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Company Attacks Mueller; Trump Supporting Chinese Company?; Melania Trump Undergoes Kidney Surgery; White House Distances Itself from Pastors' Past Remarks; Trump Team Dramatically Changes Tone on North Korea; Trump May Officially Disclose Daniels Hush Money. Aired 6-7p ET

Aired May 14, 2018 - 18:00   ET

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


[18:00:05]

WOLF BLITZER, CNN ANCHOR: Happening now, breaking news: first lady health scare.

A surprise White House announcement that Melania Trump is hospitalized after undergoing a kidney procedure.

Trump supporting China. Why is the president trying to save a major Chinese phone maker from crippling U.S. sanctions?

Russia fights back. A Russian company accused of election interference slams the special counsel, Robert Mueller, and asks a federal judge to intervene.

And pageantry of protests. Deadly violence erupts, as the U.S. and Israel celebrate the controversial opening of the new U.S. Embassy in Jerusalem.

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: The breaking news tonight.

The first lady, Melania Trump, undergoing a kidney procedure at the Walter Reed Medical Center, where she's hospitalized tonight and expected to remain in the hospital for the rest of the week.

Our experts are standing by.

But let's go first to CNN White House reporter Kate Bennett, who has been covering this. She broke the story for us earlier in the day.

The president has been there for a little while over at Walter Reed. He wasn't there during the procedure, immediately after the procedure. What's the latest?

KATE BENNETT, CNN WHITE HOUSE CORRESPONDENT: The president did speak with his wife, Melania Trump, on the phone just before she underwent this procedure earlier at Walter Reed. And she was on -- he was on the phone with her physician, with her doctor just after the procedure was finished, so certainly he has been in touch. He just wasn't there during the operation -- the procedure itself.

Many people are speculating that is because certainly he brings a lot of attention with him. He brings with him extra security, a bigger motorcade. I think the concern here was that the first lady's day -- medical procedure went well, was successful, and that when she came out of that procedure, he would then go visit, which he did.

And according to the statement, the procedure was a success, it did go well. And, as you said, she will be in the hospital likely for several days following today.

BLITZER: The president tweeted it was a successful procedure. She's in good spirits.

And that's similar to what you're hearing from her own press people.

BENNETT: Exactly.

Her communications director, Stephanie Grisham, greeted the president and spoke a bit momentarily with the press, saying that the first lady was in good spirits, she's doing well. So, clearly, this was a procedure that was successful.

BLITZER: Was it an emergency?

BENNETT: We're hearing that it wasn't necessarily an emergency.

I think we can assume that it wasn't just from the information we have received today and speaking with various medical professionals about this benign kidney issue that she had and the embolization procedure that she was treated with today necessarily wasn't an emergency situation, likely something preplanned.

However, we have seen the first lady more publicly in the past couple weeks than we have see her even in recent months. We saw her at the state dinner just a couple of weeks ago. And we saw her one week ago specifically when she launched her Be Best initiative from the Rose Garden at the White House.

And we saw her last week as well at a Mother's Day event for military moms at the White House too. So, certainly, if she was experiencing any sort of discomfort or pain, it wasn't something that we the public were seeing forward-facing, but today she did undergo this procedure.

BLITZER: Let's talk to our Dr. Sanjay Gupta, our chief medical correspondent.

Tell us about this procedure, Sanjay.

DR. SANJAY GUPTA, CNN SENIOR MEDICAL CORRESPONDENT: Well, it's a known as an embolization procedure. And it is a procedure, as opposed to surgery. Terms matter a bit here. With the procedure, it's a more minimally invasive sort of thing. Think of it like a big I.V. basically being put into one of the blood vessels and from there a catheter being put into the blood vessel and then threaded up to the area right around the kidney.

It was in that area that the doctors embolized. And what that means is they injected a type of glue or something like that to stop blood flow to that portion of the kidneys, stop blood flow to try and take away the blood flow and not let this -- this -- whatever it is, this mass or whatever it is, continue to grow, and to also prevent out bleeding from this snaps going forward in the future.

So that's an embolization procedure. It's not a surgical procedure, which typically involves actually making an incision and looking directly at the kidney, looking directly at whatever was there.

BLITZER: Dr. Bernstein is with us. He's a urologist. He used to work over at the Walter Reed Medical Center.

Walk us through what they're doing right now. And why does she have to spend three or four or five days there?

DR. GREGORY BERNSTEIN, UROLOGIST: Great question, Wolf.

So I think right now, they are making sure her pain is well- controlled. She's waking up from anesthesia. She probably had a little bit of sedation-type procedure -- anesthesia. So, they're making sure her pain is well-controlled.

They're monitoring her vital signs, making sure that she's recovering and following the expected course that would occur after this type of procedure.

[18:05:05]

BLITZER: Are there complications?

BERNSTEIN: There always are complications. Any time there's a procedure or a surgery, there's always a risk of complications, including bleeding, including infection, including pain.

