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Interview With Texas Congressman Marc Veasey; Paul Manafort Trial Continues; President Trump Once Again Calls Russia Investigation a Hoax; Mueller and the Madam; CNN Exclusive: TSA Discussing Reducing Air Marshals As Well as Elimination Screenings At Small Airports; Strong Winds Hampering Efforts to Contain Deadly Wildfire; How Should U.S. Respond to Russian Cyberattacks?; Mueller Interviews Manhattan Madam. Aired 6-7p ET

Aired August 3, 2018 - 18:00   ET



WOLF BLITZER, CNN ANCHOR: Mueller's team questioning a woman with ties to Stone who is best known as the infamous Manhattan Madam.

Moscow fires back. After a new warning by U.S. intel chiefs about Russian interference, the Kremlin is dismissing it as hysteria, while President Trump is slamming what he calls the Russia hoax. Is Mr. Trump again siding with Putin against his own intel team?

Manafort manipulation. Prosecutors zeroing in on Paul Manafort's alleged tax and banking crimes, as key witnesses accuse the former Trump campaign chairman of hiding his secret foreign income with a trail of lies. Will Mueller's star witness testify next?

And on the fire line. CNN is deep in the California disaster zone, where infernos are raging and some residents are refusing to leave.

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 in the Russia investigation.

Robert Mueller's team interviewing a notorious witness with an intriguing connection to the collusion case he may be building. Sources tell CNN that the woman known as the Manhattan Madam met with investigators this week. The special counsel's office apparently interested in her ties to longtime Trump ally Roger Stone.

Stone under the microscope in the possible -- in the probe of possible coordination between the Trump team and Russia's election interference.

This hour, I will talk with Democratic Congressman Marc Veasey, and with former NSC Cyber Response Director Anthony Ferrante. And our correspondents and analysts are also standing by.

First, let's go to our political correspondent, Sara Murray. Sara, the Manhattan Madam face-to-face with Mueller's investigation.


We know that Kristin Davis has a fascinating backstory and a long history with Roger Stone, but what we don't know is exactly what she has to offer Mueller's investigators.


MURRAY (voice-over): Kristin Davis, the woman known as the Manhattan Madam, meeting with special counsel Robert Mueller's team for a voluntary interview earlier this week, sources tell CNN.

Investigators apparently interested in her ties to longtime adviser Roger Stone. She and Stone have been close friends for a decade. Investigators also expressed interest in having Davis testify before a grand jury, the latest indication prosecutors are aiming to be build a case against Stone.

Davis' lawyer declined to comment. In a statement, Stone tells CNN: "Kristin Davis is a longtime friend and associate of mine. I am the godfather to her 2-year-old son. She knows nothing about Russian collusion, WikiLeaks collaboration or any other impropriety related to the 2016 election, which I thought was the subject of this probe. I understand she appeared voluntarily. I am highly confident you will testify truthfully, if called upon to do so."

Davis once ran a high-end prostitution ring and went to jail as part of the scandal surrounding then Democratic New York Governor Eliot Spitzer.

ELIOT SPITZER (D), FORMER NEW YORK GOVERNOR: The remorse I feel will always be with me.

MURRAY: She has worked with Stone over the years and, in late 2016, she joined his payroll to help him with clerical tasks. Mueller's team has been looking into possible contact between Stone and WikiLeaks founder Julian Assange, as well as Stone's contact with Russia during the 2016 campaign.

Stone admitted to trading direct Twitter messages with Guccifer 2.0, which is now known to be an online persona for Russian intelligence officers. But Stone says the messages were innocuous.

ROGER STONE, FORMER TRUMP CAMPAIGN ADVISER: I certainly acknowledge that I was in touch with Trump campaign officials. And I have testified under oath to the House Intelligence Committee that I certainly had a 24-word exchange with the persona Guccifer 2.0 over Twitter direct messages.

Anyone, any objective person who will read that exchange, which is included in the indictment, will see that, based on content, context and timing, it's benign. It's innocuous. MURRAY: U.S. intelligence concluded Russian intelligence hacked

senior Democratic officials and provided the stolen material to WikiLeaks, all part of Moscow's effort to meddle in the election.

Assange denies the hacked documents came from the Russian government.

While Stone once bragged about being in contact with Assange:

STONE: I actually have communicated with Assange. I believe the next tranche of his documents pertain to the Clinton Foundation, but there's no telling what the October surprise may be.

MURRAY: He later walked it back.

STONE: Yes, I followed Assange's Twitter very assiduously. I had a Google alert for him. I read every interview he gave. You could foreshadow what he's doing. I'm not involved in any collusion, coordination or conspiracy with the Russians or anyone else, and there's no evidence to the contrary.


