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Dow Suffers Historic Loss, Plunges 1,100 Points; Trump: Dems' State of the Union Reaction 'Treasonous'; Awaiting House Intel Vote on Releasing Dems' Memo; FBI E-mails Show Bureau Stunned by Firing of Comey. Aired 5-6p ET

Aired February 5, 2018 - 17:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now, breaking news. Free fall. Wall Street suffers its worst single-day point loss in history, eroding a significant chunk of the gains President Trump has been claiming credit for. So what he's saying about this record sell-off?

[17:00:34] On the attack. President Trump goes after Democrats, slamming some of them as un-American and treasonous, and labeling others as leakers and liars, along with some former intelligence chiefs. So what happens to the president's praise of bipartisanship?

Dueling documents. The House Intelligence Committee is about to vote on releasing the Democrats' rebuttal to the Republican memo alleging an anti-Trump bias within the FBI. Will the president approve its release?

And provoking North Korea. Vice President Pence heads to South Korea for the Winter Olympic Games on a mission to keep Kim Jong-un's propaganda in check. How much will Pence's presence provoke the North Korean leader?

We want to welcome our viewers in the United States and around the world.

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

ANNOUNCER: This is CNN breaking news.

BLITZER: We're following breaking news, including a dizzying plunge on Wall Street. The Dow Jones Industrial Average suffering its worst one-day loss in history, losing more than 1,100 points and now down more than 1,800 in the last two trading sessions. The dramatic drop follows a record rise over the last year, which President Trump has repeatedly touted as the result of his economic policies.

Congresswoman Zoe Lofgren of the House Judiciary Committee, she's about to join us live. And our correspondents and specialists are also standing by.

But let's begin with CNN business correspondent Richard Quest and CNN contributor Bianna Golodryga, who's covered the financial markets and the economy for years.

Richard, first of all, what caused this totally dramatic 1,100-point drop today after the 666-point plummet on Friday?

RICHARD QUEST, CNN BUSINESS CORRESPONDENT: Continuing worries about interest rates, inflation, wage growth, and the future direction of the Fed, which is also somewhat ironic considering it was the new chair's first day on the job.

We saw that on Friday as a result of the jobs report showing wages going up. And now everybody is asking just how quickly will interest rates go up and what the effect on that was going to be.

Now, Wolf, does any of that justify an 8 percent drop in the market since its all-time high? No. Except the way the market has risen to such dizzying heights. With the new ways of trading, this is inevitable. You're going to see volatility. So we saw the volatility index rise some 70-odd percent. Get used to it, Wolf. This volatility is back.

The worst sent day point drop in the history of the markets. Not necessarily the worst single day percentage drop by far.

Let's go to Bianna. Bianna, is this just a blip or does Wall Street fear this could be the beginning of a truly significant slide?

BIANNA GOLODRYGA, CNN POLITICAL ANALYST: Well, as the saying goes, what goes up must go down. Richard is absolutely right. We have been anticipating a correction. At its peak, it market was up 30 percent since the president was inaugurated.

Remember, the stock market is a forward-looking indicator. There had been a lot of anticipation into this tax cut that we saw go into fruition. It was implemented. Again, a lot of these stocks, 30 stocks. Remember, Wall Street does not equal Main Street. So while it may be confusing for people at home to say there's good news, wages going up on Friday. That's not necessarily great news for Wall Street. Interest rates have been at near zero for 10 years now. We're starting to see the Federal Reserve speak more freely about raising interest rates and keeping inflation in check.

Remember, the Federal Reserve really has two mandates. That's keeping inflation in check, and that's keeping the unemployment rate down. During the financial crisis ten years ago, the Federal Reserve lowered interest rates to where they are right now. The economy, of course, has recovered. We've seen growth throughout the world, really. And the Federal Reserve needs to have more tools in its arsenal right now. With interest rates at zero, if we have another financial crisis, they're not going to have anything else to combat it with.

BLITZER: So they're concerned, Bianna, about inflation right now. Is that a serious concern?

GOLODRYGA: It's clearly a concern enough. I mean, Richard was right to attribute a lot of the volatility to electronic trading, which is why you see these huge drops within just a matter of minutes.

