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Trump Lawyers Threaten to Sue Book Publisher, Bannon; Psychiatrist Briefed Lawmakers on Trump's Mental Fitness; Two Conservative Lawmakers Call on Attorney General to Resign; Attorney General Ends Obama-Era Rules on Legal Marijuana. Aired 5-6p ET

Aired January 4, 2018 - 17:00   ET

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


TAPPER: ... "THE LEAD" this week. I turn you over now to one Mr. Wolf Blitzer. He's next door in a place I like to call THE SITUATION ROOM. Thanks for watching.

[17:00:10] WOLF BLITZER, CNN ANCHOR: Happening now, breaking news, cease and desist. The president's lawyers push to shut down publication of a new book highly critical of President Trump sending a cease and desist letter to its author and publisher. They've also warned former Trump strategist Steve Bannon to stop talking or face a lawsuit. Will they go to court?

State of mind. A Yale psychiatrist says she briefed a dozen lawmakers worried about the president's mental state. She says he's becoming, quote, "very unstable very quickly," but the White House calls any concerns laughable.

Weed-whacked. The Trump administration changes federal policy on marijuana enforcement in states where it's now legal. Could you get arrested for smoking pot in your state?

And who got played? After President Trump taunts Kim Jong-un about the size of his nuclear button, the U.S. and South Korea agree not to hold military exercises during next month's Olympic Games. Did North Korea win this round?

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

ANNOUNCER: This is CNN breaking news.

BLITZER: Breaking news, the president's lawyers are trying to suppress the stunning new book which reveals chaos and dysfunction within the Trump White House. They've sent a cease and desist letter to "Fire and Fury" author Michael Wolff and his publisher and a letter warning former strategist Steve Bannon to shut up or be sued.

Bannon's comments in the book are among the most explosive, but a day after accusing Bannon of having lost his mind, the president has made his first public comments, noting that Bannon has now, quote, "changed his tune" by calling him a great man.

The book's shocking anecdotes have raised more questions about the president's mental fitness. Press secretary Sarah Sanders calls that disgraceful and laughable, but a Yale psychiatrist says she and another psychiatrist recently briefed a dozen U.S. lawmakers, mostly Democrats, who were worried about the president's mental state.

And amid the book's cataloging of stunning comments from insiders, a shell-shocked White House is hunkering down, banning the use of personal cell phones within the West Wing, citing security concerns. But multiple sources say it's about limiting leaks to reporters.

And with the special counsel already under attack, two conservative Republican congressmen are now calling on the attorney general, Jeff Sessions, to step down, saying he's lost control of the Justice Department and the Russia investigation.

I'll speak with Democratic Senator Richard Blumenthal of the Judiciary Committee and the Armed Services Committee. And our correspondents and specialists and guests, they are all standing by with full coverage.

Let's begin with the new shock waves from the stunning new book about President Trump. Let's go straight to our senior White House correspondent, Jim Acosta.

Jim, the White House is clearly trying to hit back.

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: They're trying, Wolf. President Trump is coming down hard on Steve Bannon, threatening legal action against him and a new book that's apparently filled with harsh comments from the former White House chief strategist. The question for the White House is whether this is just another empty threat from the president. The publisher doesn't seem nervous and just moved up the release of the book to tomorrow.

(BEGIN VIDEOTAPE)

ACOSTA: President Trump sounds like a man who couldn't care less about Steve Bannon.

UNIDENTIFIED FEMALE: Did Steve Bannon betray you, Mr. President?

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: Thank you very much. I don't know, he called me a great man last night, so you know, he obviously changed his tune pretty quick.

ACOSTA: But the president's lawyers are sending a very different message to Bannon, threatening to sue the former White House chief strategist over his comments in Michael Wolff's book "Fire and Fury," saying in a statement, "Legal action is imminent." Add that to the cease and desist letter sent to Wolff's publisher, demanding that the book be shut down. "Your publication of the false/baseless statements about Mr. Trump gives rise to, among other claims, defamation by libel."

(on camera): Should the letter from the president's lawyers, aimed at Steve Bannon and aimed at the publisher, be interpreted as a threat from the United States government, from this administration to not publish this book?

SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: It's a -- it's not from the United States government. It's from the president's personal attorney. And I think it is very clear what it's purpose is, and there's nothing to add beyond that.

ACOSTA (voice-over): Only hours after excerpts were made public, quoting Bannon as saying Donald Trump Jr. may have engaged in treasonous actions by meeting with Russians during the campaign, the firebrand conservative was praising the president.

STEVE BANNON, FORMER WHITE HOUSE CHIEF STRATEGIST: The president of the United States is a great man. You know I support him day in and day out.

