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Trump Calls Warren 'Pocahontas' in front of Navajo Group; Hearing to Determine Who's in Charge at Watchdog Agency; Another GOP Senator Joins List of Holdouts on Tax Bill; New Questions About Flynn and Special Counsel Investigation. Aired 5-6p ET

Aired November 27, 2017 - 17:00   ET

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

WOLF BLITZER, CNN ANCHOR: Happening now, breaking news. Betraying his base? President Trump takes to Twitter to push his tax bill, which the Congressional Budget Office now says would hurt the people he campaigned to help. Is the president betraying his base and is the bill in jeopardy tonight with two GOP senators saying they'll vote "no"?

[17:00:21] Dueling directors. A federal judge is hearing arguments about who's in charge of the government office designed to protect people's pocketbooks. The president says his pick is the acting director, but the deputy director says she's in charge, and she says the law is on her side.

Closing in on Flynn? President Trump's former national security adviser and close campaign adviser, Michael Flynn, may be cooperating right now with the special counsel, Robert Mueller after his lawyers told the president's legal team they can no longer share information.

And insults and lies. President Trump attacking the news media and insulting Native Americans in the Oval Office while reportedly telling people privately that the "Access Hollywood" videotape, which he apologized for, was not authentic. Is the president's thin skin going to lead to harassment or harm of reporters around the world?

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

ANNOUNCER: This is CNN breaking news.

BLITZER: We're following breaking news, including a federal court hearing here in Washington over who's in charge of the Consumer Financial Protection Bureau. Two people are claiming to be acting director following the resignation of the former chief, Richard Cordray, who is -- one is Leandra English, who served as his deputy. The other is the White House budget director, Mick Mulvaney, named by President Trump. Both showed up at the bureau today.

Also breaking this hour, the future of the Republican tax overhaul plan is increasingly uncertain, with another GOP senator now voicing deep concern. Steve Daines of Montana just put out a statement demanding changes to protect small businesses. And another GOP senator has already said he's a "no" vote, and at least half a dozen other Republican senators have yet to commit to the bill. Republicans can only lose two votes and still pass the measure, which they plan to vote on this week.

And the White House is also facing questions about controversial new comments by President Trump. Just a short time ago, he took a dig at Democratic Senator Elizabeth Warren, calling her Pocahontas while speaking at an event honoring a group of Native Americans.

And "The New York Times" is now reporting that Mr. Trump suggested to a senator and one of his advisers that the infamous "Access Hollywood" videotape, in which he boasted about grabbing women's genitals, was not authentic. Mr. Trump himself acknowledged and apologized for the tape after it was made public. The White House says his position has not changed.

We're covering all of that and much more this hour with our guests, including Congresswoman Kathleen Rice of the Homeland Security Committee. And our correspondents and specialists are also standing by.

Let's begin with the controversial new comment by President Trump. Our senior White House correspondent Jeff Zeleny is joining us with the latest.

Jeff, the White House denies President Trump used a racial slur in front of a Native American group.

JEFF ZELENY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Wolf, the president has often used derogatory terms to call his political rivals, but seldom has he done it in the Oval Office, carrying so much more weight. But that is exactly what he did this afternoon with Senator Elizabeth Warren, referring to her as "Pocahontas" as he was honoring Navajo Indians who fought in the Second World War.

Wolf, all of this was happening under the watchful eye of Andrew Jackson. His picture is hanging in the Oval Office. Of course, he was a president who presided over so many deaths of Native Americans years ago.

That caused silence to fall over the room. I was in the Oval Office when this happened, Wolf, and I can tell you the veterans were stunned there as the president called Senator Warren "Pocahontas."

(BEGIN VIDEOTAPE)

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

(on camera): How's the tax bill going, sir?

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

ZELENY: And a critical month ahead for Republicans. With a year-end spending bill looming to keep the government open. TRUMP: I think the tax bill is doing very well, and I think the

Republicans are going to be very proud of it.

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

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

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

ZELENY: So far, that seems unlikely.

