and potential money laundering after their own research partnership with former British spy Michael Steele revealed widespread evidence that Mr. Trump and his organization had worked with a wide array of dubious Russians in arrangements that often raised questions about money laundering.

The push from Fusion GPS' leaders, who say the firm spent more than 21 hours testifying on Capitol Hill, comes in a "New York Times" op-ed, where they slam Republicans for refusing to follow the money.

"We suggested investigators look into the bank records of Deutsche Bank and others that were funding Mr. Trump's businesses. Congress appears uninterested in that tip. Reportedly, ours are the only bank records the House Intelligence Committee has subpoenaed."

The president has repeatedly dismissed questions about any financial ties to Russia.

TRUMP: I have no dealings with Russia. I have no deals in Russia. I have no deals that could happen in Russia because we have stayed away. And I have no loans with Russia.

SCHNEIDER: But the Fusion GPS founders say they told lawmakers about possible money laundering schemes with Russians that span from Manhattan to Sunny Isles Beach, Florida, from Toronto to Panama.

Trump has admitted a real estate sale to at least one Russian.

TRUMP: The closest I came to Russia, I bought a house a number of years ago in Palm Beach, Florida, and I bought the house for $40 million, and I sold it to a Russian for $100 million, including brokerage commissions. I guess probably I sell condos to Russians. OK?

SUSAN HENNESSEY, BROOKINGS INSTITUTION: Maybe he was not successful in closing a deal, but certainly they were attempting to do that. And certainly there were business dealings with at least Russian nationals in the United States. And that should all be fair game for investigators.

[18:10:08]

SCHNEIDER: The White House isn't commenting on the Fusion GPS op-ed, but its founders point out that both Democrats and Republicans funded the controversial anti-Trump research.

Republicans have seized on the dossier, claiming it was the reason why the FBI launched its Russia investigation. But the op-ed rejects that argument. "As we told the Senate Judiciary Committee in August, our sources said the dossier was taken so seriously because it corroborated reports the bureau had received from other sources, including one inside the Trump camp."

No word on who that source could be, though "The New York Times" reported last weekend that George Papadopoulos told Australia's top diplomat in London that the Russians reached out to him with promises of dirt on Hillary Clinton.

The former director of national intelligence backed up that claim that the dossier did not prompt the FBI's investigation.

JAMES CLAPPER, CNN NATIONAL SECURITY ANALYST: There were other factors that I think were the stimulus for the investigation.

SCHNEIDER: Meanwhile, in the special counsel's probe, CNN has learned that Trump's lawyers held talks with Mueller's team just days before Christmas to get a read on the special counsel's next steps, since the White House has handed over all requested documents so far and several current and former White House staff have been interviewed.

The president's team had repeatedly insisted the investigation would be wrapped by the end of 2017. But the founders of Fusion GPS cast a more ominous tone at the end of their op-ed. "The public still has much to learn about a man with the most troubling business past of any United States president. Congress should release transcripts of our firm's testimony so that the American people can learn the truth about our work and most important what happened to our democracy."

(END VIDEOTAPE)

SCHNEIDER: But Senate Judiciary Chairman Chuck Grassley saying tonight that his committee will not release the transcript of its interview with the founders of Fusion GPS.

Grassley's office saying it would taint other witnesses and impact the ongoing investigate. A spokesman for Grassley is also criticizing Fusion GPS for not answering renewed calls for them to testify at a public hearing.

But tonight Fusion GPS has since fired back, saying Grassley is mischaracterizing the group's testimony, and then turning it around, saying while they appreciate the interest in a public hearing, they say others, like Donald Trump Jr., Wolf, they say he should also be called to testify publicly.

BLITZER: Yes, very, very intriguing indeed. Thanks very much, Jessica Schneider, with that report.

Let's talk about the breaking news with a key figure in the Russia investigation in Congress.

We're joined by the vice chairman of the Senate Intelligence Committee, Democrat Mark Warner of Virginia.

Senator, thanks so much for joining us.

SEN. MARK WARNER (D), VIRGINIA: Wolf, thank you. Happy new year.

And, boy, oh, boy, just listening to this first few minutes of your report tonight, it's almost surreal. You just -- you can't make this stuff up. You have got, on one hand, the president's top political adviser basically saying the president's family were almost traitorous.