ACOSTA: Sitting with GOP senators, the president claimed that he doesn't speak with Bannon.

TRUMP: I don't talk to him. I don't talk to him. I don't talk to him. That's just a misnomer.

ACOSTA: But that's not quite true. The White House has said the two men have been speaking since Bannon was fired last summer and as recently as last month.

SANDERS: I'm not aware that they were ever particularly close. I would certainly say that they've spoken a few times since he left the White House, but it's not like there were regularly scheduled calls or -- and certainly no meetings between the two of them.

ACOSTA: The other question is whether the president would actually follow through with his threat to sue, something he didn't do after the campaign.

TRUMP: All of these liars will be sued after the election is over.

ACOSTA: White House frustration with Wolff's book comes despite the extraordinary access granted to the author. Wolff wrote in "Hollywood Reporter" that he was given the access after the president approved of another story he had written about Mr. Trump. "His non-disapproval became a kind of passport for me to hang around," Wolff wrote, checking in each week at the Hay-Adams Hotel, making appointments with various senior staffers who put my name in the system and then wandering across the street to the White House and plunking myself down day after day on a West Wing couch."

(on camera): Didn't this White House give Michael Wolff all the access that he wanted?

SANDERS: Absolutely not. In fact, there are probably more than 30 requests for access to information from Michael Wolff that were repeatedly denied, including within that, at least two dozen requests of him asking to have an interview with the president, which he never did. He never discussed this book with the president.

ACOSTA: The White House also fired back at questions raised in the book about the president's mental fitness.

SANDERS: It's disgraceful and laughable. If he was unfit, he probably wouldn't be sitting there and wouldn't have defeated the most qualified group of candidates the Republican Party has ever seen.

ACOSTA: The president is trying to change the subject, promising action on immigration. Mr. Trump is defending his decision to shut down a commission that failed to prove his claim that millions of undocumented people voted in the election, tweeting, "Many, mostly Democrat, states refused to hand over data from the 2016 election to the Commission on Voter Fraud." But that's misleading. Dozens of states, Republican and Democrat, refused to cooperate.

UNIDENTIFIED MALE: Right here! Right here! Right now! Right now!

UNIDENTIFIED FEMALE: Right here! Right here! Right now! Right now!

UNIDENTIFIED MALE: Right here! Right here! Right now! Right now!

ACOSTA: Watching from the sidelines are the countless young undocumented immigrants known as the DREAMers who now face deportation. The president wants a wall in exchange for sparing them.

TRUMP: Any legislation or DACA must secure the border with a wall.

(END VIDEOTAPE)

ACOSTA: Now getting back to the Wolff book, the White House is now cracking down on staffers' use of personal cell phones, with plans to ban them inside the West Wing. White House officials say it's about security, but a source close to the West Wing told CNN this is really about suspicion and stopping the kind of leaks that are making the president furious.

And we should point out, the White House press secretary just sent a statement to CNN saying that, no, that they would not be trying to limit the use of cell phones by the media inside the West Wing. So important to report that, as well, Wolf.

And another thing we should point out, in just the last several minutes, our colleague Brian Stelter obtained a statement from the publisher of the Michael Wolff book, "Fire and Fury," saying that it is not halting publication of the book. If we have that, we can put that up on screen and read that to you. This is what the publisher is telling CNN at this point.

"Henry Holt confirms that we have received a cease and desist letter from an attorney for President Trump. We see 'Fire and Fury' as an extraordinary contribution" -- and the statement goes on to say here -- "to our national discourse, and we are proceeding with the publication of the book."

So despite these threats from the president, which the White House, Wolf, pointed out was a threat from the president, not from the United States government, not from the Trump administration, is apparently not affecting the release of that book, Wolf.

BLITZER: Yes, the release of the book has been accelerated to tomorrow morning...

ACOSTA: That's right.

BLITZER: ... 9 a.m. That's the official release of this new book. Jim Acosta, thanks very much.

Meanwhile, a Yale psychiatrist confirms to CNN that she has briefed lawmakers about the president's mental fitness saying, quote, "He is becoming very unstable, very quickly."

Let's go to our congressional correspondent, Sunlen Serfaty. Sunlen, what are you learning?

SUNLEN SERFATY, CNN CONGRESSIONAL CORRESPONDENT: Well Wolf, this is a briefing that happened up here on Capitol Hill in early December. It was just a small group of lawmakers from the House and Senate. Only about a dozen lawmakers, mainly Democrats, in the meeting but at least one Republican senator did attend this briefing.