But in the Oval Office today, while honoring Navajo Indians who fought in World War II, Mr. Trump made a crack at one of his Democratic foes, Senator Elizabeth Warren, who he has branded "Pocahontas."

TRUMP: You were here long before any of us were here. Although we have a representative in Congress who they say was here a long time ago. They call her Pocahontas.

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

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

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

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

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

(on camera): Mr. President, will you go to Alabama?

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

TRUMP: And when you're a star, they let you do it. ZELENY: While briefly apologizing for it at the time...

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

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

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

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

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

(END VIDEOTAPE)

ZELENY: So, again, we tried pressing the White House press secretary for exactly where the president stands on that old "Access Hollywood" tape. Of course, right before the election he said, "I did it. I'm sorry. I apologize."

But then there is this new reporting from "The New York Times" that he has said since that copy of the tape is a fake.

Sarah Sanders said that he stands by his original position but then did not answer further questions. She said the media has been misrepresenting the coverage of that old "Access Hollywood" tape -- Wolf.

BLITZER: Jeff Zeleny at the White House. Thanks very, very much.

Let's get some more on the battle over who's in charge over at the Consumer Financial Protection Bureau. Our justice reporter Laura Jarrett is working the story for us.

Laura, the issue is, what, in federal court right now.

LAURA JARRETT, CNN CORRESPONDENT: That's exactly right. Court is underway now, and White House budget director Mick Mulvaney says the Consumer Financial Protection Bureau is open for business and his name is on the door.

He's pushing back on any assertion that that agency is in chaos while lawyers for the bureau's deputy director, Leandra English, say that under federal law, she must serve as the acting director until the president's permanent pick is confirmed by the Senate.

Now, of course, aside from who's legally entitled to run this watchdog agency, there's also a battle of who can do the job better, with Democrats worried that Mulvaney could dismantle protections for consumers while Mulvaney told reporters just a short time ago that the bureau under the Trump administration will be dramatically different. Take a listen.

(BEGIN VIDEO CLIP)

MICK MULVANEY, WHITE HOUSE BUDGET DIRECTOR: This agency will stay open. Rumors that I'm going to set the place on fire or blow it up or lock the doors are completely false. I'm a member of the executive branch of government. We intend to execute the laws of the United States, including the provisions of Dodd-Frank that govern the CFPB.

That being said, the way we go about it, the way we interpret it, the way we enforce it will be dramatically different under the current administration than it was under the last. Anybody who thinks that a Trump administration of CFPB would be the same as an Obama administration CFPB is simply being naive. Elections have consequences at every agency, and that includes the CFPB.

(END VIDEO CLIP)

JARRETT: Now, in something of a rare showdown, both Mulvaney and the deputy director, Leandra English, showed up to work this morning, each claiming to be the interim head of the agency in dueling e-mails to the staff. But legal experts tell me, Wolf, there are no easy answers here, and a federal judge is going to be the one that has to decide.

BLITZER: We'll see what that judge decides. Laura, thank you very much. Laura Jarrett reporting for us.

We're also following another setback for Senate Republicans as they scramble to lock down support for the tax overhaul bill under a looming deadline. Let's go to our congressional correspondent Phil Mattingly. He's up on Capitol Hill.

Phil, another GOP senator has just joined the list of holdouts.

[17:10:00] PHIL MATTINGLY, CNN CONGRESSIONAL CORRESPONDENT: That's right. Senator Steve Daines of Montana. And his issue is similar to one that we've already heard about from Senator Ron Johnson of Wisconsin. It's about passthrough entities, basically small business entities like partnerships or S-corps that basically pay taxes through the individual side of the tax cut.

Now, the proposal in both the House and Senate, Wolf, have a significant cut for those entities, but Steve Daines and Ron Johnson say that's not going far enough. Basically, what they're asking right now is something that relates almost to competing demands for Republican leaders as they try and scramble to get these votes. Because while they want more money to be spent and allow these passthroughs to have a bigger tax cut, that competes with, say, the Republicans who want deficits to be considered, people like Jeff Flake, people like John McCain, people like Bob Corker, who have raised significant concerns that this $1.5 trillion package won't pay for itself in economic growth. Something a lot of analysis we've seen up to this point proves to be correct.

