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Cohen Turns on Trump; Tape Shows Illegal Activity; Trump Defends Tariffs. Aired 1-1:30p ET

Aired July 25, 2018 - 13:00   ET


[13:00:00] JOHN KING, CNN ANCHOR: The ball deserves a place.

Thanks for joining us for INSIDE POLITICS. Hope to see you back here this time tomorrow.

Don't go anywhere. A lot of news to report. "WOLF" starts right now.

WOLF BLITZER, CNN ANCHOR: Hello, I'm Wolf Blitzer. Wherever you're watching from around the world, thanks very much for joining us.

The war begins. One of the people who's been closest to President Trump officially turns on him. After Michael Cohen and his lawyers release a secret tape, the president's now responding with a blistering attack on his longtime former fixer.

Plus, does this tape show the president and his team violated campaign finance law? We have expert analysis on what this all means.

And moments from now, the president has face-to-face negotiations with the European Union as he defends his trade wars and a new bailout plan from Republican criticism.

All that coming up.

But up first, he once said he'd take a bullet for Donald Trump, but now Michael Cohen has fired the first shot in what's likely to be an all-out war between Trump and his longtime attorney and fixer. The president is lashing out over a secret audio recording of him and Cohen. It was obtained exclusively by CNN from Cohen's attorney. On the tape, Trump and Cohen discuss a potential payoff stemming from allegations by a former Playboy model of an affair with Trump. The goal was to keep the story from coming out.


MICHAEL COHEN, PRESIDENT TRUMP'S FORMER ATTORNEY: And I've spoken to Alan Weiselberg (ph) about how to set the whole thing up with funding.


COHEN: Yes. And it's all the stuff --


COHEN: All the stuff. Because, you know, you never know where that company, you never know where he's going to be --


COHEN: Correct. So I'm all over that.


BLITZER: Let's go to our White House correspondent Kaitlan Collins.

Kaitlan, the president fired off an angry response on Twitter directed at Michael Cohen. So what did the president say in this tweet?

KAITLAN COLLINS, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, the president isn't pleased, to put it lightly. He went off on Twitter this morning, not complaining about the content of what is included in that audio recording of his conversation with Michael Cohen, but the fact that Michael Cohen recorded the conversation at all. The president said what kind of lawyer would tape a client? So sad. Is this a first? He said he's never heard of it before. Why was the tape so abruptly terminated while I was presumably saying positive things? Now, the president says I hear there are other clients and many reporters that are taped. Can this be so? Too bad.

Wolf, the president doesn't elaborate on what exactly those positive things that he would have said while discussing a payment made to a Playboy mod who is alleging that she had an affair with the president weeks before the election would have been. But we do know that the White House is referring most questions about this and this recording to the president's lawyer, Rudy Giuliani, who is certainly firing back, responding.

And, Wolf, as you'll recall, Rudy, just last week, when this -- it was first reported that this recording even existed, that he believed it would exonerate the president in the end. And now today, on Twitter, Rudy Giuliani, you can see there, responding to the fact that this audio was published, saying, if Cohen, as in Michael Cohen, is telling the truth, why are he and Lanny Davis, his lawyer, misrepresenting the language from President Trump? He says that they said do not pay by cash, check, and Rudy says, why are they leaking falsely privileged and confidential information? So much for ethics.

Now, Wolf, on that last note there, there are a lot of details here. But we should note that this was considered a privileged conversation between President Trump and his attorney, Michael Cohen, but they waived privilege on this. Then allowing this recording to go to the FBI. Those prosecutors are investigating Michael Cohen. So there is no privilege here because the president and his legal team waived it.

But, Wolf, there's a lot of confusion regarding this tape, what was being discussed, what exactly the president was saying to Michael Cohen. But what's clear here is that with the release of this audio, we are seeing a dramatic new change in the relationship between President Trump and Michael Cohen. Once considered his longtime fixer, but now someone who could certainly be a pain in the side for President Trump.

