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INSIDE POLITICS

GOP One Step Closer to Putting Tax Bill on Trump's Desk; Trump Under Fire for Retweeting Anti-Muslim Videos; Trump: "Absolutely No Collusion, So We're Very Happy"; Flynn Cooperating in Russia Probe: Pleads Guilty to Lying. Aired 8-9a ET

Aired December 3, 2017 - 08:00   ET

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


(BEGIN VIDEOTAPE)

[08:00:15] JOHN KING, CNN HOST (voice-over): A blockbuster plea deal rattles the White House, but the president insists he's not worried.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: What has been shown is no collusion, no collusion. There's been absolutely no collusion.

KING: Plus, the president re-tweets anti-Muslim bigotry and angers America's closest ally.

THERESA MAY, BRITISH PRIME MINISTER: Re-tweeting from Britain First was the wrong thing to do.

KING: And Senate Republicans pass a tax cut plan. The hope now is to get a final deal to the White House by Christmas.

TRUMP: This is our once-in-a-generation opportunity to deliver real tax reform for everyday hard-working Americans.

KING: INSIDE POLITICS, the biggest stories sourced by the best reporters now.

(END VIDEOTAPE)

KING: Welcome to INSIDE POLITICS. I'm John King. To our viewers in the United States and around the world, thank you for sharing your Sunday.

It is a moment of high consequence here in Washington. A confidant of President Trump pleads guilty in the Russia meddling investigation, says he is cooperating with the special counsel. And suggests several others still in senior White House jobs knew of his improper dealings with Russia.

(BEGIN VIDEO CLIP)

SEN. RICHARD BLUMENTHAL (D-CT), JUDICIARY COMMITTEE: This acknowledgement of criminal guilt is a shattering moment for the Trump presidency. We have a moment, similar to Watergate, where the question is going to be, what did they know and when did they know it? Not just the president, but Jared Kushner and Michael Pence, the vice president. (END VIDEO CLIP)

KING: That thickening cloud of investigation comes at what should be a moment of celebration. Senate Republicans passed a tax cut early Saturday morning and after a frustrating first year, one major piece of the Trump agenda now moving closer to the finish line.

(BEGIN VIDEO CLIP)

TRUMP: People are going to be very, very happy. They're going to get tremendous, tremendous tax cuts and tax relief. And that's what this country needs.

(END VIDEO CLIP)

KING: Plus, yet another dizzying week included a major international outrage. The president's decision to share hateful anti-Muslim bigotry with his millions of Twitter followers raised alarms about his judgment and temperament here at home and drew rebukes from America's closest ally.

(BEGIN VIDEO CLIP)

BRENDAN COX, HUSBAND OF SLAIN BRITISH LAWMAKER JO COX: This is like the president re-tweeting the Ku Klux Klan. You know, this is not a mainstream organization for the president of the United States, our greatest ally as a country, to be re-tweeting, to be providing a microphone to those voices.

(END VIDEO CLIP)

KING: With us this Sunday to share their reporting and their insights, Julie Pace of "The Associated Press", Sahil Kapur of "Bloomberg", Michael Warren of the "Weekly Standard", and Julie Hirschfield Davis of "The New York Times".

Again, let's listen to the president, in a little bit more detail. He insists he's not worried.

(BEGIN VIDEO CLIP)

TRUMP: No, I'm not. And what has been shown is no collusion. No collusion. There's been absolutely -- there's been absolutely no collusion. So, we're very happy.

(END VIDEO CLIP)

KING: But despite that public show of confidence, the West Wing is shaken, on edge. The new star witness in the Russian meddling investigation says there were improper dealings with the Russian government and that people as close to the president as you can get knew about them -- in fact, encouraged them. That star witness is, of course, former national security adviser, Michael Flynn. He entered a guilty plea on Friday, admitting he lied to the FBI about late 2016 contacts with Russia's ambassador to the United States. Now, the White House has insisted, if Flynn did anything wrong, he was

freelancing. But court filings paint a very different picture, saying several top Trump advisers knew of Flynn's Russian dealings and one was directed by a senior official, CNN sources identified as presidential son-in-law, Jared Kushner. There is no question, no question, special counsel Robert Mueller, now with General Flynn's cooperation is focusing on the president's inner circle and the president himself.

And in pushing back, the president is raising new questions and giving the special counsel more to match up with other witness testimony. Just this morning, as part of a pre-sun rise tweet storm, the president insisted, quote, I never asked Comey to stop investigating Flynn. Just more fake news covering another Comey lie.

Now, the former FBI director, James Comey, said the president did ask him to give Flynn a pass and fired him after he refused to pledge his loyalty. This Saturday tweet also raising eyebrows. "I had to fire general Flynn because he lied to the vice president and FBI. He has pled guilty to those lies. It is a shame because his actions during the transition were lawful. There was nothing to hide.