On top of all that, you have people have Senator Susan Collins, who's very concerned about the inclusion of the individual mandate from Obamacare, that repeal in this bill.

So basically, right now, Wolf, what you have is a lot of senators who have a lot of demands and GOP leaders who have only a few days to try and assuage those concerns. Senator John Cornyn, the No. 2 Republican in the Senate, said that they plan to have at least a procedural vote on this bill as soon as Wednesday.

Things are moving very quickly behind the scenes. I'm told changes are already being made, offers are already being put out there, but we're going to get an early test of that tomorrow, Wolf. The Senate Budget Committee will consider this proposal before it goes to the floor. Who's on the Senate Budget Committee? Senator Ron Johnson. That committee only has a 12 to 11 advantage for Republicans. Senator Johnson isn't happy, he can sink that as soon as tomorrow, Wolf.

BLITZER: Yes. We'll be watching that very, very closely. Phil Mattingly, thank you very much.

Let's get some more on all of this. Democratic Congresswoman Kathleen Rice of New York is joining us. She's a member of the House Homeland Security Committee.

Congresswoman, thanks for joining us.

REP. KATHLEEN RICE (D), NEW YORK: Thanks for having me, Wolf.

BLITZER: Let's talk taxes for a moment. Republicans clearly feeling a lot of pressure right now to deliver on tax reform. Do you think that's going to be enough to get this bill over the finish line before the end of the year?

RICE: I personally don't think so. I mean, the more the American people are learning about what exactly is contained in either proposal, the House or the Senate tax bill, they don't like it.

I can tell you from New York state, we have a bipartisan representation of House members on Long Island, for instance -- our of us, two Democrats and two Republicans -- and the Republicans are not supporting the House bill. It is -- it will pay -- it's going to -- it's a giveaway to the rich, to the rich people in this country and to big corporations on the backs of the middle class, seniors, through Medicare cuts that are going to be inevitable in order to pay for this tax reform bill.

And I just -- I think the longer we go, the more time people have to actually absorb what it's going to mean to them in their day-to-day lives; and the public is going to outcry and say, "We don't want this plan." This is what not what the president says it's going to be, which is a great big Christmas present for everyone. It's going to be -- it's going to mean bigger taxes, more taxes for more people across this country.

BLITZER: But Congresswoman, even though those two Republican congressmen from Long Island voted against the House tax plan, it still passed overwhelmingly in the House of Representatives. It got through relatively easily, right? RICE: I wouldn't say easily. I mean, they were looking for votes.

They knew how many they could sacrifice, so I guess they gave a break to people in states like New York, which are going to see some of the biggest hits.

But I can tell you that even Republicans that I'm talking to, Wolf, in the state of New York and across this country are saying they don't want this bill to pass. It would have been nice if it had been a bipartisan effort. I mean, we haven't had tax reform in 40 years. And in order for it to be really comprehensive and benefit all people, it would have been nice to have some Democrats at the table. But they wanted to go this one route, and I think they're going to end up regretting that decision.

BLITZER: In the Senate version of the tax bill, they repeal the individual mandate, the Obamacare individual mandate. Is that a tax?

RICE: Well, look, if you want tax reform -- if you want people to have access to health care, you have to have healthy people buying into the system. That's what the mandate is.

If you talk to a lot of Republicans, Wolf, you'd said, "You like the mandate?" they'd say, "No, no, no, no." What about if we had an automatic enrollment system? They said, "Well, now that, I have no problem with."

Whether you call it a mandate or an auto enroll, the point is the same. It's to get healthy people into the system so that the burden can be borne across the board. So I think that what we're going to see if they repeal the mandate, this is going to affect Americans all across the country. Tens of millions of people are going to lose their health insurance, and I think the Republicans are going to have to answer for that.