You have got his indicted campaign manager trying to sue the FBI. And you have got a document that was produced by a known British Secret Service agent, in effect, the people who provided that document, GPS Fusion, saying there's much more to see in terms of financial ties. I think this is why we have got to finish our investigation, Bob

Mueller has got to finish his investigation. And the more of this that can be made public, the better, so that public can reach their own conclusions.

BLITZER: I want to get to that investigation. A lot of details I want to go through, but according to this new book "Fire and Fury" by Michael Wolff, Steve Bannon, the former chief strategist for the president, he called that June 2016 Trump Tower meeting in New York treasonous and unpatriotic.

He said they should have immediately called the FBI. But Bannon, he joined the campaign after that meeting. How much stock do you put into those comments by Steve Bannon?

WARNER: Listen, I don't normally look to Steve Bannon as a source, but this is something that "TIME" magazine called kind of the alter ego of President Trump early on when they were so tight in his early stages of his administration.

I do think it's clear to me that the Trump individuals, when they had this meeting, where the Russians offered dirt on Hillary Clinton, they should have under it over to law enforcement. Clearly, you saw a report from "The New York Times" that another Trump affiliate, Mr. Papadopoulos, who talked to the Australian ambassador, the Australians figured it out when some of those e-mails starting coming into the public sphere.

They turned that information of this dirt offer over to the FBI. I do feel that there were clear evidence that there were a series of Russian overtures to Trump Organization and Trump campaign officials. And it bothers me a great deal that there was not more forthcomingness to law enforcement.

BLITZER: Yes, Bannon himself says they should have gone to the FBI and revealed that kind of information. That's why he uses the words unpatriotic and treasonous.

[18:15:08]

He also echoes these same allegations -- this is truly amazing -- same allegations from the founders of Fusion GPS. Bannon says -- and I'm quoting him now -- "This is all about money laundering" and that it goes through Deutsche Bank.

What is your reaction, Senator, to that?

WARNER: There have been, beyond Mr. Bannon's allegations and GPS Fusion's allegations, lots of stories and other rumors floating around about Deutsche Bank, who was a major banker of the Trump Organization.

This clearly falls into the criminal context if there was money laundering involved. That would be the purview of Bob Mueller. Our focus is more on the counterintelligence and the Russian interference and the Russian potential collaboration or collusion. But, again, all of these stories may end up at the same place. And

it's why these investigations ought to have the chance to finish themselves and let us go to where the facts lead us, and clearly we see every few weeks a new set of facts emerge through the public, some of these that we have been able to investigate, but it's why these investigations have to see their way through to the finishing point.

BLITZER: Based on what you know, Senator, do you believe there was money laundering, which would be illegal, with the Russians?

WARNER: Wolf, as you have asked me about collusion, as you have asked me throughout this investigation, I'm going to reserve my final judgment until we have all the facts, until we interview all the witnesses.

And, candidly, one of the things that I'm hoping and believe that's critical, again, for those of us on the committee, but also for the public at large, is that the principals, people like Donald Trump Jr., Jared Kushner, Michael Cohen, Mr. Trump's lawyer, maybe the Fusion GPS folks, all have a chance to come back and testify before the Senate Intelligence Committee.

I would like as many of them in public as possible, so that we as members have a chance to ask them and judge the character of these witnesses before we reach final conclusions.

But, boy, oh, boy, there's -- as we've just seen from your reports today, and the incidents today, when you have got individuals like the president's top political adviser, at least for some period of his campaign and through the early part of his presidency, making these kind of claims, those claims have to be investigated.

BLITZER: Listen to this exchange, Senator, that the president had with reporters from "The New York Times" about his finances earlier in July of last year. Listen to this.

(BEGIN AUDIO CLIP)

QUESTION: Mueller was looking at your finances, your family's finances unrelated to Russia. Is that a red line?

QUESTION: Would that be a breach of what his actual...

TRUMP: I would say, yes.

By the way, I would say I don't -- it's possible that there's a condo or something, because I sell a lot of condo units. And somebody from Russia buys a condo. Who knows? I don't make money from Russia.

(END AUDIO CLIP)

BLITZER: It's hard to understand unless you were reading what he said. But he said, yes, he would consider it a breach, a red line, if the investigators went after his personal finances.