Listen here, CNN legal analyst, Michael Zeldin, a one-time deputy of the special counsel, Robert Mueller, calls the president's new take curious, a bit more.

(BEGIN VIDEO CLIP)

MICHAEL ZELDIN, CNN LEGAL ANALYST: I don't believe that the president would have known or could have known that four days after his inauguration, General Flynn had lied to the FBI. Sally Yates didn't tell him that.

[08:05:00] If it's true, it's a bit more problematic, because it is the possibility here that the president is somehow intervening in an ongoing investigation.

(END VIDEO CLIP)

KING: Where are we in the sense that we know that when the president tweets, that tells us what is first and foremost on his mind. He is still at it this morning. He was at it last night. We know what he's thinking about and trying to change the subject. We'll get through some of those.

But he's also putting more official statements in the public record, including with, he's now saying in an official statement, that's what a tweet is, I didn't tell Comey these things.

Comey says he did.

JULIE PACE, WASHINGTON BUREAU CHIEF, THE ASSOCIATED PRESS: Comey says he did. He says that in written testimony. He said it on camera when he was appearing before the Hill. When the president tweets this morning on the weekends, you can tell he's generally agitated with something. There was a scramble that happened yesterday after that initial tweet that you put out there, about Trump saying he had to fire Flynn because he lied to the FBI.

There was this scramble to portray this as a tweet that was written by John Dowd, one of the president's lawyers, in an attempt to put a little bit of distance between the president himself and that tweet. I'm not sure if it's any better if it's coming from the president's lawyer. That's about as official as it gets as well.

The White House is leaning hard on this idea that the Flynn court documents don't provide a smoking gun on collusion. And that is true. But what they certainly do is continue to undermine the initial White House explanations about why Flynn was fired and what he was up to during the transition.

It's really difficult now, I think, to believe that there was no one else in the transition team that was talking to Flynn about sanctions on Russia. Now, we've got KT McFarland, we got Jared Kushner talking to Flynn about Russia. The circle has suddenly grown a lot wider and much closer to the president.

KING: Well, I just -- I want to get the sense from you of how this I get what they say publicly. But when you're talking to people since Friday inside the West Wing, a sense of where is this going? A sense, they can't just say Flynn is freelancing. You look at the e-mails, "The New York Times", a great story, other e-mails, one is from KT McFarland. She was Flynn's deputy. She was in Mar-a-Lago during the transition.

Flynn is about to call the Russian ambassador. He checks in with the team in Florida, Mar-a-Lago, with the then-president elect of the United States. KT McFarland put in an e-mail, if there is at this time tit-for-tat escalation, Trump will have difficulty improving relations with Russia, which has just thrown USA election to him, she writes.

Mr. Bossert, another security adviser, replied by urging all the top advisers to defend election legitimacy now. Now, what the Trump team is saying, she was talking in shorthand. She's saying, that's what the Democrats were going to say.

But you have -- A, these e-mails confirm, they're having conversations about talking to the Russians before they're in official power, about American policy -- which is taboo, if not just flat-out wrong. And which has just thrown USA election to him. Bob Mueller is not shutting down anytime soon.

JULIE HIRSCHFIELD DAVIS, REPORTER, THE NEW YORK TIMES: Absolutely not. And, I mean, Julie is right that this is part of what this does is sort of give some concrete information and proof behind the idea that this was not a freelancing effort by Michael Flynn, but in fact, a campaign-wide to make these overtures to Russia or to sort of improve relations with Russia and to talk specifically about sanctions.

What those KT McFarland e-mails do is show that there wasn't just a policy imperative behind that, but a political imperative behind that, because whether or not you believe she was simply stating a fact that Democrats are going to say and are saying that Russia tried to swing the election to Trump or you believe that she was actually stating that as a fact that she knew to be true, it's certainly the case that that was what was animating what their conversations with the Russians were going to look like going forward. And that could be a major problem.

And again, it gets to this question of whether the president was directing this, of whether -- we know that his inner circle and people as far up as his son-in-law, there was no one closer to him than Jared Kushner on the campaign or on the transition we're doing, so far. And so, from sort of indicating that this is wrapping up, I think this is an indication that Mueller has a lot more to dig into.

And every time the president makes a statement like that tweet yesterday, he's got some more. Because now, he's essentially suggesting that not only did he know that Flynn lied to the vice president, but he already knew that Flynn lied to the FBI.

KING: And for anything that happened during the campaign, and up to 25 days into the administration, Mueller also now has a Michael Flynn who signed a plea agreement that requires him to tell things that Bob Mueller is not asking about. If he becomes aware of anything, if anything pops into his head, he's supposed to talk up. I'm sorry to interrupt.