BLITZER: Yes, the Congressional Budget Office says about 13 million who have health insurance would lose the health insurance over the next ten years, maybe 4 million over the next year or two.

On a separate, very sensitive issue, why do you believe President Trump is attacking the Consumer Financial Protection Bureau right now?

[17:15:08] RICE: Because he wants to give a gift to financial institutions and his friends in this country. I mean, there's no other reason to explain why you would try to gut an agency that -- whose sole purpose is to protect consumers.

And what we need to do is bring Americans back to 2007/2008 and the economic, you know, tsunami that we had. And that was because, you know, people were being duped into buying homes that they couldn't afford. You know, financial institutions were making out like bandits, and regular Americans were left holding the bag.

So the -- the Consumer Financial Protection Bureau really was -- was created to be the voice for consumers. And they've actually returned billions of dollars to consumers in protection, you know, in making cases where consumers were being taken advantage of through whatever financial institution was trying to, you know, whatever scheme they were trying to push.

If we do not have this agency -- and, you know, look, I heard Mick Mulvaney say before to the victor go the spoils. And did you really think that a Trump CFPB was going to be like an Obama one? Well, maybe not. But I certainly don't expect this agency under this administration to be run by someone who voted to do away with the agency and get rid of these protections for consumers.

So this is another issue where we need the voters to kind of educate themselves about this issue. Understand how important it is to keep this agency going to protect consumers, especially, you know, when you're, you know, working in this kind of climate right now with the tax reform bill that they want to pass.

BLITZER: Let's turn to the issue of sexual harassment and assault up on Capitol Hill. Was Senator Al Franken's apology today enough to merit him staying -- his staying in the U.S. Congress? What do you believe?

RICE: I don't think so. I think if you ask any person on the street, do you think the action that CBS took with Charlie Rose was appropriate? Or Louis C.K., or anyone else in Hollywood, Harvey Weinstein, they would say, "Yes, they took the right action."

Why can't we do the same thing in Washington? What's so -- what is so problematic, and the reason why I'm being so vocal on this issue, Wolf, is because what we are saying in Washington is there's a set of rules that apply to people who are not politicians in Washington, and there's a totally different set of rules that apply to elected officials serving in Congress. And that's why there is such distrust of government and Congress just in general across the board.

People are seeing us circle the wagons and protect our own. Whether it's Donald Trump not coming out against Roy Moore and supporting him to the extent that he is, or if it's Nancy Pelosi protecting John Conyers and saying that she leaves it up to him to make the right decision. I think that's ridiculous. I called on John Conyers to resign.

For all of these women who make these -- have made these credible allegations, Wolf, there were, to a story, professional repercussions for every single one of those women who were harassed. There should be professional repercussions for every single harasser. And it seems like the private sector has it right, and us in Congress don't.

And guess what? We're not -- we weren't elected by a board of directors in Washington. We were elected by the people. And what's important is that when scandals like this happen, we can't circle the wagons and protect our own. There's no reason for the public to trust us if we can't even call people out and say, "You have betrayed the public trust, and there has to be a consequence."

BLITZER: So you want both Conyers and Franken to resign?

RICE: I think they should. And I think that that's what most people feel would be an appropriate consequence for these elected officials. And, you know, if we can do it in the private sector, and we all

applaud what happened to Harvey Weinstein and everyone else in the private sector, why can't we do it here? I don't think it's enough to say, "Al Franken, you have to -- you should apologize and that's good enough" or "John Conyers, you have to step down from your leadership position, but you can stay as a Congress person."

What if CBS said to Charlie Rose after all of those horrible allegations that were all found to be credible, "You know what? Instead of putting you in prime time, Charlie, we're going to put you at a time when not as many people are going to see you"? People would be outraged by that. That's not a real consequence. And in Washington, stepping down from a powerful committee is not a consequence either.

BLITZER: Congresswoman, there's more we need to discuss. I've got to take a quick break. We'll resume our conversation right after this.