What do you say about that? WARNER: Well, I think, clearly, Bob Mueller's charge is to look into

crimes that may have been committed in terms of Russian interference in the election or things that arose out or may have caused that kind of collaboration.

So I think Mr. Mueller's investigation is going to -- I think he's been obviously very tight-lipped about where it's headed, but I think he's per suing all angles. He's already got one guilty plea from Mr. Flynn and two indictments. I think there will probably be more coming.

And our investigation is more around the counterintelligence issues on what happened and how we make sure it doesn't happen again. But part of that will also deal with, could the Russians have any kind of undue influence on individuals involved in campaigns?

There again, I think we have got more facts to uncover. I think there are facts that we have uncovered that at the end of the day, when we come to a conclusion, will have to be reported. But this has got to play itself out.

I know everybody wants, what have you heard so far? Our job is to finish this job before we present a final product, though.

BLITZER: The president says -- he said last July in that "New York Times" interview, "I don't make money from Russia."

Is he telling us the truth?

WARNER: You and others will have to wait for the end of our report and obviously the conclusion of the Mueller investigation.

But as these issues are raised up, whether by Mr. Bannon, who is, at least until recently, a very close affiliate, and associate, and advocate for the president, and when you have got a group like Fusion GPS both raising similar issues around the finance question, clearly, somebody has to look into this.

[18:20:07]

BLITZER: Yes. As they used to say, they often still say, follow the money. And I assume Robert Mueller and his team are doing exactly that.

Senator, there's more we need to discuss. Other developments unfolding as we speak. We will take a quick break. We will be right back.

(COMMERCIAL BREAK)

BLITZER: We're back with the vice chairman of the Senate Intelligence Committee, Senator Mark Warner. We're following the breaking news.

The president's former chief strategist, Steve Bannon, is calling the Russia meeting over in Trump Tower, in New York City, treasonous, according to a new book. And we're also following a lot of new information in the Russia investigation.

[18:25:02]

Senator, do you want Steve Bannon to come before your Senate Intelligence Committee and testify?

WARNER: If he has got a factual basis for these allegations, particularly one that you hadn't mentioned yet, that he assumed that the participants of that meeting then were brought up and met Mr. Trump himself, I would like to find out whether that's true or not.

I would like to find out why he made these claims about money laundering, about this meeting being treasonous. Obviously, I agree that this meeting should have been reported to the FBI. If he has got a story to tell, I would like him to come before our committee and before Mr. Mueller and give testimony, yes.

BLITZER: Because he says in this new book he finds it hard to believe, almost impossible to believe, that Donald Trump Jr. wouldn't have introduced those Russians who came to Trump Tower to the president, to the then candidate himself.

Is there any evidence that Donald Trump as candidate actually met with those Russians at Trump Tower when they came to the meeting?

WARNER: Wolf, I would let Mr. Bannon try to have a chance to explain that allegation.

But let's -- one thing we do know is that that meeting was not the first time that Russians had offered dirt on Hillary Clinton. You have got that meeting. You have got the overtures to Mr. Papadopoulos, where he already in that case pleaded guilty to lying to the FBI because he didn't come forward with some of that information.

You have got a number of other suggested overtures. And one of the questions I think Americans have a right to ask is why were the Russians making so many overtures to the Trump campaign about dirt on Hillary Clinton? Then we have had this effort after the fact where clearly the intelligence community of our country determined that the Russians did intervene to try to help Mr. Trump.

And then you have the fact after the election where you have individuals like the president's first national security adviser having repeated contacts with the Russians, where he then had to plead guilty to.

There are very serious questions that still remain to be answered and that the public deserves a right to know.

BLITZER: As you know, the Fusion GPS founders, they're accusing Republicans of refusing to follow the facts of the investigation and of protecting President Trump.

Do you see evidence of that in your Senate Intelligence Committee?

WARNER: Wolf, I'm very proud of the fact that the Senate Intelligence Committee is the last place where we're still conducting this in a bipartisanship manner.

We have some bumps we have to work through, and that's the case. Clearly, the majority has got pressure to try to shut this investigation down from some, and they have resisted that. We have got folks on my side that have presume that the president is guilty before you hear all the facts.