[17:05:02] But there is concern about the Fed raising rates. You get used to a good thing; you get used to a free party, the Federal Reserve having interest rates at zero. Once those interest rates start going up, you'll see Wall Street really reacting in ways that we've seen today and over the last week. But of course, we've been in the need in anticipating some sort of market correction, regardless.

BLITZER: Richard, what are your two most important takeaways for our viewers out there right now? Both those who do have money in the stock market and for those who do not.

QUEST: If you don't need to do anything, don't. I mean, that's the long and short of it now. You're in this, and it's going to play out. Hopefully, if you're in your older years, you've been rebalancing more toward bonds. Bonds had a good day. The yield went down. The price went up.

But the takeaway is simple. More volatility. If you don't need to sell, don't. Ride it out. There's -- this is a market for speculators, for professionals and for momentum players. It is not a market that you play with once it's on fire like today.

BLITZER: We're certainly going to keep on top of this breaking story. Richard and Bianna, guys, thanks very much.

Also breaking this hour, some truly remarkable attacks on Democrats by President Trump, using words like "treasonous" and "un-American." Let's go to our chief White House correspondent, Jim Acosta.

Jim, the president is truly lashing out at Democratic members of the House and Senate.

JIM ACOSTA, CNN CHIEF WHITE HOUSE CORRESPONDENT: He certainly is. And speaking of the stock market, the president is due to arrive back here at the White House from an economic event in Ohio earlier today. So we'll see if the president has any comments about this deep dive in the Dow earlier today.

But meanwhile, as you said, Wolf, you're right. The president has been continuing this barrage of attacks on the Russia investigation and on the Democratic Party. This time he's taking aim at the top Democrat on the House Intelligence Committee, Adam Schiff, who wants to release his own memo on the Russia probe. Schiff would like to respond to that controversial Republican memo that was declassified by the president last week, but it's not at all clear Mr. Trump will let that happen. As he was talking earlier today in Ohio, he was praising the Nunes memo and calling Democrats, essentially, treasonous.


ACOSTA (voice-over): At a speech with factory workers in Ohio, President Trump was turning the screws on his critics, touting the release of a House Republican memo that accuses federal investigators of abusing their power in the Russia probe.

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: Did we catch them in the act or what? You know what I'm talking about. Oh, did we catch them in the act. They are very embarrassed. They never thought they were going to get caught. We caught them. We caught them. So much fun. We're like the great sleuth.

ACOSTA: Sounding at one point like and undemocratic strongman, the president also ripped into Democrats for not applauding him enough at the State of the Union speech, saying that was treasonous.

TRUMP: They were like death. And un-American. Un-American. Somebody said treasonous. I mean, yes, I guess, why not? Can we call that treason? Why not? I mean, they certainly didn't seem to love our country very much.

ACOSTA: The president began the day blasting the ranking Democrat on the House Intelligence Committee, Adam Schiff, who's pushing to release his own memo to explain why the FBI wanted to conduct surveillance of former Trump campaign aides who are suspected of being in contact with the Russians.

Mr. Trump tweeted, "Little Adam Schiff, who is desperate to run for higher office, is one of the biggest liars and leakers in Washington. Adam leads closed committee hearings to illegally leak confidential information. Must be stopped."

Schiff fired back, accusing the president of tweeting false smears.

UNIDENTIFIED MALE: Do you support the release of the Democratic memo, President Trump?

ACOSTA: The president wouldn't say whether he would declassify the Schiff memo, but he praised the GOP chairman behind the Republican memo, tweeting, "Representative Devin Nunes, a man of tremendous courage and grit, may someday be recognized as a great American hero for what he's exposed and what he's had to endure."

But Nunes spent part of the morning diminishing the role of former Trump campaign advisor George Papadopoulos, who was cited as part of the Justice Department's rationale for granting surveillance.

REP. DEVIN NUNES (D-CA), CHAIRMAN, INTELLIGENCE COMMITTEE: If Papadopoulos was such a major figure, why didn't you get a warrant on him? And if Papadopoulos was such a mental figure, you had nothing on him. You know, the guy lied. As far as we can tell, Papadopoulos never even had knew who Trump -- never even had met with the president.

ACOSTA: But that's not true. As has been widely reported, Papadopoulos sat down with then-candidate Trump during the campaign. Even fellow Republicans are pushing back on the president's claim that he's been vindicated by the Nunes memo.