(COMMERCIAL BREAK)

[17:24:19] BLITZER: President Trump is singing out CNN in a series of new Twitter attacks. We're back with Democratic Congresswoman Kathleen Rice of New York, a member of the House Homeland Security Committee.

Congresswoman, over the weekend, the president tweeted this, and I'll read it to you and our viewers. "FOX News is much more important in the United States than CNN, but outside of the United States, CNN International is still a major source of fake news, and they represent our nation to the world very poorly. The outside world does not see the truth from them."

He then followed with another tweet this morning, which said, "We should have a contest as to which of the networks plus CNN, and not including FOX, is the most dishonest, corrupt and/or distorted in its political coverage of your favorite president, me. They are all bad. Winner to receive the fake news trophy."

What's the impact of these kinds of tweets?

RICE: I think when you read these you see how this is really one man's attack on one channel. To say "excluding FOX," which has really become just an arm of the administration, shows that the president, as thin-skinned as he is, he does not -- he cannot countenance people giving truthful stories about him that may shed him or his administration in a negative light.

And this -- when he talks about fake news, if you travel anywhere in this world and you see the effects of Russia's interference and their fake news propaganda in countries all across the world, this is real stuff.

And for the president to talk about this as if, you know, the fake news began and ends with -- begins and ends with CNN and other news agencies in this country, just because he doesn't like the reporting of him and his administration, is so disturbing it's beyond words. I mean, Russia has made attempts to upset democracies all across the

world. We know this for a fact. He still is the only person in this country who will not acknowledge the interference by Russia in the 2016 elections. And I just don't know when this is going to end and when he's going to just admit it and move on and understand that this is an issue of national security for us in this country, to not allow a foreign, not friendly country interfere into our elections.

BLITZER: Congresswoman Rice, thanks for joining us.

RICE: Thank you so much, Wolf.

BLITZER: Coming up, new questions about whether the former national security adviser, Michael Flynn, will cooperate with special counsel Robert Mueller's investigation of the Trump campaign.

Also coming up, more on the breaking news as the White House defends President Trump's use of a word many consider a racial slur against Native Americans during an Oval Office visit by members of the Navajo code talkers.

(BEGIN VIDEO CLIP)

TRUMP: We have a representative in Congress who they say was here a long time ago. They call her Pocahontas.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: We're following multiple breaking stories, including the White House now brushing off criticism of President Trump referring to Senator Elizabeth Warren as Pocahontas. During an Oval Office visit by members of the World War II Navajo code talkers.

[17:32:14] Presidential press secretary Sarah Sanders this afternoon told reporters the word is not a racial slur.

Let's bring in our political specialists. Chris Cillizza, let me play the clip with the president in the Oval Office with these World War II heroes, these Navajo code talkers who helped win World War II, and here is the president.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: You were here long before any of us were here, although we have a representative in Congress who they say was here a long time ago. They call her Pocahontas. But, you know what? I like you. Because you are special.

(END VIDEO CLIP)

BLITZER: OK. Chris, your reaction?

CHRIS CILLIZZA, CNN POLITICS CORRESPONDENT AND EDITOR AT LARGE: I mean, you know, it's sort of, in a way, beyond parody. Like that -- that he has said this before, No. 1. He has called her Pocahontas before. That he would do so in those circumstances.

And you can't even tell in that shot, Wolf, because it's a little tight. If you pull back, he's doing so in front of a portrait of Andrew Jackson, the president who issued the forced removal orders of Native Americans and led to the trail of tears.

It's a combination of bad optics, but also just a president who I think conflates sort of not being politically correct with civility. He seems to think, "Well, I'm just -- I'm saying it how it is, and people will laugh at this." And people will laugh at it. Some. That doesn't make it right. It doesn't make it a way in which a president, I think, should act.

And I think it will have lasting consequences well beyond the four or eight years that Donald Trump is president. How he is willing to mainstream incivility, insult and bullying.