And our job is to make sure that we follow the facts wherever they lead. And I think we have done a pretty good job.

BLITZER: Can you agree to release the transcript of the Fusion GPS founders' testimony?

WARNER: Listen, we will work through that.

Or what may even be a better option is to bring back the Fusion GPS folks and let them testify in public and lay out to the American public what they believe happened.

Clearly, it was the case where the individual they hired, Mr. Steele, was a known former British agent, expert on Russia. He made some obviously very serious allegations. We have got to still find out whether that dossier is true or not true, and love to hear from them.

But I would also like to hear from the other principals, and if possible in public, Donald Trump Jr., who was at the meeting, Jared Kushner, who was at the meeting, individuals like Michael Cohen, who was part of the Trump Tower negotiations.

And there are others who are major figures in the investigation, some who our committee staff have talked to, but those of us who are the actual senators have not talked to yet. And the more we can do this in public, the better.

BLITZER: How much longer will your committee work on this?

WARNER: Wolf, we're going to take as long as it takes to get the facts out.

I'm not sure we could have predicted things like today's event of Mr. Bannon coming out with these allegations, which raises a whole host of other questions. There is work we need to do in the short-term, though.

For example, one of my big concerns is because the president of the United States still doesn't accept the seriousness of this intervention, we don't have anybody out of the White House running how we protect our electoral systems in 2018.

We have seen DHS now get into the game, but they have acknowledged recently that it may take up to eight months to get every state better protected before the 2018 elections. That concerns me a great deal.

So, I think, in the short-term, what we see from the committee some recommendations on how we can improve electoral security, because the one thing we do know is, while the Russians may have favored Trump in 2016, they are not Republican or Democrat. They're for efforts to try to destabilize our country.

BLITZER: And you see evidence of that unfolding, even as we speak right now, going ahead to the midterm elections and then in 2020?

WARNER: Wolf -- Wolf, the one thing I can assure you is, the Russian efforts to try to intervene in -- not only in our electoral process but n a variety of ways in American society did not end on election day in 2016.

That is a whole -- we are in a realm of new types of conflict in terms of cyber, misinformation, disinformation, and we have to be better protected. I sometimes worry that we still invest in the world's best 20th Century military, but in many ways conflict in the 21st Century may be around cyber, misinformation and disinformation.

BLITZER: Yes. A lot of intelligence leaders, they've suggested cyber warfare, potentially the long-term -- the biggest threat, national security threat facing the United States right now.

Thanks so much for joining us, Senator.

WARNER: Thank you, Wolf. Happy new year.

BLITZER: Happy new year to you, as well.

Just ahead is the president furious about Steve Bannon's betrayal in a new book because his former chief strategist is, what, telling the truth? And we'll talk about some of the juicy details from that book, including Ivanka Trump's presidential ambitions and a secret pact with her husband. Stay with us.

(COMMERCIAL BREAK)

[18:35:52] BLITZER: We're following the breaking news: the remarkable public war of words between President Trump and his former chief strategist, Steve Bannon, lobbing extraordinary accusations and insults at each other.

Let's dig deeper with our correspondents and specialists. And Gloria Borger is with us.

Steve Bannon had this to say in this new book by Michael Wolff about that June 9, 2016, Trump Tower meeting between campaign officials and Russians, quote, "Even if you thought that this was not treasonous or unpatriotic or bad expletive -- and I happen to think it's all of that -- you should have called the FBI immediately."

Donald Trump Jr. was in the meeting, Jared Kushner son-in-law was in the meeting, the campaign chairman Paul Manafort was in that meeting with all these Russians. How incredible, Gloria, is it to hear Steve Bannon talk like that?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Publicly. I think it is incredible. And I think what's the most stunning about this part of the book is that he is saying this publicly about the president's family. He is saying this about Donald Trump Jr. and Jared Kushner. And for the president, that is a real kind of dividing line here. I think that -- that Bannon has spoken out of turn one time too many with his statements in this book.

And I think, look, we all know that there is no love lost between Steve Bannon and Jared Kushner. I mean, they're at war with each other, openly and publicly. And I think that -- I think that today, that Steve Bannon is on the losing end of that, because the president has now been completely alienated for the time being. I'm not going to say forever, because nothing is forever with Donald Trump.