MURRAY: Investigators have also been probing Stone's finances and his personal life. People familiar with the situation say at least two witnesses were asked whether Stone was actually the father of Davis' son.

Earlier this week, Stone posted a photo of Davis and her child to Instagram with this caption: "Why do FBI agents dispatched by Robert Mueller keep asking a number of my current and former associates if I am this baby's father? What does this have to do with Russian collusion and the 2016 election?"


MURRAY: Now, Andrew Miller, another former associate of Roger Stone, has also been ordered to testify in front of Mueller's grand jury. Just another indication, Wolf, of how prosecutors seem to be circling in around Roger Stone.

BLITZER: Yes, they are really moving around that area. All right, thanks very much, Sara Murray, for that report.

Now to the criminal trial of President Trump's former campaign chairman Paul Manafort.

On the stand today, accountants who testified that Manafort falsified financial documents as part of his alleged scheme to commit tax and bank fraud.

Our crime and justice reporter, Shimon Prokupecz, is joining us.

Shimon, so what were the biggest developments today?

SHIMON PROKUPECZ, CNN CRIME AND JUSTICE CORRESPONDENT: Well, certainly not a big day for Paul Manafort and his defense team. This accountant, she's one of the people who was given immunity by the special counsel to testify, because essentially she said she helped forge some of these documents, she put together fake documents to help Manafort to try and get him some loans.

She also says that during -- while Manafort was working on the Trump campaign in 2016, he had asked her to fake numbers in some documents, in billing, saying that he had received some money from an overseas client. So all of this really coming out today at the trial, an important witness clearly for the prosecution.

She was on the stand for most of the day. She will be back on Monday. She's expected to take the stand at 1:00.

BLITZER: What can you tell -- what can we tell, Shimon, where the prosecution is heading, based on what we have seen for -- so far the way they're setting up evidence of double bookkeeping, for example, fudged loan applications, and hidden offshore accounts?

PROKUPECZ: Right, so, look, it's clear they have a pretty strong case. They have e-mails from Paul Manafort to this accountant, to other people. There are notes, there are conversations that they know all about.

It's a tight case, it seems. It seems like they have a lot of information. And, really, what they're doing is, each witness is kind of supporting other theories, other witnesses. And, in fact, I think what today shows us is this is all a buildup to next week, when Rick Gates is expected to take the stand.

BLITZER: Shimon, prosecutors also questioned his claims about that apartment that he had in Trump Tower. What's that about?


So that has to do with tax issues. He claimed that this was not a rental property -- or that this was a rental property and not a personal property. It really has to do with how he was paying taxes, trying not to -- trying to avoid, essentially, paying some taxes, or paying less taxes, and the accountant testified that he basically asked her to lie about how that apartment -- what the purposes of that apartment at Trump Tower was for.

BLITZER: Shimon Prokupecz with the latest on that front, thank you, Shimon, very much.

Joining us now, Congressman Marc Veasey. He's a Democrat. He serves on the Armed Services Committee.

Congressman, thanks so much for joining us.


BLITZER: When you look at all of these developments with Roger Stone and Paul Manafort, what do you think it means for President Trump, big picture?

VEASEY: Oh, I think that it's bad news for President Trump.

And with his latest lashing out on Twitter, you know, asking for the attorney general to fire Mueller and end the investigation and put this to a close, it appears that the president is lashing out. He knows that this is serious business. He has proclaimed his innocence over and over again, but I think that it's getting to a point where he's getting desperate.

He seems to be very angry about this, lashing out at the media, trying to denigrate the media, and say that the news that they present is not real. I think that he's in a lot of trouble.

BLITZER: The president's personal lawyer, Rudy Giuliani, says the upcoming midterms in November, he says they're really about impeachment or no impeachment, his words.

At the end of last year, you voted in favor of an effort to launch impeachment proceedings against the president. Right now, what evidence do you have that impeachment, high crimes and misdemeanor, is warranted?


And, of course, you know, when we had the vote on the House floor, I voted present to Representative Green's amendment that he had. But what I will tell you, I don't think that the midterm elections is just about impeachment or not impeachment.

As a matter of fact, I think that's an issue that's not that relevant at all. I think that people are concerned about what happened in Helsinki. I think that people are concerned about the economy and these tariffs.

And just going back to Helsinki very briefly, people here in Texas, Wolf, were embarrassed by what they saw. And I thought the president had a chance to turn the page. Many people think, was he compromised? Is there something to that dossier? And when he was with Putin on the world stage with cameras in front of him, he had a chance to be tough.


Instead, he let Putin walk all over him. And I think it just further reinforced that there's a lot of fire to all of this smoke that's happening around this investigation.

And he didn't do anything to move on from this. And with the latest revelations and everything that's going on right now with the Manhattan Madam, Paul Manafort and Roger Stone, it just appears to be getting worse and worse for him.