UNIDENTIFIED FEMALE: The memo has no impact on the Russia probe?

REP. TREY GOWDY (R), SOUTH CAROLINA: Not to me it doesn't, and I was pretty integrally involved in the drafting of it.

ACOSTA: As for the Schiff memo, the White House says it will examine whether it will be released. HOGAN GIDLEY, WHITE HOUSE DEPUTY PRESS SECRETARY: The president will

use the same methods, same mechanisms to go over that document just like over the Republican memo. He will do the same thing and take the same painstaking care to look at the Democrat memo.

[17:10:13] ACOSTA: But the reality is, the president said he wanted to release the Nunes memo before he had even read it.

REP. JEFF DUNCAN (R), SOUTH CAROLINA: Let's release the memo.

TRUMP: Don't worry, a hundred percent. Can you imagine?

ACOSTA: Back in Ohio, the president was also congratulating himself for making sure NFL players were not taking a knee in protest at the Super Bowl.

TRUMP: There was nobody kneeling at the beginning of the Super Bowl.

ACOSTA: That was just after he was bragging about how he doesn't brag.

TRUMP: I'm non-braggadocios.


ACOSTA: Now, one thing president was not bragging about earlier today was the stock market, which was plummeting as he was speaking in Ohio. As you can see right now, Wolf, over at Joint Base Andrews, just outside of Washington, the president is arriving back from his trip. There he is with the first lady, arriving from his trip up to Ohio to talk about his tax-cut policies.

One thing he was not talking about today was the stock market and the way it had been roaring up until the last week or so. The president, we should point out, he is keeping his eye on the financial markets, according to White House officials here.

But Wolf, a major correction on the stock market, on Wall Street, would not be welcomed over here at the White House, where the president has said repeatedly the healthy stock market was the result of his economic policies. This White House has really been riding this wave ever since the president came into office down on Wall Street. And of course, waves do crash, and it happens from time to time on Wall Street. The White House is finding that out very clearly this evening, Wolf.

BLITZER: Just to be precise, Jim, so the president spoke about the economy for about 45 minutes in Cincinnati and never mentioned the stock market dropped at all? Is that right?

ACOSTA: He was -- he did not reference the stock market diving, no. He did not mention the Dow diving during his remarks earlier today. And that is why we're waiting right now to find out what he has to say about this. Because as you've been saying all -- all during this broadcast, that this is a very historic day on Wall Street. The largest point drop in the history of the market. And the president, on down to the White House press secretary, in briefing after briefing, the president has been mentioning it at news conference after news conference, they've been touting the performance of the stock market. Critics have been saying, "Well, a lot of people on Main Street aren't invested in the stock market. Their 401(k)s, perhaps, aren't as large as, you know, what people are dealing with in Manhattan with their very large portfolios."

And so some have wondered whether there's been a disconnect here at the White House in terms of this touting of what's been going on on Wall Street. But Wolf, no, we did not here the president talk about that earlier today in terms of what was happening on Wall Street. That's why we're waiting outside on the South Lawn of the White House as we speak to see if the president has some comment on it. Because obviously, what the president has to say about these markets moving will be very critical right now, Wolf.

BLITZER: All right. We'll see if he says anything. We'll have coverage of that. Jim Acosta, thanks very much.

Now to Capitol Hill, where the House Intelligence Committee is expected to vote soon on releasing a Democratic memo defending the FBI against Republican allegations. It abused surveillance laws to target the Trump campaign.

Let's go to our senior congressional correspondent, Manu Raju, who's working the story for us. Manu, the White House won't commit to releasing this Democratic document. At least not yet.

MANU RAJU, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Yes, that's right. And the House Intelligence Committee now meeting behind closed doors to decide whether or not to vote to release this Democratic memo that provides a rebuttal to that Nunes memo from last week. A point by point rebuttal, we're told. Roughly ten pages in length.

And several of the Republican members going into this meeting made very clear that they're going to vote "yes" to release the memo, and there are going to be enough votes today, we're expecting, to send this to President Trump's desk. Then he'll have five days to decide whether or not to object to its release or allow its release. That's something that he and the White House have not said yet what they would do.