BLITZER: Yes, I suspect this war between President Trump and his team and Michael Cohen and his team is only just beginning.

Kaitlan Collins, thanks very much for that report.

So what does this secret audio recording between President Trump and Michael Cohen confirm? And what doesn't it confirm? It suggests that the president knew about Playboy model Karen McDougal's claims of an affair and about efforts to keep the story quiet. Listen to what Cohen tells then candidate Donald Trump about efforts to buy the rights to McDougal's story.


MICHAEL COHEN, PRESIDENT TRUMP'S FORMER ATTORNEY: I need to open up a company for the transfer of all of that info regarding our friend David, you know, so that I'm going to do that right away. I've actually come up and spoken to --


COHEN: And I've spoken to Alan Weiselberg (ph) about how to set the whole thing up with funding.


[13:05:00] COHEN: Yes. And it's all the stuff --



BLITZER: All right. Let's bring in our legal analyst, former federal prosecutor Shan Wu, who is joining us.

So, from your perspective, Shan, what is this audio -- and you've listened to it presumably several times so far -- what does the excerpt confirm? What does this say about Michael Cohen's strategy right now?

SHAN WU, CNN LEGAL ANALYST: I think what we learned from this audio is three things, awareness, cover-up and timing. That's what you've got to listen for. So clearly it seems that the president is aware of this. It's not the first time he's ever learning of it. He's also very concerned about -- I'll talk about cover-up in a second, about the timing. There's an earlier portion of it where he was talking about wanting to postpone things for four weeks. So he's clearly aware of the election, which has important aspects in terms of the campaign finance laws. And then, lastly, the kind of cover-up issue is, why are they even using this corporation to make the payments through? Possibly requires more investigation. They want to do that to more distance him from the payments.

KING: There's a reference on the audio recording to a David. We presume it's David Pecker, the publisher of American Media, which is the parent company of "The National Enquirer."

What's the significance of that? WU: Again, it's the awareness issue. He says our friend David. Clearly

the president is not surprised of this issue. I think there's even a moment in the tape where Cohen says, I've told you before. And it goes to his awareness that that publisher is involved and why are they doing this? Why are they having this payment made?

BLITZER: It's a very significant development.

Trump is also heard saying something along the lines, and the tape is a little bit murky occasionally, pay with cash. It's muddled a little bit, that audio. It's not clear whether he suggests paying with cash, paying with a check.

I want to play that clip for you right now and our viewers can listen to it closely.


MICHAEL COHEN, PRESIDENT TRUMP'S FORMER ATTORNEY: And I spoke to Alan about it. When it comes time for the financing, which will be --


COHEN: We'll have to pay (INAUDIBLE) --

TRUMP: (INAUDIBLE) pay with cash (ph).

COHEN: No, no, no, no, I got -- no, no, no.

TRUMP: Check (ph)?



BLITZER: All right, so what did you hear there? Pay with cash? Pay with check? Potentially that's a significant issue.

WU: Yes, it's not clear who's saying the word check, but I think the legal analysis on that is check or cash does not matter. The real issue is payment and Trump seems very aware that he wants to make a payment.

BLITZER: Well, you pay cash, then there's really no record, right?

WU: Right.

BLITZER: If you pay with a check, there's a record.

WU: That would be the sort of lay person notion that the president might be thinking. But, obviously, there's still going to be an electronic record of the payment made. So either way the payment is going to be tracked someplace. His notion of cash may make it harder to track is inaccurate but it may show evidence of his intent to cover it up. BLITZER: Shan Wu, thanks very much for that analysis.

Here's a reminder of the allegations, denials and revelations surrounding President Trump's alleged affair with Karen McDougal.


BLITZER (voice over): June, 2006, that's when "Playboy" playmate Karen McDougal claims she began a nearly year-long affair with then reality TV star and business mogul Donald Trump.

KAREN MCDOUGAL, PLAYBOY PLAYMATE: We were together ten months before I chose to end it. So we saw each other quite frequently.

ANDERSON COOPER, CNN ANCHOR, "AC 360": So dozens of times you were together?

