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CNN: McMaster Could Leave White House By End of Month; CNN Exclusive: FBI Counterintel Investigating Ivanka Trump Business Deal; Kushner's Family Business Gets Billions in Loans After WH Meeting; President's Statement at WH Gun Meeting Derail WH Plan To Unveil Gun Proposals Today. Aired on 8-9p ET

Aired March 01, 2018 - 20:00   ET

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

[20:00:08] ANDERSON COOPER, CNN HOST: Good evening.

Once again, we have breaking news from the White House. Word of a possible big departure from the West Wing. Another one. That's just after the other one.

This time, it's the president's national security adviser, Lieutenant General H.R. McMaster, who himself replaced Michael Flynn. And we should say, it has not yet happened.

Yesterday, of course, it was Hope Hicks, plus an avalanche of other breaking news. Tonight, McMaster's reporting comes with a side order of CNN exclusive reporting on the adviser who is closer to the president on anyone else on earth, his daughter, Ivanka, and a deal of hers that could be holding up her permanent security clearance.

Once again, a very big night indeed.

Let's start with the McMaster story and CNN's chief national security correspondent, Jim Sciutto.

Jim, so, what do we know?

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: Anderson, my colleague Barbara Starr and I are told that General McMaster could leave his position as national security adviser by the end of this month, that according to administration official, or in the near future. Multiple sources describing it that way.

And in addition, it is becoming more likely that McMaster will not return to the military and a possible four-star general job there but would ultimately retire as a three-star general and go on into a civilian job. This follows many public and private disagreements between McMaster and President Trump, and the feeling from a number of people that I've spoken with is just that his position as national security adviser became untenable because of many of those disagreements.

COOPER: Is there any word on who could actually be replacing him?

SCIUTTO: So, we're hearing a number of names, among those names being considered, make that clear, being considered, Safra Catz. She's the CEO of Oracle. She was also former member of the Trump transition team. John Bolton, former U.S. ambassador to the U.N.

Another name mentioned, Stephen Biegun, he's the vice president at Ford Motor Company, as well as a former senior staff member to Condoleezza Rice under George W. Bush's administration, I should say, that Ford has told CNN that that is not true, he's not in discussions. I should also say that the NSC spokesperson, Michael Anton, has dismissed all these reports of McMaster's departure with a favorite phrase of the Trump administration, and that is fake news.

But again, my colleague Barbara Starr and I hearing this from multiple people who are aware of the discussions inside.

I should make one more note, as well, that we know of a senior military officer who was consulted about the possibility of taking on this job, as well, he, saying no because he was concerned about how he could fulfill what is basically a political job while still in uniform. And, of course, Anderson, that was the position that McMaster was in, he still has his three stars. And now, the question has been, would he go back to the military. But our information is that he will not go back to the military after his departure.

And again, Anderson, I should also say, this is the Trump White House. It's up to President Trump himself, the final decision in these kinds of personnel moves could always change.

COOPER: Right. Jim Sciutto, appreciate that.

Also, because this is clearly to Jim's story, let's go next to CNN's Jim Acosta at the White House.

So, what is the White House saying about this report?

JIM ACOSTA, CNN CHIEF WHITE HOUSE CORRESPONDENT: Well, as Jim mentioned, just a few moments ago, the president is calling this story that H.R. McMaster might be leaving any time soon fake news, but, Anderson, past being prologue, we know all too well when the president says something is fake news, that doesn't necessarily make it so. And in many cases, it's probably the opposite of that. It's probably real news.

And with all the talk of these departures this week, we talked about Hope Hicks last night, tonight we're talking about the possibility of H.R. McMaster leaving, you know, this is another sign of a White House that is just in this constant state of turmoil. I did talk to a source earlier this evening with respect to H.R. McMaster who said that there are some expectations that General McMaster, once he leaves the White House and once that's finished and finalized, that he'll go to the Hoover Institution, which is a leading think tank here in Washington and out in California, which also has ties to Condoleezza Rice, by the way.

But this source was cautioning that that is not finalized yet, that the deal is not finished. But that is a possibility in terms of a landing spot for McMaster.

COOPER: And if and when this happens, I mean, this will be, what, the 11th top level official to leave this White House.

ACOSTA: That's right. And earlier today, as you heard, the White House press secretary Sarah Sanders was not really closing the door on the possibility that Jeff Sessions, the attorney general, may be leaving. When she was asked whether the president wanted to get rid of his attorney general, she said, not that I know of.