Now, this vote comes after last week's vote, when the Republicans blocked the release of the Democratic memo, saying they had just been presented with it instead of allowing the House to review the memo in a classified setting. Now they're apparently ready to send this to be reviewed publicly, pending the president's approval.

Now this comes as some members of the committee are raising concerns about some of the president's remarks, including his criticisms of Adam Schiff. One Republican congresswoman on the committee said this just moments ago.


RAJU: You didn't like how he attacked Schiff today?

REP. ILEANA ROS-LEHTINEN (R-FL), INTELLIGENCE COMMITTEE: No. I think it was uncalled for. It's unhelpful. It doesn't move the -- the issues in a positive way.

And this name calling has really got to stop. Or else he's got to be a little more original. Little again? Come on. With Marco, you know, it was a good burn. But he's just -- he's got to be more imaginative. If he's going to continue, and he shouldn't. Just kidding. He really should not. But use better ones.


[17:15:07] RAJU: So some discomfort from one Republican member about the president's attacks against Adam Schiff. But she also made very clear that she would support the release of the Democratic memo, as other Republicans did, going into this meeting.

So Wolf, the ultimate question is what the White House is going to do if the president agrees to allow this. Or redacts any of this information that will kick the issue back to the House Intelligence Committee. So that's an open question, about what the House Intelligence Committee would do if the president decided he would not allow it to be released in full or in part. Would they override the president? Would the full House override the president? That's another question that the committee would have to decide and the full House would have to decide later this week.

We'll see what happens after they vote, in a matter of moments, to send this to the president's desk and give the president an opportunity to allow the declassification of this memo, which rebuts the Nunes memo, which of course, the president has heralded as something that has vindicated him from the Russia probe, Wolf.

BLITZER: Yes. We anticipate members, including Adam Schiff, will walk out, make a statement to reporters. We'll have live coverage of that following this important meeting of the House Intelligence Committee.

Manu, thank you very much.

Let's get some more on all of the breaking news we're following, and there's lots of it today. Democratic Congresswoman Zoe Lofgren of California is joining us. She's a member of the House Judiciary Committee. Congresswoman, thanks so much for joining us.

REP. ZOE LOFGREN (D-CA), JUDICIARY COMMITTEE: Thanks. Thanks for having me, Wolf.

BLITZER: All right. There's a lot I want to go through. But let me start with the plunging stock market today. Are you worried this could be a sign of bigger problems in the U.S. economy?

LOFGREN: Well, I hope not, but I'm no expert on the stock market. Ask me about the Constitution or technology. I'd be better suited to answer. BLITZER: All right. Let's talk about the president's comments today

in Ohio. While touting his tax plan, touring the economy, he said Democrats attending a State of the Union address were, in his words, "un-American" and "treasonous" for not applauding him enough. Your reaction?

LOFGREN: I think that's pathetic and bizarre. I mean, I guess he thinks he is the United States and, if we don't applaud him, it has something to do with America.

You know, I went to the State of the Union, because it's about the presidency. I did not vote for Donald Trump, and I usually don't agree with him. But that doesn't mean that you should engage in wild applause for things that are false -- a lot of what he said was untrue -- or misguided. So it's kind of a weird comment he's making, I think.

BLITZER: I wonder if the president knows what treason -- how treason is defined in the U.S. Constitution. I have it right here. "Treason against the United States shall consist only in levying war against them, or in adhering to their Enemies, giving them Aid and Comfort. No person shall be convicted of treason unless on the testimony of two witnesses to the same overt act..."


BLITZER: "... or confession in open court."

Clearly, treason is a very specific crime.

LOFGREN: Yes, it is.

BLITZER: The punishment can be the death -- the death penalty.

LOFGREN: Well, I don't think I'm worried about getting the death penalty for not clapping for Trump at the State of the Union. Let me put it that way.

BLITZER: You're on the Judiciary Committee. You're not on the Intelligence Committee, but you're colleagues in the Intelligence Committee, they're preparing to vote as we speak right now on whether to send the president a Democrat memo which is expected to counter some of the claims made...


BLITZER: ... in that controversial Republican memo authored by the chairman, Devin Nunes, alleging surveillance abuses by the Department of Justice and the FBI. There's no guarantee, by the way, that the president will choose to declassify the Democratic memo, even if lawmakers send it his way.