And so these are things that the doctors, I'm sure, are prepared for, they have probably counseled her on ahead of time and prepared her for, and now they're taking appropriate steps afterwards.

BLITZER: But the facility there at Walter Reed, the physicians, the nurses, these are world-class?

BERNSTEIN: Top-notch. Top-notch.

BLITZER: You spent, what, 13 years over there?

BERNSTEIN: I spent 13 years in the military. I did all my training over there at Walter Reed, and nothing but the best.

BLITZER: So, she's in good hands right now?

BERNSTEIN: Great hands.

BLITZER: Talk about -- Kate is with us. She's an expert on first ladies, Kate Andersen Brower.

Talk a little bit about how other first ladies have dealt with similar kinds of situations.

KATE ANDERSEN BROWER, CNN CONTRIBUTOR: Well, in 1987, Nancy Reagan had a mastectomy. And then Betty Ford famously had a mastectomy in the late '70s, where she very publicly talked about breast cancer for the first time.

And there's also a really moving story about President Ford taking Marine One to visit her at Bethesda Naval Hospital and praying with their son Mike in aisle for her health.

So I think it's common for the president to show up after the procedure actually because of the kind hubbub that is made about the presidential motorcade or wherever the president is going. So, it makes sense to go after the procedure is done.

But it's certainly a very private thing. But many first ladies have had to undergo surgery. Laura Bush in 2007 had surgery for a pinched nerve. This is probably more serious than that and is more similar to what happened in the '80s.

BLITZER: And unlike a president, they don't really provide a lot of the medical information as far as first ladies are concerned.

ANDERSEN BROWER: That's true. I mean, they weren't elected, right?

So, there is this feeling that they should be given a certain amount of privacy, and especially this first lady, who is so private. That's why I was very surprised that they came out and talked about this today. It was really refreshing.

BLITZER: Well, what about that, Sanjay? Were you surprised?

GUPTA: Yes, I guess as well I was surprised that they -- we had the information that we did have. It came out obviously when she's still in the hospital.

Look, I'm a reporter, right? I always want a little bit more information. We still don't know exactly what it was. We know it was a benign process, a benign condition of the kidney that required embolization.

I think that, a lot of times, when you hear benign condition of the kidney, you think of something like a cyst, which is what I first thought. But then that's not something that is typically treated by embolization.

So it keeps -- we keep coming back this question, what exactly is it that was treated? And also how do you reconcile the fact that it's a pretty minimally invasive procedure that she had done today? How do you reconcile that with the fact that she's going to stay in the hospital for as many days as she is?

Typically, it's overnight just to monitor pain, make sure there's no complications or infection. We're hearing until the end of the week that the first lady is likely to stay in the hospital. Just a couple of questions still I think that I would like to have answered.

But, to your question, I think, yes, I was surprised to get as much detail as we did get.

BLITZER: Yes.

It's -- to me, I was surprised -- Dr. Bernstein, you're an expert in this area -- that she's going to be spending all these days in the hospital.

BERNSTEIN: Right.

A couple days. As Sanjay alluded to, sometimes, you can go home on the same day for this type of procedure. Some days, you stay a few days longer. And that varies from situation to situation, case to case.

I think obviously there's a little bit of luxury at the military medical center in Bethesda, where she has a private suite, there is security there, the nurses and the staff there probably more -- not quite what you would envision a typical hospital room would be like for you or I.

BLITZER: What would have been the symptoms. Dr. Bernstein, that would have caused her -- I'm feeling a little pain?

What would she need to go through in terms of radiology or whatever, pictures, in order to determine she needs this procedure?

BERNSTEIN: Great question.

Again, not being part of the team and not knowing exactly what the condition was, I suspect that she may have had some discomfort, may have had some pain in her abdomen. Again, with the doctors maybe not being clear of what it was, they would have suggested some imaging such as an ultrasound or a C.T. scan or even an MRI to try to determine what the cause was.

And then they made the determination, found whatever this issue was in her kidney, determined that that was the potential cause of her symptoms, if she did have any symptoms, and then developed a treatment plan from there.

BLITZER: Any final word?

ANDERSEN BROWER: Well, I mean, I think this is a first lady who is very calculated.

She understands. She likes to know all of her information. She keeps a very tight-knit staff, a tight-knit group. She's very detail- oriented. I'm not that surprised that she's opting to stay, probably under medical advice, as long as she can, despite what people may say or question.

This is also a first lady that is very independent, acts independently of her husband, and other past administrations that we have seen. So, I'm certainly not surprised, one, that we got just a tiny sliver of information, and, two, that she's going to stay and do what's probably best advised for her.

BLITZER: Good work all around. And we -- as I say, we wish her only, only the best, a very, very speedy recovery. We will have more on the story later.

[18:10:00]

But there's other important news we're following. In the Middle East tonight, tension and blood -- bloodshed, I should say, as the United States makes good on the president's campaign vow and opens up the U.S. Embassy in Jerusalem.