MICHAEL WARREN, REPORTER, THE WEEKLY STANDARD: No, no, that's right. I think the fact that the Mueller investigation is in the White House now, essentially. Short time period, the Trump team spin has been, oh, he was an Obama administration official, but he was a Trump administration official in the Trump White House.

But I think we can't be too myopic. I think it's important to focus on what this plea deal is about. We should also remember that Mike Flynn was being investigated for a lot of things, a foreign agent registration violation. He wasn't registered, all these sorts of things.

And this was a pretty small guilty plea. What he's pleading guilty to here. And I think it's important to remember that that what the Mueller investigation is after, what it can ask.

[08:10:05] What Michael Flynn might be testifying about, may not have to do with this very interesting, you know, late December conversation. It could have to do with a lot of other things. And I think the myopic focus on simply that two-day period where he's talking with Kislyak, sort of hides the fact, obscures the fact that Michael Flynn was a major figure in the Trump campaign and the White House.

KING: I think that is a critical point, because Mueller is a very strategic person. He gets the George Papadopoulos plea, he indicts the former campaign chairman of the deputy, he gets a plea from a guy they said was the coffee boy, but he gets the word "Russia" in court filings and puts it in there.

In this case, you're right, this doesn't tell us about the campaign. This is about transition after the campaign. But he gets Russia, he gets dealings, and he puts in the court file, in a time when all these other White House officials have to come in and testify and be witnesses, he puts in that essentially, you keep saying he was freelancing, I have the proof he is not. You were all in on this and if you were all in on this, what else were you all in?

That's -- you make a great point. He could have charged it -- the information says he told four lies. They only charged him with one.

WARREN: That's right.

KING: A prosecutor only does that, only lets you off easy, if you will, if he thinks he's getting a bigger fish.

SAHIL KAPUR, REPORTER, BLOOMBERG POLITICS: Exactly. And Michael Flynn is exposed on a number of counts. He has potential criminal exposure on the issue the allegations on Turkey, on kidnapping and lobby and stuff like that. And if you're Bob Mueller, you think that putting him on the two lies, he had admitted to, contacts between the presidential team and Russia as it relates to sanctions and a U.N. Security Council resolution are not necessarily criminal or illegal, just my looking at them.

Clearly, there's a reason these lies were put out there. Why are multiple members of the president's inner circle and transition team lying about contacts with Russia? And right now we have four indictments and two guilty pleas and it looks like Mueller is closing in more and more --

KING: And he's moving up the letterhead. This is the national security adviser to the president of the United States. This is not a junior job. This is one of the most sensitive positions in the United States government -- access to every piece of intelligence coming into the United States government.

And I just want to read one piece of the filing. A very senior member of the presidential team directed Flynn to contact officials from foreign governments, including Russia and sources tell us that very senior member is Jared Kushner, the president's son-in-law. If you're the president of the United States, General Flynn has flipped, you know your son-in-law has been interviewed at least once. You know this investigation is continuing. That -- this is as close as you can get.

The question now is, forgive the Watergate cliche, what did the president know and when did he know it?

WARREN: I think a very important thing you said, Jared Kushner interviewed once. I think actually twice. CNN reported that some time at the end of November, that he came in. And it wasn't for hours long, Kushner was there, he was there for fewer than 90 minutes, just a week or so before this guilty plea comes down. I would be very interested to know what exactly Mueller asked him in that relatively very short period of time.

KING: I bet the president is interested, too. Up next, more on General Flynn and why his guilty plea matters so

much. And politicians say the darnedest thing. "Saturday Night Live" putting the Flynn flip in the context of the Christmas season.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I'm Michael Flynn, the ghost of witness flipped.

Mr. President, there's a lot of people from your past that could come back to haunt you. Tonight you will be visited by three of them.

UNIDENTIFIED MALE: Who are you?

UNIDENTIFIED FEMALE: It is I, Hillary Rodham Clinton! You have no idea how long I've wanted to say this. Lock him up!

UNIDENTIFIED MALE: No! No!

(END VIDEO CLIP)

(COIMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MICHAEL FLYNN, FORMER NATIONAL SECURITY ADVISER: We do not need a reckless president who believes she is above the law.

(CHEERS AND CHANTING)

Lock her up. That's right! Yes. That's right, lock her up.

If I -- a guy who knows this business, if I did a tenth of what she did, I would be in jail today.

(END VIDEO CLIP)

KING: That's Michael Flynn at the Republican convention last year. The irony, more than obvious.

But the message of that clip is the important part. The candidate gets the final say on plum convention roles. General Flynn was there because of his close relationship with Donald Trump.

(BEGIN VIDEO CLIP)

JAMES CLAPPER, FORMER DIRECTOR OF NATIONAL INTELLIGENCE: The rule of law does prevail in this country, and that to me is very important. Obviously, huge implications for the White House. It's not a good day.

You know, he is not a coffee boy. This is not a hoax. It's not fake. It's real.