I talked to senior administration officials earlier this evening about all of this, this official said that Sessions just doesn't pay attention to this kind of political drama, that his job doesn't entail following political drama. That he's doing the things he likes to do and he was over at the White House earlier today on an opioid matter.

But, Anderson, I mean, putting aside all the palace intrigue, keep in mind, we're in the second day in a row of the president causing massive confusion on policy issues, on gun control.

[20:05:08] Yesterday, as we saw, he created all sorts of confusion when he said, for example, that mentally ill people could have their firearms confiscated from them before any kind of due process, and then today over here at the White House, he announced tariffs on aluminum and steel that may be imposed next week. He did that without White House officials even explaining, you know, what the details of all that will be, which countries will be affected and so on.

And so, for all of this talk of Mr. Magoo, it's been sort of another looney toons week over here at the White House. And since it's Thursday, we can't exactly say that's all folks -- Anderson.

COOPER: Yes. All right. Jim Acosta, thanks very much.

Joining us now retired Army Lieutenant General -- oh, well, are we having Hertling joining us?

All right. It looks like a high school yearbook, but in fact, these are high level people, we talk about, this would be the 11th departure within the administration so far. Five from communications directors, five at chief of staff, a chief strategist, press secretary, Omarosa, quite a list. Could be growing, as we said.

Joining us now is retired Army Lieutenant Mark Hertling, retired Navy Rear Admiral and former Sate Department spokesman, John Kirby, and former Obama White House communications director, Jen Psaki.

So, Admiral Kirby, how big of a deal would it be if, in fact, General McMaster leaves his post at the White House?

REAR ADMIRAL JOHN KIRBY (RET.), FORMER STATE DEPARTMENT SPOKESPERSON, OBAMA ADMINISTRATION: Oh, it's a big deal. I mean, national security adviser is a key position inside the White House. Obviously, a very, very close adviser to the president of the United States, the commander-in-chief. So, any departure, movement in that office, is a big deal. It's significant.

And it's going to have an effect on the way policy, particularly foreign policy and defense policy, is implemented and executed. The national security adviser is the integrator, the facilitator. His job is to make sure that the inner agency process moves along smoothly and that options are teed up to the president in a thoughtful, measured way. There's been some concern under General McMaster as the degree to which that has really been healthy under his leadership. But it will have a significant effect.

COOPER: General, I mean, does it align with anything you've been hearing in military circles? I'm wondering what message would it send about the highest levels of American national security apparatus.

LT. GEN. MARK HERTLING (RET.), U.S. ARMY: It would be troubling right now, Anderson, because of what Admiral Kirby just said. There's a lot of things going on. And McMaster is at the center of it.

He's a very disciplined, very smart guy. He's been driving processes, the national security strategy, really was his product, bringing a lot of people together. It set the stage for how we deal on the international community.

And what's interesting is, H.R., I know H.R., and he's very much of a process-driven guy, even though he is very flexible, and any time you have these kind of operations, it's intelligence-driven. I'm sure he's been exceedingly frustrated by the lack of having intelligence drive communications, driving operations and strategy. And, you know, over the last year, he's tried to reconsolidate things after the debacle that was the Flynn National Security Agency, and now he is actually bringing some things together.

But I got to believe that it's been a tough year for him and it's been extremely difficult. He's been very verbal on the world stage. He's gone to a lot of conferences and talked some things, and as you know, many of the things he's talked about have been disconnects with what the president said.

COOPER: Right, and then publicly criticized by the president. Jen, I mean, there's the geo-political message, and then just the political message it sends about how the White House is or is not functioning.

JEN PSAKI, FORMER WHITE HOUSE COMMUNICATIONS DIRECTOR FOR PRESIDENT OBAMA: That's right. In this "Game of Thrones" style of staff shuffles in this White House, what it also likely means is that General Kelly has recovered a bit from the Porter scandal from a few weeks ago, at least in President Trump's eyes, which means he's probably there to stay for awhile. Some people may like that, some people may not like that, inside and outside the White House.

It also probably means Secretary Tillerson can live another day and will be there for a couple more months, because you can't fire your, or let go of half of your national security team. So, you know, in terms of politics, it creates, not to criticize my own trade, but this is certainly more significant internally and on the geo-political scale than the communications director departing, because this sends a message to the world, it is also somebody who is a key asset for people within government as well as within Congress.