But the move is greeted by violent protests along the Gaza border, where Israeli troops have been clashing with rioters, killing dozens of people.

Let's go to our senior White House correspondent, Pamela Brown.

Pamela, what's the latest?

PAMELA BROWN, CNN JUSTICE CORRESPONDENT: Well, Wolf, the White House is touting the relocation of the U.S. Embassy to Jerusalem up, formally upending decades of U.S. foreign policy.

And it is a move that has caused deadly clashes nearby. The White House today pinning the blame squarely on Hamas, making it clear that Israel doesn't deserve any blame for the deaths and injuries.

(BEGIN VIDEOTAPE)

BROWN (voice-over): Tonight, the Trump administration fulfilling one of its campaign promises, recognizing Jerusalem as the capital of Israel by opening its embassy there.

BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER: President Trump, by recognizing history, you have made history.

BROWN: President Trump sending a video message, as well a delegation led by his daughter Ivanka and son-in-law Jared Kushner, to commemorate the occasion.

JARED KUSHNER, SENIOR PRESIDENTIAL ADVISER: While presidents before him have backed down from their pledge to move the American Embassy, once in office, this president delivered, because when President Trump makes a promise, he keeps it.

BROWN: During the ceremony, violent protests continued in Gaza, leaving dozens of Palestinians dead and another 2,000 injured, according to the Palestinian Ministry of Health.

KUSHNER: As we have seen from the protests of the last month and even today, those provoking violence are part of the problem and not part of the solution.

BROWN: The administration placed the blame directly on the Palestinians.

RAJ SHAH, WHITE HOUSE DEPUTY PRESS SECRETARY: The responsibility for these tragic deaths rests squarely with Hamas.

BROWN: Back home, the president's position on China appears to be evolving. He tweeted this on Sunday: "China and the United States are working well together on trade, but past negotiations have been so one-sided in favor of China for so many years that it is hard for them to make a deal that benefits both countries. But be cool. It will all work out," despite campaigning in part on talking tough against China.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: China is responsible for nearly half of our entire trade deficit.

BROWN: And while he's enjoyed a close relationship with President Xi since taking office, just last month, Trump had this to say:

TRUMP: China has been taking advantage of the United States for many years.

BROWN: But now President Trump is vowing to save a Chinese company already facing U.S. sanctions, tweeting this: "President Xi of China and I are working together to get massive Chinese phone company ZTE a way to get back into business fast. Too many jobs in China lost. Commerce Department has been instructed to get it done."

The Chinese company violated U.S. sanctions by selling to Iran and North Korea, and its devices are considered a major security concern by top U.S. intelligence officials.

CHRISTOPHER WRAY, FBI DIRECTOR: We're deeply concerned about the risks of allowing any company or entity that is beholden to foreign governments that don't share our values to gain positions of power inside our telecommunications networks. It provides the capacity to maliciously modify or steal information. And it provides the capacity to conduct undetected espionage.

BROWN: Today, the White House defended the president's pledge.

QUESTION: How does President Trump statement that too many Chinese jobs are at risk square with his campaign promises that China is stealing American jobs?

SHAH: Well, why I don't think this has frankly any bearing on the president's campaign promises.

It's a significant issue of -- concerning the Chinese government, and in our bilateral relationship, there's a give and take. And we discuss these issues.

(END VIDEOTAPE)

BROWN: Also, today, Wolf, the White House has done little to put to rest the controversy surrounding a White House aide's crass remarks about Senator John McCain.

Deputy Press Secretary Raj Shah didn't provide an explanation today about why Kelly Sadler hasn't provided a public apology for the remark, despite the fact that she told Meghan McCain, John McCain's daughter, privately that she would.

Also, Raj Shah says this matter has been dealt with internally, without providing any details as to what that is -- Wolf.

BLITZER: All right, Pamela, thank you, Pamela Brown at the White House.

Let's go live to Jerusalem right now.

Our global affairs correspondent, Elise Labott, is on the scene for us.

Elise, what's the situation like tonight?

ELISE LABOTT, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, tonight, Wolf, the euphoria of the embassy opening, the jubilation that Israelis felt is really kind of giving way to the violence that we're seeing in Gaza.

More than 50 Palestinians have been killed. Obviously, the IDF, the Israeli military, is saying that this is clearly on the hands of Hamas, just like President Trump did.

[18:15:01]

But, today, obviously, kind of mixed images that we see, the contrast between the celebrations of the Israelis, the emotion felt by their close ally, recognizing Jerusalem after 70 years as their capital, with the crushing blow of the Palestinians and the violence and the death that they face.

Everyone blaming Hamas, certainly, but these are -- some of these were peaceful protesters. And a lot of are saying that Israelis didn't necessarily have to use live fire on them -- Wolf.

BLITZER: Turkey, as you know, is recalling its ambassador, not just from Tel Aviv, Elise, but also from here in Washington, D.C.