And the briefing was specifically focused on the topic of Donald Trump's fitness, mental fitness to be president.

And I spoke with one of the psychiatrists, Dr. Bany Lee, from Yale who is one of the briefers that spoke with lawmakers. And today when I talked to her, she says that lawmakers were very engaged, were interested, were asking a lot of questions and that she left that meeting with lawmakers feeling that they were legitimately concerned about his mental fitness. And to put it in her words, she says that lawmakers were concerned about the dangers that his mental instability poses to the nation.

BLITZER: What was the substance of the briefing? What else do you know about it?

SERFATY: Well, this is interesting. Dr. Lee here tells me that she put forward her opinion of Trump's mental fitness and really painted a very bleak picture of his mental fitness. She told lawmakers that she believes Trump is -- Trump is showing signs of impairment. That he's becoming, in her opinion, very unstable very quickly, he's unraveling, that he seems to be, in her opinion, losing his grip on reality.

[17:10:19] She made it perfectly clear when I spoke with her today that she is not in a formal position to formally diagnose the president, given that she has not seen him personally, and that is an important note to make here. Because this is an unusual move for a health professional to make. It breaks with a protocol of medical professions to not diagnose someone without having a formal examination, but certainly interesting briefing up here on Capitol Hill, Wolf.

BLITZER: Yes, pretty extraordinary, I must say. All right, Sunlen. Thanks very much. Sunlen Serfaty reporting.

Joining us now, Democratic Senator Richard Blumenthal of Connecticut. He's a member of the Judiciary and Armed Services Committee.

Senator, thanks very much for coming in.

SEN. RICHARD BLUMENTHAL (D), CONNECTICUT: Thank you, Wolf.

BLITZER: As you know, the White House is pushing back big time on this notion about -- that the president may have a mental health issue. The White House press secretary calling these reports disgraceful and laughable, but his recent tweet about North Korea and the nuclear button, the size of the nuclear button, that has raised alarm bells. Not just for -- from Democrats, but from Republicans, as well. Have you heard Republican lawmakers, at least personally, express to you similar concerns?

BLUMENTHAL: My concern is principally about the instability of his policies, even more than his personality. And certainly, my Republican colleagues have raised very serious questions about his taunts and threats to North Korea, calling Kim "Rocket Man" on the one hand, fury and fire; on the other hand, trying to, sometimes, spawn negotiations. It has been an ambivalent, inconsistent policy.

And likewise, his views on Russia. He is probably the only senior official who really questions whether or not Russia interfered in our election. And if he is denying it, and also refusing to hear reality about Russian aggression against our country, attacks on our democracy, very, very troubling.

BLITZER: I know you did not attend that meeting with the Yale University psychiatrist. Your colleagues did. Was it appropriate, do you think, to have that kind of a meeting? Because this psychiatrist never personally had any contact with the president, did not question the president at all?

BLUMENTHAL: I have no knowledge about the background of the meeting, who requested it and how it happened to come about. Members of Congress have a duty to gather information and hear views from whoever, particularly experts, has light to shine upon critical problems, and so the meeting itself was appropriate. What to do about it is something else.

BLITZER: You don't know, maybe you do know who the Republican senator who attended that meeting is, do you?

BLUMENTHAL: I can't shed light on who attended.

BLITZER: You don't know that. All right. The president, as you know, next -- this month is scheduled to receive a complete physical examination, but the results of that are not necessarily bound to be released publicly. Either his physical condition, his mental condition, the results of that physical exam. Other presidents have released a lot of that detail, but there's no indication that this president is going to do so. We'll see if he does.

But should he be required to do so? Do the American public -- does the American public deserve to know the physical and mental condition of the president?

BLUMENTHAL: Very clearly, the American public needs and deserves to know the physical and mental condition of the president of the United States. There may be certain parts of that condition that can be kept private, as has been done by previous presidents, but overall, the report should be released, as should be his tax returns, which have been the practice previously, as well. This president's violated all the norms. And that really is deeply concerning.

BLITZER: So in other words, we remember during the campaign, his personal physician released a letter, a statement saying he's in great physical shape, but none of the specifics were there. You wanted to go a lot further after he gets this physical exam that's coming up in the next couple of weeks.

BLUMENTHAL: As many of the details as are relevant to his physical condition and consistent with his privacy ought to be released. The public needs and deserves this.

BLITZER: Let's turn to Steve Bannon, and he's quoted in this new bombshell of a book, and suggesting that that very controversial meeting over at Trump Tower in New York City in June of 2016 with Trump campaign officials including the president's son, the president's son-in-law, Paul Manafort who was the campaign chairman. He suggested it was treasonous, unpatriotic.

