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THE SITUATION ROOM

North Korea Missile Launch; Republicans Move Forward on Tax Bill; Interview With South Carolina Senator Lindsey Graham; Trump Spars With Tom Dems After They Bail on Meeting; Russian Intercept of U.S. Navy Jet Causes "Violent Turbulence"; Senate Budget Committee Passes GOP Tax Bill. Aired 6-7p ET

Aired November 28, 2017 - 18:00   ET

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


[18:00:04] WOLF BLITZER, CNN HOST: Standoff. The top Democrats in Congress bail on a meeting with the president after he mocks them and warns that he's not likely to cut a bipartisan deal. Is the war of words making a crippling government shutdown more likely?

Rubik's Cube. As the GOP tax bill clears a key committee, the top Senate Republican admits he faces a challenging puzzle, as he struggles to lock up support within his own party. Did the president's visit to Capitol Hill today change any minds with the bill now heading to a full Senate vote?

And Russian turbulence. Moscow's warplanes are at it once again, putting a U.S. military crew at risk with a very dangerous unprovoked intercept. We're going to tell you what happened during 24 harrowing minutes in the air.

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: We're following multiple breaking stories this hour, including another menacing advance in North Korea's weapons program and its goal of striking the United States.

The defense secretary confirming that a ballistic missile fired toward Japan just hours ago flew higher than any previous launch by Kim Jong- un's regime. Tonight, President Trump says he's taking the North Korea situation very seriously, promising, and I'm quoting him now, "We will take care of it."

Also breaking, the president says he will blame Democrats if there's a government shutdown after the Senate and House minority leaders bailed on a meeting with him. Chuck Schumer and Nancy Pelosi pulled out of the talks after Mr. Trump slammed them on Twitter and declared that he didn't expect to reach a bipartisan deal.

Also tonight, Pelosi is accusing the president of verbal abuse in a sad stunt after he spoke to reporters with two empty seats beside him. The escalating feud playing out as the clock ticks towards a possible government shutdown, just 10 days from now. This hour, the president and his party have taken a crucial first step

in their struggle to pass a tax reform bill before the holiday break. Mr. Trump lobbied GOP lawmakers up on Capitol Hill shortly before the Senate Budget Committee passed the measure, sending it to a vote in the full Senate. Two key Republicans on that panel who had been holding out for changes in the bill wound up voting for it.

But multiple GOP senators still have concerns and the outcome of the final vote remains uncertain.

I will talk about all those stories and much more with Republican Senator Lindsey Graham. He's a key member of the Budget and Armed Services Committees. And our correspondents and specialists are also standing by.

First, let's go to our chief national security correspondent, Jim Sciutto, with more on the North Korean missile launch and the U.S. response.

Jim, the United Nations just announced it will hold urgent talks on North Korea.

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: That's right, an urgent matter for the U.N., an urgent matter for the U.S.

This was the highest-altitude missile launch by North Korea ever, going some 2,700 miles into space. That's more than 10 times the altitude of the International Space Station. That matters because this is a capability consistent with an intercontinental ballistic missile with the capability of reaching the continental U.S.

(BEGIN VIDEOTAPE)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: It is a situation that we will handle.

SCIUTTO (voice-over): Faced with North Korea's 23rd launch during his administration, tonight, President Trump issued a sharp warning to Pyongyang, following what appeared to be a successful test of an intercontinental ballistic missile.

TRUMP: A missile was launched a little while ago from North Korea. I will only tell you that we will take care of it. We have General Mattis in the room with us and we have had a long discussion on it.

SCIUTTO: A U.S. defense official says that the missile flew for more than 50 minutes and reached an altitude of almost 2,800 miles, higher than ever before, and a sign that the missile has the capability and range to reach targets as far as the U.S. homeland.

JAMES MATTIS, U.S. SECRETARY OF DEFENSE: It went higher, frankly, than any previous shot they have taken, the research and development effort on their part to continue building ballistic missiles that could threaten everywhere in the world.

SCIUTTO: The launch follows a period of relative quiet from Kim Jong- un, who hadn't launched a missile in more than two months. This year, however, North Korea has placed its weapons program on international display, firing some 23 missiles in a total of 16 tests since February.

The U.S. now believes that Pyongyang may be able to equip missiles with a miniaturized nuclear warhead that could potentially reach the United States.

(END VIDEOTAPE)

SCIUTTO: Now, North Korea has not yet demonstrated the capability to move a reentry vehicle. That's what would be necessary to get a warhead on to target down here on Earth.

[18:05:05]

But for some months now, Wolf, U.S. intelligence, the view, as they have described it to me, is that the U.S. has to assume that North Korea has such an untested capability for the purposes of national security here.

What is clear is that over the course of these last few months, Wolf, North Korea has made tremendous progress and it's leading in the direction of a capability that multiple administrations, multiple presidents have Said they would never allow -- Wolf.

BLITZER: Very speedy progress, indeed, a lot faster than a lot of experts thought. Jim Sciutto reporting for us, thank you very much.

Let's go live to the Korean Peninsula right now. We're joined by CNN's Will Ripley, who has reported extensively from inside North Korea. He's joining us from Seoul, South Korea, right now.

Will, what are you learning?