What, if anything, can Democrats and Republicans who want this memo released, what if anything, can they do if the president chooses not to make it public? LOFGREN: Well, the House, any member of the House can raise the

issue, and the House could vote to release it, even if the president declines to release it.

But Adam Schiff, the lead Democrat on Intel, did say that he wanted to make sure that the law enforcement community had cleared the memo before it was released. So I'm sure he would insist upon that.

Of course, the major issue, the existence of the FISA warrant is classified. That piece of information is classified. And when the Republican memo was released, that secret was blown.

So having read the Democratic memo, it's -- it's copiously footnoted and very thorough. I'm not sure any of it would be kept from the public, given that the Republican memo has already been released. But that's something I'm sure we would want information from the FBI about.

BLITZER: The president clearly believes the Nunes memo, in his word, vindicated his claims that the Russia investigation is a hoax. What's your reaction to that?

[17:20:02] LOFGREN: Well, I think this is a side show in many respects. I think my colleague Trey Gowdy mentioned yesterday this has nothing to do with the Russia probe that Mr. Mueller is engaging in.

I do think it's of interest that the FISA court found, not once but four times, that Carter Page was an agent of a foreign power. That's pretty significant. And of course, he was, earlier, an adviser to the Trump campaign for foreign policy. So that's not becoming, but it's not really the Russia probe that Mr. Mueller is engaged in so far as I'm aware.

BLITZER: Congresswoman Zoe Lofgren, thanks so much for joining us. LOFGREN: Thank you.

BLITZER: Up next, newly-released documents reveal action inside the FBI to the firing of the former director, James Comey. What did agents say about President Trump's dramatic move?


UNIDENTIFIED MALE: I'm here to give you an update.



[17:25:17] BLITZER: We're standing by for the House Intelligence Committee to vote on whether it will release a Democratic memo defending the FBI against Republican charges of anti-Trump bias.

We're also learning new information about reaction inside the bureau to President Trump's firing of the FBI director, James Comey, last May. Our justice correspondent, Evan Perez, is working the story for us.

Evan, what are you finding out?

EVAN PEREZ, CNN JUSTICE CORRESPONDENT: Well, Wolf, these are over 100 pages of internal e-mails from inside the FBI. Lawfare blog run by Ben Wittes, who's a friend of Jim Comey, had filed a FOIA to be able to get access to these internal investigations, and they really show a picture of people, frankly, stunned at the fact that James Comey was fired as he was by President Trump.

And if you remember, the White House, Sarah Sanders, the president himself, all said that Comey was fired because he had lost the confidence and the support of rank-and-file agents inside the FBI. And the picture we get from these documents is the opposite.

If you'll -- one thing we have here is a quote from one of the e-mails that was -- that was obtained by Lawfare. It's from a special agent in charge of the Phoenix office of the FBI, and he says, quote, "We all felt the pain associated with the loss of a leader who was fully engaged and took great pride in the FBI organization and our employees. Simply stated, Director Comey will be missed."

Far from losing confidence, you know, from among the troops at the FBI, what we're seeing in these e-mails, again, over 100 pages, is people putting together books of letters from employees to be able to send to James Comey because of the way this was handled, Wolf.

It certainly doesn't portray what Sarah Sanders said, what what Sarah Sanders even said at her press conference, that she had heard from, internally from inside the FBI, support for the president's actions. That's far from what these internal documents show us.

And if you remember, right after the firing of Comey, the president had set up this idea of doing a photo op, a speech at the FBI headquarters, and that was scrapped, because I think what they got was a sense that this was not going to be welcome.

BLITZER: Yes. And he learned that he was fired watching TV...

PEREZ: Right.

BLITZER: ... which was obviously humiliating.

PEREZ: On this program.

BLITZER: That's correct. All right. We're going to get a lot more on this. Evan, thank you very, very much. Evan Perez is our justice correspondent.

Coming up, will the House Intelligence Committee allow the Democratic memo on FBI surveillance to be made public?

And later, Vice President Pence heads to Asia hoping to keep the heat on Kim Jong-un and North Korea.

(COMMERCIAL BREAK) BLITZER: We're following multiple breaking stories, including today's brutal sell-off on Wall Street. The Dow Industrials suffered the worst one-day point loss in history, closing down more than 1,100 points.