But Richard Burr, who's the chairman of the Senate Intelligence Committee, does not believe it's really necessary to bring in Steve Bannon for questioning by the committee, even though other members of the committee, Mark Warner, the ranking Democrat, the vice chairman, he wants Steve Bannon to come in. Where do you stand?

[17:15:03] BLUMENTHAL: Steve Bannon ought to be a witness before that committee, as well as the Judiciary Committee where I sit. But...

BLITZER: Has your committee asked for him to be -- to come in and testify?

BLUMENTHAL: We have not yet, but let's be very blunt, Wolf. What Steve Bannon thinks about that meeting, whether he calls treasonous or not, matters a lot less than what Robert Mueller thinks about that meeting. And Robert Mueller, as special counsel, is going to find the facts and follow the law and pursue a criminal case based on treason or violation of money laundering statutes, or fraud against the government or any of the other possible criminal violations that may be involved in that meeting, which raises the serious prospect, it is chilling, shattering evidence of collusion with Russians by the Trump campaign.

BLITZER: Because in this new book, Steve Bannon suggests that there is a problem that the Trump Organization has with money laundering involving Russia, which of course, would be illegal. By the way, the founders, the cofounders of Fusion GPS, the firm that commissioned that Russian -- that dossier on Russian connections with Trump, they also think that money laundering is at the heart of all of this. Based on what you know, is there a problem here?

BLUMENTHAL: Very serious problem, Wolf. And ironically, more than a year ago, I urged that the records of Deutsche Bank be subpoenaed by the attorney general of the United States. In fact, I advocated appointment of a special counsel because of the prospect of money laundering involving both Donald Trump Jr. and Senior involving Deutsche Bank and Russian banks. So I think there is a lot of fire behind the smoke.

BLITZER: Because my information is that members of Congress -- Congress, the House and the Senate -- they have not sought to subpoena the Deutsche Bank records, but what about Robert Mueller? Do you know if he has -- he has those records?

BLUMENTHAL: No one can confirm other than Robert Mueller whether he has subpoenaed the records; and Deutsche Bank itself has been somewhat vague on the topic in responding to questions, but eventually, those records will be in Robert Mueller's hands. I would say with near certainty.

BLITZER: And what do you suspect they will show?

BLUMENTHAL: What they will show is the reason why Robert Mueller wants them, that there have been dealings between Donald Trump and Deutsche Bank. It's the only bank that has loaned money to Robert [SIC] -- to Donald Trump in recent years because of his bankruptcies and because of the allegations of fraud against him. And it may show, as well, that there was money laundering between Russian banks and Deutsche Bank.

There is a complicated and tangled web here of financial dealings. And when Steve Bannon focuses on money laundering, he's definitely onto something. But Robert Mueller is following the traditional prosecutor mantra, follow the money.

BLITZER: So when President Trump says -- and he's often said he's had nothing to do with Russia over the years, your reaction -- except maybe some Russians bought condos in very -- various buildings, your reaction is?

BLUMENTHAL: There's a lot more than Donald Trump has admitted in his dealings with the Russians.

BLITZER: But have you actually seen records to show this?

BLUMENTHAL: I have heard secondhand about records. I've seen reports of records. And so far as his dealings with the Russians, there are indications in the testimony and the interviews that we've conducted on the Judiciary Committee that point to dealings.

BLITZER: Can you elaborate on indications from the testimony?

BLUMENTHAL: I can't at this point elaborate on what is in those interviews.

BLITZER: All right. Stand by, Senator. We have more to discuss, including two of your Republican colleagues in the House, Mark Meadows, Jim Jordan, they want the attorney general of the United States, Jeff Sessions, now to resign, because he's removed himself from the Russia investigation. Much more on that coming up.

(COMMERCIAL BREAK) [17:22:43] BLITZER: As Republicans step up attacks on the special counsel's Russia investigation, two conservative congressmen, key members of the House Freedom Caucus, are now calling on the attorney general of the United States, Jeff Sessions, to resign, saying he's lost control of the Justice Department.

We're talking with Senator Richard Blumenthal of the Judiciary Committee. We'll get to him in a moment. But let's go live to our senior congressional correspondent, Manu Raju.

Manu, what is all this about?

MANU RAJU, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, two leading conservatives -- Jim Jordan of Ohio, Mark Meadows of North Carolina -- who sit on the key committees that are investigating the FBI and decisions that were made in 2016, are raising new concerns about Jeff Sessions as attorney general, saying that he has lost control over his law enforcement agency and, if he cannot get things under control, particularly as it comes to the Russia investigation, then he should step aside.