COOPER: And, Admiral Kirby, I mean, I remember then-candidate Trump's affinity for generals, speaking very highly about them, you know, at multiple campaign stops, just watching them on the Sunday shows, actually campaigning with General Flynn. He also at times he said he knew more than generals did.

Does it surprise you that he seems to have a fraught relationship with at least some current and former military leaders? I don't know that it surprises me. Every -- there's this idea that every general is the same, and they're not. General Hertling certainly is not like every other general either.

And they're all individual. They all bring to the job unique skills. There's been some reporting that the president has bristled at the way that General McMaster briefs him.

[20:10:02] And, so, look, the president is -- he's entitled to have the national security adviser that he wants. And if this relationship is not working, it's a healthy thing to break it off and let both men move in different directions.

But I also worry and have worried when he did name so many generals and former generals to job, that it could result in the militarization of the development of policy, and that's never a healthy thing. Admirals and generals are really good and smart at what we do, but we don't always have the same political fidelity and touch that other civilian political appointees can bring to the job.

So, it's not healthy to have, I don't think, so many around you.

COOPER: General, I mean, can active duty military officers turn down this job if the president calls them up and says, I'd like you to do this?

HERTLING: Yes, that's tough to do, Anderson. But remember, you know, General McMaster was one of two general officers after Admiral Harwood turned it down, he was retired, but he had -- president Trump had two active duty general officers, three stars, Bobby (INAUDIBLE), and H.R. McMaster. He chose them in a span of about an hour.

So, I'm not sure, you know, there was that ability to connect, to see what he was getting into, and, again, President Trump at the time, when he was transitioning, did not know the intricacies of foreign policy, National Security Council workings, how to pull all the elements of the intelligence community together with the various directors of government, so, he picked a guy who certainly is smart, but, you know, I'm sure personalities clashed, as has been reported to do.

Can an -- I didn't answer your question. Can an active duty general turn it down? It would be tough. You would probably have to say, I'll turn it down and retire and putting my retirement papers right now.

COOPER: Wow.

I mean, Jen, we're also at the point, maybe long past the point, where the White House denies something or dismisses it, those denials really carry very little weight.

PSAKI: That's right. And I think, look at how Jim Acosta, who is reporting on the White House, brushed off what the White House said about it. And that tells you a lot about how important your credibility is when you're a spokesperson, when you are speaking on behalf of the president, and how much it matters in cases like this, because we've heard time and time again, high level officials say, the president has absolute confidence in this person, the president's sitting in the Oval Office with this person. And then just a couple days later, they depart.

So, this doesn't lead us to conclude that General McMaster is there to stay, it actually leads us to conclude he likely is on the rocks and as CNN has been reporting, looking for his way out and they're looking for his way out, as well.

COOPER: Yes, General Hertling, Admiral Kirby, Jen Psaki, stay with us.

Much more ahead to talk about, including exclusive new CNN reporting on a deal by Ivanka Trump that the FBI's counterintelligence unit has been paying attention to. That and the Jared Kushner news, that Kushner business companies got half a million dollars in loans from companies that Jared Kushner met with at the White House.

(COMMERCIAL BREAK)

[20:16:38] BURNETT: Breaking news tonight in the possible departure of National Security Adviser H.R. McMaster is just one in a series of seismic developments, possibly a manifestation of a White House in trouble, or unstable, certainly new addition to an already heavy strain, we should say.

But there's plenty more, there's new exclusive CNN reporting about Ivanka Trump and an international business deal that could be holding up her security clearance. First daughter Ivanka Trump, as you know, is one of the president's closest advisers. Here she is representing the country at the Winter Olympics in South Korea, also meeting with the South Korean president.

In short, she's doing official government business in a very difficult part of the world, potentially involving some of the most sensitive intelligence there is. Yet neither she nor her husband Jared Kushner have been able to get the kind of full non-interim top secret security clearance that many believe they need to do their jobs. It's not fully clear what the specific concern about this one international business deal is with Ivanka Trump, which we'll go into detail in a moment.

The main question in all such cases is whether a foreign power might be able to exercise undue influence on U.S. policy or gain access to secrets because of a government official's financial affairs, or, in this case, family ties, as well.

Keeping them honest, this is a problem that candidate Trump suggested would never arise if he were elected. Here he is on the campaign trail, slamming his opponent, Hillary Clinton, saying that unlike her, he couldn't be bought.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Hillary Clinton has nothing in the campaign. She's all special interest and donors and they give her the money. Then she will do whatever they tell her to do.