BLITZER: Dana.

DANA BASH, CNN CHIEF POLITICAL CORRESPONDENT: I mean, look, this does not surprise anybody that the president did what he did. I think it is important that we don't all become immune to statements like this from the president of the United States in the White House. Which is -- they're completely inappropriate.

Sarah Sanders at the White House podium kind of said what she had to say, because that's her job being the press secretary for Donald Trump. That, well, you know, it was really about Elizabeth Warren. It's not. It's about having respect for the office, having respect for the people who he's talking to. Never mind Native Americans. It's nothing to do with Elizabeth Warren.

BLITZER: Ryan, how did you see it?

RYAN LIZZA, CNN POLITICAL ANALYST: I mean, just from the -- from beginning to end, the way that the White House -- their -- the way that they don't understand the optics of a ceremony about Native Americans.

I mean, I still can't get over that he's doing this in front of the portrait of Andrew Jackson. This is -- you know, this is a president that both Republicans and Democrats have celebrated, but it would be like doing an African-American heritage event under a portrait of a famous Confederate.

BASH: Like Robert E. Lee.

LIZZA: Robert E. Lee...

BASH: Right.

[17:35:09] LIZZA: ... or Jefferson Davis, right? I mean, to Native -- Jackson essentially committed a genocide against Native Americans. So just start with that, that no one in the White House thought, "Whoa, this is probably not the greatest place to do this event."

And then what it suggested to me, just watching it, is Trump just knew nothing about Native American history, about the people who were there, about why he was honoring them. So the only thing that popped into his mind was this -- this joke that he has patented. When he says, "People call her that," that's not really true. The president is the only one as far, as I know, that calls her, Senator Warren, Pocahontas. So just boneheaded from -- beginning to end.

CILLIZZA: And just to add to Ryan's point, I think Ryan's exactly right about what sort of, like, what pops into his head. I think what he thinks is "Native Americans, Pocahontas, I've told that joke on the campaign trail, and people have laughed at it." So he just goes to it, because that's sort of what he does.

To the extent he thinks at all about the potential for insult or offense, and I don't know that he does. Maybe he does. I think he thinks, "Oh, those snowflakes, they get offended at everything. Political correctness run amok."

I mean, I really think that, if there is a thought in regards that, it's sort of a "Well, I'm doing it anyway. Full speed ahead. Damn the torpedoes."

BLITZER: Yes. We've got some other topics I want to discuss. Let me take a quick break, resume this discussion right after this.

(COMMERCIAL BREAK)

[17:41:03] BLITZER: We're back with our political specialists. Chris Cillizza, the tax bill in the Senate coming this week, it's going to be potentially very, very divisive, but the Congressional Budget Office, the committee on -- the Joint Committee on Taxation, both nonpartisan, bipartisan, they're both suggesting middle-class families could be hurt over the ten years. Poor families will be hurt. The wealthiest will do just fine.

CILLIZZA: Yes, and that this bill will add to the deficit by a not insignificant amount of money.

The Republican Party pre-Donald Trump would be very opposed to a bill like this, I believe. Post-Donald Trump, we'll see. Remember, this is a party largely defined by its commitment to lowering the deficit.

I remember watching a million John McCain speeches in 2008 in which he said, "We're passing this debt on to our children and grandchildren. This is no longer acceptable."

So McCain, Bob Corker, Jeff Flake, yes, these are people who are outspoken Trump critics, but in the case of each of them, they're also people who have been consistently concerned about the added -- adding to the deficit over time.

BASH: Except that my sense in that covering the last big tax cut, the Bush tax cuts of 2001, where it tremendously added -- there were no offsets. It really added to the deficit. John McCain voted against it, and he was in the minority at the time. I think it's maybe, in large part, a reaction to that that there is even a discussion in the Republican Party about deficits.

But, look, I think at the end of the day, the whole question is how they get to yes. It's not unlike any piece of legislation, but particularly among Republicans how you get the 50 Republican senators who are going to vote yes.