How extraordinary is it -- extraordinary is it for a NATO ally to pull its ambassador from the United States?

LABOTT: Well, the Turks have pulled the ambassador for -- recalled for consultations on several times over the years for various issues.

But Prime Minister Erdogan has been very tough on President Trump's move to move the embassy and recognize Jerusalem. Today, in London, he gave a very tough speech, calling the U.S. not part of the solution, but part of the problem, and said that the U.S. has forfeited its role as a Mideast peace broker, and then went on to talk about the Israelis in terms of what they're doing and the deaths of Palestinians, calling it genocide.

So, this actually makes it more difficult for some of the moderate Sunni Arab allies of the United States and those countries that have been kind of warming up to Israel, Wolf, like Saudi Arabia, like the United Arab Emirates, to be a moderating force.

When you have the Turkeys and the Irans of the world speaking this way, it kind of -- they have to balance their street, their people and the emotions that they see with what's going on, on the ground on, with their desire to work with Israel on issues like countering Iran.

BLITZER: Elise Labott in Jerusalem for us tonight, Elise, thank you very much.

Just ahead, a Russian company charged with election interference here in United States fights back against the special counsel, Robert Mueller, in court.

And Rudy Giuliani has a new timeline for the decision on a possible Trump-Mueller interview.

(COMMERCIAL BREAK)

[18:21:59]

BLITZER: A Russian company indicted by Robert Mueller says interference in the 2016 election is -- quote -- "a make-believe crime" and it accuses the special counsel of trying to justify his own existence.

Let's go to our justice correspondent, Evan Perez, who is working the story for us.

Evan, the company is now asking a federal judge to intervene.

EVAN PEREZ, CNN JUSTICE CORRESPONDENT: That's right, Wolf.

There were 13 people and three business as in all that were indicted in February related to this troll form, this Russian troll farm, that prosecutors say interfered in the 2016 election. Concord Management and Consulting is the only one so far to show up in court.

And that's a bit of a surprise. And they're taking shots at the special counsel, Robert Mueller. In part, they say that the indictment has absolutely -- quote -- "absolutely nothing to do with any links or coordination between any candidate and the Russian government."

And they're asking the judge in this case to allow them to see the secret grand jury instructions that were given before these charges were brought down. They say that the one charge that they're facing, which is conspiracy to defraud the United States, is a make-believe crime, as you pointed out.

They say it has nothing to do with Russian interference. And they also say that the special counsel is under obligation to show that any -- that someone knew they were violating the U.S. law before they're charged or before they commit such a crime.

So, one of the things that they're doing is taking shots at Robert Mueller, the special counsel, making a sarcastic comparison. They say that he was instructed essentially to indict a Russian, any Russian, making a sarcastic reference to the movie "Casablanca." They say in that movie -- they basically say round up the usual suspects.

And they're making that comparison to what Robert Mueller is doing in this case -- Wolf.

BLITZER: The president's personal attorney, Rudy Giuliani, Evan, is telling the Associated Press he isn't likely to determine whether President Trump will to Mueller until after the North Korea summit next month.

Originally, he had said he hoped to have all this figured out by Thursday. That's the one-year anniversary of the Mueller investigation. What are you hearing?

PEREZ: Yes, Wolf, look, I mean, I think you give it another 30 minutes, and we might get another pronouncement from Rudy Giuliani as to when this thing will go.

Look, I think we are waiting now. The president's legal team is looking at the date that's coming up, which is the North Korea summit. Everything is based on that date. They say that in any case, even if they agreed to do an interview with the special counsel, which, by the way, is highly, highly doubtful, if you listen to them and you listen to what they're doing they're telling their client.

They say that that won't happen until well after the North Korea summit, which is, of course, in early June. Look, at this point, I think Rudy Giuliani is using the media a little bit to negotiate with the special counsel's office.

I'm not sure if this a strategy that's going to work, but it is a strategy that they seem to be pursuing at this point.

BLITZER: Yes, June 12 in Singapore, that's when the summit will take place.

Evan, thanks very much.

PEREZ: Thank you.

BLITZER: Let's dig deeper with our specialists and our analysts.

And, Samantha Vinograd, this Russian trading company echoing what President Trump has been saying and pointing its attack against Mueller.

[18:25:04]

SAMANTHA VINOGRAD, CNN NATIONAL SECURITY ANALYST: I think we have to consider this as the next phase in Russian information warfare campaign against the United States.

To me, this is propaganda, and there's an audience of one, and that's President Trump. They talk about the DOJ being political. They talk about the special counsel trying to save himself. They even partake in one of Donald Trump's favorite pastimes, which is pointing the finger at past U.S. administrations.

And, to me, this means that the Russians did their homework, their lawyers did their homework, and they're trying to get under the president's skin.

And the interesting thing, Wolf, is, it's hard to tell where the talking points start. Were they Russian to begin with, and Donald Trump started using them, and then the Russians used them again? We're in this virtuous cycle where the Russians and Donald Trump are echoing each other.