Now one of the things that they are pointing to, Wolf, is his decision to recuse himself from the Russia investigation last year. And as we know, that has set off a whole chain of events where Rod Rosenstein, the deputy attorney general, is now overseeing the investigation, Rosenstein appointing Bob Mueller, the special counsel, who's investigating any potential collusion between Trump associates and Russians.

Now Wolf, Democrats who have largely opposed Jeff Sessions -- just one voted to confirm him as attorney general last year -- now are taking a different position. They are saying he should not step aside as attorney general, because they're concerned that if Sessions does, Trump will install a loyalist who will be in charge of the Mueller investigation, and they're concerned that that could undercut Mueller's own investigation.

Earlier today, I had a chance to ask Senator Chuck Schumer, the minority leader, if he still believes that Jeff Sessions should resign. This is what he said.

(BEGIN VIDEO CLIP)

RAJU: Last year, you called on Jeff Sessions to resign as attorney general. Today, two conservatives called on him to resign as attorney general, in large part because of his recusal from the Russia investigation. Do you still stand by your call from last year...

SEN. CHUCK SCHUMER (D-NY), MINORITY LEADER: No, I voted against Jeff Sessions and said he never should be there in the first place, given his record on civil rights, on immigration, on so many other issues. My view now is very simple. Nothing, nothing, nothing should ever interfere with the Mueller investigation. He must be allowed to pursue that to wherever it leads.

(END VIDEO CLIP) [17:25:00] RAJU: So clearly, Wolf, stopping short of those calls from

last year, in which he said himself, Chuck Schumer, that Jeff Sessions should resign. And of course, as we know, Wolf, Sessions has had a rather contentious relationship with the president, who's raised concerns repeatedly over Sessions's decision to recuse himself. He's called him "beleaguered." He's criticized the attorney general, raising the specter that the president himself could eventually fire Sessions.

But if he did do that, Wolf, Senate Republicans almost certainly would push back. A number of Republicans who served with Jeff Sessions when he was a senator from Alabama say that would be a bad idea, including Chuck Grassley, who's a chairman of the Senate Judiciary Committee; says he sees no reason for Sessions to step aside right now. So we're seeing a split between Senate Republicans and some House conservatives who are starting to demand that Sessions should step aside, Wolf.

BLITZER: All right, Manu. Thanks very much. Very interesting development.

We're back with Democratic Senator Richard Blumenthal of the Judiciary Committee. Do you think he should resign?

BLUMENTHAL: No, he should not resign. And I was probably the first member of the Judiciary Committee to say that I would oppose his nomination. I voted against them there and on the floor of the Senate. I differed with him on many, many issues.

But the members of the Freedom Caucus, the hard right wing of the Republican Party in the House of Representatives have stated their agenda. They think he should resign, because he hasn't gotten the Russian investigation under control. That is exactly what Jeff Sessions should not be doing. He's recused himself, properly, because he was involved in contacts with the Russians and potential collusion between the Russians and the Trump campaign. That is the subject of the Mueller investigation. He should not be a part of it. He should not resign, because it would disrupt the special counsel investigation. And that is part of the concerted, coordinated, concentrated agenda of the Trump sycophant defenders to demean and discredit the Mueller investigation.

BLITZER: If he doesn't resign, the president presumably, if he wants to -- he has the authority -- he could fire Sessions, right?

BLUMENTHAL: The president could demand his resignation, but it should be seen as a step to discredit and stymie and stop the special counsel investigation. And I think it ought to prompt the uproar that followed the Saturday Night Massacre, firing of the special counsel in that instance. And then the attorneys general, acting attorneys general who refused to fire the Watergate special prosecutor.

BLITZER: Let me get your thoughts on a decision by the attorney general, Jeff Sessions, today to reverse an Obama administration guidance back in 2013 saying, you know what? Those states that legalized marijuana, they can do what they want. The federal government is not necessarily going to interfere. But now, Sessions is instructing U.S. attorneys to go ahead and get involved and deal with this, saying there are federal laws banning the use of marijuana. IN California just the other day, legalized recreational use of marijuana.

What approach do you believe the Department of Justice should take? Should it implement federal laws -- there are laws -- saying marijuana is illegal, even if the states go ahead and legalize it?

BLUMENTHAL: In this area of prosecution, I think deference to the states is very appropriate as the Obama administration sought to do.

What's happened as a result of this initial announcement, which has been very vague and unclear, is more uncertainty.