MCDOUGAL: Many dozens of times. Yes.

COOPER: And you were intimate?


BLITZER: The alleged affair came to light during Trump's 2016 presidential run.

In September of 2016, Trump and his personal attorney, Michael Cohen, discussed buying the rights to McDougal's story from AMI, the parent company of "The National Enquirer."

Then, in November, days before the election, "The Wall Street Journal" reported McDougal reached a $150,000 deal for her story with AMI. Hope Hicks, the Trump campaign spokeswoman, denied both the payment and the affair to "The Wall Street Journal."

In March of 2018, McDougal sued AMI to get out of her hush agreement and broke her silence on CNN.

COOPER: Were you in love with him?

MCDOUGAL: I was. Yes.

COOPER: And do you think he was in love with you?

MCDOUGAL: He was. Yes. He always told me he loved me.

BLITZER: In April, 2018, AMI settles, releasing McDougal from the agreement. The same month the FBI raided the office of Trump's personal attorney and fixer Michael Cohen and seized legal records. The stunning revelation that Cohen secretly recorded conversations between himself and Trump, including the one where they discussed payments to McDougal. When asked about it in the White House briefing on Monday, Press Secretary Sarah Sanders said this.

UNIDENTIFIED MALE: Does the president still deny that he ever had a relationship with a woman named Karen McDougal? SARAH SANDERS, WHITE HOUSE PRESS SECRETARY: Once again the president

maintains that he's done nothing wrong.

BLITZER: One day later, CNN obtained those tapes.

MICHAEL COHEN, PRESIDENT TRUMP'S FORMER ATTORNEY: When it comes time for the financing, which will be --


COHEN: We'll have to pay (INAUDIBLE) --

TRUMP: (INAUDIBLE) pay with cash (ph).

COHEN: No. No, no, no, no, no.


BLITZER: The attorney for Michael Cohen says his client is ready to tell the truth. Lanny Davis says that's why Trump attorney Rudy Giuliani is going after Cohen. Listen.

[13:10:10] (BEGIN VIDEO CLIP)

LANNY DAVIS, ATTORNEY FOR MICHAEL COHEN: This man has turned a corner in his life, has hit a reset button and he's now dedicated to telling the truth. And the reason that Giuliani is attacking him, so viciously, rewriting what everybody hears with their own plain ears is they're afraid of him because Donald Trump can't stand the truth, to quote a famous movie, and the truth will come out.


BLITZER: All right, let's bring in our chief political correspondent Dana Bash and our chief political analyst Gloria Borger.

Gloria, what's Cohen's strategy going forward right now with his decision to go ahead and release this audiotape?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Well, first of all, I have to say that this is kind of Shakespearean, this whole thing. I mean there was nobody more loyal to Donald Trump for years and years and years than Michael Cohen. Any one --

BLITZER: They worked together for 12 years.

BORGER: And any one of us who has spoken to Michael Cohen know that he was the president's greatest defender during the campaign, both privately and on television. Now I think they're at a bit of a crossroads where Michael Cohen -- and this started shortly after July 4th, right around when he hired Lanny Davis, when he decided, look, I've got to -- I've got to go my own way and declare his independence. And now we see this progressing to Lanny Davis releasing this tape.

I think the strategy is to establish a distance between yourself and the president to perhaps let prosecutors know that you have a lot of information that perhaps you are willing to share, and Lanny Davis portrays it as kind of a sea change that Michael Cohen has suddenly decided to be a different person. I mean we really don't -- you know, we really don't know what's inside Michael Cohen's head right now, but we do know that there are legal cases that are progressing and that Michael Cohen is in some trouble with the Southern District of New York. And we don't know how they're going to react to this.

DANA BASH, CNN CHIEF POLITICAL CORRESPONDENT: And they have been -- for these two people, as Gloria said, who were so close, and knew each other's probably deepest, darkest secrets, for them to be playing out their warnings about and strategies for one another in public like this is really extraordinary. And that's what this is. And it keeps escalating and notching up, up, up.