(CROSSTALK)

BLITZER: Hold on. Go ahead.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: I mean, I actually disagree somewhat.

I think this motion was a perfectly appropriate motion for this defendant to make. This is what lawyers do. They try to get a case thrown out. It is a somewhat unusual case, conspiracy to defraud the United States.

It's not unprecedented that there's a charge like that, but it's certainly unusual. And it's entirely appropriate for defense attorneys to try to get a case thrown out.

I don't really think there's anything wrong or inappropriate or -- about this motion. Yes, it reflects some of the things the Donald Trump thinks about the special counsel, but they're on the other side of the special counsel in this case, so why shouldn't they fight back?

BLITZER: They're fighting, which is, of course, their right, to fight back.

Gloria, Mueller, he clearly wants to sit down and ask the president of the United States a whole bunch of questions. Giuliani says, not so fast, certainly not before next month's summit with Kim Jong-un.

What do you think?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, look, everybody else on the legal team thought that Rudy Giuliani was -- that that was an idea, it was not a fact, when he thought about May 17, and that was Rudy Giuliani freelancing, which he did. And now that's -- and now that's over. The president's legal team has always been saying that there's not enough time, because they would have to brief the president so much if he were going to testify before Mueller.

And, of course, he can't do that with the summit coming up. But I think this reflects a new strategy they have. And the new strategy -- the old strategy was, let's get it over with quickly, we want to be done with this.

And now the strategy is, drag it out. We're going to drag it out. They don't want him to testify, as Evan said, but they believe that if they can drag this out past the midterm elections, this is pretty good for them.

So -- and I think they may be banking on the fact that Mueller doesn't want to do report unless he hears from the president, although Mueller's a tough cookie. We will have to see. I can't make any predictions about his reaction.

But this is their new strategy. It's not -- it's not to rush things anymore.

BLITZER: Your newspaper, David Swerdlick, "The Washington Post," is reporting that President Trump often vents, still vents every day, multiple times during the day, about the Michael Cohen, FBI raid in New York.

He vents that he wants better -- quote -- "TV lawyers" to defend him out there on cable news. What else are you hearing?

DAVID SWERDLICK, CNN COMMENTATOR: Yes.

I mean, the TV lawyers comment is -- it's both funny and also predictable for this president. It's a great report by my colleagues.

Wolf, we have known from "The New York Times"' report earlier this year that the president at one point last year had said, where's my Roy Cohn, referring to his longtime fixer from the '70s.

He still hasn't found the guy that -- or woman who can go out on TV and represent him the way he wants to be represented. I think that's why he hired Rudy Giuliani. But Mayor Giuliani has been ineffective at doing that.

He wants someone who's like 75 percent pit bull, maybe 25 percent lapdog, who just gives this perfect representation of what he wants to say to the public, without getting him in further legal trouble. No one's been able to do that.

BLITZER: And, Jeffrey, the -- Rudy Giuliani says they're going from defense to offense right now.

But does that really work, to go on the offensive against Robert Mueller?

TOOBIN: Well, it works in the sense that you -- he's rallying the base.

And if you look at the polling results, Republicans are now much more allied against Robert Mueller's investigation. It doesn't work with Mueller. Mueller is going to do what Mueller is going to do.

But if you want to keep your base on your side, you keep attacking Mueller. And that does appear to be working. So, I think Gloria is right. I think they're starting to kick the can down the road.

Donald Trump ain't giving no interview here one way or another.

(LAUGHTER)

TOOBIN: And whether he takes the Fifth, or whether he goes to court, or whether he drags this thing out until Chelsea Clinton is president, I don't know.

But it is -- I mean, he's just not talking to these folks.

BLITZER: And it does seem to be working, Gloria. You have seen the most recent polls that, among Republicans, a vast majority believe it is a witch-hunt.

BORGER: Yes.

Well, and that's -- you know, and that's not going to bother Mueller in the grand jury or when he writes his report, whenever that is.

[18:30:08] But you know, I remember talking to Robert Ray, who worked -- who replaced Ken Starr. And one of the things he said to me was, you know, it's difficult when a special counsel does not have the public on his side. And, of course, Ken Starr did not.

We're not approaching that level with -- with Mueller, but that is clearly the strategy of the president's legal team. Because when he does decide not to testify or plead the Fifth, he can say, "Why would I sit down with this guy? They're being unfair to me. This is a crooked investigation. They're out to get me." Et cetera, et cetera. And that's exactly what they'll do.

BLITZER: Everybody stick around. There's more news we're following. Why President Trump may officially acknowledge the Stormy Daniels hush money as early as tomorrow.

(COMMERCIAL BREAK)

[18:35:36] BLITZER: Tomorrow could see the first official acknowledgement of the hush money paid for the porn star Stormy Daniels to keep quiet about her alleged affair with President Trump.