BLITZER: You know, David Swerdlick, Steve Bannon went even further -- and this is also pretty remarkable -- saying that this is all about money laundering, and he pointed to the Deutsche Bank. Echoes of what we've heard from many others, including the Fusion GPS founders.

How damaging is that for the White House to hear it from Steve Bannon, not necessarily from Democrats or critics?

DAVID SWERDLICK, CNN POLITICAL ANALYST: Right. Quite damaging. One, because you think of Steve Bannon as an ally of President Trump, and he is laying this out there for everyone to hear.

The other thing is that he's got this theory of the case, at least in the interview, that's similar to what the founders of Fusion GPS laid out in that "New York Times" op-ed.

I think, obviously, these allegations are just allegations. Paul Manafort pled not -- pleaded not guilty. But the idea that Steve Bannon laid out there, if you read the entire quote, that Special Counsel Mueller hired Andrew Weissman, who's known as a money laundering guy, right at the start when he was putting his team together, fuels the idea that this is where this investigation is going.

BLITZER: So do we have to bring back, Jeffrey Toobin, the old expression, "Follow the money"?

JEFFREY TOOBIN, CNN CHIEF LEGAL ANALYST: Well, that's certainly part of the investigation. But there's so much here.

Remember -- remember, what -- you know, what Democrats and Republicans have been arguing about since "The New York Times" revealed the meeting in Trump Tower between the Russians who said in those e-mails, "We want to show you how the Russian government wants to help your father win the election," and Donald Trump Jr. said, "I love it." You know, Republicans have said, "OH, there's nothing wrong with that. That's just opposition research. And here you have Steve Bannon saying, in effect, that was a crime. I mean, that is amazing.

The fact that, you know, this pivotal meeting, which is something we have all talked about so much, and here is the president's ultimate loyalist saying, "Oh, yes, this was treasonous."

And yes, that's only part of it, because the whole Deutsche Bank side of the equation, which to be fair, we don't know what's in the records, but Steve Bannon sure knows a lot about the Trump family and their finances. And he says, if you follow the money, as you suggest, it's not going to be good for Jared Kushner or Donald Trump.

BLITZER: And I assume, Jeffrey, that Robert Mueller, Andrew Weissman and other special counsel investigators, they're following the money even as we speak.

TOOBIN: Well, you know, there actually have been contradictory reports about whether Deutsche Bank has been subpoenaed. But in light of this and in light of everything that has gone on in this investigation, I would be very surprised if these Deutsche Bank records have not yet been obtained. And that is very important for not just Jared Kushner but Donald Trump himself, because so much of his finances were tied up with Deutsche Bank.

[18:40:27] BLITZER: Rebecca Berg, the president, really an extraordinary statement, not a tweet, an official White House statement. He responded to the Steve Bannon comments in this new book saying this, among other things: "When he was fired, he not only lost his job, he lost his mind."

But since he was fired over the summer, he's met with the president, apparently, and he's spoken with the president. They did have a continuing relationship.

REBECCA BERG, CNN POLITICAL ANALYST: Absolutely, Wolf. And they continued to speak, as press secretary Sanders acknowledged today, up until -- through December. And so they were in touch up until that Alabama Senate election. I think that was kind of the point where the president started getting frustrated with Steve Bannon. According to sources I've spoken with, he expressed frustration with Steve Bannon in a meeting with Romney McDaniel at the White House last month after the Alabama Senate race. And so this was sort of the culmination of a frustration that had already been building.

But this was just, as Gloria said, crossing the line for the president. Obviously, he found the nuclear button with that statement today, to use the president's term in his tweet yesterday. And the question is, is this a breaking point that Steve Bannon can bounce back from? As you said, Gloria, nothing is forever with Donald Trump, but this is a different sort of situation, because you have the entire family sort of wrapped up in this and also lashing out today publicly at Steve Bannon.

BORGER: I think there's a question here, though, which is Steve Bannon knows an awful lot about what's going on inside the White House and is still in touch with people there, et cetera, et cetera, but what does he know about the Russia investigation? What does he know about the Deutsche Bank stuff? What does he know about what occurred in that meeting, aside from the fact that it was a very dumb thing to do? He called it treasonous. But it wasn't very smart, at the very least.