WILL RIPLEY, CNN CORRESPONDENT: I just spoke with a North Korean official, Wolf, who told me back in October that North Korea would be demonstrating their capabilities to the Trump administration with a long-range ICBM launch, just like this one.

And that official also said that the world needs to expect a seventh nuclear test. Remember, it was back in September that North Korea threatened to detonate a nuclear device above the Pacific Ocean, a threat that has not come to fruition yet.

But when I interviewed a senior diplomat in Pyongyang just in the last month or so, he said that the world should take that threat literally. And after North Korea following through on this particular launch, one can only assume that in order to demonstrate their full nuclear deterrent, in their words, round off the nuclear program, that we can expect to see more provocative actions from North Korea.

And in fact, here in Seoul, the unification minister held a press conference just hours before this launch, which happened, unusually, in the middle of the night here, demonstrating North Korea's about to roll out this ICBM and launch it with little advanced warning. Certainly, the United States would not have been able to launch a preemptive strike and shoot down that missile launch site before the missile went into the air.

The unification minister saying that North Korea is rapidly advancing its nuclear program faster than any experts here had predicted. And in fact, CNN has already reported that it could be just a matter of weeks before North Korea has in its possession a reliable intercontinental ballistic missile, potentially capable of hitting anywhere on the mainland U.S. -- Wolf.

BLITZER: It's clearly the gravest national security threat facing the United States right now. Will Ripley reporting for us from Seoul, South Korea.

North Korea just one of the urgent matters on the president's plate today, as Republicans try to push through their tax bill while the threat of a government shutdown is looming.

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

Jim, the president is juggling global and political threats today.

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: That's right, Wolf.

But President Trump was tougher on the Democrats today than he was on Kim Jong-un. President Trump turned his negotiations for avoiding a government shutdown into a reality TV moment, making a show out of congressional Democrats who skipped a meeting at the White House today.

White House aides placed name cards in front of empty seats where the Democrats Chuck Schumer and Nancy Pelosi were supposed to be seated. Without the help of Democrats, the president is still hoping his own party can line up enough votes to pass the GOP tax cut plan.

(BEGIN VIDEOTAPE)

ACOSTA (voice-over): In a hastily called statement, the president insisted he's on top of North Korea after the communist regime defied Mr. Trump's fiery warnings in the past and conducted another intercontinental ballistic missile test.

TRUMP: We will take care of it. We have General Mattis in the room with us and we have had a long discussion on it. It is a situation that we will handle.

ACOSTA: But the president saved his toughest talk for Democrats, who backed out of a meeting at the White House aimed at keeping the government running. The White House left the seats for congressional Democratic leaders, Chuck Schumer and Nancy Pelosi, empty.

TRUMP: They have been all talk and they have been no action. And now it's even worse. Now it's not even talk.

ACOSTA: With just 10 days and counting until a government shutdown, congressional Democrats are furious with the president after his tweet, "Meeting with Chuck and Nancy today about keeping government open and working. Problem is, they want illegal immigrants flooding into our country unchecked, are weak on crime, and they want to substantially raise taxes. I don't see a deal."

Schumer and Pelosi punched back, saying they will work with Republicans in Congress instead of the president.

SEN. CHUCK SCHUMER (D-NY), MINORITY LEADER: Mr. President, it's time to stop tweeting and start leading. If President Trump says he's not interested in cutting a deal, we can come up with a good deal on our own.

ACOSTA: Earlier in the day, the president, who wrote "The Art of the Deal," traveled to Capitol Hill in search of finding one. Republican leaders still scrambling for GOP votes to push their tax plan across the finish line sounded exasperated.

SEN. MITCH MCCONNELL (R-KY), MAJORITY LEADER: You will have to ask them why they think it's appropriate to refuse to meet with the president of the United States over something as significant as how we're going to fund the troops and all the other needs that are addressed by the spending decisions we make every year.

ACOSTA: Stung by Pelosi and Schumer's decision to skip their meeting with the president, the White House fired out of a testy statement, saying: "The president's invitation to the Democrat leaders still stands and he encourages them to put aside their pettiness, stop the political grandstanding, show up and get to work. These issues are too important."

[18:10:10]

The West Wing's concern over pettiness comes one day after the president launched a racially charged attack on Senator Elizabeth Warren in front of Native American war veterans.

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

ACOSTA: Warren slapped back at that.

SEN. ELIZABETH WARREN (D), MASSACHUSETTS: Really amazing people, and President Trump couldn't even make it through a ceremony to honor these men without throwing in a racial slur.

(END VIDEOTAPE)

ACOSTA: Now, Senate Majority Leader Mitch McConnell complained earlier today he never turned down an invitation to come to the White House when Barack Obama was in the Oval Office.

Former Obama aides are disputing that, saying McConnell would pretend to have scheduling conflicts to avoid being seen with Obama.

And then, earlier today, Wolf, we should point out the president did say he will blame Democrats if there is a government shutdown. Of course, the voters may want to blame the party in charge here in Washington. That's the Republicans -- Wolf.

BLITZER: Jim, there's also some breaking news tonight in the standoff between the budget director, Mick Mulvaney, whom the president appointed to be the acting director of the Consumer Financial Protection Bureau, and the deputy director who went to federal court to say the law puts her in charge of this agency on this temporary basis.

Update our viewers on what has happened.