These people have given her tens of millions of dollars. My campaign has the absolute opposite message.

I'm self-funding.

I'm the only one on both sides that's self-funding.

I'm self-funding.

I'm self-funding, by the way.

I have no oil company. I have no special interests.

I have over $100 million, that's a lot of money that I don't take in from the special interests, because I don't need it.

(END VIDEO CLIP)

COOPER: He didn't need it, he said, because he and his family are rich.

However, he failed to mention the sources of that wealth, which include numerous overseas investments and numerous overseas investors. Now, this latest item on Ivanka Trump hits just a day after "The New York Times" published that story on her husband, revealing the Kushner family real estate company which Kushner does still have a stake in, according to "The Times", got loans totaling half a billion dollars from companies he met with at the White House in his official capacity.

So, I want to underscore that. While in his official government capacity as a senior adviser to the president of the United States, the father of the woman he married, Jared Kushner met with bankers and investors who later lent his family business to which he still reportedly has financial ties $500 million.

That story comes hard on the heels of reporting that officials in four countries have conversations about potential vulnerabilities that Kushner had to manipulation, due to his complex financial interests and his family company's real estate woes.

So, as of this moment, Jared Kushner has a plain old secret security clearance, which sounds important, but isn't. The White House calligrapher has higher clearance now, which raises the inevitable question, can he still do his job? And if not, can he stay?

(BEGIN VIDEO CLIP) SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: Look, Jared is still a valued member of the administration and he's going to continue to focus on the work that he's been doing, and we're going to continue pushing forward on that front, as well.

REPORTER: Are there any concerns about conflict of interest, given those meetings that he had with executives from companies that gave his family business millions of dollars?

SANDERS: I would refer you to the statement that was put out by his attorney.

(EN VIDEO CLIP)

[20:20:03] COOPER: Sarah Sanders at today's briefing.

Before the latest story about Ivanka Trump hit, CNN's Shimon Prokupecz, Sara Murray and Kara Scannell got the exclusive.

Shimon and Sara join us now.

So, Sara, I understand one of Ivanka Trump's international business deals is drawing this interest from FBI investigators. What did you learn?

SARA MURRAY, CNN WHITE HOUSE CORRESPONDENT: That's right. We know that counterintelligence officials have been looking at this Trump Tower deal in Vancouver. Ivanka Trump was really the point person in the family in the Trump Organization for this project. Now, it's not exactly clear what it is about this deal that has investigators so interested.

This is another one of those arrangements where the Trump Organization doesn't actually own the property. Instead, they strike up this licensing and branding agreement with the developer. In this case, the developer is a Malaysian guy. He's a member of one of the wealthiest families in Malaysia. He's the one who actually owns this building. And then they sell off the condos.

And as is customary with a lot of these Trump properties, the condos have generated a lot of interest from foreign buyers. So, any one of these things could be a concern, but the timing of the deal is also really interesting. This is one of the few Trump properties that actually opened after Donald Trump took office. It opened in February of 2017.

COOPER: Shimon, why would counterintelligence be interested in this? Any idea?

SHIMON PROKUPECZ, CNN CRIME AND JUSTICE REPORTER: Yes. Well, so like what you were talking about, Anderson, there's a lot of concern over the contacts that really everyone around Trump was having, Jared Kushner, Ivanka. This one particular deal and her contacts with perhaps some of the investors, some of the people who were maybe buying into this property, something triggered the counterintelligence. I mean, the FBI has been spending well over a year now looking at some of their contacts, some of the deals that were being made.

But something in this particular deal, I've been told, really triggered the FBI and they've really been looking into it, trying to get a sense, again, it's sort of what you said. Was there some kind of influence? Were they trying to exploit her, her husband Jared Kushner? All of that remains a concern for the FBI.

COOPER: And, Shimon, I mean, would this have any impact on the Mueller investigation?

PROKUPECZ: Well, it potentially could because a counterintelligence investigators who are looking at this are also working wit the Mueller team. Anything that has to do with this family, with the president, is all now being run out of the Mueller team, out of the Mueller case. So, potentially, it could.

And, you know, from everything that I know, Mueller has seen some of this information, it is before him, it is before his prosecutors and his investigators, so, it could potentially. We don't know that Ivanka has any kind of exposure to this, it could simply be part of what Mueller has been doing, as we saw in the indictments against the Russians, is looking at what others were doing, what other countries were doing to try to influence some of the people in this country.