And it also begs the question, why in the world did the Republicans on the House Intelligence Committee think that now was the time to end the investigation? The American public just, in my opinion, don't have confidence in congressional Republicans and their integrity anymore.

BLITZER: Well, we will see how that plays out in November in the midterm elections.

As you know, Congressman, Russia has now officially publicly responded to that news conference over at the White House yesterday by the nation's top national security and intelligence chiefs.

A Russian spokeswoman denying that Russia had anything to do with cyber-warfare in 2016 against the U.S., says: "The two-year hysteria" -- these are her words -- "The two-year hysteria mocks the whole political system of the United States."

What do you make of that? And do you feel that the government is doing enough to counter the ongoing threat right now from Russia?

VEASEY: Obviously, the Russians will say anything to strengthen their position. And it's sad that, in many cases, it seems like the president is also going along with this, trying to downplay what they did in the elections.

And you know the history, Wolf. Before the 2016 campaign, the Russians have always tried to influence our elections to try to undermine our democracy. But they have found, in my opinion, players within the Trump administration that may have -- that, like the Guccifer 2.0, that had contact with Roger Stone, and it's really unsettling that they're not taking this more seriously.

Again, when he was with Putin, he had a chance to be firm, be tough, and say, no, you can -- you have to stop meddling with our -- interference. And what's scary about this is that with the social media platforms that are available out there, it really gives the Russians more opportunities, more tools, and a much easier way to communicate and infiltrate groups of people and organizations within America.

And they're just not taking it seriously. And what's so ironic about that, Wolf, and sad at the same time, the same party, the Republican Party, that has gone around the country trying to implement oppressive voter I.D. bills everywhere, saying that -- that they're concerned about the sanctity of the ballot, they're just letting the Russians walk all over our electoral system and the security of our election system.

They voted to zero out dollars that would have gone to voting clerks all around the country to help protect our elections and to make sure that the Russians can't hack into our systems. And they had the opportunity to vote with Democrats on the House floor here recently. I spoke on the House floor about it.

And they voted, again, to zero out that money that would have been helpful in these efforts.

BLITZER: I want to switch gears for a moment while I have you, Congressman. I want to play for you a moment from the president's rally. He spoke for more than an hour in Pennsylvania last night. Listen to this.

(BEGIN VIDEO CLIP) DONALD TRUMP, PRESIDENT OF THE UNITED STATES: You know who the new star? You know who that new leader is? Maxine Waters.


TRUMP: Very low I.Q. Low I.Q. No, no, Maxine Waters is like -- she's like their new star.


BLITZER: He's been attacking her for weeks now. Certainly not the first time he's attacked her. But he goes after her I.Q. A few weeks ago, he said it was -- her I.Q. was in the 60s. What do you think about that?

VEASEY: Oh, I think that it's absolutely terrible.

And, again, President Trump has shown that he just doesn't know how to bring the country together. He continues to attack people, the same way how he did throughout the entire Republican primary process, the same way how he attacked Secretary Clinton and others, even after he won the campaign, when most people historically in this country move on and turn the page.

And it just shows just how childish and petulant he is. I believe that -- in his own words that he says that he has the temperament of an 8-year-old. And he just proved it in Pennsylvania.

But what he really needs to be concerned about in Pennsylvania is his bad poll numbers. Of course, he narrowly won Pennsylvania in 2016. But now people there are roundly rejecting him.

And with the type of behavior and the way that he attacked Representative Waters, it's not a big surprise.

BLITZER: So you're from Texas. I want to ask you about the situation on the border with Mexico.

As you know, more than 500 kids, children, are still being -- are still waiting to be reunited with their mothers and their fathers. The Trump administration is now arguing that the ACLU and other private organizations should use their resources to help locate the parents who have already been deported.


And the federal judge is calling that simply unacceptable. What's your reaction to that, that there are still more than 500 children who have been separated from their parents?

VEASEY: Wolf, that is absolutely insane that they would ask on nonprofit organizations to try and clean up a mess that they caused.

I was down there with the border -- on the border, of course, with Senator Gillibrand not too long ago. And we saw kids as young as 2 years old that were separated from their parents. What the administration did was terrible. And, in my opinion, Wolf,

as long as you have someone like Stephen Miller in the White House, he's going to continue to embarrass the president on matters of immigration. He's a terrible person.

He reportedly told other White House staffers that he actually found joy in seeing young children separated from their parents. And he's the one that continues to advise the president to take these terrible decisions as it relates to immigration.

And asking nonprofits to step up and do the job that they should be doing is absolutely -- it shouldn't -- we shouldn't even be considering that. It's just ridiculous.

BLITZER: Congressman Marc Veasey of Texas, thanks so much for joining us.