ACOSTA: That's right, Wolf. Keep in mind, this is a critical agency that is tasked with protecting consumers against shenanigans coming from big banks and credit card companies, but earlier today, a federal judge ruled in the Trump administration's favor.

The president's pick to head the CFPB, the acting CFPB director, Mick Mulvaney, he will be the person in charge of that agency, according to a judge's decision earlier today. This may get appealed once again, but for now it, appears to be a victory for the White House -- Wolf.

BLITZER: Yes, an important win for the White House, indeed. All right, Jim Acosta reporting for us, thanks very much.

Let's get some more on all of this. Republican Senator Lindsey Graham is joining us. He's a leading member of the Budget, Armed Services and Judiciary Committees. He's a busy guy.

Senator, thanks so much for joining us.

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: Thank you.

BLITZER: I want to get to taxes shortly, but let's talk about North Korea. How much closer does this latest intercontinental ballistic missile test bring North Korea to actually threatening the United States with a nuclear-tipped ICBM?

GRAHAM: Well, I will let the intelligence community give you that answer, but I believe every test puts them closer, and the president has said, we will take care of it, not the United Nations, not China, we will take care of it.

And my hope is that North Korea will realize that he is serious about this. The president is not going to allow North Korea to have a nuclear weapon in their hands that can hit America with an ICBM that can make it to the United States. And if we have to go to war to stop this, we will.

And if there's a war with North Korea, it would be because North Korea brought it on itself. And we're headed towards a war if things don't change.

BLITZER: But that could result in tens of thousands, if not hundreds of thousands, maybe millions of casualties.

GRAHAM: There you go.

(CROSSTALK)

BLITZER: You have been there. You understand, even with conventional weaponry, what potentially is at stake along the demilitarized zone. Seoul, a city of, what, 10 or 15 or 20 million people, is only 30 miles away.

GRAHAM: Yes. You're dead right. It's not lost upon me what a war would look like with North Korea. One, we would win it, but a lot of people would get hurt and killed.

At the end of the day, the president has got to pick between homeland security and regional stability. He's told China, Japan, and South Korea that he wants a diplomatic solution. We're not trying regime change. We're not trying to spread democracy to North Korea. We're not trying to unify the peninsula.

We're just simply saying, we're not going to allow this man in North Korea to have a missile to hit America with a nuclear weapon on top. And all the bad things you described are real, but the president is picking America over the region, and I hope the region will help us find a diplomatic solution.

BLITZER: So when the president said today, we will take care of it, it is a situation we will handle, those were his words, what do you understand from him? What is he saying?

GRAHAM: Yes.

Well, I talked to him this morning before the missile test. And we talked about taxes, but we talked about North Korea. Every president before him has said, we're not going to allow North Korea to have nuclear weapons. Well, they have got nuclear weapons. Every president before President Trump has said, we're never going to allow them to hit the homeland with an ICBM, with a nuclear weapon on top.

They're about to get a capability. China is the key to this. The president's engagement with the Chinese was very productive. But this is a provocative act by North Korea. They're miscalculating President Trump. And he is ready, if necessary, to destroy this regime to protect America.

And I hope the regime understands. If President Trump has to pick between destroying the North Korean regime and the American homeland, he's going to destroy the regime. I hope China understands that also.

BLITZER: Even if it means the huge number of casualties?

GRAHAM: Even if it means thousands, hundreds of thousands of people over there get hurt to protect America.

[18:15:02]

Now, that's the choice that the president has to make. I stand with him. The best outcome is not to have a war. I don't want a war. He doesn't want a war. But we're not going to let this crazy man in North Korea have the capability to hit the homeland.

We're not going to live this way. To our friends in China, we're not going to live this way. You need to help us. And if you don't help us, we will take care of it. And us taking care of it manes that the war's in your backyard, not ours.

BLITZER: We hadn't seen a missile launch along this kind, any missile launch from North Korea since the last one, I think, was September 15.

GRAHAM: Right.

BLITZER: Do you think the president's rhetoric about Kim Jong-un, he calls him short and fat, or his decision to name North Korea as a state sponsor of terror once again, is actually provoking Kim Jong-un to do what he did today, for example, and presumably much more down the road?

GRAHAM: President Trump is not the problem. It's the North Korean regime.

They believe that if they get an ICBM to hit America with a nuclear weapon on top, they're home-free. I believe that whether they use it or not, they're liable to sell any technology. It's not in the world's interest for Kim Jong-un to have a hydrogen bomb and a bunch of missiles.

So I think they believe the best way for the regime to survive is to be able to attack America. They're making the biggest miscalculation in modern history. If North Korea watches CNN, I hope you understand that President Trump is not going to allow the United States to live under the threat of a nuclear missile, a nuclear weapon coming to America from North Korea.

And if you want that capability, you're going to get in a fight with the United States and you're going to lose that fight, and that will be the end of the regime.

BLITZER: I do know that the North Korean leadership watches CNN and CNN International.

As you know, the president, he has touted his relationship with Chinese President Xi.

GRAHAM: Yes.

BLITZER: Is there any evidence that you have seen that it's actually having a positive impact on the situation?

GRAHAM: I thought so until today. I was very encouraged that a delegation from China was going to North Korea.

