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Interview With White House Director of Legislative Affairs Marc Short; Interview With Delaware Senator Chris Coons; Russia Helping North Korea Break Sanctions?; Can Republicans Get Budget Passed?; Trump Attorney Issues New Denial of Story Alleging Payment for Porn Star's Silence; Panetta Blasts Alleged Trump Derogatory Remark: "This Is Not Who We Are". Aired 6-7p ET

Aired January 17, 2018 - 18:00   ET



WOLF BLITZER, CNN ANCHOR: He's warning in a new interview about the danger of a nuclear attack on the United States. And he's offering a rare and surprising slap at Russia.

And what Bannon knew. As Steve Bannon prepares to be interviewed by the special counsel, there's a new report out tonight that he admits talking to key Trump aides about that infamous Trump Tower Russia meeting. How will that impact the investigation?

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: Breaking tonight, as the U.S. government careens toward a possible government shutdown, the president's chief of staff makes a startling admission, a congressman in the room confirming to me just a little while ago that John Kelly described some of Mr. Trump's campaign promises on immigration as uninformed.

Let's go to our White House reporter, Kaitlan Collins.

Kaitlan, tell us more about this extraordinary remark by John Kelly.


A source within the room has confirmed to my colleague Jim Acosta that while the President Trump's chief of staff was meeting with Hispanic lawmakers on Capitol Hill today and discussing immigration and the wall, he told them he believes some of Trump's campaign promises were -- quote -- "uninformed" and then of course a congressman later confirmed that remark to you.

When he was on the campaign trail, President Trump promised to not only build a wall, but to make Mexico pay for it. Since he's been in office for this last year, he's realized it's a lot easier to chant something like that at a rally than to actually enact it once you are in office. It's not the only thing the president is struggling with. Another is

DACA, a program the president promised to terminate as soon as he got into office. He did not do that, of course. He later rescinded the program in the fall, but tasked Congress with coming up with a solution for those 700,000 or so dreamers that are affected by the program.

But right now, Wolf, it doesn't seem like there's a solution in sight for Congress on DACA.


COLLINS (voice-over): With time running out and no break in the stalemate over government spending of DACA, President Trump paid a visit to Capitol Hill today, not for negotiations, but instead to honor former Senate GOP leader, Bob Dole.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: You are a patriot, a hero, a leader, and today you have become a recipient of the Congressional Gold Medal. It's an honor to be with you, Bob. Thank you for your service.

COLLINS: Ahead of his visit, the president telling Reuters that a bipartisan compromise on dreamers reached last week by six senators was "the opposite of what I campaigned for" and -- quote -- "unacceptable."

TRUMP: We're working on it. We're working on it.

COLLINS: But Republican leaders are saying it isn't clear what is acceptable to the president when it comes to a deal on DACA.

SEN. MITCH MCCONNELL (R-KY), MAJORITY LEADER: I'm looking for something that President Trump supports. And he's not yet indicated what measure he's willing to sign. As soon as we figure out what he is for, then I would be convinced that we were not just spinning our wheels going to this issue on the floor.

REP. PAUL RYAN (R-WI), SPEAKER OF THE HOUSE: What point would it be to bring a bill through here that we won't have signed into law by the president?

COLLINS: Amid the confusion on DACA, Republican leaders finding clarity on a plan to fund the government and prevent a shutdown. Now they need to find the votes.

RYAN: I think cool heads hopefully will prevail on this thing.

COLLINS: The proposal would fund the government through February 16, extend the Children's Health Insurance Program for the next six years, and delay three unpopular Obamacare-related taxes.

But a short-term spending bill is not very popular with some House conservatives. Freedom Caucus Chairman Mark Meadows told reporters he doesn't believe there are currently enough Republican votes for it to pass. Amid the threat of a shutdown Friday, both parties are pointing

fingers over which side is to blame for the stalemate. House Speaker Paul Ryan says Democrats are unreasonable by trying to attach a dreamer deal to the spending bill.

RYAN: It is just unconscionable to me that they would block funding for our military or cut off funding for these states that really will lose their funding for CHIP by playing these political games and tying them to unrelated issues.

COLLINS: A point echoed today about White House Press Secretary Sarah Sanders.

SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: The president certainly doesn't want a shutdown. And if one happens, I think you only have one place to look, and that's to the Democrats.

COLLINS: But some Democrats insisting that any bill must address DACA and dreamers for their support and argue, since Republicans control the White House and both chambers of Congress, they can pass a short- term bill on their own.

REP. JOE CROWLEY (D), NEW YORK: With two days to go, our Republican colleagues have been complicit in the lack of leadership that's been demonstrated by the White House.

COLLINS: And even more criticism of President Trump today coming from his own party, as frequent Trump critic Jeff Flake blasted the president on the Senate floor.