VEASEY: Thanks, Wolf.

BLITZER: Just ahead, the president once again sounds like he's on the same page as Vladimir Putin, as he steps all over his own intelligence and national security chiefs and their choreographed message about Russian interference in the elections.

Also tonight, the Kremlin is now weighing in. I will get reaction to all of that from a former White House cyber-security official.



BLITZER: Breaking tonight, the Kremlin is responding to dire warnings by top U.S. national security officials about Russia's ongoing attacks on American democracy.

Russia's Foreign Ministry dismissing it all as simply hysteria. This just hours after President Trump again called the Russia investigation a hoax, undermining the dramatic and unified message sent by his own intelligence and national security chiefs.

Our chief White House correspondent, Jim Acosta, is in New Jersey for us.

Jim, you're right near the Trump golf resort, where the president is staying.


And President Trump is taking some time off at his country club in New Jersey, but the storm clouds hanging over his administration have also made the trip, along with his smartphone, I suppose, from Washington.

And one question the president is likely to work on during his Jersey vacation is whether to finally talk with the special counsel, Robert Mueller. (BEGIN VIDEOTAPE)

ACOSTA (voice-over): President Trump arrived for a summer vacation at his New Jersey golf club facing a potential hazard that's nowhere near the putting green, the prospect of sitting down for an interview in the Russia investigation.

The president is receive nothing shortage of advice, as political strategists warn it's a trap.

COREY LEWANDOWSKI, FORMER TRUMP CAMPAIGN MANAGER: I'm not an attorney, but my political advice to the president would be not to sit down with Bob Mueller. The opportunity to make a misstatement, potentially, or to potentially get caught up on the word is, is too great of a -- of something that could happen there.

ACOSTA: While the president's legal team is keeping the door open.

RUDY GIULIANI (R), FORMER MAYOR OF NEW YORK: I'm not going to give you a lot of hope it's going to happen, but we're still negotiating. We haven't stopped negotiating.

ACOSTA: At a campaign rally in Pennsylvania, the president hardly sounded like he's warming up to the Russia probe.

TRUMP: Now, we're being hindered by the Russian hoax. It's a hoax, OK?

ACOSTA: Mr. Trump is still bending the truth when it comes to his relationship with the Russians, telling his supporters he's no friend of the Kremlin.

TRUMP: I will tell you what. Russia's very unhappy that Trump won. That, I can tell you.

ACOSTA: Despite the fact that Vladimir Putin just reveal at their joint summit he wanted a Trump victory.

VLADIMIR PUTIN, RUSSIAN PRESIDENT (through translator): Yes, I did. Yes, I did, because he talked about bringing the U.S.-Russia relationship back to normal.

ACOSTA: Democrats accuse the president of being at odds with his own national security team, who warned the world Russia is still trying to interfere in U.S. elections.

SEN. BEN CARDIN (D), MARYLAND: The president was missing. And, as you said, he was not only missing from that event. The next day, he calls it a hoax. And what President Trump did in Helsinki and what he did yesterday in calling the Russian probe a hoax, it gives a green light to Mr. Putin to continue his activities here in the United States.

ACOSTA: And as one of the president's top intelligence officials conceded, it's not fully known what Mr. Trump told Putin behind closed doors. DAN COATS, U.S. DIRECTOR OF NATIONAL INTELLIGENCE: I'm not in the

position to either understand fully or talk about what happened at Helsinki. I will turn it over to the national security director here to address that question.

ACOSTA: The president is still nursing his grudges with the media, disputing any news reports that he kept the queen waiting during his visit to Britain last month.

TRUMP: I'm waiting. So, I was about 15 minutes early. And I'm waiting with my wife, and that's fine. Hey, it's the queen, right? We can wait. But I'm a little early.

Honestly, folks, it was such a beautiful, beautiful visit and afternoon. But they can make anything bad, because they are the fake, fake, disgusting news.

ACOSTA: Mr. Trump again turned to the issue of immigration, this time trying to defend his past comment that Mexican immigrants are rapists and criminals.


TRUMP: Coming down the escalator, and you remember what I said. They're sending -- do you remember that? They're sending. And I mentioned words. I won't even mention them tonight, because there's a lot of young people here. But I mentioned words, and everybody thought it was wonderful.

But then, about two days later, they said, did he say this? Did he say that? Guess what? What I said is peanuts compared to what turns out to be the truth. It's peanuts.



ACOSTA: Now, getting back to the Russia investigation, a source familiar with discussions inside the president's legal team says deliberations over whether Mr. Trump should sit down with Mueller have been going on for months.

The president is fully aware of all of these risks, we're told, but the source said the president has been advised that talking to the special prosecutor would be a good thing for the institution of the presidency.