And let's be very blunt about the threat of drugs in this country. There is an opioid epidemic. There is a plague of addiction. And the focus of the federal government ought to be on interdicting, disrupting, prosecuting, anyone who deals in drugs and makes money from the trade of drugs. And the policy ought to focus on heroin, opioids, fentanyl, carfentanil, all of the drugs that are so deadly and where the federal government, frankly, has failed to fulfill its duty.

And this announced policy just creates uncertainty. It threatens to override state rights. I'll tell you, as a formal federal prosecutor, as well as a state attorney general, I think that more clarity than confusion is necessary here. And this announcement seems designed more for political points than real prosecution.

BLITZER: Before I let you go, I know you just came back from a visit to Puerto Rico. You're deeply concerned the federal government isn't doing enough to help the Americans, American citizens -- they're all American citizens -- in Puerto Rico. What's your bottom-line assessment of what the situation there is like right now?

BLUMENTHAL: Puerto Rico continues in humanitarian and economic crisis. Its economy is on the brink of total failure. Its energy company is bankrupt. More than half the island lacks drinkable water. Almost half the island lacks electricity. The schools, many of them are still shuttered, and people are suffering.

And the federal response has been an abject, abysmal failure. We should do much more for our fellow Americans there. The out migration has been an exodus of unprecedented proportions. And that will cost Puerto Rico the brains and talent and energy it needs to rebuild. So the goal ought to be long-term, major recovery I proposed, a measure with my colleague Senator Sanders that would be a marshal plan-like program and that's the kind of commitment that we owe our fellow Americans.

WOLF BLITZER, CNN HOST: Huge exodus of Puerto Ricans moving to Florida over these past couple months, and I assume that's probably going to continue. Senator, thanks so much for joining us.

BLUMENTHAL: Thank you very much. BLITZER: Senator Blumenthal, appreciate it very much.

Coming up, after President Trump taunts Kim Jong-un about the size of his nuclear button, the U.S. and South Korea all of a sudden they agree to suspend scheduled military exercises. Is that a win for North Korea? Stay with us, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: We're following multiple breaking stories in the wake of an upcoming book's explosive revelations about what the author claims is constant dysfunction and infighting in the Trump White House. This first on-camera remarks about Michael Wolff's new book entitled "Fire and Fury." President Trump today insisted he doesn't talk with this former top strategist, Steve Bannon repeatedly disparages the President and his family in the book.

[17:35:09] Let's bring in our political specialists to discuss. And David Axelrod, the portrait we see of an administration that is in turmoil in effect that emerges from this book including the President's own mental health, what do you make of the excerpts that we've seen so far?

DAVID, AXELROD, CNN SENIOR POLITICAL COMMENTATOR: Well, first of all, it's good that you use the word portrait because Wolff is known to be an impressionistic writer. But even if there are embellishments in the way this information is presented, it's a devastating portrait and it confirms a lot of fears that people had about the unpreparedness of this president, the unpreparedness of his staff, and the mercurial nature of his personality in a job that requires steadfastness. And, you know, the real problem beyond reinforcing those fears, and I suspect by the way that those who love Trump will continue to love Trump, but the real problem is that it becomes a central story now and it will for some time at a time when, you know, this president was coming out of a break in which he was celebrating having passed a major piece of legislation, just tax cuts and seemed to be getting some footing and now this throws him right back again. And it is a -- it is a devastating development for him.

BLITZER: There's no doubt about that. The criticism and the concerns being expressed are not just, Gloria, from democrats but also some republicans including one republican, we don't know who that republican senator is, who attended that briefing with a Yale University psychiatrists raising questions about the President's mental health.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Right. But -- look, it's never good for the President when a question about his mental acuity is raised at a presser with his press secretary as happened today. And I think one of the most devastating parts of this is that this is now become part of the -- of the national conversation. I mean, Sarah Sanders swatted it away and said it was ridiculous and part of the, you know, trash book et cetera, et cetera, but that has now become part of the conversation. You could make the political case that Democrats are having this meeting because they want to raise the specter of the 25th amendment because mental acuity is one of the reasons you could potentially get rid of a president but given the fact that there are conversations that Michael Wolff quotes in his book and talks about people who work for the President who said he couldn't focus for more than 30 minutes, it was difficult to have a conversation with him. I think it takes it -- I think it does take it to a different level. The concerns we've always had in the past were about how engaged he was? How fluent he was on policy, et cetera, this is a whole different kind of concern which clearly the White House has to swat away.

BLITZER: Chris Cilliza, what are you hearing?