[17:32:47] We have a lot to talk -- talk over with our specialists. And Bianna, it wasn't just today, 1,175-point drop. On Friday the Dow dropped 666 points. More than 1,800-point drop in the two last trading days.

BIANNA GOLODRYGA, CNN POLITICAL ANALYST: That's right and a reminder that Wall Street does not equal Main Street, because on Friday, you'll recall we got another positive jobs report. Eighty-eight straight months of jobs growth in the U.S. Another indication that we saw was that wages finally started to go up. The logic being that people will have their wages go up, they will be more incentivized to go and spend more money and thus could trigger inflation.

And then you'll see the Federal Reserve coming back in and raising interest rates. And that's why you're starting to see this big sell- off. We've had interest rates at near zero for the past ten years now. The party was bound to end at some point. And we'd seen this huge run-up in the stock market. A lot of it had been in anticipation of the tax cut that we saw from the administration. But at its peak, the market was up some 30 percent since the president was inaugurated, so we could have expected a market correction. We're starting to see that right now.

The question is, how long will this continue? And if it does continue for an extended number of days, will that have any impact on consumer confidence overall?

BLITZER: The president, Gloria, is not speaking about this. He spoke for about 45 minutes on the economy, didn't mention this drop in the stock market. But the White -- and he didn't say anything when reporters shouted questions as he was walking back into the White House.

But they just put out a statement, the White House. And let me put it up on the screen, and we'll read the statement. "The president's focus is on our long-term economic fundamentals, which remain exceptionally strong. The president's tax cuts and regulatory reforms will further enhance the U.S. economy and continue to increase prosperity for the American people."

So that's the statement from the White House.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Chris Cillizza and I were just talking about the fact that, remember, John McCain said the fundamentals of our economy are strong, and that got him in a lot of trouble when he was running for president.

Look, I think he's hoist on his own petard here. This is a president and reporting out of -- our reporters at the White House are saying that he had been advised by outside advisers, don't keep talking about the stock market as the barometer of how well the economy is doing. Except that he continued to do that.

[17:35:05] So now, if you see a decline, if you see a decline in the stock market, the president has to figure out a way to explain it.

And the Democrats, I can tell you, are going to jump at this. Because they're going to say this is an overheated economy, that you didn't need a big corporate tax cut in the first place to juice an economy that was already percolating pretty nicely, thank you very much. And as a result, the worry is inflation, and this is going to be a long- term problem because -- because of the president's tax cuts. So they're going to -- they're going to take this and they're going to run with it.

BLITZER: You know, the visual was pretty awful. He was speaking in Cincinnati, touting the economy and going on and on and on. But then on the other screen, on all the cable networks, you saw the Dow dropping, first 300, then 500, then 800. It dropped at one point, 15 hundred points before settling a drop of 1,175.

CHRIS CILLIZZA, CNN POLITICS CORRESPONDENT AND EDITOR AT LARGE: Yes, I was watching live, Wolf, and if I'm not mistaken, the 1,500 point, as low as it dropped, was in the middle of his speech.

Any president would be aware of that. This president uniquely so, due to how much cable television he consumes, whether that's live or via tape.

Just to add to Gloria's point, live by the -- live by the Dow, die by the Dow. When you make claims like, if Hillary Clinton had won, the stock market would be down 50 percent, and you say things like we're adding trillions of dollars, just look at the stock market. I think the quote from the White House is not wrong. Which is look, as Bianna noted, there are some good strong fundamentals here. The problem is that when you have a president who is like, every time the Dow goes up, he says, "See? Everything I'm doing is working." Well, then when it goes down, you unfortunately, because you set up this premise, you get more blame for it.

GOLODRYGA: Sometimes else to keep in...

BLITZER: Go ahead, Bianna.

GOLODRYGA: I was going to say just something else to keep in mind is today is the first day of the new Fed chairman, Jerome Powell. He was a Trump-appointed chairman. This president is anything but conventional. Conventionally, the president and the Federal Reserve are very independent of each of other, and the president typically does not walk into the Fed's territory. So it will be interesting to see if there's going to be any pressure, either subtly or aggressively from the president on his self-appointed, self-picked Federal Reserve chairman.