SEN. JEFF FLAKE (R), ARIZONA: No politician will ever get us -- or tell us what the truth is and what it is not. And anyone who presumes to try to attack or manipulate the press for his own purposes should be made to realize his mistake and to be held to account.


COLLINS: The White House had its own pointed response to Flake.

HUCKABEE SANDERS: He is not criticizing the president because he is against oppression. He is criticizing the president because he has terrible poll numbers. And he is, I think, looking for some attention. I think it is unfortunate.


COLLINS: Now, Wolf, of course, if the government does shut down on Friday, it will be one day before the one-year anniversary of the Trump presidency.

And asked today if the president will still travel to his Mar-a-Lago club in West Palm Beach if the government does shut down, the press secretary, Sarah Sanders, told us she will let us know if there's any schedule changes.

BLITZER: All right, Kaitlan, thanks very much, Kaitlan Collins over at the White House.

Let's go up to Capitol Hill right now for the latest on the scramble to avoid a federal government shutdown.

Our congressional correspondent, Phil Mattingly, is joining us.

Phil, where do things stand right now?

PHIL MATTINGLY, CNN CORRESPONDENT: It's a high wire-act right now, Wolf, for Republican leaders. They need a lot of things to go in their direction in a very compressed timetable.

Just to give you a sense of the landscape right now, House Republican leaders still struggling to secure the votes on their own for their short-term funding bill. Over in the Senate, still no idea in terms of where Republicans leaders as it comes to their own votes.

Obviously, the prerequisite for anything moving in that chamber, Democratic help. And up to this point, as Kaitlan laid out quite well, Democrats are keeping their powder dry, not willing to bail out the majority leader, not willing to bail out Republicans and right now still pushing for the idea that they want their issues addressed, most notably DACA.

It's very clear to everyone involved that Republicans aren't going to consider any type of DACA resolution anytime soon. Basically, you have to look at this, Wolf, as a multistep process. As it's currently scheduled, House Republicans want their short-term funding bill on the floor tomorrow.

If they are able to secure the votes -- and it's going to have to be Republican votes only -- Leader Nancy Pelosi and the Democrats has already made it clear she's whipping her members against the bill, trying to get the entire caucus against it -- if Republican leaders can get it through the House, then it's all on the floor in the Senate and it's all on the backs of Democrats whether or not they will come forward on this.

Or, Wolf, as you know quite well, whether or not they decide that this is the moment to fight, this is the issue to fight on, and this is something where they're either going to respond to a base who believes that it is exactly that moment or they're going to try to move forward and kick this can down the road a little bit -- while longer.

One thing is very clear up here right now, Wolf. There's a lot of frustration, nobody is happy with the process, nobody is happy with the fact they're just trying to kick the can down the road again. The real question is, will those frustrations lead to some type of grudging solution, if you will, or will it lead to a shutdown on Friday night, Wolf?

BLITZER: Yes. They have 51 Republicans in the Senate. You need 60 to get it passed, so you need Democrats on board.

Phil Mattingly, thanks very much for that.

Let's get some more on all of this.

Senator Chris Coons is joining us. He's a Democrat. He's member of the Judiciary and Foreign Relations Committees.

Senator, thanks for joining us.

SEN. CHRIS COONS (D), DELAWARE: Thank you, Wolf. Always good to be on with you.

BLITZER: So, pretty extraordinary, the White House chief of staff, General John Kelly, telling Democratic lawmakers in the House today that some of President Trump's campaign promises on immigration, a border wall during the campaign were simply uninformed. What does that tell you?

COONS: Well, that's a fairly gracious way for General Kelly, the chief of staff, to say that what Trump was getting people to chant at all of his campaign rallies was implausible and unrealistic.

The idea that we would ever build a concrete wall that stretches 2,000 miles from the Gulf of Mexico to the Pacific Ocean and get Mexico to pay for it was an implausible campaign promise at best.

What he's now saying is that not only was that uninformed, it was also unworkable, that that's really not a credible solution to securing our border.

Here's the good news, I think, in the Senate, Wolf. There is a bipartisan bill that's been hammered out by Senator Graham, Senator Durbin, by six senators, Democrat and Republican, that makes the critical investments in controlling the border, in border security, that the Department of Homeland Security of the Trump administration asked for this year and that would solve DACA, the dreamer problem.

I think if that gets on the floor, it gets 60 votes. The question here is whether the president can hear yes, when he's the one who invited this group into the White House a week ago Tuesday and asked them to come up with a deal.

BLITZER: In that Reuters interview, the president says that's a terrible compromise, a terrible deal, and he says he's ready to blame Democrats if there is Friday night government shutdown.

What do you say to that?

COONS: Wolf, it's never happened that the government has shut down when it's controlled by one party, where one party has the House, the Senate and the White House.

And your earlier reporting in this segment made it clear House Republicans, who have the majority, are struggling to get enough votes to pass their preferred version of a temporary funding bill.