CHRIS CILLIZA, CNN POLITICS EDITOR AT LARGE: Yes, I mean I'm with Gloria. There's two options on any time. You have a book like this any administration, which is you either ignore it and hope it withers on the vine, or you go full frontal assault on it. Given who Donald Trump is and as David noted, given some of the allegations in here, he's not going to go the ignore-it route. I do think -- I thought Sarah Sanders made a fair point as it related to -- they -- she was asked today, is there something in the book, specifically, you can say it's a book of lies, but what specifically is wrong? Then she cited what I took to be at least in the excerpts, the thing that I found the hardest to believe which is that after the 2016 election, Donald Trump did not know who John Boehner was, who the former Speaker of the House, seems odd.

I think we owe it to viewers, to readers, to ourselves as journalists, to when there are questions raised in these books, given Michael Wolff's history, but also, broadly speaking, when you have explosive allegations like this to try and track them down. What I would say though is you can't just say, it's all wrong. It's all a lie because -- and I think David and Gloria touched on this -- you are dealing with something that this confirms a lot of what our reporting already told us. It's not as though the book says, Donald Trump was a calm presence in the White House -- we know a lot of what is being portrayed here is born out. So there's a lot of truth in it so I think it's up to the White House to say these are things that aren't true, beyond just the John Boehner thing.

BLITZER: We didn't know -- David Axelrod, let me -- le you weigh in -- we didn't know that Steve Bannon believes that controversial Trump Tower meeting in June of 2016, that the President's son, son-in-law, campaign chairman had with the Russians was treasonous and unpatriotic, and we certainly only learned now that lawyers for the President, personal lawyers for the President have sent what's called a deceased -- cease and desist letter to the author, Michael Wolff, and the publisher citing false, baseless statements saying they got to stop production of the book. In response, they've accelerated production of the book and it's being released tomorrow morning as opposed to next week.

[17:40:08]AXELROD: Yes, I think they've done more for book sales than anybody ever could have imagined and this is like Henry Holt and the folks over there must be thanking their lucky stars for the President's lawyers right now because they've just hyped the thing beyond all imagination, but, you know, there are two questions you raised there, one is what was Steve Bannon thinking and what were they thinking generally when they let this reporter wander around the White House? You know every White House and mine included has this notion that they can repurpose books for their own story, that somehow if they're -- if they -- if they're revealing and if they're -- if they're ingenious enough that they can produce -- somehow produce the book they want, it never works out that way.

And it's just a terrible idea. I can't imagine allowing a reporter the kind of free reign that Wolff apparently had there. And then finally, I would say this whole notion of whether or not they believe this to be wrong or -- I mean, how do you -- how do you condemn Bannon for the things that he allegedly said and then say the book is fiction? It reminds me of that Yogi Berra story where he said nobody goes that restaurant anymore, it's too crowded.

BLITZER: Stand by. On that note, there are other developments unfolding. We'll resume our discussion and analysis right after this.

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[17:45:25] BLITZER: We're back with our political specialists. There are lots of developments right now. And David Axelrod, let me start with you because you served in the Obama administration when marijuana was being legalized in some states, now more states are legalizing marijuana for recreational use, not just medicinal purposes. Listen to what the President said as a candidate during the campaign.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: The marijuana thing is such a big, such a big thing. I think medical should happen, right? Don't we agree? I mean, I think so. And then I really believe you should leave it up to the states. It should be a state situation.

(END VIDEO CLIP)

BLITZER: All right, that was then, the attorney general of the United States, Jeff Sessions, today says don't leave it up to the states, the federal government is going to reverse Obama administration regulations and get involved and prevent this, what's your reaction?

AXELROD: Well, first of all, this is one case where Jeff Sessions' position as a senator was different than Donald Trump's position as a presidential candidate. He was always deeply critical of the administration's policy on this issue, but Sessions did tell senators when he was up for confirmation that he by and large would continue it or he suggested that he would because this is a touchy issue, but the Justice Department under the Obama administration made the decision that they were going to respect the will of the voters in so far as they weren't going to prioritize these prosecutions in these states that they were -- they were going to allocate their resources differently. So this is a big, big leap and it's going to be very, very controversial in the states where voters have spoken.

BLITZER: Gloria.

AXELROD: So, one wonders why, why he took this step at this moment. BORGER: Could it be that because as of January 1, California, big blue state --

(CROSSTALK)

BORGER: -- big blue state has legalized marijuana? And there are some other blue states, I would say maybe six or so of them, half dozen or so, which have completely legalized marijuana. So this may be a way to kind of give it to them, right.

AXELROD: Only Alaska is not in that category.

BORGER: Exactly.