(END VIDEO CLIP)

KING: General Clapper there speaking to Jake Tapper Friday afternoon. General Clapper, the former director of national intelligence. Not a coffee boy, that's what they said at George Papadopoulos, the campaign adviser who cut a plea deal with Robert Mueller. You can't say that about Michael Flynn.

And to the general's point, pretty hard to say this is fake and this is a ruse, at this point, when you have the former national security adviser to the president of the United States admitting he lie, when he was in the White House, the lie took place when he worked for the president of the United States in the West Wing of the White House.

DAVIS: Well, and what we do know that he lied to the FBI in this January 24th interview about activities that took place during the transition. What we don't necessarily know what was in the rest of his proffer that led bob Mueller to give him this deal where he's Cooperating with the investigation. And that is what has to be very concerning to the White House right now and is concerning to the president and his lawyers, because those charges that he wasn't charged, that the lies that he told, that he was not charged, in this deal, are still things that Mueller could come and charge him with.

[08:20:10] And so, he has a lot hanging over his head. He obviously has a lot to say to bob Mueller. And those are the conversations and the pieces of information -- those are next shoes to drop.

PACE: And you have to remember with Mike Flynn, he is one of the few people who's been tied up in all of this, who is around Trump in three distinct and really important periods. The campaign. He was flying on Trump's plane with him, he was at campaign events, obviously, at a high-profile speaking role at the convention. Transition -- during the transition, he was talking to foreign governments, he was involved in a lot of real-time discussions about policy going forward.

And yes, it was 25 days. But it was 25 really important and hectic days in the White House. So those three areas of time give him an awful lot to talk to Bob Mueller about.

KING: And so, Bob Mueller put a marker down here. And he is very strategic in the sense that this is about conversations during the transition, but showing that Flynn is saying now on the record and cooperating that he was in touch with all of these other people in the transition. What message is Bob Mueller sending to those people when he calls them back in about election stuff, when he's going to ask him about other things?

They all know that Flynn is cooperating, that the e-mails have been turned over. It get to the point, you asked this question to the president, almost a month into office, to the president's credibility, what did he know and when did he know it?

(BEGIN VIDEO CLIP)

PACE: Can you say whether you are aware that anyone who advised your campaign had contacts with Russia during the course of the election?

TRUMP: Well, I told you, General Flynn, obviously, was dealing, that's one person, but he was dealing -- as he should have been -- PACE: During the election?

TRUMP: No, no, nobody that I know of.

PACE: So, you're not aware of any contacts during the course of the election?

TRUMP: How many times do I have to answer this question?

PACE: Can you just say yes or not on it?

TRUMP: Russia is a ruse.

(END VIDEO CLIP)

KING: There's the president of the United States on the record. Now, the charges with Flynn deal with after the election. Deal with the transition.

But that's on purpose. We know he's still looking into a whole lot of election season stuff there. The credibility of that statement and so many others from the president are going to be called into question as we go on. And you have to have a sense, if you're one of those people that was at Mar-a-Lago in December, who was around the president during campaign, you're asking, is there something I need to know about. Or if you've told anything to investigators that you now Flynn can contradict, you have to get in there and clean it pup.

KAPUR: There's a flippancy there, I think, as we just saw the president's response to Julie's question that that has been maintained throughout that I think there's a disconnect between that and the gravity of this situation. And that himself seems to get his news from a lot of sources that aren't talking about this.

You know, and one this comes back home to the White House, I think a lot of people are going to be shocked.

WARREN: I would imagine that the president's flippancy aside, everyone below him is calling up their lawyer, make sure -- if they didn't have a lawyer already lined up when Mueller was named as special counsel, they're doing it now. I just can speak for myself, I've got relative radio silence from a lot of those people who were in campaign, transition, White House, somewhere in that span over the last couple of days.

People have to be worried because they've got to make sure they've got their stories straight.

KING: And the defining question for Mueller, tracing it back from the transition, trying to pull the levers of foreign policy while President Obama was still president, to help Russia, but why are you so inclined at every stop to be cozy to Russia, to be favorable to Russia, to take Russia's side on these big questions? That's what they're trying to trace back.

The president is trying to change the subject a bit today. Director Mueller, now special counsel Mueller, did remove from the investigation an FBI agent back during this summer. He got reports that the FBI agent had sent some texts to a colleague that indicated an anti-Trump bias.

He was removed from the investigation back during the summer. What the special counsel's office would say, we found a problem and dealt with it quickly. The president saying, after years of Comey, the phony and dishonest Clinton investigation and more, running the FBI, its reputation is in tatters. Worst in history, but fear not. We will bring it back to greatness.

The president essentially trying to find, understandably politically, latch unto this, the whole thing is tainted because of this.