Our national correspondent, Athena Jones, is working the story for us. The president has an important deadline tomorrow.

ATHENA JONES, CNN NATIONAL CORRESPONDENT: Hi, Wolf.

That's right. Under the Ethics and Government Act of 1978, the president is required to file his financial disclosure report by tomorrow, May 15. The big question is whether or not he'll reveal officially for the first time the payments he made to reimburse his personal attorney, Michael Cohen, for a payment Cohen made. Some ethics experts argue he has to.

(BEGIN VIDEOTAPE)

WALTER SCHAUB, FORMER DIRECTOR, OFFICE OF GOVERNMENT ETHICS: There really is no loophole he can rely on. He has to disclose this debt.

JONES: President Trump could officially acknowledge the now-infamous $130,000 hush payment to porn star Stormy Daniels when he files his financial disclosure report due tomorrow.

Walter Schaub, who until last July headed the Office of Government Ethics, says in a new op-ed in "USA Today," under the law, Trump must come clean and disclose all debts over $10,000 at any time during 2017, even if he later repaid them.

Why does this matter? Trump's personal attorney, Michael Cohen, said he paid the money to Daniels, whose real name is Stephanie Clifford, just days before the 2016 election to keep her quiet about an alleged 2006 sexual encounter with Trump.

RUDY GIULIANI, LAWYER FOR DONALD TRUMP: That money was not campaign money. Sorry.

SEAN HANNITY, FOX NEWS HOST: They funneled it through a law firm.

GIULIANI: Funneled through a law firm, and the president repaid it.

JONES: New Trump lawyer Rudy Giuliani revealing in recent interviews that Trump paid Cohen back through a monthly retainer of $35,000, starting in 2017, statements Trump seemed to back up on Twitter.

Schaub says that debt to Cohen must be formally reported. And Giuliani calling those payments an expense or a retainer --

GIULIANI: The retainer agreement was to repay expenses.

JONES: -- doesn't shield Trump from having to reveal them.

Giuliani has also made contradictory arguments about whether the Daniels money amounted to a campaign expenditure.

GIULIANI: It wasn't a campaign anything.

Even if it was considered a campaign contribution, it was entirely reimbursed out of personal funds.

JONES: Schaub says arguing it was campaign money would put Trump on the hook legally for not disclosing both the reimbursement to Cohen and the underlying Daniels pay-off to the Federal Election Commission.

Now serving as senior director of ethics at the Campaign Legal Center, Schaub says if Trump doesn't disclose the Daniels payment, he'll be breaking the law, and the Office of Government Ethics might not certify his report.

SCHAUB: Knowing and willful omission from the disclosure report can subject a filer to both criminal and civil penalties. So he would quite literally be committing a crime if he knowingly and willfully omitted it.

There is no way that anyone at the Office of Government Ethics could possibly believe this was not a reportable debt. And so if they're doing their jobs, they will refuse to certify it.

(END VIDEOTAPE)

JONES: Now, the Department of Justice has tried to prosecute omissions from disclosure reports in the past, but it's unlikely the president would face prosecution in the short term. Schaub said it's really up to Congress to hold the president accountable and force him to comply with the law.

Schaub said last year when he headed the OGE, the Office of Government Ethics, Trump failed to file his financial disclosure work on time, instead filing it a month late. If he files on time, the public should expect to see the report within a few days.

But keep in mind OGE doesn't disclose specific information about individuals, so there's no way to know whether the president has asked for an extension, and there's no word from the White House on what the president plans to do. We've asked multiple times.

BLITZER: I'm sure you have. All right, Athena. Thank you very much.

Let's get back to our panel. David Swerdlick, if the president does have to disclose these kinds of payments through the -- through his company to Michael Cohen, do you think he'll suffer any political consequences at all?

DAVID SWERDLICK, CNN POLITICAL ANALYST: I think it will look bad. I think he'll have to weather a couple of days of continued bad press, but no, I don't think there will be consequences. Last week, CNN/SSR poll, he had a 41 percent approval rating, 86 percent approval among Republicans. I think his core supporters, Republicans, including some family values type religious leaders, have priced this all in. They're sticking with the president.

BLITZER: Let me ask you, Gloria, about another Cohen client, the FOX News host Sean Hannity. "The New Yorker" magazine is now reporting the president and Hannity, they sometimes speak multiple times of day, very often every night around 10 p.m. after he finishes his show. What does that tell you about the kind of information the president is receiving?

[18:40:14] BORGER: It's a new version of pillow talk between the two of them.

I think that we shouldn't be surprised by this. Sean Hannity and President Trump are close, and I think the president watches FOX News. And the great piece in "New York" magazine by Olivia Nuzzi basically said they gossip. They talk about who's up and who's down in the media industry, which by the way, the president was a part of and is clearly very interested in. And I think he think he gets -- I think he gets his news, opinions, and thinks what's important from watching FOX News.