Even that version doesn't address things that all of us are looking to solve, community health centers, disaster relief funding, and DACA.


So, I hope that, in the time we still have, the days between now and Friday, that Republican and Democratic leaders will sit down and hammer out the framework of a deal the president will sign off on.

If he won't, he's the author of this mess. He's the one who blew up this week. And, frankly, the shutdown will be on him.

BLITZER: President Trump also told Reuters, Senator, that Russia is helping North Korea actually evade sanctions, international sanctions. Are you encouraged at least to hear the president hold Russia accountable?

COONS: Absolutely.

I think this was a very constructive statement for President Trump to recognize what many of us have been briefed on, which is that North Korea is managing to evade China's partnership with the United States and the world community in enforcing sanctions to try and squeeze their economy, that Russia is actually helping them evade those sanctions.

That's an important step forward, for President Trump to recognize publicly that Vladimir Putin's Russian regime is not just being unhelpful, but is undermining our national security.

BLITZER: Steve Bannon, the president's former chief strategist, struck a deal with the special counsel, Robert Mueller, to avoid testifying before a federal grand jury.

He will instead be interviewed by the special counsel's team. And now we know, thanks to this reporting from Axios, that Bannon revealed he had a conversation about that June 2016 Trump Tower meeting with the Russians.

How significant is he as a witness?

COONS: Very significant. He played an important role in the campaign, in the transition, in decisions in the early days of the administration.

In fact, I still think he has some real sway in the administration, even after his significant falling out with President Trump, if you just look at the actions of last week.

I will remind you, he may not be in front of a grand jury, but my attorneys advise me that federal statutes provides that he would still face perjury charges if he would be untruthful when in testifying to the special counsel's investigators. And I think he's got a lot he could testify about.

BLITZER: The White House press secretary, Sarah Sanders, says Congress consult with the White House on executive privilege and on obtaining confidential material.

Would you consider that? You're a member of the Judiciary Committee. COONS: Look, what's been reported about Steve Bannon's testimony to the House Intelligence Committee, that he was consulting with the White House during his testimony, that he was asserting some sort of executive privilege that would have attached to his service on the campaign and on the transition, even conservative Republican Congressman Trey Gowdy recognized that that's twisting executive privilege out of all recognition.

The Republicans and Democrats on that committee promptly subjected him to a subpoena. I think it's important that we have clear direction on the Judiciary Committee and the Intelligence Committee about what the contours are of executive privilege.

The White House has to assert it. It's the executive who has the privilege they can assert, not former employees.

BLITZER: Senator Coons, thanks for joining us.

COONS: Thank you, Wolf.

BLITZER: Just ahead, is the White House chief of staff undermining the president or is he helping him avoid a government shutdown? I will ask the White House director for legislative affairs about John Kelly's startling remark that some of Mr. Trump's campaign promises on immigration were uniformed.

And we will dig deeper on the breaking news about the Russia investigation and Steve Bannon's newly revealed conversations about that Trump Tower meeting. How significant will all of this be to the special counsel?



BLITZER: We're following breaking news in the Russia investigation, a new report taking us inside Steve Bannon's rather contentious testimony up on Capitol Hill.

Let's bring in our chief security national correspondent, Jim Sciutto.

Tell us more about this new report from Axios, Jim, about the admission apparently made by Bannon.

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: Well, it's interesting, because Bannon refused to answer virtually all questions about his time during the transition or in the administration, in the Trump administration, except for the topic of most interest to the special counsel, Robert Mueller, and that is on the June 2016 Trump Tower meeting between Jared Kushner, the president's son Donald Trump Jr. and Russians offering damaging information on Hillary Clinton.

He says, Steve Bannon, according to sources talking to Axios, he says that he was in discussions, Bannon was, with Reince Priebus, of course, the former chief of staff, Sean Spicer, the former White House press secretary, Mark Corallo about this meeting. Mark Corallo was a legal spokesman for the administration who actually resigned because he felt that the administration was verging into the area of obstruction of justice. This meeting of interest for two reasons to special counsel Mueller.

One, the fact that it took place, Russians offering damaging information on Hillary Clinton, the closest information we have seen so far to something that could amount to collusion or cooperation, but also the attempt by the White House with the president participating to explain this away in misleading fashion, saying it was about adoptions, not about damaging information on Hillary Clinton, a story that the president was apparently involved in and a story that was immediately belied by e-mails that we saw first reported by "The New York Times."

BLITZER: A critical meeting, indeed.

Steve Bannon has now apparently struck a deal with the special counsel, Robert Mueller. What do we know about his plans?

SCIUTTO: That's right.

Well, a couple things. One, that Steve Bannon is not going to speak before the grand jury, but he will speak to special counsel investigators. He is also, according to CNN's reporting, agreed to not follow the same rules he followed, in effect, before the Intelligence Committee and that is he will answer questions thoroughly and fulsomely that the special counsel asks.