And Lindsey Graham said to me on CNN yesterday, failure is not an option here. And that is a very, very, very big driving force. If it wasn't really an option with the Obamacare repeal, which did fail, but this is -- the stakes are even higher on this because of the Obamacare.

BLITZER: Because the Congressional Budget Office says it will, over the next ten years, increase the national debt by $1.4 trillion.

LIZZA: Yes, and, look, there's been a pattern of Republicans when they are in power caring a lot more about tax cuts. When they're out of power and a Democrat controls the White House, talking more about deficit. So there is some, you know, for strategic reasons, there's a long history.

But, you know, it does mean that Republicans who are not so fond of Trump have a pure policy reason to say they don't like this tax bill, right? So McCain and Flake and Corker, who let's be honest, are not big Trump fans...

BASH: Right.

LIZZA: ... have been very explicit about that, if they decide to come out against it, they have a ready-made reason. They can talk about deficits.

And it's not just the tax bill, but the omnibus -- omnibus package that's being negotiated right now is going to increase Pentagon spending and discretionary spending. There's tens of billions of dollars in disaster relief that has to go through Congress. So this is -- December is going to be a big spending month. So if these Republicans want to say, "That's too much. I can't support that tax bill for those reasons, they have a reason to do it.

BASH: Not to mention dealing with the DREAMers, which is not going to be very popular, the way that they're probably going to head, not among Republicans.

BLITZER: Dana, those three Republican senators or any three Republican senators, because the Democrats are not going to vote for it, any three Republican senators vote against this legislation, it winds up like repeal and replace Obamacare.

BASH: It does. It does, it does. Except that, Ryan, you talked about the fact that it's about whether or not you want to support the president or not. For some of these senators who are retiring, it doesn't matter, but for most of them...

LIZZA: Corker and Flake, yes.

BASH: Corker and Flake, right. Most of them, it's not about supporting the president. It's about their own hides and making sure that they signal to -- I mean, this is the big thing. It's about signaling to Republicans who voted them in office that they know how to govern and they know how to keep their promises.

[17:45:00] BASH: If they can't get this done, it means they can't really get anything done. And it's -- they believe it's lights out for the majority at the Senate.

CHRIS CILLIZZA, CNN POLITICS EDITOR-AT-LARGE: Dana is --

BASH: And the House.

CILLIZZA: -- absolutely right. And I think that that is the motivation beyond all other things of trying to pass this.

That said, this could be a rock and a hard place situation for Republicans, in that, I think, it is a very dire situation if they go to their voters and say, well, we said we were going to change and we know how to govern. We didn't pass anything, but it's fine.

WOLF BLITZER, CNN ANCHOR: Yes.

CILLIZZA: At the same time, I've not seen a poll on this tax cut/tax reform bill that shows it even close to the kind of thing that the public is asking for.

Theory is that will change once it goes through. Maybe it will when -- if and when money comes back to people in their pockets here.

But they are playing with fire here. This is not a if we pass it, it's a big win in 2018, and if we don't, we lose. It could be a lose- lose.

BLITZER: All right. Everybody stand by. There's more news happening right now, including some new questions emerging about whether the former national security adviser Michael Flynn may be cooperating with the Special Counsel Robert Mueller's investigation of the Trump campaign right now.

(COMMERCIAL BREAK)

[17:51:01] BLITZER: We're following new questions right now about whether the former national security adviser Michael Flynn is cooperating with investigators for Special Counsel Robert Mueller's investigation.

Our Chief National Security Correspondent Jim Sciutto has been working his sources for us. Jim, what are you learning?

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: Well, Wolf, the key signal was Flynn's lawyers cutting off contact and information sharing with White House lawyers, an indication that Flynn's team is at least discussing the possibility of making a deal with prosecutors. And to do so, Flynn would need to make clear exactly what information

he could provide to the prosecution.