Again, China shares the same goal, a denuclearized peninsula. We don't want South Korea to have nuclear weapons, Japan, or North Korea. We share the same goal. I was very encouraged. I thought the engagement with the Chinese president and President Trump went very well, until today. Clearly, to me, the North Koreans are not listening to the Chinese.

They don't take the statements of President Trump seriously and they're making a huge miscalculation. And we're on a collision course with this regime. President Trump is not going to allow you to perfect the technology to hit America with a nuclear weapon. And if there's a war, it would be because you want one.

BLITZER: Do you agree with the president that Russian President Putin can be very helpful in dealing with North Korea as well?

GRAHAM: No.

BLITZER: You don't think they have any influence, the Russians?

GRAHAM: None at all.

I think North Korea -- I think the Russians are trying to intercede here by helping North Korea. You know, the sanctions have worked to some extent, but the regime clearly believes that the pathway forward for their survival is to have a nuclear weapon to hit America, hold us hostage, and their home-free.

They're making a big miscalculation. I don't see where the Russians can help at all. But I do believe the Chinese are outcome- determinative. They own 90 percent of the North Korean economy. And the Chinese leadership has to tell the North Korean leadership in very no uncertain terms that things have to change.

BLITZER: On August 2, as you know, Senator, the president signed into law a bill that was overwhelmingly passed in the House and the Senate, 98-2 in the Senate, that would enact new sanctions on North Korea, Russia, and Iran. But guess what? That law has not yet been implemented. And it's almost December. Does that concern you?

GRAHAM: Yes, it does.

The Congress has spoken in a uniquely bipartisan way. We're talking about a dysfunctional Congress. I understand why people think we can't -- you know, we're not very popular. But 97-2 for Russian sanctions in the Senate, overwhelming vote in the House, we have created a new law that the president signed.

It is his job, his obligation to implement that law, and I hope he will.

BLITZER: Why hasn't he?

GRAHAM: I don't know. But I can tell you this, that the Congress is going to insist on its implementation.

I think the president is making a serious miscalculation here. The Russians will only respond when we push back. They did interfere with our election. They will keep doing it until the price for doing it is too great. Let's impose these sanctions that the Congress passed overwhelmingly, and the only way you're going to get Putin's attention, in my view, is to push back. BLITZER: Because, as you know, the president strongly opposed this

legislation. He didn't want you to implement new sanctions against Russia specifically. Why do you think he refuses to get tougher with Russians, especially with Putin?

GRAHAM: I don't know. I think he's got North Korea just absolutely right.

[18:20:00]

We're never going to let them hit the American homeland with a nuclear weapon. If we have to go to war to stop it, we will. I think he understands the Iranian threat very well.

I think he's done a good job of suppressing ISIL. But when it comes to Russia, I think he's making a mistake here. And at the end of the day, we're a separate branch of government and we're going to push back. And, hopefully, the president will respond and implement the law that we passed. If he doesn't, then we're going to have a problem.

BLITZER: Yes, it is the law of the land.

GRAHAM: It is the law of the land. Yes, it is.

BLITZER: It was passed in the House and the Senate, signed into law by the president, reluctantly, but he did sign it. It still is not being implemented.

GRAHAM: That's right.

BLITZER: On a different subject, Senator, I wanted to ask you about CNN's excellent reporting on a huge problem, Libyan slave auctions of fellow human beings going on in Libya right now.

GRAHAM: Yes.

BLITZER: You saw Nima Elbagir, her excellent report.

After the president tweeted, though, that CNN International is -- and I'm quoting him -- "a major source of fake news," Libyan media, they're now using that presidential tweet to question the truth of the CNN report.

Are you concerned, Senator -- and you're a blunt guy -- that the president's Twitter attacks on the news media are emboldening other countries to label real, serious reporting as fake or could even lead to American journalists working overseas being jailed or attacked?

GRAHAM: Well, I think the president feels like that CNN and about every other major news outlet in this country is just unfair to the point of being over-the-top unfair. I think there's some truth to that.

But you're a good news organization. The report in Libya was well done. It was a natural result of us leaving and abandoning Libya after Gadhafi fell. It's a terrible situation. I hope the president understands that what you reported in Libya is real.

But you have got to understand, too, that if you're President Trump, you can't turn on CNN or any other news network in the country without somebody beating the hell out of him. And I guess that wears on him.

BLITZER: But that's the nature of a free press. That's our responsibility, to report the news honestly and fairly.

GRAHAM: That's right.

BLITZER: And not just do whatever a president or any world leader wants.

GRAHAM: I'm not suggesting that you report the news in a way that you think is unfair, but I -- let's be honest with you -- honest about this.

MSNBC and CNN is just 24 hours a day that Trump did something wrong and stupid, and also good news reporting on FOX. He's always right. So the bottom line is, you have got to understand why most Republicans don't trust CNN.

BLITZER: Yes, well, I just want to point out what he was attacking. He attacks CNN all the time, but he was specifically attacking over the weekend CNN International.

(CROSSTALK)

GRAHAM: Well, I'm not attacking you. I'm on your show.

BLITZER: Our reporters around the world, they risk their lives every day...

GRAHAM: Yes, they're good at what they do. Absolutely.