But so, you know, as a -- as a question about what does this tell us about where Mueller is going or the Russia investigation, I'm not so sure that Steve Bannon is kind of the best -- you know, the best source on that. It does tell you about, if you -- if you read more into these -- into these excerpts, it tells you an awful lot about the way Donald Trump is regarded by the people who work for him and by the people around him.

BLITZER: You know, Jeffrey, what's your initial takeaway? You've read the excerpts that have been released, at least so far. Just a small chunk of the book. More is about to be released. But what's your take away right now?

TOOBIN: That the people that work with Donald Trump most closely think he's totally unfit to be president. He doesn't read. He doesn't listen. He doesn't know anything about policy. He has no interest in policy. He pays no attention when people talk to him. That to me is the most important part...

BORGER: Right.

TOOBIN: ... of this book. And it's a story that comes from Donald Trump's friends, not from his enemies. That's what makes this story so extraordinary.

And my hat's off to Michael Wolf, the journalist who did this, if this all holds up, and so far no one has pointed out any inaccuracies or false statements in the book.

BLITZER: Because even in the statement that the president, David Swerdlick, the president released, it was a carefully-written statement, the specific details were not denied. The president simply said, you know, you know, "When he was fired he not only lost his job, he lost his mind. Steve was rarely in a one on one meeting with me, only pretends to have had influence to fool a few people with no access and no clue, whom he helped write phony books."

SWERDLICK: Right. Strong pushback from the president. A lengthy pushback. But nothing in there that said "X statement is untrue" or "This fact, as reported by Michael Wolff, is simply not false [SIC]. We never heard of this before." There was nothing like that in this statement.

BLITZER: Everybody stand by. There's other shocking developments emerging from this new book. We'll assess when we come back.

(COMMERCIAL BREAK)

[18:48:21] WOLF BLITZER, CNN HOST: More breaking news unfolding, including a statement we just received from the White House. The office of the press secretary telling us that the president's Advisory Commission on Voter Integrity, the Voter Fraud Commission as was called, is now being dissolved.

Let me read the statement from the White House, quote: Despite substantial evidence of voter fraud, many states have refused to provide the Presidential Advisory Commission on Election Integrity with basic information relevant to its inquiry. Rather than engage in endless legal battles at taxpayer expense, today I signed an executive order to dissolve the commission and have asked the Department of Homeland Security to review these issues and determine the next courses of action. Gloria, it's a pretty extraordinary big statement since the president

made such a big deal at the end of the election saying, yes, he lost the popular vote because there was, what, 3 million to 5 million illegal ballots that was cast.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Well, and it seems that the president was the only one who thought that there were 3 million to 5 million illegal ballots cast. I mean, secretaries of state throughout the country have made the case to the commission that, A, there is a lot of information they would not be able to obtain legally, but, B, that there was no issues with that kind of massive voter fraud and that they were investigating nothing and were clearly willing to go into legal battle over this. And I think they just made, you know, the decision to pull the plug on it.

BLITZER: What do you think, Jeffrey?

JEFFREY TOOBIN, CNN CHIEF LEGAL ANALYST: Well, this commission was a fiasco from day one --

BLITZER: Right, yes.

TOOBIN: -- because it was investigating fraud which does not exist.

BLITZER: Yes.

TOOBIN: What this has this has been all about has been Republican efforts since the 2010 elections to make it harder for black people and poor people to vote.

[18:50:05] This is something that the Obama administration went to court about repeatedly. The Jeff Sessions Justice Department has dropped those cases when they can.

This is a huge civil rights issue in this country. The Trump administration has recognized how difficult it is -- I mean, has recognized the futility, at least of this commission, but in state after state, you still see Republican efforts to stop early voting, to stop absentee ballot voting, to make it harder for people to vote with photo IDs.

I mean, this is a huge civil rights issue in this country. It's a good step that this ridiculous, unnecessary commission is gone, but it's only one step, and there are a lot more problems on the way.

BLITZER: You know, Rebecca, you remember shortly after he won the election, the president tweeted this. He was then the president- elect: In addition to winning the Electoral College in a landslide, I won the popular vote if you deduct the millions of people who voted illegally.

That's what he said then. Now, this White House commission is being dissolved.