I mean it wasn't that long ago that Rudy Giuliani, it was last month, told me and a few others that all Michael Cohen has to do is tell the truth and he's home free, directly into the camera, talking to one person, Michael Cohen. And that has, you know, that has escalated to where we are now --

BORGER: Right.

BASH: Where Michael Cohen, both of them really, both sides, are clearly seeing, for whatever reason, a public relations necessity to keep ratcheting it up in public. And I think it seems to be, Gloria, I don't know if you agree, more of a PR strategy here right now --

BORGER: It is.

BASH: Than a legal strategy. It's hard to imagine when it comes to Michael Cohen's legal defense that it is a good thing to put this tape out there.


BASH: This is about the PR war.

BORGER: I think it is. I think it's a -- I think it's a PR strategy.

Look, Michael Cohen feels that the president has kind of left him in the dust. And that he's rejected him and that has left him out there, hanging out there. That Cohen has not gotten a lot of love from the president or from the family after all he's done -- after all he's done for them. And I think he feels that he wants his name back. And this is one way to do it. As Dana points out. It's a PR strategy. The question is whether it's a legal strategy. And we don't -- we don't know the answer to that.

BASH: And it's also a question of whether it's going to work.

BORGER: Right.

BASH: Which is a very big, opening question.

BORGER: Exactly. Exactly. BLITZER: It could really -- I mean it's ugly right now. It can really get a lot more ugly in the days and weeks to come --


BLITZER: Because you got two teams who are going to war against each other. And the accusations are about to explode.

BASH: And there are two teams who play dirty and know each other's tactics because they've worked together. I mean Michael Cohen, if nothing else, knows how Donald Trump thinks and vice versa. And, you know, as the gloves peel off, it is going to be -- because of that, it is going to be even more fascinating to see. It's hard to imagine, for example, that team Trump, aside from Rudy Giuliani's tweet today, or the president's tweet today, leaving it at that.

BORGER: Right. I mean we'll just -- you know, we'll have to see what they decide to do. I mean do they decide to release more tapes? Do they -- we don't know. But we do know that Rudy Giuliani, you know, is a hardball player.


BORGER: And he just got punched. So we'll have to see whether he punches back.

But in the grand scheme of things, how -- the big question here is, how does this affect, if at all, Michael Cohen in the Southern District of New York, or potentially even with the special counsel?

[13:15:01] BLITZER: Yes, remember, Michael Cohen's under criminal investigation right now --


BLITZER: By the U.S. attorney for the Southern --

BORGER: No charges. No charges.

BLITZER: Southern -- no charges yet. But he potentially, if he is charged, you know, he's a man in his early 50s. He's got kids. He's got -- he's got to worry about what could happen down the road.

BASH: True. But -- and the other piece of that big picture that -- Gloria, that you laid out so well is really whether Michael Cohen even has anything on Donald Trump or anyone else to give to --

BORGER: Right.

BASH: The prosecutors in New York, if he is, in fact, facing, you know, a series of charges or even one charge that could put him away. We don't know the answer to that. And certainly this tape suggests he could, but it also suggests he might not.

BLITZER: Yes. My suspicion is that Michael Cohen worked for a dozen years with Donald Trump. He knows a lot -- BASH: He sure does.

BLITZER: Of secrets out there. And the president should be cautious in dealing with him because if this thing totally explodes, who knows where it's going to lead. But we'll see what happens.

Guys, thank you very, very much. I suspect this story is only just beginning.

Meanwhile, Republican and Democratic lawmakers here in Washington, they are standing by to react to the audiotape and what happens from here.

Plus, as Republicans blast the president's bailout of farmers hurt by his trade wars, the president is now about to go face-to-face with the E.U. president who's called his tariffs stupid. We'll see the encounter.

And, after a report suggests President Trump was furious that Melania Trump, what she was watching on Air Force One. She was watching CNN. The first lady has just responded. We'll tell you.