(BEGIN VIDEOTAPE)

SCIUTTO (voice-over): Tonight, the legal fate of Michael Flynn, once both U.S. national security adviser and loyal supporter of President Trump --

LT. GEN. MICHAEL FLYNN (RET.), FORMER NATIONAL SECURITY ADVISOR TO PRESIDENT DONALD TRUMP: Donald J. Trump to be the next president of the United States!

SCIUTTO (voice-over): -- is an open question. Flynn's attorneys have cut off ties with Trump's legal team and other defense lawyers involved in the ongoing Russia probe, telling them they would no longer share information as they had been doing for months.

That change could mean that Flynn is cooperating with prosecutors or negotiating a deal that could end with Flynn pleading guilty.

MICHAEL ZELDIN, CNN LEGAL ANALYST: When Flynn notifies the others in the group, I'm no longer aligned, it means he's got something different going on. And in this case, it's either plea negotiations or plea negotiations and cooperation agreements.

SCIUTTO (voice-over): At the same time, President Trump's lawyer is putting new distance between General Flynn and the President, stating, it's important to remember that General Flynn received his security clearance under the Obama administration.

Notwithstanding, that it was Donald Trump that named Flynn his national security adviser.

FLYNN: As of today, we are officially putting Iran on notice.

SCIUTTO (voice-over): Sources interviewed by the Special Counsel tell CNN that Flynn is under scrutiny for failing to disclose paid lobbying he performed during the presidential campaign on behalf of the Turkish government and for failing to report payments he received from the Russian government, including during a trip to Moscow in 2015 in which he appeared alongside Russian President Vladimir Putin at a lavish banquet.

Flynn's son, Michael Flynn, Jr., was directly involved in his work for both Turkey and Russia, opening himself to legal scrutiny as well.

CNN has learned that General Flynn is now deeply concerned about his son's potential legal exposure.

In addition, Flynn may be under scrutiny for making false statements to the FBI. While serving as national security adviser, Flynn told FBI investigators that he did not discuss U.S. sanctions on Russia with then Russian ambassador to the U.S., Sergey Kislyak, a position that Vice President-elect Pence echoed at the time in an interview with CBS. MIKE PENCE, VICE PRESIDENT OF THE UNITED STATES: They did not discuss

anything having to do with the United States' decision to expel diplomats or impose a censure.

SCIUTTO (voice-over): But when investigators pressed him, Flynn changed his answer to say that he didn't remember. That episode led to his ouster from the White House.

UNIDENTIFIED MALE: Raise your right hand, please.

SCIUTTO (voice-over): Concerned that he had lied to the FBI, then Acting Attorney General Sally Yates made this stunning judgment.

SALLY YATES, FORMER ACTING ATTORNEY GENERAL OF THE UNITED STATES: And because we believe that General Flynn was compromised with respect to the Russians.

(END VIDEOTAPE)

SCIUTTO: A key witness to this Special Counsel investigation of Flynn, the former CIA Director James Woolsey, who also advised the Trump campaign, showed up at Mar-a-Lago this weekend for dinner with President Trump -- POLITICO first to report that -- and had a lengthy conversation with the President.

Woolsey's spokesman would only say that Woolsey has served multiple presidents over his career and has never shared the contents of his conversations, Wolf, with them.

BLITZER: He was the CIA Director during the Bill Clinton administration, indeed.

SCIUTTO: Yes.

BLITZER: All right. Thanks very much for that. Jim Sciutto, good reporting.

Breaking news coming up next. President Trump accused of using a racial slur while speaking with a group of Native Americans over at the White House.

(BEGIN VIDEO CLIP)

[17:55:01] DONALD TRUMP, PRESIDENT OF THE UNITED STATES: You were here long before any of us were here. Although we have a representative in Congress who, they say, was here a long time ago. They call her Pocahontas. But you know what, I like you because you are special.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

[17:59:59] BLITZER: Happening now, holdout. Another Republican senator voices concerns about the GOP tax bill, suggesting he may vote no unless changes are made. Tonight, President Trump is predicting the new bill will pass even as

a new estimate warns the legislation would hurt the poor --