REBECCA BERG, CNN POLITICAL REPORTER: And so, part of the reason the commission was formed in the first place was some of the pressure the White House was getting after Trump made those claims publicly and even in some private meetings with congressional lawmakers as well, and reporters, of course, kept asking about it, you know, what did he mean?

But it's worth noting also that the White House statement this evening on the commission dissolving mentioned the states that wouldn't provide them with information but doesn't mention that many of those states were Republican states, that the secretaries of state believed, as Gloria mentioned, that this wasn't information that they could give to the federal government, and these were Republican states where they particularly had these federalist sort of concerns about states rights versus federal rights.

BLITZER: And it's interesting, you know, David Swerdlick, the president says he's dissolving the commission to avoid engaging in endless legal battles at taxpayer expense.

DAVID SWERDLICK, CNN POLITICAL COMMENTATOR: That and to avoid the fiasco that Jeffrey just described. We actually ran a piece not long ago at the "Washington Post" written by one of the state secretaries of state who was on the commission, I believe the secretary of state of Maine, who said he was on the commission, and himself could not get information about the commission's activities from Kris Kobach, the head of the commission.

BLITZER: All right, so this commission --

BORGER: Was a fraud.

BLITZER: Well, the commission is now toast. It's over with.

We'll move on. There's more breaking news we're following. What the White House is saying about President Trump's tweet taunting North Korea's nuclear capabilities.

Stay with us.

(COMMERCIAL BREAK)

[18:56:45] BLITZER: There's more breaking news tonight. The White House is defending President Trump's disturbing tweet taunting North Korean dictator Kim Jong-un's nuclear capabilities. Critics call it a dangerous escalation of tension between the two countries.

Let's go to our Pentagon correspondent, Barbara Starr. She's working the story for us.

Barbara, President Trump essentially boasted that he can launch a bigger and faster nuclear attack than Kim Jong-un.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Wolf, think of it as the battle of who's got the bigger button, except there are no buttons.

(BEGIN VIDEOTAPE)

STARR (voice-over): For President Trump, there is no actual button to push to launch a nuclear war.

PETER FEAVER, FORMER NSC SPECIAL ADVISER: The system is not a button that the president can accidentally lean against on the desk and immediately cause missiles to fly, as some people in the public, I think, fear it would be. It requires the president to work with military aides who are attending him and who have possession of the materials that he needs, and it requires personnel at all levels of echelon command, all the way down to the missile silo to carry out an order.

STARR: But the president decided to challenge Kim Jong-un on who has the biggest button. I, too, have a nuclear button, but it is a much bigger and more powerful one than his, and my button works.

Trump was responding to Kim's statement --

KIM JONG UN, NORTH KOREAN LEADER (through translator): The entire continent of America is within reach of our nuclear attack. They must never forget, the nuclear button is placed on my desk at all times.

STARR: Like all presidents, Mr. Trump has been briefed and detailed from the beginning on nuclear launch procedures. A military officer is nearby at all times with everything the president needs.

Former White House military official Bill Gully wrote in his book "Breaking Cover" that the football, or presidential emergency satchel, historically contains a list of strike options, authentication codes, a list of secure bunkers where the president can shelter, and instructions for the emergency broadcast system.

Whether the president is on the golf course or at the White House, he has sole authority to launch a nuclear attack, but the consequences of what is political rhetoric may be enormous.

JAMES CLAPPER, FORMER DIRECTOR OF NATIONAL INTELLIGENCE: We were closer to some sort of an encounter, military encounter, with the North Koreans than we have been in some time --

UNIDENTIFIED FEMALE: Because of a tweet like this?

CLAPPER: Because of statements like that.

(END VIDEOTAPE)

STARR: Now, top U.S. commanders continue to emphasize that nuclear orders are followed when they are legal and proportional to the threat and that the process for every president of the United States is very disciplined -- Wolf.

BLITZER: Very quickly, Barbara, the reaction over at the Pentagon to what the president said about that nuclear button?

STARR: I think broadly it's viewed as a political statement by the White House. They are very aware that President Trump knows everything he needs to know about how to launch a nuclear attack, Wolf. BLITZER: All right. Barbara, thanks very much. Barbara Starr

reporting from the Pentagon.

Stay with us, by the way, later tonight for a CNN special report on the Trump Presidency, "One Year Later". That's coming up at 11:00 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.