[13:20:59] BLITZER: Assuring farmers and attacking his own party, President Trump did both in a series of tweets on trade earlier today. In one he tweeted this, China is targeting our farmers who they know I love and respect as a way of getting me to continue allowing them to take advantage of the U.S. They are being vicious in what will be their failed attempt. We were being nice until now. China made $517 billion on U.S. last year.

In another tweet, quote, every time I see a weak politician asking to stop trade talks or the use of tariffs to counter unfair tariffs, I wonder, what can they be thinking? Are we just going to continue and let our farmers and country get ripped off? Lost $817 billion on trade last year. No weakness. Close quote.

Yet many of those politicians who want to stop tariffs are, in fact, Republicans.


SEN. MIKE ROUNDS (R), SOUTH DAKOTA: The tactics that is being used -- that are being used right now are not helping our producers. And all we're saying is, look, wouldn't we have been better off if we'd have made a deal with TPP or perhaps have strengthened our NAFTA agreement first before we go after China?

SEN. BEN SASSE (R), NEBRASKA: When you have tariffs, they're a bad thing, and then you try to solve them with bailouts, another bad thing, you're not heading in a good direction. You're trying to make America 1929 again. And that's not what the people in the state I represent want. We want to feed the world. We want more markets and we want more trade. REP. PAUL RYAN (R), HOUSE SPEAKER: I've made it pretty clear, I don't

think tariffs are the right answer. I don't -- I don't support tariffs. I think tariffs are taxes.

I think there are better tools to use to get them to play fairly.


BLITZER: China, of course, isn't the only target of the steep U.S. tariffs. Right now the president is holding trade talks with European Commission President Jean-Claude Juncker.

Our correspondent Tom Foreman is here to break it all down for us.

Tom, so how are the tariffs hurting the U.S. economy?

TOM FOREMAN, CNN CORRESPONDENT: Well, as some of those lawmakers just said, because they're attacking things that are being sold over there. The U.S. imports about -- let me reset here real quickly. The U.S. imports about $600 billion worth of goods from the European Union. That's more than America sends the other way in exports. But those exports are still critical to American businesses and communities coast to coast. And as retaliatory tariffs are raised in the E.U. and elsewhere, as they charge more for those U.S. goods to come into their market, the darker states on this map are where people are feeling it the most because they make a lot of stuff for export.

Two of the hardest hit, California, way over here, and Tennessee, right here. California, of course, is a huge economy and would have some hand in pretty much many of the 160 or so products being targeted by European tariffs.

But look at the top three items here and you can see why Tennessee is feeling the heat. Whiskey. Sales of U.S. whiskey have been booming overseas. A lot of it from Tennessee and neighboring Kentucky. But when tariffs make it more expensive, that poses a real threat to that growing market.

Now the map of affected states looks a little different when you talk about retaliatory tariffs from China. Agriculture is a big part of this equation. Louisiana, for example, has almost $6 billion in agricultural exports. Washington state has another roughly $5 billion. And then California weighs in again, always important, about $4 billion in automotive products out there.

So if all these states will feel so much pressure, why do this? From the president's point of view, this is the reason. Look at how much the U.S. exports from China versus how much China imports from the U.S. The difference is around $376 billion. The White House doesn't like that and believes the short-term problems and all these complaints about a trade war right now for American communities will be outweighed by the long-term gains of these numbers coming a little more into balance.


BLITZER: This battle is heating up dramatically right now.

Tom Foreman, thanks very much.

And, by the way, we're waiting to hear from the president. We'll hear what he has to say on all of this. That's coming up shortly.

But, first, the White House raising eyebrows after CNN reveals officials will no longer release summaries of what happens in the president's phone calls with world leaders.

[13:25:06] Plus, comparisons to George Orwell after the president tells Americans, don't believe what you see or read. We'll discuss.


[13:29:58] BLITZER: The year is 2018, not 1984, but the sentiment is eerily similar to George Orwell's dystopian novel. The president of the United States saying it's not just the media lying to you, but now your own eyes are deceiving you as well.