Wolf, it's unclear whether or not the president will heed that advice. We do expect Rudy Giuliani, the outside lawyer, to visit with the president while he's in New Jersey for this vacation week. But, at this point, Wolf, I think it can only be described as crunch time for a critical decision for the president to decide whether or not he's going to sit down with Robert Mueller.

Big decision coming, Wolf.

BLITZER: It certainly is. All right, Jim Acosta in New Jersey for us, thanks very much.

Joining us now, Anthony Ferrante. He's the former director of the National Security Council's cyber-response team.

Anthony, thanks very much for coming in.

We saw the nation's top national security intelligence chiefs yesterday make a very powerful case about Russian interference in the U.S. elections in 2016, what they're doing right now towards the midterm elections.

We heard a very different line, though, from the president last night. Does that hinder the effort right now, the very different line from the president, does that hinder the effort to counter Russian aggressions?


First, I want to say that I was very, really -- very happy to see the intelligence officials make that announcement. I think that was a huge step in the right direction as far as educating the American people about the cyber-threat that we're facing from nation states.

This isn't an election cycle threat. This is an ongoing threat to undermine our way of life here in the United States. And, yes, absolutely, the conflicting messages, it's exactly what it does. It introduces so much doubt, and it sends mixed messages, not only to the states and state officials, as they're working diligently to protect their infrastructure and their voting process, but also to the American people.

BLITZER: And the FBI director, Christopher Wray, said that there are now investigations going on in all the field offices across the country. Is that a good idea?

FERRANTE: Absolutely. I mean, those investigations never stopped. I was on the Obama administration, carried over into the Trump administration, worked this issue diligently with my colleagues on the cyber-security directorate.

And the investigation never stopped. Essentially, this started in the summer of 2016, and still carries on today.

BLITZER: Yes, my sense was, if the president were really serious, he would have been at that event. It wouldn't have been in the Briefing Room.

Would have been in the East Room at the White House or the Rose Garden. He would have introduced all of his top security, national security chiefs. He would have made a very tough statement directed at the Russians. But he was absent on that front.

One individual who was there, General Paul Nakasone, the head of the National Security Agency, he's also head of the U.S. Cyber Command, I want you to listen to what he said, because it's significant. (BEGIN VIDEO CLIP)

GEN. PAUL NAKASONE, UNITED STATES CYBER COMMAND: U.S. Cyber Command and the National Security Agency are tracking a wide range of foreign cyber adversaries and are prepared to conduct operations against those actors.

Our forces are well-trained, ready, and very capable. We will work in conjunction with other elements of our government to ensure we bring the full power of our nation to bear on any foreign power that attempts to interfere in our democratic processes.


BLITZER: All right, so that's a strong statement.

And what I heard him say is the U.S. as offensive cyber-warfare capabilities to do to the Russians what they're doing to the United States.

But I didn't hear him say that the U.S. is ready to do that.


I mean, that is a very bold statement. I mean, one of the things we were always concerned with while on the National Security Council is, we wanted to de-escalate cyber-effects operations.

The last thing we want to do is continue to escalate and to cause havoc in our way of life. I mean, we have to appreciate that a computer network is involved in every single element of our lives. So, to conduct offensive cyber-operations, we better be pretty serious about it, and we have to understand the full effects.

BLITZER: Because the Russians would understand that. They understand sanctions to a certain degree, strong statements. But if they are told by the United States, if you continue to meddle in U.S. elections, to undermine U.S. democratic institutions, the U.S. is going to launch an offensive cyber-warfare attack against you. We're going to release all sorts of information you don't want to see released, because the U.S. has great capabilities in this area, right?

FERRANTE: Absolutely. Of course. The United States absolutely has great capabilities in this area.

However, the United States also has to consider their posture, their -- their cyber-security posture, because, just as easy as we can launch these effects operations against an adversary, an adversary can launch them against us.

[18:30:13] BLITZER: So is that why President Obama didn't launch offensive cyberattacks against the Russians, when he knew what they were doing leading up to the 2016 election?

FERRANTE: President Obama did -- did conduct various stern warnings and operations against the Russians. I mean, it started with his in- person meeting, where he gave Vladimir Putin a stern warning. It continued, for the first time in history, President Obama utilized the red phone to issue a stern warning to the Russians, told them to knock it off, continued with economic sanctions.

President Obama expelled 35 diplomats, closed two facilities. And what a lot of people don't know is President Obama teed up a variety of classified options. Teed them up and handed them to the Trump administration to effect.

BLITZER: But he didn't authorize, he didn't give the go ahead to launch those operations. And the Russians continue doing what they were doing. They weren't deterred, and they're continuing to do it right now.

FERRANTE: Well, I mean, we don't know if President Obama authorized those operations. Those operations would be classified. And -- and it certainly is not something that would be advertised for the purpose of us not wanting to escalate the situation.