PACE: That's his best argument right now is that, look, I told you that they were going after me, that this was unfair, that they were favorable to Clinton, this is the proof that I need. I think the fact Mueller seems to have acted pretty quickly is a counterweight to that. But certainly as a messaging tactic for the president, this is about the best he could ask for coming on the heels of the Flynn plea.

KAPUR: And there's a method to that, too. Every time he does that, it gets a lot of attention and his base listens to him and they believe him more than anybody else. That's why we see 80 to 85 percent of Republicans continue to support him, his popularity continues to be higher than any Republican member of Congress. And the way the party leaders deal with the situation in the wake of these charges and how this pans out is going to be dependent on what the base thinks is really true.

KING: And what we'll get next from Bob Mueller in addition to that.

Up next, Senate Republicans pass a big tax cut plan and are betting it will help the economy and their 2018 election prospects. But not a done deal just yet.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TRUMP: Last night at about 3:00 in the morning I got a call. I said, call me. You can call me. It's the largest tax decrease in the history of our country, by far. It's not even close.

(END VIDEO CLIP)

KING: It's not quite ready to wrap and put under the tree, but the president's promise of a tax cut by Christmas is within reach, now that the Senate passed its plan, as you heard from the president, very early Saturday.

One giant hurdle remains: the House and Senate now need to negotiate a compromise between two competing plans, a compromise that can then, again, pass both chambers.

[08:30:00] The Senate drama included last-minute changes made by hand. Some Democrats complained they were learning about changes from lobbyists, not fellow senators. But it passed, 51-49; all the Democrats voted no, plus one Republican defection, Tennessee's Bob Corker.

(BEGIN VIDEO CLIP)

SENATOR MITCH MCCONNELL (R-KY), SENATE MAJORITY LEADER: As you noticed, at the end there was not a single Democrat who thought this was a good idea. And so, we're going to take this message to the American people also a year from now. Everybody had plenty of opportunity to see the measure.

You complain about process when you're losing. And that's what you heard on the floor tonight.

(END VIDEO CLIP)

KING: A very happy, if a little weary, majority leader after the vote early Saturday morning. This is a giant deal. There was a question of whether the Republicans could get to the finish line in the Senate.

They still have a ways to go. Most people seem to think they're going to take the political imperative that we better do something this year and get it done.

But, let's start with the Senate getting to the finish line. What was the most critical thing?

SAHIL KAPUR, BLOOMBERG POLITICS: Well, they made a series of compromises at the end to placate holdouts. You got Jeff Flake and Jim Lankford with some various measures to contain some of the gimmicks in there specifically as it relates to small businesses.

You gave Susan Collins an exemption on the state and local deduction which, you know, is important for the northeast. So, they were close. Now they finally have it over the finish line in the Senate.

They've got to go to conference with the House. And get it back to the House and the Senate. But, you know, this looked very doubtful for a long period of time. They're very close. They're pretty much there.

KING: And if you look at some of the details, this is the Senate bill. They have to reconcile with the House. They have -- the basic architecture are the same, but some of the details themselves are a little different.

If you look at the Senate bill, corporate tax rate would drop from 35 percent to 20 percent. Individuals get two times the standard deduction, temporarily cuts rates, down a few years in a row, those rates go back up. Families get twice the child tax credit they now get. Axes state and local income tax deductions, keeping the property tax deduction in the Senate but it caps that at $10,000. Health care, it acts as the individual mandate and expands the Medicaid deduction.

So now they try to figure this out in the short-term. The Republicans are betting getting a signature item done. This is the one thing that was on everybody's list for the Republican Party in 2017 they'll do.

Obamacare repeal is not going to happen. President's promised infrastructure plan this year is not going to happen. That political imperative seems to be drawing it to the finish line.

Given the past ten months, will they get it done in the next three weeks?

JULIE HIRSCHFELD DAVIS, "THE NEW YORK TIMES": I mean it seems like they are, as "The Hill" said, you know, most of the way there. And there is such a desperation on the part of Republicans to have this be a win.

There's so much in this bill, as you just outlined, that they like -- the repeal of the individual mandate, the large, large and permanent corporate tax cut, the individual tax cuts, even though they are only temporary, the tax cut for pass-through entities, these smaller businesses and partnerships. This is all huge for Republicans and they really, really want this to happen.

The problem, I think, that we saw this week, the only problem is that in getting it to the finish line in the Senate, they pretty much negated the possibility that they were going to be able to get this back through the House without a conference, which was a hope among some White House officials, that they could sort of pre-bake a lot of these deals they would have to cut with the House Republicans, and essentially have a bill that after passing the Senate, could very quickly just be pre-conferenced in through the House, within a matter of hours.

And that clearly didn't happen, because of all the deals they had to cut at the very end. And it's not totally clear. I mean, the one Republican hold out Bob Corker had big concerns about the deficit effect of this bill. And there are a lot of conservative Republicans in the House who ostensibly, are very concerned about deficits.