BLITZER: Shawn Turner, as the president was speaking about the economy, he was complaining that during his State of the Union address before a joint session of Congress, Democrats weren't applauding enough. They were just sitting on their hands. Listen to this. (BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: Even on positive news, really positive news like that, they were like death and un- American. Un-American. Somebody said treasonous. I mean, yes, I guess, why not? Can we call that treason? Why not?


BLITZER: How damaging is that, for the president of the United States to call Democratic lawmakers treasonous and un-American?

SHAWN TURNER, FORMER DIRECTOR OF COMMUNICATIONS FOR U.S. NATIONAL INTELLIGENCE: Yes, you know, Wolf, strong rhetoric in our politics is nothing new. But there comes a point when rhetoric becomes so toxic between politicians that you've got to take a step back and ask yourself whether or not they can still effectively govern.

I think with regard to politicians, we've already gotten there, gotten to that point in this country.

But what really bothers me about the rhetoric right now is it's not just strong rhetoric and muscling in between politicians. Our democratic institutions have been pulled into the mud-slinging. You'll remember the president referred to the intelligence community as Nazis. We've had the president talk about the FBI being in tatters.

And I think that when you're talking about that level of toxic rhetoric between politicians and in our democratic institutions, it's going to take us a while to recover from that. So I think it's a dangerous thing, and it has a very negative effect on the morale of people working in government.

BLITZER: We're getting more reaction to the president's words of treason, about these lawmakers being un-American. Everybody stand by. We'll take a quick break, resume this conversation right after this.


[17:43:41] BLITZER: We're back with our specialists. And Bianna, I want you to weigh in on the president calling these Democratic lawmakers who didn't applaud him enough at the State of the Union "un- American" and "treasonous."

GOLODRYGA: I mean, it's the president being the president. It's -- it comes to a point where I'm not sure why anybody is surprised. And yet at the same time, it's not normal. And it's something that we've seen the same behavior from the other side of the aisle to other presidents, as well, during the State of the Union. We've seen speakers say, of the other opposing party, that they don't want the president to be successful. I mean, this is sort of, unfortunately, the partisanship that we've seen throughout the past 20, 30 years, and it's growing even more so.

So for the president to seem that this is surprised or calling it treasonous just takes it to the next level. And one would think he would know better than to use such words, but it's not very presidential, to say the least.

CILLIZZA: But partisanship -- I mean, look, partisanship isn't treasonous.

GOLODRYGA: Of course.

CILLIZZA: Dissent isn't treasonous. Right? I mean, this is to Bianna's point. It's just == conflating the two, and I know his defenders will say, "He was joking. Everybody laughed. You guys need to -- you guys need to lighten up." OK, I just don't think it's funny to joke about treason equaling people not applauding for you when you think it is appropriate for them to applaud.

Think back to President Obama's State of the Unions when he touted the Affordable Care Act, you know, bringing many more people on to the insurance rolls. Lots of Republicans did not stand for that. I remember it very distinctly.

Why not? Because they didn't believe that the way in -- they weren't against more people being covered. They didn't believe the way in which he did it was appropriate, that the government should have done it. It should've been more private industry.

The difference is President Obama didn't say you were all treasonous and un-American for not doing it. I mean, whether he is joking or not is totally beside the point.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: You know, the word treasonous has suddenly erupted.

I mean, we heard about it a few weeks ago when Steve Bannon, in Michael Wolff's book, is quoted as talking about the meeting at Trump Tower with Donald Trump, Jr. and the gang as treasonous. And he ended up having to apologize for that and take it back and all the rest but he called that treasonous.

Now, the obvious reason he said that is because they were meeting with Russians. So we -- but the President is saying that the Democrats are treasonous. For sitting on their hands? So it's just ridiculous, honestly, the fact that the President would even say it.

And by the way, we're not paying attention to the other word on our Chiron. Un-American.


BORGER: Un-American. How is it un-American to decide not to applaud something?

CILLIZZA: The concerning thing, I think, is not necessarily that he said it. It's that I think he may actually believe -- he views himself as the country. Donald Trump is the -- so if you don't cheer for Donald Trump, you're not cheering for the country which, of course, is not -- you know, that equation is never true with any president.