The Russians know what we did. Just like we're watching the Russians, they're watching our activities. So it is going to be interesting to see how this continues. I do think it needs to start with a consistent message from the White House and the government; and we do need to help these states.

BLITZER: Speaking of a consistent message, we know that in May, the White House actually eliminated the position of cybersecurity coordinator at the National Security Council. There also have been some major departures of cybersecurity officials at the FBI.

So is that sending the right message? Do the FBI -- does the FBI, does the National Security Council have the capability to do what it needs to do?

FERRANTE: So I think that's a fair question. There have been some departures. I do know the White House eliminated that position. I do think that position is important at the White House. Coordinating the inter-agency cybersecurity efforts is a difficult job and does require senior leadership in the White House.

I was disappointed to see them dissolve that position. But I do know that team is working extremely hard every single day, probably some of the hardest-working people in the executive office building on the White House campus.

At the FBI, that is a natural -- natural result of people giving -- contributing dedicated careers. Those were decorated officials who served some upwards of 30-plus years. And that is just the cycle.

I assure you, having walked the halls of the J. Edgar Hoover Building and having walked the halls of an FBI field office, there are incredible men and women working, seeking the truth, investigating these matters every single day. And the FBI will continue to serve the American people.

BLITZER: Anthony Ferrante, thanks so much for joining us. FERRANTE: Thanks.

BLITZER: Also, thanks so much for your service to the country over the years. Appreciate it very much.


BLITZER: Just ahead, Roger Stone, the madam, and Robert Mueller. Where will this new angle in the Russia investigation lead?

And as jurors hear testimony about Paul Manafort's alleged crimes, can the president effectively distance himself from his former campaign chairman?


[18:38:19] BLITZER: Breaking news tonight, sources are telling CNN that the special counsel, Robert Mueller's, team has interviewed the so-called Manhattan Madam, Kristin Davis, apparently because of her ties to former Trump advisor Roger Stone. The sources say investigators are interested in having Davis testify before a federal grand jury, as well.

Let's dig deeper with our correspondents and our analysts.

And Sara Murray, you've been doing a lot of excellent reporting on all of this for us. First of all, tell us about Stone's relationship with Davis, why Robert Mueller is interested.

SARA MURRAY, CNN POLITICAL CORRESPONDENT: Well, it's kind of hard to figure out exactly what Robert Mueller is looking for. They've known each other for about a decade. They've been friends at points. They've been coworkers at points. You know, Roger Stone worked on her campaign when she was running for New York governor in 2010, on this platform of legalizing prostitution and marijuana.

And then more recently, at the end of 2016, she joined Roger Stone's payroll and has been helping him out with clerical work. But in all the people in this orbit that I talked to, nobody could really put their finger on what exactly they thought Kristin Davis might know about Roger Stone that would be of interest to Mueller.

BLITZER: Ryan Lizza, how do you think it fits into the wider probe?

RYAN LIZZA, CNN POLITICAL ANALYST: I think the fact of her kind of, you know, eccentric past is probably not the big issue for the investigators. Stone is known to have a lot of colorful characters around him.

I think what Sara said, the fact that she did this clerical work for Stone, that she may have some insight into his personal dealings with other people that Mueller's team is looking at. That seems more likely to be what's of interesting, similar to Stone's other assistant, who they want information from.

BLITZER: And I assume they're really anxious to try to figure out precise what Stone's connection to WikiLeaks was, to Guccifer 2.0, which was -- which the U.S. government now says was simply a front for the Russian intelligence service.

[18:40:05] MURRAY: Right. That's right. And Roger Stone has admitted he traded messages back and forth with Guccifer 2.0. He at times bragged about speaking with Julian Assange during the campaign, and then he walked that back and said he wasn't in contact with Julian Assange.

And so the people who are around him and even Roger Stone himself have admitted, you know, they're waiting for him to be indicted. They think an indictment could be coming at some point. It has something to do, potentially, with hacking, potentially with Russian collusion.

They say it's trumped up. They say Roger Stone did nothing wrong, but they say he's also bracing for potential financial charges. They know that Mueller is going through his past business dealings, the work he has done, and the people he's worked with in the past. And so there's no telling what Mueller could find along the way that he decides is worth prosecuting.

BLITZER: I'm sure, Sabrina, the president is worried when he sees what's going on, not just with Roger Stone, but with Michael Cohen in New York, with Allen Weisselberg, the chief financial officer of the Trump Organization, been called to testify, as well. I'm sure he's not happy about this.

SABRINA SIDDIQUI, "THE GUARDIAN": Absolutely. And I think it's important to recall that, although Roger Stone was removed from the Trump campaign in its early stages, he has known Trump closely for decades, and he has acted as Trump's long -- most long-standing political adviser.