BLITZER: -- to report the news fairly and responsibly. And when the president of the United States starts calling this fake news, that endangers those reporters, and it emboldens autocrats and dictators to simply shut the opportunities down for a free press.

That's the concern I have. And I'm sure you share that concern.

GRAHAM: Yes.

Well, listen, I saw this coming a long time ago. You know, Clinton and Obama basically just withdrew after Gadhafi failed. There was a moment when Senator McCain and myself, Rubio and Senator Kirk went to Libya with a little bit of help, a little NATO assistance. The vacuum would not have been filled by a bunch of radical jihadists.

The Libyan people are good people. They rejected radical Islamic groups at the ballot box, but the security environment completely deteriorated because the West abandoned Libya after Gadhafi failed. So at the end of the day, the story you told in Libya about human slavery is true. And it's terrible. And it was foreseeable. And we need to fix it. And there you go. BLITZER: Yes. And if CNN's Nima Elbagir and her team hadn't reported

that, we wouldn't know that.

GRAHAM: There you go.

BLITZER: In this day and age, there's a slave trade going on in Libya right now.

(CROSSTALK)

BLITZER: All right, Senator, there's more we need to discuss. There are other developments unfolding as we speak. We will take a quick break, resume our conversation right after this.

GRAHAM: Absolutely.

(COMMERCIAL BREAK)

[18:28:46]

BLITZER: We're back with Republican Senator Lindsey Graham.

We're following more breaking news, the Republican tax bill clearing a very important hurdle tonight with the Senate Budget Committee approving the measure.

Senator, we are going to talk about that in a moment.

But I want to go to CNN's congressional correspondent, Sunlen Serfaty, right now.

Sunlen, tell us more about this important vote today and what happens next.

SUNLEN SERFATY, CNN NATIONAL CORRESPONDENT: Well, what happens next, Wolf, is this tax bill now heads to the full Senate floor for a vote in front of the full Senate.

And it was remarkable that the fact of the matter is that just getting a vote out of the Senate Budget Committee today was a difficult task for Senate Republicans. There was some drama leading into it. It was not a sure thing that this Republican tax bill would get out of the Budget Committee.

It ended up voting along party lines, but that fact really underscoring that there is considerable concern, consternation among Republicans about parts of that bill.

You had Senator Ron Johnson, who's been very vocal about his concern about the pass-through tax rates in the bill as it currently stands right now, he said, yes, I will vote to advance this bill forward out of committee on to the Senate floor, but that doesn't mean that I'm necessarily going to be a yes on the overall tax bill when we vote on it on the Senate floor.

And there certainly are a handful of other Republican senators with their own concerns. They want changes made. This is something that Senate Majority Leader Mitch McConnell addressed earlier today. He can only afford to lose two Republican senators. And he described it as something of a Rubik's Cube. The idea that if you appease some senators to bring them in, that you risk alienating others. Here's what he had to say.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R-KY), MAJORITY LEADER: It's a challenging exercise. Think of sitting there with a Rubik's Cube, trying to get to 50, and we do have a few members who have concerns. And we're trying to address them. And we know we will not be able to go forward until we get 50 people satisfied and that's what we're working on.

(END VIDEO CLIP)

SERFATY: So McConnell there talking about this constant battle, that no doubt he will be facing not only in the hours ahead, the days ahead. The Republicans will plan on pushing this through very quickly. They will -- still intend to have a vote on this bill sometime this week, but considerable work ahead to get the Republicans onboard.

BLITZER: Yes, certainly is. All right. Sunlen, thanks very much. Sunlen Serfaty up on Capitol Hill.

Let's get back to Senator Lindsey Graham.

So Senator, how big of a role did President Trump play in getting this tax bill through your committee? You're a member of the Senate Budget Committee. It passed, 12 Republicans versus 11 Democrats.

GRAHAM: Well, let me tell you, I thought he did a masterful today in lunch. He met with Susan Collins, myself, and Senator Alexander before lunch, because Senator Collins has got a concern that if you repeal the individual mandate, premiums are going to go up. She's really worried about stopping the subsidy payments, the CSR payments, and she comes from the northeast and she wants a $10,000 property tax deduction like the House has.

The president and Senator Collins had a very good meeting. She wants some other things, also. But the president said to her and to the conference as a whole that if we were to repeal the individual mandate as part of a tax cut, "I will fund the CSRs. I will put some money into a high-risk pool," the Collins/Nelson bill, and that he would support a $10,000 property tax deduction. So that was a huge step forward in terms of meeting Senator Collins' legitimate needs.

Senator Corker, I think, is very close to finding a trigger that will work in terms of his deficit concerns. I talked to Ron Johnson just before I came on your program. I think we'll find a way to give better treatment to passthrough entities.

The bottom line is, 52 people are trying to buy a car. Here's our choices. We may not all agree on the color or the type of car, but if we don't get a car, we're all going to walk. And most people don't want to walk. They'd rather have a car.

BLITZER: Well, when it comes to the president's commitment to Susan Collins, the Republican from Maine, is there a chance, Senator, the president doesn't actually deliver on that commitment? Because as you know, previously...

GRAHAM: Right.

BLITZER: ... he expressed support for the Alexander-Murray legislation in the Senate, Senator Murray, Senator Alexander. But as soon as he expressed support for that legislation, dealing with health care, bipartisan legislation, his White House director of legislative affairs, Marc Short, he was here in THE SITUATION ROOM, he said that wasn't necessarily the case. A lot of people are concerned. He makes a promise, but then he backs away.