He's not going to use the same invocation of executive privilege or raising the possibility of executive privilege. And the fact is, he can't with a special counsel investigator. He has got to answer those questions directly.

BLITZER: The former Trump campaign manager Corey Lewandowski, he also was also interviewed today by members of the House Intelligence Committee.

What are we learning about that?

SCIUTTO: Well, it's interesting, because the tales of two Corey Lewandowskis, right?

Because yesterday on FOX, he said he was going to be very forthcoming. Today, we heard a very different posture from him. Listen to the promise he made on FOX News.


COREY LEWANDOWSKI, FORMER TRUMP CAMPAIGN MANAGER: I'm going to answer every question truthfully, honestly, to the best of my ability and to the best of my recollection.

But because I have nothing to hide, I'm looking forward to this opportunity to help finally bring this to a close.


SCIUTTO: In fact, when he was before the Intelligence Committee today, Corey Lewandowski refused to answer any questions related to his time after he left the campaign in 2016, he said, perhaps explaining, that he was unprepared for those questions.

But Adam Schiff, the ranking Democrat on the committee, who often speaks on our air, he said that this in effect smells fishy to him, because coming in, he said he was going to answer all questions. As he goes there, he claims he wasn't prepared, he refuses to answer the questions the committee asked.

And Adam Schiff made the point that Rick Dearborn, who also appeared before the committee today, the former deputy White House chief of staff, he answered all their questions there. Adam Schiff intimating the possibility that perhaps the president spoke to Corey Lewandowski. We don't know what that is based on. But, either way, a very different tale from Corey Lewandowski yesterday and today before the committee.

BLITZER: Jim, I want you to stick around.

Barbara Starr is joining us from the Pentagon right now.

In this new interview with Reuters, Barbara, the president doing something he doesn't very often do, criticize Russia. Tell us about that.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, in this interview, the president is pinning it on Russia, saying that the Russians are still supplying oil, other goods and services, if you will, to North Korea.

That's helping North Korea, of course keep its weapons program alive. They need the currency. They need the supplies to keep it going, to keep their economy going. And the president taking a very tough line on Russia for doing this, also again saying that China could do more.

But what it's really doing is raising the question is the dilemma Mr. Trump is facing. If he wants to even consider any kind of threat of military action, what North Korea knows is that South Korea would not agree to that right now at least, South Korea not in favor, by all accounts, of any U.S. strike against North Korea at this point at least.

And you cannot do it without South Korea's assent. Going into year number two of the Trump administration, the big question politically on the international stage perhaps from Mr. Trump, is he facing finally having to acknowledge North Korea is a nuclear state, they will not give up their weapons? No indication Kim is going to give it all up. And no indication that there is a really viable military option politically against North Korea.

Diplomacy, sanctions, looks like China and Russia are still evading those to some extent. Hard to see where it goes from here. North Korea not giving it up -- Wolf.

BLITZER: Good point.

Jim, how unusual is it to hear President Trump being critical of Russia? Russia apparently, according to the president, helping North Korea evade sanctions.


It's almost a one-off for him to be so aggressively critical there. And it may be a case where the intelligence the president has been presented with is just so undeniable, incontrovertible, that he has to.

And, of course, we know that the president has particular attention focused on the North Korea threat. He's not been shy about criticizing China in the past, including via tweets about it, not doing enough here.

So, here, you have the president stepping forward on Russia. The question, of course, would he do the same on other issues, election interference? We haven't seen that. But on this issue, one that has his attention now, and where it appears the intelligence is incontrovertible, perhaps the president had no choice.

BLITZER: It's a good point.

Everybody, stand by. There's more breaking news we're following.

With Congress deadlocked on immigration and a government shutdown looming, White House Chief of Staff John Kelly tells lawmakers that President Trump's campaign promises on the border were uninformed.

The White House director of legislative affairs, Marc Short, he is with us. He's standing by. We will discuss.



BLITZER: Breaking tonight, the White House chief of staff admitting to lawmakers that when President Trump made promises about a border wall with Mexico as a candidate, he was uninformed. That's what the White House chief of staff said.

Joining us now, the White House director for legislative affairs, Marc Short.

Marc, thanks so much for joining us.


BLITZER: In the last hour, we spoke with Congressman Ruben Gallego. He is a member of the Congressional Hispanic Caucus. And he confirmed publicly that the White House chief of staff, John Kelly, said that what the president used to say during the campaign about a border wall, other immigration, represented uninformed opinions at that time, the president was uninformed.

Your reaction?

SHORT: I was there in the meeting, Wolf. I don't remember the general ever saying the president was uninformed.


BLITZER: What did he say? What do you remember?

SHORT: I do think that what General Kelly said is to say that, just like the president listened to his generals to help figure out the plan to defeat ISIS, he's listened to the people on the field in CBP and come up with a better border plan, which is different, admittedly different, than what he said on the campaign.