And so I think if you look at the way in which Roger Stone increasingly seems to be a target of this investigation, and you go through all of these contacts that he did have with the Russians -- you mentioned Guccifer 2.0. He even took a meeting in May of 2016 with a Russian national who went by the name Henry Greenberg, who claimed to have damaging information about Hillary Clinton.

I think one thing that Mueller is certainly interested in is not just what were Roger Stone's activities and whether or not they were legal, but what, specifically, did the president know about what Roger Stone was up to at that time?

BLITZER: You know, Ron Brownstein, the president's legal team, they seem to be pretty confident that the president is not going to get an indictment from Mueller's -- Mueller's investigators. They seem to be, though, suggesting, "You know what? We're going to play this out in public opinion right now." And they're trying to generate that kind of support, especially among their base.

Is that a safe bet on their part?

RON BROWNSTEIN, CNN SENIOR POLITICAL ANALYST: Well, look, I mean, the Office of Legal Counsel, the Justice Department, has twice determined that a sitting president cannot be indicted. But the first time they did it, Richard Nixon was in the White House. And the second time they did it, Bill Clinton was in the White House. So each time, they had an incentive to reach that conclusion.

It's possible -- it's certainly possible that the special counsel could choose to challenge that if he believes the evidence warrants a criminal action against a sitting president.

But it is more likely that they choose to take whatever they find and move it into the political arena. And I think on that front, you'd have to say that the president is having one clear kind of effect on public opinion. He has mobilized and moved opinion among Republicans to the point where Republicans in Congress have been intimidated from really performing any kind of oversight. We're a long way before we start talking about impeachment.

But today, you know, you could be looking at oversight at many different aspects of these questions, including exactly what happened in Helsinki, and rather than doing that, congressional Republicans, particularly in the House, have been kind of more engaged in trying to undermine the investigation itself.

So in that way, the focus on public opinion has been a success. The cost, of course, is that most Americans believe the investigation is fair. The FBI is not biased against the president. That was both in the Quinnipiac poll just the other week. And the Republicans risk, in essence, sending a message to any American who's ambivalent or conflicted about President Trump, that they will not perform insight or constrain him in any way.

BLITZER: Do you think the president is going to sit down for an interview with Mueller's team, Ryan?

LIZZA: We've been -- for six or seven months, we've had this -- they've been basically --

BLITZER: Going on since January, I think, they were talking about that, trying to work out some sort of arrangement.

LIZZA: They really haven't made any progress. Right? They've exchanged letters back and forth since then, and the leaks have been that Trump really wants to sit down. His lawyers are saying "no".

It eventually has to come to head, right? We know from Giuliani that the special counsel sent the White House a letter the other day, outlining maybe perhaps a more circumscribed set of questions.

They have to make a decision now, and then Mueller is finally going to have to decide, does he give up hope that the White House is actual cooperating and issue a subpoena? And then there'll be a legal battle over that.

Just two points on what Ron said. I think, one, it's also worth noting that the prosecutor in the Watergate case and in the Ken Starr's investigation of Bill Clinton, both believed that they could indict a sitting president -- BROWNSTEIN: Challenged, yes.

LIZZA: -- even though, obviously, neither did. So that issue is never -- has never been settled. But Giuliani himself just said that their whole strategy is about impeachment. So they've publicly said that.

BLITZER: Go ahead.

BROWNSTEIN: Well, they want it to be about impeachment in terms of, because they believe it will gin up more of their base than the other side in the midterm election. And I think, you know, we are a long way from that.

But Ryan's point, it just underscores, really, how significant this fifth Supreme Court justice could be, on so many issues, Brett Kavanaugh. I mean, the questions of a subpoena, could a president be indicted? Not to mention all the policy issues that we're fighting, such as the attempt to revoke California's authority on fuel economy standards, which was -- just occurred yesterday.

[18:45:07] I mean, this -- on so many fronts, the critics of the president are counting as the courts to be a counterweight to Republican-controlled Congress that has been unwilling to function in any way as a counterweight, and that avenue could be significantly narrowed if this fifth Supreme Court justice is confirmed.

WOLF BLITZER, CNN HOST: That's an important point, indeed. We'll see what happens on that front.

Everybody, stick around.

Just ahead, a live update on that deadly fire raging in northern California. Why fire crews are facing a much-harder task tonight.


[18:50:13] BLITZER: Now, a CNN exclusive, a follow up to our report of discussions within the TSA about possibly eliminating passenger screenings at smaller airports around the country. We're learning there are other controversial cuts also being discussed.

Our aviation correspondent Rene Marsh is working the story for us.