GRAHAM: Well, here's what I believe. He said it to the entire Republican conference. He said it to Susan Collins. And I believe him. And here's the way it would work, is that if you do repeal the individual mandate, which I think we should as part of the tax bill, then you need to really make the subsidy payments, because that would create premium increases if you stop the payments, and put that to Alexander Murray/Collins/Nelson proposal on any effort to fund the government with the omnibus bill or a continuing resolution.

I believe the president will keep his word. And I think that is a good deal for the country at large.

BLITZER: We still don't know if your other Republican colleagues, senators Corker and Flake, are a "yes" on the bill when the final vote comes up on the Senate floor. Wouldn't amendments winning them over, though, potentially lose other Republican votes? As the majority leader, Mitch McConnell says, this is a Rubik's Cube.

GRAHAM: Well, it's not -- people have legitimate concerns. What if the economy doesn't grow the way we think it will and the revenue doesn't come in? The trigger is to deal with that situation.

Senator Corker says, "If we don't grow the way you think we will, then I want to have a back stop." So I think he's reached an accommodation with the finance committee -- that I'll let him speak for himself -- that to me is a really good deal. If we don't hit that half a -- 4/10 of 1 percent of GDP growth to pay for this tax cut, there will be a trigger that will roll back some of the tax cuts.

I think that's going to happen. I think they're very close to a deal. I know Ron Johnson very well. He's smart as hell. His concerns are legitimate. And I think we can address them.

BLITZER: So would you support what's now called that snapback?

GRAHAM: Yes.

BLITZER: In other words...

GRAHAM: Yes, I would. BLITZER: ... if the economy isn't booming at 3 or 4 percent...

GRAHAM: Yes.

BLITZER: ... but let's say it's under 2 percent, you would go back and increase taxes?

[18:35:08] GRAHAM: What I would do is have a trigger saying, if we don't -- 4/10 of one percent of GDP growth.

No. 1, I don't like the Obama-era tax policies. I want to replace them. During the eight years of President Obama, the average GDP growth was 1.9 percent. We've had one quarter of 3 percent. We can do a lot better than 1.9 percent.

Four tenths of one percent pays for the $1.5 trillion. The bottom line is, if for some reason, we don't hit that number, then I'm willing to roll back some of the taxes, because the deficit matters to me. It matters to Senator Corker.

BLITZER: Would you roll back individual tax rates or corporate tax rates?

GRAHAM: I'll let Senator Corker tell you how it works, because he's the guy behind this. And I think a lot of people in our conference agree with the idea that we need a debt backstop.

I think a lot of people in our conference, if we repeal the individual mandate, would like to see the subsidy payments made to make sure that the insurance market stays stable until we can actually replace Obamacare. I think most people in our conference believe we can do better than President Obama when it comes to the economy. This tax bill is good. We'll have a debt backstop, and repealing the individual mandate is good policy. Continuing the subsidies that will replace Obamacare with something better makes sense.

BLITZER: So I just want to be precise, Senator. The corporate rates, you don't think would go back up. Right now, they want to reduce the corporate rate from 30 percent -- 35 percent to 20 percent. And that's permanent.

GRAHAM: Right.

BLITZER: There's no sunset. There's no time limit.

Individual families, they would have a reduction in tax rates, but that would be sunsetted after ten years or so.

GRAHAM: Right.

BLITZER: Why not sunset the corporate rates as opposed to the individual family rates?

GRAHAM: Well, the point that Senator Corker's making, if we don't grow by 0.4 percent, which I'm confident we will, we need a mechanism in year six, I think it is, to readjust the tax cut. And I'll let him tell you what makes sense to him.

The one concern you have about a trigger or a backstop is that people invest hundreds of billions of dollars, and they've got to be fairly certain...

BLITZER: But I just want to be precise. You would -- after six years, let's say the economy isn't booming, as you hope it will, and there's going to be a huge rise in the nation's debt.

GRAHAM: Right.

BLITZER: You would go ahead and increase tax rates for individuals, for families, but leave the corporate rate at, let's say, 20 percent?

GRAHAM: What I'm trying to tell you is I'll let Senator Corker tell you about how the trigger would work.

What I'm trying to tell you is after having talked with him today, I think he's reached an accommodation with the finance committee, Senator Toomey from Pennsylvania, that makes him feel good about the trigger.

I think at the end of the day, we'll find a passthrough reform measure that will make Senator Johnson feel that passthroughs are being treated more fairly.

One thing I agree with Senator Johnson on, I don't like the idea that C-corporations can -- can deduct their state and local taxes and passthrough individuals and entities can't. So I would support a change to the Senate bill that would take away from C-corporations the ability to deduct state and local taxes and put them in the same boat as everybody else.

BLITZER: One final question. Your good friend, Senator McCain, what do you think? Because he's leaving the door open, either way.

GRAHAM: Here's what I think. John will look at this long and hard. His No. 1 goal is to restore defense spending.