Even President Trump in the meeting that was televised on Tuesday talked about the reality that there are places where we cannot put a wall. And he's listen to CBP and say, "Here's where physical barriers are most needed to protect our country."

[18:30:21] The president is listening to the professionals. We should be celebrating that, and Democrats should be looking at it and saying, "Hey, he's listening to CBP to say where we need to secure our border. We should get behind that, as opposed to silly stories about someone saying he was uninformed."

BLITZER: Because John Kelly, the White House chief of staff, he was just interviewed on FOX. He said President Trump has, quote, "evolved in the way he looks at things and changed his attitude toward the DACA issue and even the wall." That's John Kelly himself saying that.

SHORT: I agree with that. I'm not -- I'm not disagreeing with that, Wolf. What I'm saying is that the president's position, he's listened to CBP officials and devising what a better plan would be to secure the border. He has said that. That is different than saying he was uninformed.

BLITZER: Ruben Gallego said flatly he used the word "uninformed." Kelly said the president was "uninformed." Other members have said exactly the same thing, not only to CNN but to other news organizations.

SHORT: Wolf, we should be celebrating the fact that CBP has come forth a plan to secure our border. We should be getting Republicans and Democrats on board, as opposed to, once again, having some controversy about a word that was used in a meeting.

I don't recall General Kelly saying the president was uninformed. He said this is how our decision has evolved. This is what's needed. We should be getting behind the professionals who are on the line, securing our border every day, and telling us what they need to secure our border. BLITZER: But it seems the Republican leaders in the Senate and the

House, they're still confused precisely where the president stands, even the Senate majority leader, Mitch McConnell. Listen to what he said just a little while ago.


SEN. MITCH MCCONNELL (R-KY), MAJORITY LEADER: I'm looking for something that President Trump supports. And he's not yet indicated what measure he's willing to sign. As soon as we figure out what he is for, then I would be convinced that we were not just spinning our wheels going to this issue on the floor.


BLITZER: All right. So what needs to be in the bill for the president to sign it?

SHORT: I think we've been crystal clear with all of Congress on that.

BLITZER: So why is he confused?

SHORT: That's a good question, Wolf. We've been crystal clear with him and his staff, as well. What we've said is we need a physical barrier. We need to end chain migration. We need end the diversity lottery visa program, and we're willing to address DACA. Those are the concrete things that we need. They're the four pillars we've agreed to talk about, and we've put forward our plans in each of those areas.

BLITZER: Because Lindsey Graham, the Republican senator who's trying to come up with a compromise that would allow the 700,000 DREAMers to remain here in the United States, he says flatly there's a Tuesday Trump, referring to one meeting last week, as opposed to a Thursday Trump when the president, a very different perspective, rejecting the compromise.

Which version is Congress negotiating right now, what the president said on Tuesday -- he wants a bill on love, he's open to whatever compromise you come up with, I'll take the heat -- you remember the president said all of that?

SHORT: Sure.

BLITZER: Or a very different President Trump in that Thursday meeting?

SHORT: Wolf, there's no difference. What he has said in that meeting on Tuesday was to talk about the whole group of that table which represented a lot of diverse viewpoints. Senator Graham has been a constructive voice in this, has been very helpful, but the plan he brought forward was a very narrow plan worked through just a few members in his own group, working group.

We said we wanted to have a plan that others could agree to, as well. That's the difference. It's not a Tuesday versus Thursday. It's Senator Graham and Senator Durbin trying to bring to the president a plan that has not been signed off on by others.

When we left the meeting on Tuesday, the four leaders -- McCarthy, Hoyer, Durbin and Cornyn -- agreed they would be the ones organizing these moves forward. We met with them today. We're making progress. But the Durbin...

BLITZER: Progress that part of the spending bill to keep the government operating would also include DREAMers?

SHORT: I don't see that that's going to happen, Wolf. I think that the reality is that we're going to face another C.R., which is disappointing to all of us.

BLITZER: A continuing resolution to keep it going until mid-February.

SHORT: That's right. And that's frustrating to us, because we put forward budget back in February. Here we are now, 11 months later, with still Congress still not having a spending bill in place.

BLITZER: But you flatly rejected the Lindsey Graham, Dick Durbin deal? The compromise?

SHORT: I think that the Lindsey Graham-Dick Durbin deal is still what's being used by the four leaders as a baseline. We think that it's important that they've narrowed the focus of those four pillars we asked for, which is a step in the right direction. But in each of those categorist we felt that Durbin and Graham did not go far enough. And that's what we're trying to improve.

BLITZER: Is the government is going to shut down?

SHORT: Wolf, I don't think the government is going to shut down. I think that it's more important that we make sure our troops are continuing to be funded, our national security is funded, government workers are funded. That is -- that is the plan. I think that we'll get there this week.