RENE MARSH, CNN AVIATION CORRESPONDENT (voice-over): A new internal TSA document CNN exclusively obtained shows the proposal to eliminate screening at more than 150 small to medium-sized airports is just one of several cost-saving measures the agency is discussing. A senior TSA employee tells CNN the agency is looking at cuts that could save more than $300 million in 2020.

One cut: reducing the number of air marshals, eliminating screening at small airports, staffing cuts at TSA headquarters and changes the benefits are also being discussed. TSA did not comment. Juliette Kayyem, a former official with Department of Homeland

Security under Obama, is concerned.

JULIETTE KAYYEM, CNN NATIONAL SECURITY ANALYST: Ending security at certain airports and ending or flat lining the air marshal service are inconsistent, because if you're going to decrease security at certain airports, what you would want to do is increase the presence of air marshals or other security features just in case.

MARSH: CNN revealed the most controversial cut -- eliminating screening at small airports like this one in Redding, California, where Bryant Garrett is the manager.

BRYANT GARRETT, MANAGER, REDDING MUNICIPAL AIRPORT: Since I as the airport don't want to take on either the liability nor the cost, and I'm quite certain airlines don't want to take that off. So, if TSA backs out, there's a void and I don't know who would fill it.

UNIDENTIFIED MALE: We are the police, remain calm.

MARSH: Air marshals are the last line of defense, armed agents aboard planes to prevent hijackings. Critics have questioned its effectiveness but the TSA has defended the program as a deterrent.


MARSH: And just as recently as May, the TSA defended the program. It raises the question about why the agency is discussing cuts now. CNN reached out to TSA multiple times but did not receive any response.

But the big question tonight is, Wolf, when you hear about all these cuts that are potentially big discussed here, it is a matter of the risk against aviation changing or is it that the agency under strict pressure to cut?

BLITZER: Excellent reporting for us. Rene, thank you very much.

There's breaking news next. The latest on the deadly wildfire still growing in northern California.


[18:57:26] BLITZER: Strong winds are hampering crews as they try to get the upper hand on the northern California wildfire that's now grown to more than 131,000 acres.

Let's go to CNN's Scott McLean. He's on the scene for us.

Scott, what's the latest?


Well, this area is actually under a red flag warning because the conditions here are ideal for this fire to get out of hand.

(BEGIN VIDEOTAPE) MCLEAN (voice-over): As fire continues to bear down on California, there is no relief in sight. After days of relative calm, high winds are fanning the flames.

BRICE BENNETT, CAL FIRE SPOKESMAN: Wind coming in clears the airspace so we can see what we're doing and actually have an aerial fire fight. However, it does mean increased fire activity.

MCLEAN: At the Carr Fire, which has already destroyed more than 100,000 homes, hot and dry conditions have made the hillsides tinder dry, with not a drop of rain in the forecast.

BENNETT: What would happen is a shift in Mother Nature.

MCLEAN: In the small town of Lewiston, there's heavy smoke over the ridge as a non-stop cycle of helicopters drops fire retardant on the mountains. Almost everyone in town has long evacuated but not James Deborrello.

JAMES DEBORRELLO, STAYED TO DEFEND HIS HOME: My wife and dogs got packed and they left, but I stayed to do what had to be done.

MCLEAN: With his neighbors lone gone, Deborrello has volunteered to feed their cats.

And even their turkeys, too.

DEBORRELLO: He couldn't make it this morning, so Uncle James will take care of you.

MCLEAN: He has nothing packed and no plans to leave.

DEBORRELLO: At the worst, I'll just jump in the river and let it burn over.

MCLEAN: Armed with two water trucks and a friend, he's planning to defend his neighborhood even if flames reach town.

(on camera): When you look over the ridge, though, and you see smoke, are you not afraid?

DEBORRELLO: When your number's up, your number's up.

MCLEAN (voice-over): More than a dozen fires are still burning across the state, visible even from space. Officials reporting Friday morning the Mendocino Complex Fire is now even bigger than the Carr Fire, threatening over 9,000 buildings. Even as big flames have crossed over the ridge and toward the community of upper lake --

UNIDENTIFIED MALE: The kids have left, the grand kids have left.

MCLEAN: -- some like Teresa Pena are ignoring evacuation orders.

TERESA PENA, STAYED TO DEFEND HER HOME: I have to stay here until the flames are at my door because I got nowhere else.


MCLEAN: And the good news for the town of Lewiston is that crews have bulldozed three separate fire lines and the wind is actually blowing away from town but as far fire fighters will tell you, under these conditions, things can change in a hurry, Wolf.

BLITZER: Scott, thanks very much. Scott McLean on the scene for us.

Thanks very much for watching. I'm Wolf Blitzer in THE SITUATION ROOM.

"ERIN BURNETT OUTFRONT" starts right now.