SHAWN TURNER, CNN NATIONAL SECURITY ANALYST: You know, listen, I think I agree with what's being said here. I mean, look, treason is a crime. And I think that for the President to accuse the Democrats of treason, if he really believes that's the case, then I don't think that anyone could say that those are just words and that he's joking.

BLITZER: Yes, the constitution says treason is something that happens during a time of war. You aid the enemy, you're treasonous. Not something to laugh about.

All right, guys, everybody stand by. There's more breaking news right now. The Vice President, Mike Pence, heads to Asia, hoping to keep up the international pressure on Kim Jong-un.


[17:51:58] BLITZER: On the same day President Trump called Democrats un-American and treasonous for not applauding his State of the Union address, the Vice President, Mike Pence, is on his way to South Korea right now to represent the United States during the winter Olympic Games.

The Vice President also intends to emphasize the Trump administration's hardline attitude toward North Korea. Brian Todd has more now on the Vice President's plans.

What are you hearing, Brian?

BRIAN TODD, CNN CORRESPONDENT: Wolf, we're told by White House officials tonight that Vice President Pence is going to be on a mission to continue the Trump administration's strategy of applying maximum pressure on Kim Jong-un and that Pence is going to be doing that even while he's at the opening ceremonies.

But at the same time, Secretary of State Rex Tillerson, tonight, isn't entirely ruling out a possible meeting with North Korean officials at the sidelines of the Olympics. All of this collectively tonight could be making South Korean officials much more nervous about the prospects of an incident-free Olympics with North Korean athletes taking part.


TODD (voice-over): As Kim Jong-un prepares to send his skaters, female hockey players, and skiers to the winter Olympics, there are signs tonight of growing tension on the Korean Peninsula.

SUE MI TERRY, FORMER ANALYST, CENTRAL INTELLIGENCE AGENCY: I think the South Korean government is highly anxious and very nervous right now because they just want to have smooth Olympics, and there's a lot thrown into the mix.

TODD (voice-over): Vice President Mike Pence will be at the Olympic opening ceremonies in South Korea on a mission, U.S. officials say, to keep Kim Jong-un's regime from capitalizing on Kim's decision to send North Korean athletes to the games.

White House officials tell CNN that at every opportunity while he's there, Pence will point out the repression of Kim's regime to keep the regime from hijacking the Olympic message with, quote, propaganda.

To hit home that point, Pence will have a special guest with him during the opening ceremonies. Fred Warmbier, whose son, Otto, died after being released from North Korean captivity last year.

South Korean officials, eager to highlight their recent dialogue with North Korea, have so far not commented on Pence's planned messaging at the games.

TERRY: They're not going to really like the fact the Vice President is coming with Otto Warmbier's father trying to highlight North Korea's human rights issue and the depravity of the Kim Jong-un regime. I don't think South Koreans are going to be too happy about that or that they cannot say that out loud to the Americans.

TODD (voice-over): Adding to that tension, diplomatic sources tell CNN North Korea will show off dozens of long-range missiles at a parade on Thursday as the games kick off, missiles capable of hitting the U.S. It's an attempt, sources tell CNN, to, quote, scare the hell out of the Americans.

Analysts say as sanctions start to pinch Kim, he may soon have to choose between paying for his nuclear and missile programs and buying off North Korea's elites who help keep him in power.

MARCUS NOLAND, EXECUTIVE VICE PRESIDENT AND DIRECTOR OF STUDIES, PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS: One thing that might well happen, and this is what happened under his father, is those resources shift away from the party and towards the military. So the generals are kept in luxury and they are able to continue their military programs, but the party begins to wither because the resources simply aren't available.


[17:54:59] TODD: How are we going to know when sanctions are really pinching Kim Jong-un?

Analysts say look for signs that his elites are no longer flaunting the TVs, the cars, the other luxury items that they've gotten in the past. That may be a sign that they're now actually not getting those items.

Also when the prices of North Korean corn and rice start to go up inside North Korea and the value of North Korean currency goes down on the black markets. Those are going to be signs that Kim Jong-un is really feeling the pain of sanctions.

We can look for some of those signs in the coming months, Wolf.

BLITZER: Frightening developments unfolding. Brian, thank you very much. There's more breaking news. Stocks take a record dive on Wall Street,

losing more than 1,100 points. So what's behind the historic loss?