BLITZER: Because in this Reuters interview, the president said the Lindsey -- the Lindsey Graham-Dick Durbin compromise is the opposite of what he campaigned on. And now you're saying maybe that could be the basis for some sort of compromise.

SHORT: I think it's in all four of those areas that needs to be substantially improved. The border security element that the president campaign on is what we're still asking for. CBP presented to Congress last week a $33 billion plan, of which 18 was physical structure. The Durbin-Graham proposal provided 1 year, $1.6 billion of funding. And even in that, it tied our hands and saying no new dollars can go for new technologies. We're constantly testing new prototypes for the wall. So they're basically tying our hands and saying we can't use those funds.

[18:35:13] BLITZER: Here's the problem you have, to keep the government operating. A simple majority in the House, 218 votes. I suspect you can probably get that. But in the Senate you need 60. You have 51 Republicans. You need a bunch of Democrats to support it. Chuck Schumer, the Democratic leader, says there's widespread revulsion among Senate Democrats to voting on a short-term spending bill.

SHORT: Two points there. One, I think it would be very challenging for a Senator Heitkamp or Senator Manchin or Senator Tester or Senator Donnelly to "I'm not going to fund our troops, because I want to make sure we do something for illegal aliens with DACA."

BLITZER: So you think they have 60 votes?

SHORT: I think that's difficult for Democrats in the Senate. But we share the frustration that Congress should be doing its job and they've not done their job. They've not given us a spending bill, even though we've had a budget submitted in February. The fiscal year ends in September. Here we are in January without a funding bill.

BLITZER: And you know it's a Republican majority in the House and a Republican majority in the Senate.

SHORT: But we also need ten votes in the Senate and the Senate so far, Democrats have been unwilling to allow a motion to move forward on those appropriations bills.

BLITZER: Yes, all right. We'll see what happens. Lindsey Graham, by the way, says he's not going to vote for this continuing resolution. You've got a lot of work to do over the next 48 hours.

SHORT: We always do.

BLITZER: Marc Short, thanks very much for coming in.

SHORT: Thanks for having me, Wolf.

BLITZER: Appreciate it very much.

Much more news right after this.


[18:41:02] BLITZER: We're following multiple breaking stories including truly stunning remarks by President Trump's chief of staff, John Kelly about Mr. Trump's border wall promises made during the campaign. Kelly suggesting they were uninformed, those comments by the president.

Let's bring in our analysts to discuss this and more. But Gloria, I know you're doing reporting on how the White House is working behind the scenes to limit the testimony given to congressional investigators in the Russia probe. What are you being told about this effort?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: My colleagues and I are reporting just that, Wolf, that the White House is trying to find a way to kind of set the parameters for what former staffers, et cetera, will be able to tell investigators.

And we saw that sort of blow up yesterday with -- with Bannon's testimony, where he -- his lawyer, we are told, took some breaks and was on and off the phone with people in the White House counsel's office, trying to find out exactly what he was allowed to testify to, given this big question of executive privilege.

And according to the White House, Bannon was not allowed to discuss any activities related to the transition or his tenure in the White House.

Now, people in the White House say they're not doing anything beyond trying to maintain legal precedent, and that's what -- and that's what they're trying to do. There are some Democrats who believe that this effectively muzzles anybody who would come before the committee.

BLITZER: Phil Mudd, how is the special counsel, Robert Mueller, and his team going to view this effort?

PHIL MUDD, CNN COUNTERTERRORISM ANALYST: Well, I think there's a fundamental difference between somebody from the White House going over to the legislative branch -- that is the Congress -- and saying, "Look, I don't want to talk to you." There's a behind-the-scenes reason beyond that sort of high-end policy issue of we want to separate out advice to the president from a conversation with the Congress. They're going to be afraid that, No. 1, all the questions are going to be partisan and, No. 2, they're going to leak within 30 seconds of when Steve Bannon says something.

That does not hold true when Bannon goes in for a conversation with Mueller. That operation has been fairly leak-free, and obviously, you're not dealing with the same issues related to whether you want a White House official talking to the Congress.

So I think the bottom-line question is whether the real story is going to come out some day and whether Steve Bannon speaks. I think the answer is yes, he'll speak to Mueller. No, he won't speak to the Congress.

BLITZER: Could this potentially, David, create even more problems for the White House?

DAVID SWERDLICK, CNN POLITICAL ANALYST: Yes, Wolf, I think there's potentially a political problem and a legal problem. If you're on the legal side, if you're the special counsel's team, you want to look at this and say, OK, is this assertion of privilege really a genuine assertion of privilege or is it more an attempt to obfuscate or maybe even obstruct justice?

On the political side, I just think it goes back to the narrative from the White House all along, going back more than a year, that this is a hoax, there's nothing to see here when it comes to Russia. And if, in fact, they're telling people, "You can't talk about this. You can't talk about that," and it's not real executive privilege, that pokes a hole in that whole idea.