To my Democratic colleagues., I can't imagine turning down a request from President Obama to meet with him, even though we disagreed. To Pelosi and Schumer, you know, you've got a job to do. You represent the party out of power. But there's a deal to be had to fund the government. And the last thing we need to do is shut down the government with North Korea threatening our homeland. The last thing we need to do is continue defense spending at the level that we have today.

Senator McCain's primary reason for being in the Senate right now is to fix a broken military. He will vote on the tax bill if he thinks it's good for Arizona and good for America. I hope he can get to "yes." I think the economy needs to grow better than it has in the last eight years. But I'm telling everybody, this North Korea threat is real, and the last thing we need to do as Republicans and Democrats is to act in such a fashion as to encourage North Korea to do more.

BLITZER: As I've been saying for a while and others have been saying, North Korea represents the major national security threat...

GRAHAM: Yes, you're right.

BLITZER: ... facing the United States right now.

Senator Graham, always good to have you here in THE SITUATION ROOM.

GRAHAM: Thank you.

BLITZER: Thanks so much for joining us. You're always welcome, of course.

GRAHAM: Thank you, sir, thank you.

BLITZER: There's more breaking news we're following. North Korea's most powerful missile launch yet. Is the Kim Jong-un regime getting closer and closer to being able to strike anywhere in the world?

(COMMERCIAL BREAK)

[18:44:32] BLITZER: Breaking tonight, President Trump promising he'll take care of the North Korea situation after Kim Jong-un's newest missile launches that appears to be the most powerful one yet.

Let's bring in our analysts and our specialists. And Gloria, let's start with you.

The president was on camera earlier, addressing the North Korean ICBM launch, but he couldn't resist hitting the Senate minority leader, Chuck Schumer, the House minority leader, Nancy Pelosi. Listen to this.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: Chuck Schumer and Nancy Pelosi did not show up for our meeting today.

[18:45:02] I'm not really that surprised. We have a lot of differences. They're weak on crime. They're weak on illegal immigration. They want the illegal folks to come pouring into our border. They want high taxes, we want low taxes.

(END VIDEO CLIP)

BLITZER: The Democratic leaders, as you know, they backed out of that meeting at the White House after the president insulted them on Twitter. Does this play well for President Trump?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Look, I don't think it plays well for anyone. I understand why they did it. There have been many times in the past when Obama was president, where Republicans said their schedules were too busy to go meet with him at the White House, because they said the meeting had been scheduled last minute.

So, it happens on both sides. I think it makes nobody look good, quite frankly. I think the president's tweet this morning was incendiary on purpose.

And I think what this means, substantively, is that as we head towards December 8th and this question of whether there's going to be a government shutdown and whether there's going to be a deal on DACA and whether there's going to be a deal on military spending that Lindsey Graham was just talking about to you, I think those are the large questions here, and that the president has already said he's going to blame the Democrats. The Democrats have already said they're going to blame him. So, they all look, you know, they all look kind of foolish here.

BLITZER: You know, Rebecca Berg, the meeting with the Republican leadership, the Democratic leadership was supposed to happen earlier today in the Oval Office at the White House, but the White House moved it to the Roosevelt room, also in the West Wing, seemingly to set up the optics of President Trump sitting between two empty chairs with placards for Schumer and Pelosi. Was that smart, politically?

REBECCA BERG, CNN POLITICAL REPORTER: Well, it's certainly a bit of political stagecraft, some political showmanship, Wolf. Whether it was effective, we'll have to wait and see.

But clearly the president is laying the foundation here for what could be a blame game if there is a government shutdown. He wants that visual of Democrats not showing up, not even showing up to the, quote/unquote, negotiating table. It's a literal table, but metaphorically speaking, as well.

Now, whether he will need that tool in his tool belt, that will depend on whether there is a shutdown and whether they can reach a deal or not. But they're essentially trying to have an insurance plan with this.

BLITZER: You know, David Swerdlick, the president -- he's going to need Democrats to avert a government shutdown. The deadline, December 8th. Was it wise to pick this fight right now, just an hour or two before the meeting was supposed to begin, he goes ahead and tweets and mocks the two Democratic leaders.

DAVID SWERDLICK, CNN POLITICAL COMMENTATOR: No, Wolf, I don't think it was wise. In fact, I think it was an unforced error. As the kids say, it was a self-own.

The president I think, after watching for almost a year now, sees this kind of thing where he says at the end of his tweet, I don't see a deal. That's sort of an opening gambit, a negotiation tactic. The problem in this case, is that he gave Schumer and Pelosi a window, an opening for their own gambit, which is to say, look, if you're not going to come to this, you know, starting on a friendly note, then we'll just wash our hands of it and not show up at the meeting at all. And you being the president and Republicans being the party that controls both houses of Congress, they will be the ones that at least initially who have to respond to what to do next.

I agree with Gloria that this doesn't really look great for either party. But again, being in the minority, I think that Schumer and Pelosi have a little more leeway to play this game than Republicans ultimately do.

BLITZER: Jeffrey Toobin, how do you see it?

JEFFREY TOOBIN, CNN CHIEF LEGAL ANALYST: Well, you know, I'm thinking about these 2 million kids who were -- who have been raised in the United States, the DREAMers. The president has said he wanted a deal to protect them.

This deal is falling apart. There is no energy behind the deal to connect it to the budget, which they are supposed to resolve by December 8th. So, I mean, it's all well and good to talk about, you know, the political theater and who has doesn't show up for a meeting.