CILLIZA: One other thing that is -- goes counter to this being smart politics is young people, young people do not care. They are 100 percent in favor of pot being legalized, all the way up to about 34 years old. That's an issue that's turned big time. So for a party that's trying to young itself, this will not go over well. Donald Trump probably doesn't care, but --

BLITZER: We'll see happens in this one. Everybody stand by, there's other news we're following including North Korea. North Koreans hold a huge celebration for Kim Jong-un. President Trump claims credit for the new dialogue between North and South Korea, who's the big winner? Stay with us.

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BLITZER: We're following breaking news in the North Korea nuclear standoff. In a new interview with PBS, former Vice President Joe Biden says the United States has never been closer to nuclear war with North Korea. This comes amid new dialogue between North and South Korea.

Let's go to CNN's Brian Todd. So Brian, who's the big winner in this propaganda war that's going on right now?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, we're hearing real concern in Washington tonight that Kim Jong-un is the leader in this standoff who has got the optics working in his favor tonight. He has extended an olive branch to South Korea offering talks over sending North Korean athletes to the Winter Olympics. And now, he's at least temporarily rid of a giant military maneuver by his enemies which he has always seen as a threat. This is all drawing warnings over just how far the dictator can push the envelope with the U.S. and its allies.

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TODD: Tens of thousands of North Koreans paid tribute to their young dictator Kim Jong-un today rallying in Pyongyang, in a square named after Kim's grandfather. Speakers praised him for building his nuclear arsenal and bidding back his enemies' challenges. But tonight, some analysts say Kim may have beaten back an even bigger challenge without launching a missile after President Trump and South Korean President Moon Jae-in agreed in a phone call not to hold joint U.S.-South Korean military exercises during next month's Winter Olympics in Pyeongchang, South Korea. A military show of force that angers the North Korean leader.

The South Koreans say they were concerned that Kim Jong-un would launch some kind of provocation during the games.

HARRY KAZIANIS, CENTER FOR THE NATIONAL INTEREST: Kim Jong-un, all of a sudden now, offering talks in his New Year's Day speech really had a great and a smart idea. What he wanted to do was hold South Korea hostage. What he was trying to do is to offer these talks essentially as a way as to get some -- a bribe more than anything else.

TODD: In a morning tweet, Trump took credit for the new dialogue between North and South Korea, saying it was his tough stance that made it happen. But experts say it may be just the opposite, that with the South Koreans receptive to Kim's offer for talks and now with military drills being put off, the tyrant in Pyongyang is gaining the upper hand.

DAVID ASHER, CENTER FOR A NEW AMERICAN SECURITY: Kim Jong-un wanted to see the South Koreans bend. The South Koreans are bending. The North Koreans have gotten pretty much exactly what they wanted at the tip of a hydrogen bomb and an ICBM.

TODD: But tonight, the White House says Trump and Moon Jae-in are committed to placing quote maximum pressure on North Korea to scale back its weapons. Defense Secretary James Mattis suggested the delay in exercises was primarily logistical to avoid traffic problems for example during the Olympics.

JAMES MATTIS, DEFENSE SECRETARY OF THE UNITED STATES: I would say for us it's a practical matter. We would call it deconflicting.

TODD: But analysts pointed out Kim Jong-un gave up nothing and is getting exactly what he wants especially because he has always hated the joint U.S.-South Korean exercises, repeatedly telling his people it's a practice for an invasion of North Korea.

[17:55:00] BRUCE KLINGNER, THE HERITAGE FOUNDATION: In recent years, they've also taken on a sense of pre-emptive attack, decapitation of the North Korean leadership and U.S. and South Korean officials have mentioned that. They also have included a scenarios of seizing North Korean nuclear weapons if there's a crisis.

(END VIDEOTAPE)

TODD: Is Kim Jong-un having his cake and eating it too? There are concerns tonight that he could launch another missile soon. And U.S. officials tell CNN that while they believe recent sanctions are impacting Kim's regime with fuel shortages, they're not sure that that's his motivation for reaching out to South Korea and they say there is no indication at the moment that the sanctions are affecting his missile and nuclear programs. Wolf?

BLITZER: Brian, as you know, President Trump, he went even further today reassuring the South Korean President about the Winter Olympic Games, right?

TODD: That's right, Wolf. According to South Korean officials, the President told Moon Jae-in that he will send high-level representatives from his team, including even members of Trump's own family, to the Winter Olympics. That's important to the South Koreans. We cannot overstate, Wolf, just how nervous they are about pulling off these games safely.

BLITZER: For good reason. All right. Brian, thank you very much.

Coming up, breaking news. The President's lawyers sent a cease and desist letter to the author and the publisher of a highly critical new book. They're also warning former Trump's strategist, Steve Bannon, to stop talking or face a lawsuit. Will they go to court?

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