BORGER: You know, but I think Phil's point is so important here, which is that Bannon is now going to appear voluntarily before the special counsel, and he will not have the same issues. He will testify about everything: about the campaign, about the transition, about his time in the White House. Whereas he was not allowed to do that before the Congress.

So I think Mueller, while he might have liked to hear more before the committee that would have given him some indication about what Bannon was going to say, I think his -- he's probably shrugging about this and saying, "Well, fine. It's not going to affect me."

BLITZER: Phil, how worried should the White House be about Steve Bannon?

MUDD: I think significantly worried. One quick point before I answer your question. Remember, before we hear anything about Steve Bannon not wanting to talk to Mueller, it was the president's deputy attorney general who chose to select Mueller as the special counsel.

How do you sit at the White House and say, "I don't want our former strategic advisor Steve Bannon to talk to the guy who was selected by our own deputy attorney general"? That doesn't make a lot of sense.

I think they should be worried, because, one, there's some facts here that are -- been laid out on the table in the past day and that is Steve Bannon knows more than we know. For example, who was aware of that meeting between Don Jr. and the Russia lawyer last summer? We didn't. I don't remember being aware f it myself that Reince Priebus was aware of this. He laid that on the table yesterday.

People like me are looking back saying, wait a minute. If this was non-meeting, why are so many people involve in this? And why did you think it was so significance that Reince Priebus had to know? What's behind that smoke?


Everybody, stand by.

There's more news we're following tonight. The president's personal lawyer is issuing fresh denial about allegations first made in "The Wall Street Journal" that the president had an affair with a porn star and then paid for her silence a month before the election. The new statement comes as a tabloid magazine published what it says are the first on-the-record quotes from the woman who goes by the name Stormy Daniels, and after several other news outlets confirm they had the story but eventually dropped it.

Let's go to CNN's Brian Todd. He's been looking into these allegations and all of the denials.

What are you finding, Brian?

BRIAN TODD, CNN CORRESPONDENT: Wolf, the quotes from this porn across about her alleged encounter with Donald Trump have a lot of detail. But we just learned that the magazine now publishing those quotes had the information in 2011. Other media outlets had the information as well and were set to publish it just before the election in 2016 and then decided not to. (BEGIN VIDEOTAPE)

TODD (voice-over): Tonight, more news outlets are coming forward, acknowledging they had information about an alleged affair between Donald Trump and a porn actress who goes by the name Stormy Daniels.

STORMY DANIELS, ADULT FILM ACTRESS: I just wanted to give you a commendation.

TODD: New accounts that raise questions about President Trump's denial of the affair. CNN has learned that FOX News and ABC's "Good Morning America" had information about the alleged affair in the weeks leading up to the 2016 presidential election but didn't publish it.

"The Daily Beast" and "Slate" said they had it too and they didn't publish it. CNN was told about Fox's decision by four people familiar with the matter and despite Fox's pro-Trump leanings, a top editor at the network told CNN: In doing our due diligence, we were unable to verify all of the facts and publish a story.

OLIVER DARCY, CNN MEDIA REPORTER: Fox is saying that the story that just not meet their standards, and despite the on-the-record confirmation from the porn actress's manager at the time and despite the reporter having seen documents about a settlement, it just did not meet their standard for publication.

TODD: "Slate", "The Daily Beast" and sources at ABC News all say they communicated with Daniels shortly before the election about doing interviews but that Daniels suddenly stopped corresponding with them or backed out of interviews.

On Friday, "The Wall Street Journal" reported that in October 2016, Trump's personal attorney, Michael Cohen, arranged a $130,000 payment to Daniels to keep her silent about the alleged affair. Cohen, the White House and Daniels have denied the affair happen. Daniels, in a statement sent by Cohen, denied getting hush money.

Now, new accounts are surfacing. Alana Evans, a porn actress who says she's a friend of Daniels, described to NBC's Megyn Kelly what she says Daniels told her about Daniels' alleged first encounter with Trump at a Lake Tahoe, Nevada resort in 2016 .

ALANA EVANS, ADULT FILM ACTRESS: She says, well, picture this, Donald Trump chasing me around the bedroom in his tighty-whities isn't something that you ever forget.

TODD: No one is saying the alleged affair wasn't consensual, and tonight, the gossip magazine "In Touch Weekly" is out with a personal firsthand account from Daniels, whose real name is Stephanie Clifford, about the alleged affair. Daniels described in some detail her alleged first sexual encounter with Trump in 2006 and says, quote: He told me once I was someone to be reckoned with, beautiful and smart, just like his daughter.

An editor at "In Touch" tells CNN, they had this information back in 2011. Why didn't they publish it then? JAMES HEIDENRY, EDITORIAL DIRECTOR, IN TOUCH MAGAZINE: Why wasn't it published before? I can't speak to. In fact, I don't have the answer. But when I was made aware of it just a few days ago, I immediately realized that had to be the next cover of "In Touch".