And so, you could imagine a scenario where they have some last-minute reservations and they want to see this held up. But again, I think the imperative is so strong, I wouldn't be surprised to see most of them swallow those concerns.

JULIE PACE, "ASSOCIATED PRESS": Especially in the House, even though the deficit is a huge concern. Some of these guys got elected on the idea of deficit and over government spending. But they're all up for election next year and they're facing the prospect of having to go face voters, who will say hey, you've got the White House now, you've got the Senate and you've got the House and you couldn't get anything done?

That, for House members is actually, I think, worse than perhaps putting aside some of their concerns about deficit spending and then just voting for this bill.

KING: Political imperative trumps the policy details and the math issue especially on the deficit. The fact that so many Republicans are turning their back on the deficit pledge is pretty stunning. Let's listen to the President here who has been asking them to do this. He's the one who says please get it done by Christmas. Don't carry it over to 2018. He's happy.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: It was the biggest package in terms of tax cuts ever passed in our country. Now we go on to conference and something beautiful is going to come out of that mixer. We now go into what I call the mixer. And the mixer is conference. And out of that, the House Republicans and the Senate Republicans are going to pick something that will be truly spectacular.

(END VIDEO CLIP)

KING: It's like baking a cake. You put the mixture in. I love sometimes -- the language of this time needs to be changed. I'm not sure he has the right solutions for it all the time. It's the mixture or something.

(CROSSTALK)

MICHAEL WARREN, "THE WEEKLY STANDARD": I like that.

[08:34:58] KING: But in that same set of remarks, Michael, he also said, you know, well, maybe the corporate rate will be 22 percent. That was one of the reasons it held up things in the Senate because Mitch McConnell, the leader kept telling senators who wanted to change things the President wants 20 percent. The President's adamant about 20 percent. We can't raise that, which would free up some money to do some other business.

Now the President, after the vote, says he's open to this. Could the President complicate the very delicate act of trying to get to the finish line?

WARREN: Yes, that sound you hear is Mike Lee and Rubio's heads exploding when they heard that because that was all the push at the very end even. As you all know, it was even just, raise the corporate rate just, you know, 0.94 percent and they couldn't get it done.

I think this was -- this is a big victory for Republicans, but it's also, in some ways, a missed opportunity as they look at 2018. It is a bill that looks very much like a conventional Republican tax bill. There were some opportunities there, I think, to actually do a more Trumpian-style populist, particularly with the child tax credit. To expand that child tax credit which Rubio and Lee were trying to do to working people who don't pay income tax but pay payroll taxes.

They weren't able to get that done and in fact weren't really able to get very many Democrats even onboard with that. I wonder if what comes around to November 2018, that's going to be I think a very difficult political sell.

This is a typical Republican tax bill, pre-Trump. Is Trump going to be able to sell that? He's going around saying, this doesn't help wealthy people. Wealthy people are mad about this.

Well, Republicans have often argued that just because wealthy people are getting a tax cut, that's good for growth, that good for the economy. That's the sell that Paul Ryan wants to make, but Donald Trump's going to be the one at the front.

Is he going to make that? I'm not so sure it's going to be effective.

KING: And as you have analysis during this conference period, is he going to call it mean? Is he going to come out and say something?

To me, there's two sides of this coin -- stunning, hats off to Mitch McConnell. It's not about the policy, but just as a partisan leader, being able to keep the Republican discipline and force that in the end. He only last one vote.

The flip side of that is to your point -- stunning just testament of the current political environment. Ten Trump state Democrats, president won their states, on the ballot next year in the Senate races. Some of those states he won by 40, 30, 25 points -- not one of them felt the political compulsion that they had to vote for this. In fact, they all say that their safe vote back home was Trump's for it, I should be against it.

That tells you a lot about the political environment.

WARREN: There's no strategic plan to win over Heidi Heitkamp or Joe Manchin or Joe Donnelly, who would like to be able to say, I voted with Republicans and broke with my party on some thing or the other. Thirty-plus points victory in North Dakota, 40 plus points in West Virginia. These are Democrats who are certainly vulnerable.

Can I just say Republicans are playing a very interesting long game here and they're playing it very effectively? When Democrats have the presidency under Bill Clinton and Barack Obama, they talk about the debt, the debt crisis. They get them to cut spending. Then when they return to power, they use that spending to cut taxes.

It's a very effective strategy and it's worked well and it's the mantra of starve the beast, shrink the size of government. The next time there's going to be, our entitles are out of control and we have to cut Medicare and Social Security, because now we have no money.

KING: Great historical perspective.

Everybody sit tight.

Up next, the President stokes anti-Muslim sentiment and angers a critical ally.

And the Secretary of State insists he isn't going anywhere.