And I think that's the way he curates the news, despite the fact that he has at his disposal every intelligence agency in the government. But it doesn't surprise me at all that he and Sean Hannity remain close friends.

BLITZER: An excellent article. You're right.

In "New York" magazine. No, no, you said, "New York." I said "New Yorker." You were correct. It was in "New York" magazine. A very, very good article.

Let's talk about another story that's developing right now, Sam, the president's approach to this Chinese telecom, this phone company, ZTE. All of a sudden he's tweeting, he's suggesting, you know, the U.S. has got to help create some jobs for ZTE. He posted on Twitter about a conversation with President Xi of China, and they're "working together to get massive Chinese phone company ZTE a way to get back into business fast. Too many jobs in China lost."

All of a sudden, he's worried about jobs in China. How do you explain that?

SAMANTHA VINOGRAD, CNN LEGAL AND NATIONAL SECURITY ANALYST: I don't really feel bad about Chinese jobs. I don't feel bad for ZTE.

I mean, let's just remember, the president's own administration imposed export bans on ZTE because they violated U.S. sanctions on Iran and North Korea.

So we have a situation now where the president, obviously, undercut the credibility of his team that's negotiating with China on trade issues right now. He also undercut his own credibility on being the toughest guy on Iran or North Korea. He pulled out of the Iran deal last Tuesday and reimposed sanctions on Iran, and just a few days later he gets a call from his new friend, President Xi, and is willing to lift -- or look at lifting restrictions on a sanctions buster. That seems really discordant to me.

BLITZER: Another issue, Jeffrey. I'm anxious to get your thoughts on this one. AFP, the French news agency, now reporting that the Trump Organization is working on a huge project in Indonesia right now, and they're going to get hundreds of millions of dollars in loans from Chinese institutions.

Anything wrong with that at all, if our sitting president's company does business like that?

JEFFREY TOOBIN, CNN CHIEF LEGAL ANALYST: Well, this is one of the unprecedented areas of the Trump presidency, in that he -- his company, which he continues to have a very substantial ownership stake in, continues to do business while he's president. So, you know, foreign diplomats stay in the Trump hotel right by the

White House, because they want to ingratiate themselves with the Trump family. The Trump family does business all around the world with companies, as you point out, in Indonesia, among many other places, and they want to ingratiate themselves with the Trump family. So they put up this money.

You know, there is something called the Emoluments Clause in the Constitution, which says that sitting presidents cannot receive direct money from foreign -- from foreign entities while they're president. There are now lawsuits in the court about whether that's being violated.

But this is just another area where we are in uncharted territory in this -- in that we have a sitting president who is benefiting financially from the work of governments from around the world.

BLITZER: Lots of unanswered questions. All right, guys, stick around. There's more news we're following, including the controversy surrounding two evangelical pastors that the Trump administration sent to Jerusalem for the opening of the new U.S. embassy there.

(COMMERCIAL BREAK)

[18:48:50] WOLF BLITZER, CNN HOST: The White House is defending the presence of two controversial evangelical pastors who attended the opening of the new U.S. embassy in Jerusalem today.

CNN's Tom Foreman is joining us right now.

Tom, these two pastors have some pretty shocking statements, at least in the past.

TOM FOREMAN, CNN CORRESPONDENT: Yes, they have, so much so that president people might see them as flame flowers, but for team Trump, they were path finders, that led him to an electoral promised land, and this action fulfilled one of his pledges to them.

(BEGIN VIDEOTAPE)

ROBERT JEFFRESS, FIRST BAPTIST CHURCH PASTOR: We thank you every day, that you have given you a president who boldly stands on the right side of history.

FOREMAN (voice-over): The prayer by Robert Jeffress drew quick applause from Team Trump and fast fire from critics who noted that Baptist pastor's long history of attacking other faiths.

JEFFRESS: It is an evil religion. It is an oppressive religion.

FOREMAN: Jeffress has condemned Islam, Catholicism, Hinduism, Buddhism. He said Jews can't be saved and he's gone after Mormons, too.

JEFFRESS: I'm saying it's a theological cult.

FOREMAN: The White House tried to distance itself from the controversy.

RAJ SHAH, DEPUTY WHITE HOUSE PRESS SECRETARY: I haven't seen those remarks, but obviously those aren't remarks the president believes in.

[18:50:01] FOREMAN: But former Republican presidential nominee Mitt Romney himself a Mormon tweeted, such a religious bigot should not be giving a prayer to the embassy opening.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: What a good guy. Where is he? Come here. I love this guy.

FOREMAN: For Trump, however, the equation is wildly different. Jeffress supported his presidential bid, he advises the president and he helped push 80 percent of white evangelical voters to Trump's side in the election.

TRUMP: He said he may not be perfect, but he's going to make this country great. He's a leader, that's what we need. And I want to thank you, Pastor.

FOREMAN: Another pastor taking part in the dedication, John Hagee. He told the ultra conservative "Breitbart" Website Trump will win political immortality for the embassy move.