But there are people's lives here. There's a children's insurance program that's running out of money. There's a defense budget to be passed. And, you know, these issues either are beginning to be dealt with or they're not. And I don't think most people care who goes to a meeting or, you know, what people tweet. But the substance of people's lives are at stake here. And I'd just like to see the president address that.

BLITZER: Yes, there's a lot at stake right now in these coming days before the end of year, the Christmas break.

You know, David Swerdlick, let me get back to you and ask you about some of your "Washington Post" colleagues who were targeted by Project Veritas, this anti-media organization. A woman came to your newspaper with a story about supposedly being raped by Roy Moore, the Republican Senate candidate in Alabama, but turns out she was paid by Project Veritas to make this up, to try to undermine "The Washington Post" reporting on the Alabama Senate candidate.

[18:50:05] Tell us more about this very strange, extraordinary incident.

SWERDLICK: Yes, Wolf. So, you know, viewers will remember James O'Keefe of Project Veritas, and before, he was head of Project Veritas, that's his organization, as the guy who made the video where he dressed up like a pimp and did the sting video on ACORN early in the Obama administration. He also went into Senator Mary Landrieu's office in New Orleans under false pretenses and wound up being charged with a crime in that situation to try to do a sting video.

He has done this and made a career out of it. And I think what you saw here was a situation where it looked presumably like a good opportunity to try and sting my "Washington Post" colleagues, but the underlying problematic premise with what they tried to do is it assumed that my colleagues and "The Washington Post" journalists, CNN journalists, aren't careful, which we are.

I thought our colleague Chris Cillizza had a great post on this today on CNN.com where he basically said, look, this is what James O'Keefe and Project Veritas and others who do the same thing don't understand about big news gathering organizations. Yes, occasionally things do slip through the cracks, but we're out there gathering information, getting tips, trying to confirm that information. That's what my colleagues, Beth Reinhard, Stephanie McCrummen, Alice Crites, did in their original piece about Roy Moore, and it has held together because anyone who reads it can see how carefully it is put together.

So, it's not really about in this case trying to score a point back on Project Veritas as much as it is about illustrating how careful journalists really do take their jobs, reporters really do take their job.

BLITZER: Yes, Gloria, go ahead. I want you to weigh in.

BORGER: Well, I -- you know, I totally agree with everything David is saying. I think what's interesting about "The Washington Post" reporting in their first piece is they kind of lifted the veil for everybody reading it. And they told you what they did in their reporting. How they cross checked it, how they went back to people. How they tried to verify certain facts.

And so they kind of let you know the serious journalism they were doing. And so it was not surprising to somebody who read the first piece that they wouldn't fall for this woman whose story fell apart by virtually doing a search on her, and then following up with it.

And the question is, who is going to pay for this stuff? It's -- you know, the Moore campaign has said they have nothing to do with it, but who is funding this kind of thing to try and trip up people who are actually trying to do honest good work?

BLITZER: Yes, excellent reporting by "The Washington Post".

BORGER: Yes.

BLITZER: I should say that.

All right. Everybody, stand by. Just ahead, a Russian fighter jet's very dangerous encounter with a U.S. military aircraft that caused a violent reaction. We have new information.

(COMMERCIAL BREAK)

BLITZER: Tonight, we're learning about a potentially very dangerous move by Russia that put a U.S. military air crew in harm's way for about 24 very tense minutes.

Our Pentagon reporter Ryan Browne is following the story for us.

Ryan, tell us what happened.

RYAN BROWNE, CNN PENTAGON REPORTER: Well, Wolf, U.S. officials telling us yesterday that a Russian SU-30 fighter jet crossed in front of a U.S. P-8 surveillance plane over the Black Sea, in what U.S. officials are saying international waters and they said the Russian action was not provoked but they said that it resulted in an unsafe intercept.

Basically, they said the Russian jet crossed from right to left in front of the U.S. plane, activating its after burners and forcing the U.S. plane to fly through what's called its jet wash, kind of behind it there, and it was such a fierce force that it caused what U.S. officials are describing as violent turbulence, forcing the U.S. plane to roll about 15 degrees.

So, again, it's considered very unsafe over there in the waters of the Black Sea. Now, there had been -- there hadn't been these type of unsafe interactions with Russia aircraft for some time. The last such interaction was in June when a Russian jet flew within about five feet of a U.S. Air Force plane over the Baltic Sea. But last year, in 2016, there was a very close call where the Russian jet buzzed the USS Donald Cook, came very close to that, saw some of the footage there from that instance, as well as another instance in 2015, also in the Black Sea, where a USS Ross.

Now, again, the Black Sea, very contested area. Russia has been building up its military presence after it annexed Crimea there, deploying additional forces. The U.S. and NATO allies also operating in this area. So, this is typically this kind of geopolitical contest has created a lot of these instances where these aircraft come in close proximity to one another -- Wolf.

BLITZER: All right. Ryan Browne reporting from the Pentagon -- thanks very much.

Remember, important programming note. Stay with CNN later tonight for a very timely debate on tax reform. That's coming up, 9:00 p.m. Eastern.

That's it for me. Thanks for watching.

"ERIN BURNETT OUTFRONT" starts right now.