TODD: "In Touch" magazine will not tell us whether they pay for interviews or not. But the magazine's editor says they did not pay Stormy Daniels.

Today, Trump's attorney, Michael Cohen, sent a statement, saying, quote, this is not breaking news, it's old news that wasn't true then, and not true now. An old and debunked story that Ms. Clifford denied in 2011, 2016, and again in 2018.

Another attorney who represents Stormy Daniels did not return our calls -- Wolf.

BLITZER: Has the president's personal attorney Michael Cohen ever specifically deny making a payment to this porn actress?

TODD: He has not addressed that question directly, Wolf.

[18:50:01] Michael Cohen has denied that the affair took place. Stormy Daniels in a statement sent by Michael Cohen denies getting hush money. But today, we pressed Cohen again, did you arrange for or make a payment to Stormy Daniels, he didn't answer, Wolf.

BLITZER: Brian Todd, reporting for us, thanks very much.

Much more news right after this.


BLITZER: Tonight's scathing new criticism of President Trump's vulgar remarks about immigrants of color.

[18:55:02] The former Defense Secretary Leon Panetta writing a new opinion piece for CNN, sending a message to the president that this is not who we are as Americans.

The former defense secretary is joining us right now.

Mr. Secretary, thanks so much for joining us.


BLITZER: So you are not only denouncing President Trump's racist comments about immigrants from Haiti and Africa in this article You also write this: It is important that the world knows that although he may be president, Donald Trump does not speak for the overwhelming majority of Americans. This is not who we are.

Do you think that message can speak louder than the president's? PANETTA: I really believe it can, because I honestly believe that the

vast majority of Americans understand that we are a land of immigrants. I'm the son of Italian immigrants. They believed in giving their children a better life, which is the American dream. I've lived the American dream.

The statute of liberty speaks to the American Dream. We are a land that is always welcomed immigrants to our country. And it's for that reason that I think it's important for the world to know that we truly do believe we are a land of immigrants and we'll welcome those to our country so that they can enjoy the American dream.

BLITZER: Yes, I'm a son of immigrant my son. My family has lived the American dream as well.

But many Americans who voted to Put president Trump in the White House, they have actually embraced his comments about immigrants, Muslims, Mexicans and others. What do you say to them?

PANETTA: Well, you know, I think what's encouraging to me is the overwhelming majority of Americans who support trying to protect these DACA students. Eight out of 10 Americans support the DREAM Act. Two of three Republicans support the DREAM Act.

So, deep down, Americans do understand the importance of protecting those who are seeking to be a part of the American Dream. As secretary of defense, I saw men and women in uniform from families across this country who were willing to fight and die for this country. As a matter of fact, there are 900 DACA young people who are in the military who are providing the skills and the capabilities that we need in order to protect our national security.

Deep down, the Americans know that that's what makes our country strong. And I honestly believe that every American understands that we have to welcome those who need to be a part of the American Dream. That is the great strength of what the United States of America is all about.

BLITZER: You also write this, Mr. Secretary, President Trump who himself is the grandson of immigrants and is married to an immigrant, criticize better themselves as own family did.

Are you upbeat, optimistic that there can be a deal on DACA on the Dreamers?

PANETTA: I really am. I think -- I think we understand that we have to provide this protection. The president has said we have to do it. Republicans and Democrats say we have to do it. I hope the Congress doesn't simply kick the can down the road, because, frankly this is not going to get any easier in four weeks because with this president, who may say something that could in flame the issue again, we could be in trouble in four weeks.

We have the chance now to adopt a compromise that has been put together op the Senate side by Senator Graham and Senator Durbin. It's something that is a compromise. We all understand that. But it has the best chance of trying to provide the protections that these kids need so that they won't lose their status in the United States.

BLITZER: So what's your advice to President Trump right now as time clearly is running out?

PANETTA: I would say, Mr. President, let Congress do its work. If we are able to fund the CHIP program, the health care program for kids, if we are able to provide disaster assistance, if we are able to fund the government and provide defense money as we should, then we certainly ought to be able to pass the DREAM Act. That's the responsibility of the Congress. It's the responsibility of the president of the United States to do what is right for the American people.

BLITZER: Who is going to be blamed if there is a government shutdown?

PANETTA: I have always felt that everybody bears some blame if there is a government shutdown. But clearly, the president of the United States, majority party in the Congress, both in the House and the Senate, are the ones who will bear the largest responsibility. That's just a fact of life.

BLITZER: Mr. Secretary, thanks so much for joining us.

PANETTA: Good to be with you, Wolf.

BLITZER: Always good to have Leon Panetta here in THE SITUATION ROOM.

That's it for me. Thanks very much for watching.

"ERIN BURNETT OUTFRONT" starts right now.