JOHN HAGEE, FOUNDER & SENIOR PASTOR, CORNERSTONE CHURCH: Jerusalem is and always shall be the eternal capital of the Jewish people.

TRUMP: The problem is, in the '90s, he suggested Adolf Hitler was fulfilling a prophecy in the Holocaust.

HAGEE: And they the hunters shall hunt them. That will be the Jews. Hitler was a hunter.

FOREMAN: Hagee says his comments were grossly misrepresented. His group says the comments were based on the writings of Jewish theologian. And similarly, Jeffress cites context and history in defending his comments.

JEFFRESS: Islam is wrong. It is a heresy from the pit of hell.

(END VIDEOTAPE)

FOREMAN: Simply put, he tweeted back at Mitt Romney that Christians have for many centuries believe Jesus alone offer salvation and still believing that is, quote, neither bigoted nor newsworthy -- Wolf.

BLITZER: All right. Tom, thank you. Tom Foreman reporting.

Just ahead, the Trump team's rather dramatic change in tone on North Korea.

(COMMERCIAL BREAK)

[18:56:24] BLITZER: As President Trump prepares for his upcoming summit with Kim Jong-un, we're seeing a rather dramatic change in U.S. rhetoric about North Korea. Let's bring in CNN's Brian Todd.

Todd, the change in tone has been sudden and dramatic.

BRIAN TODD, CNN CORRRESPONDENT: Wolf, this change in tone has been nothing short of extraordinary. We've gone from the president threatening fire and fury and trading insults with Kim Jong-un to what we're hearing tonight, the president and his secretary of state bestowing praise and even lofty titles on the dictator.

(BEGIN VIDEOTAPE)

TODD (voice-over): Mike Pompeo says after meeting with Kim Jong-un in recent days, that he and President Trump have their eyes wide open on the risks of making a deal with the dictator. But the secretary of state is otherwise brimming with optimism over what can be accomplished in their planned summit next month.

MIKE POMPEO, SECRETARY OF STATE: It is our fervent hope that Chairman Kim wants to make a strategic change.

TODD: That title Pompeo was giving Kim these days is raising eyebrows.

POMPEO: It is Chairman Kim, in this case interacting with me directly.

If Chairman Kim chooses the right path, there is a future brimming with peace and prosperity for the North Korea and North Korean people.

TODD: Pompeo's compliments come after President Trump offered his own positive view of Kim in recent days.

TRUMP: He really has been very open and I think very honorable.

JAMIE METZL, FORMER NSC OFFICIAL: President Trump and Secretary Pompeo are gushing over Kim Jong-un. President Trump called him honorable. Secretary Pompeo called him Chairman Kim. This is a guy who has up to a hundred thousand people in terrible conditions in prison camps.

TODD: It was only a few months ago that President Trump was calling Kim something less than chairman.

TRUMP: Little rocket man.

TODD: Tonight, experts stress that it's a positive development that the Trump team and the North Koreans are talking but they also warn of promises like Pompeo made over the weekend. That if North Korea dismantles its nuclear weapons, it could receive American investment.

POMPEO: What Chairman Kim will get from America is our finest, our entrepreneurs, our risk takers, our capital providers. Not our taxpayers. They'll get people --

TV HOST: Private capital? POMPEO: They will get private capital that comes in. North Korea's

desperately in need of energy support, electricity for their people. They're in great need of agricultural equipment and technology.

TODD: Analysts say if all that Western investment flows in, there could be blowback to the regime that the Trump administration and the North Koreans aren't prepared for.

METZL: Because the primary goal of the North Korean regime is to stay in power, we don't know how much economic opening is even possible without threatening the underpinnings of that regime.

TODD: But tonight, there's also concern about the sincerity of North Korea's promise to shut down its main nuclear bomb test site, Punggye- ri. Trump recently tweeted, so great for world, site closure and no more testing. But geologists in China said at least part of that site has already collapsed from North Korea's massive thermonuclear bomb test in September.

(on camera): Is it functional at all?

DAVID ALBRIGHT, FORMER U.N. WEAPONS INSPECTOR: I think part of the site would be functional. Another mountain could be used. But I think that test site, it seems like it was -- that particular mountain seems to not be useable anymore.

(END VIDEOTAPE)

TODD: Still, weapons experts believe that Kim could simply decide to go elsewhere to test his bombs, or that he may have already concluded that he's refined his nuclear bombs enough and manufactured enough of them that he doesn't believe he needs to test any more at all -- Wolf.

BLITZER: Do you know how many bombs he has, Brian?

TODD: David Albright, the weapons inspector we talked to assesses that Kim has between 15 and 35 nuclear bombs, Wolf. So, verifying that all of them have been destroyed is going to be a really tough task for the Trump administration.

BLITZER: Certainly will be. Brian Todd, reporting for us. Good report, Brian. Thank you.

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

"ERIN BURNETT OUTFRONT" starts right now.