[08:38:05] (COMMERCIAL BREAK)

KING: Welcome back. America's place and its face on the world stage were called into question this past week. On the personnel front, word of a major shake-up plan leaked. The President wants Secretary of State Rex Tillerson forced out. And then to tilt his team to the right by shifting CIA Director Mike Pompeo over to state and asking conservative Senator Tom Cotton to take the CIA job.

Again word of this came from the President's inner circle, but on Friday he called it fake news, though his tweet doing that then went on to make clear who's boss. "He's not leaving. And while we disagree on certain subjects, I call the final shots. We work well together and America is highly respected again," -- that from the President.

Highly-respected would not be a factual way to characterize the reaction to another set of Trump tweets, re-tweets putting his blessing -- the President of the United States' blessing on anti- Muslim bigotry promoted by a neo-Nazi British fringe group.

(BEGIN VIDEO CLIP)

THERESA MAY, BRITISH PRIME MINISTER: The fact that we work together does not mean that we're afraid to say when we think the United States have got it wrong and to be very clear with them. And I'm very clear that re-tweeting from Britain First was the wrong thing to do.

(END VIDEO CLIP)

KING: Let's get to the personnel stuff in a minute and start there. This is the President of the United States re-tweeting just a hateful account from the White House, angering the British ally. The White House says it doesn't matter, who cares about the details of the video. This is about the President trying to make a point that, you know, having tough immigration laws is important.

There are a thousand million ways to make the point for tough immigration -- why? Just somebody, why?

PACE: There's no good reason for it. And it does matter that the is what the President of the United States is doing. It does matter who he's choosing to promote on his Twitter account, given the wide following that he has, given the fact that he's used that as an official mouthpiece of the administration.

And the reaction from someone like Theresa May I think is particularly notable because Theresa May has been one of those world leaders who has been trying to find ways to play kind of play both sides with Trump.

She was here very early in the administration. She had a visit where she was very positive about him. She's been a little more restrained in the criticism than some of the other European leaders.

But for her, in her political moment, this was just unacceptable. There was no way that she could say anything that was short of the statement that she did make. And she actually, I think, is going to get a bit of a boost in Britain right now.

And what that means in terms of the U.S. relationship with the U.K., what it means with Europe as they're dealing with things like the Iran deal, for example, where he actually needs the Brits on his side, if he's going to try to make changes to that deal.

This is not a situation where it's a tweet that's just a throwaway. I think it could have implications for the relationship with the U.K.

KING: Consequences in the relationship. And some are worried, and we haven't seen any evidence of this yet. But his own State Department sent word up to the White House -- be careful here, this could cause protests around the world. This could cause anti-Muslim, anti- American protests in Muslim nations around the world.

KAPUR: Right, stoking grievance and resentment is a big part of President Trump's political appeal, economic, and as we see here, racial. I think that's the answer to your question. It's part of the fuel that, you know, that enflames his base.

But I do think it's important to know that the President has a tendency to tweet and to observe things as if he's an idle observer of his own government. When you're president, every word weighs a ton. I'm not sure he quite grasps the impact of his tweets on world events and how the reaction is to --

DAVIS: No. And the idea that he could be -- putting aside for a moment the truly hateful nature of these particular videos that he was retweeting -- the idea that he, that the President of the United States would actually be circulating something on his Twitter account, which as Julie said, he has said, they have indicated at the White House, they consider to be an official statement of the United States government, that he doesn't know the nature of. And he doesn't know where they come from.

And the White House essentially asked reporters this past week to believe that he had never heard of this woman who initially put out these videos is stunning.

[08:45:01] And we've repeatedly seen from the White House lectern, at the briefings, that this is not a White House that considers their words or their statements to have to be particularly carefully-worded, to have to be accurate, necessarily, if they didn't know it at the time.

And that is something that's new under President Trump, and it's not something in the ten months that he's been in office that he's learned on. He's continued to do this.

KING: It's reckless, yes. Yes, it's reckless. It's dangerous.

DAVIS: And there's no indication that he thinks that there's a price to be paid for it.

KING: Right. And let's come now back to the personnel. These stories leaked out, first to the "New York Times", that the President had this plan, the chief of staff was orchestrating it. Push Tillerson out, put Pompeo over there, bring Tom Cotton in. Now the President says it's fake news. Rex Tillerson last night at dinner said people need to get better sources.

This came out from senior administration officials. So whether they're going to force him out they just wanted to diminish him and publicly humiliate him, why?

WARREN: Well, I don't think the President is very happy with Rex Tillerson despite what he's saying. I think this is real. I think this is happening. It's in the motions. And the question really now is when.

Look, I think there's actually a correct view that Pompeo, though he's to the right, certainly to the right of where the State Department bureaucracy is, might be a better manager other than Rex Tillerson has been.

There's been a lot of reason not just from the White House, but from the State Department, as well, to be angry and frustrated with the way Rex Tillerson is running. It just hasn't worked out.

I think the bigger question, though, is whether Tom Cotton at the CIA is the right move, either for the CIA, both for the CIA and for Cotton himself.

KING: And if you're going to have to fill these jobs over a four-year term and maybe eight years, if you win reelection -- would you want to take these jobs when this is what happens?

If it's all the same, Mr. President, fine.

WARREN: If the President asks you, that's what I'm hearing.

KING: Ok. Our reporters share from their notebooks next, including a big decision from the President regarding the Middle East and big questions facing the Democrats in the year-end showdown over a possible government shutdown.

[08:46:57] (COMMERCIAL BREAK)

KING: Let's head one last time around the table and ask our great reporters to share a little something from their notebooks and help get you out ahead of the big political news just around the corner.

Julie Pace.

PACE: This week the Supreme Court is going to hear arguments on one of its most closely-watched cases of the term. This is a case between a gay couple in Colorado and a baker who refused to bake them a wedding cake.

The couple is really worried that this will open up the door to a wide range of discrimination from businesses against same-sex couples. The baker argues that he's an artist and he shouldn't be compelled to make a cake that violates his religious views. So this is something that's going to get a lot of attention. There's a lot of interest from both sides here. So a big argument to watch this week.

KING: Fascinating case to watch this week. Hopefully we'll have the time to spend on the Supreme Court.

PACE: Exactly.

KING: Sometimes we get distracted by other things, I guess.

Sahil.

KAPUR: John, the government is set to shut down this month and Democrats are debating amongst themselves how far to go, how hard to push and to force this battle.

There are three things they want. Obamacare stabilization; they want to extend the Children's Health Insurance Program; and they want a DACA fix.

Republicans need their votes to keep the government funded. Democrats are really mad about this tax bill and various other things that are going on. And there is determination among some of them to fight to the end, even force a government shutdown if they have to. Some of them don't want to go so far.

We'll see what happens.

KING: Very interesting few weeks ahead.

Michael.

WARREN: Well, taxes are done, we've got government shutdown, but the administration and Congress is looking forward to infrastructure. Maybe we're actually going to get something in the next year before the midterms on infrastructure. The administration has got a goal, I'm hearing, of something like early summer.

You should be watching people like Elaine Chao, the Transportation Secretary, EPA Administrator Scott Pruitt to be sort of the lead from the administration.

What I'm hearing from Capitol Hill is some complaints that the administration's a little vague, not entirely clear about what they want. General idea is, though, more flexibility to states -- and that means, of course, more money to spend on roads, bridges, these sorts of things.

So be on the lookout for that.

KING: They promised it in year one. We'll see if they can get it in year two.

Julie. DAVIS: Well, this week the President is going to make a big speech on Jerusalem, recognizing Jerusalem as the capital of Israel, which is something that no American president has done in decades. It is the policy of the United States, but this is a big move that he's actually making, sort of in substitute for making the decision, which he promised to do during the campaign, to actually move the American embassy in Israel to Jerusalem from Tel Aviv.

A lot of his pro-Israel and religious conservative supporters wanted to see him do that. He's punting on it a second time. And I'm hearing he's getting a lot of pressure to actually say in this speech that this is the last waiver he'll sign, this is the last time he'll delay the decision. And they're trying to figure whether or not to do that.

At the same time, it's not clear that they've actually laid the groundwork in the Arab world or in the Middle East at all for this kind of a speech, which is going to be a very significant statement. And so -- and there's a possibility, too, that it could actually violate some U.N. Security Council resolutions that do not recognize the sovereignty of Israel.

So, big speech to watch and a lot of unanswered questions about how the administration is going to play this and how it will affect the potential for a peace process.

KING: To borrow a word from the President -- huge. It's a very huge deal.

I'll close with this. There's an old saying that timing is everything in politics. Well, the plea deal with General Michael Flynn is a great example on at least two fronts.

Special counsel Robert Mueller has to disclose his spending in the days to come and a guilty plea from the President's former national security advisor makes it most difficult to cast the investigation now as a waste of time and money.

[08:54:57] And as the legal fallout rattles the West Wing, there's also this. With the first year in office winding down, we're already beginning to see a trickle of administration departures. It's exhausting work. The end of the year always brings administration turnover.

With the stunning Flynn news, look for morale issues to tip the scale in favor of leaving for many who are torn right about moving on or giving it another year.

That's it for INSIDE POLITICS. Again, thanks for sharing your Sunday.

Much more on the Michael Flynn cooperation deal and the broader Russia meddling investigation just ahead as the top Democrat on the Senate Intelligence Committee joins "STATE OF THE UNION WITH JAKE TAPPER".

Have a great Sunday.

[08:55:32] (COMMERCIAL BREAK)