COOPER: Now, Sara, I mean, the last we'd heard Ivanka Trump had an interim security clearance. Is that still the case? I mean, do we know if hers has been downgraded like her husband has been?

MURRAY: Well, look, Anderson, if suddenly Ivanka Trump got a top secret security clearance, there is no one in her orbit who is coming forward with that information. You know, we know deals like, one in Vancouver, can present another hurdle in the security clearance process. And, obviously, we saw the case with Jared Kushner was, it was not only his financial dealings, but also the Mueller investigation that prevented him from obtaining this full security clearance.

But the reality is, because these two people are married, their background checks, their security clearance process has an impact on one another. So, Ivanka Trump could be impacted by her own business deals. She could be being impacted by her husband. 2

Now, we do have a comment from a representative for Ivanka Trump, who sort of downplaying the situation, saying CNN is wrong. That any hurdle, obstacle, concern, red flag or problem has been raised with respect to Ms. Trump or her application.

This person goes on to say, nothing in the new White House policy has changed Ms. Trump's ability to do the same work she has been doing since she joined the administration. And that last phrase sounds familiar, it's because we heard something very similar when Jared Kushner's security clearance was downgraded. Obviously, we know that John Kelly made a ruling that if you are operating under an interim security clearance, you were no longer going to be able to keep that and see top secret information. You're either be downgraded or having to move on. COOPER: Yes. Sara Murray, thanks very much. Shimon Prokupecz, as

well.

Just ahead in the middle of another night of breaking news, from the White House. We'll take a breath and discuss the implications of what you just heard.

(COMMERCIAL BREAK)

[20:28:12] COOPER: Back now with the breaking news on CNN's exclusive reporting that U.S. counterintelligence officials are scrutinizing one of Ivanka Trump's international business deals, according to two sources familiar with the matter. So, just to recap, CNN is reporting the FBI has been looking into the negotiations and the financing surrounding Trump International Hotel and tower in Vancouver, according to a U.S. official, and a former U.S. official.

And the scrutiny could be a hurdle for the first daughter as she tries to obtain a full security clearance in her role as adviser to the President Donald Trump.

Now, in any case, it is another potential ethics entanglement for a member of the Trump family.

Joining us to talk about it is former FBI and CIA senior official, Phil Mudd, Norm Eisen, who served in several capacities in the foreign services and crucially to this conversation, is President Obama's White House ethics czar. Also with me again is Jen Psaki.

So, Phil, I mean, how big a deal is this? What does it tell you that the FBI, as far as we know, hasn't been able to finish up or, you know, that the first daughter has not been able to get a full-time security clearance?

PHIL MUDD, CNN COUNTERTERRORISM ANALYST: Let's make sure we understand two questions. First, I didn't see anything in the reporting that suggested she did anything wrong.

COOPER: Right.

MUDD: That said, there's some key questions here you've got to ask, if you are doing the security clearance.

Number one, did she declare it? We know we have a history with White House officials in this administration of not declaring their contacts.

Number two, does this company have dealings with the U.S. government, and is she involved in any of those dealings?

Number three, let me give you a simple question, Anderson. What happens when they pick up the phone and they ask for a meeting at the White House? Does she now feel compelled to offer that meeting?

And the last question, I think, would be, does the intelligence community, including the FBI, have information on the people she's dealing with that indicate those people are dirty, what does that mean?

So, I'm not sure she's done anything wrong, but with the complications of her and her husband's sort of financial dealings, they're like the Tylenol twins if you're a security official. So many questions about whether there's a conflict of interest.

COOPER: Ambassador Eisen, does it raise ethics concerns for you?

NORMAN EIJSEN, FORMER WHITE HOUSE ETHICS CZAR FOR PRESIDENT OBAMA: Anderson, thanks for having me back.

It raises profound ethics concerns. The question of the Vancouver Trump property that's under counter intelligence investigation is only the latest entanglement for Ivanka, for her husband Jared, because we impute these potential conflicts to spouses. They apply to the other, and for the whole Trump family. It's been a never-ending stream of these.

And, you know, if in fact, there is some problem there, it may represent a conflict that should require her to step away from certain issues, and the behavior of the Trump's is more like that of a royal family than of a modern-day elected officials between the conflicts and the nepotism and of course, the President himself has the largest conflicts of all hanging on to his businesses, another troubling development.

COOPER: Jen, I mean, the idea that America was getting Jared Kushner and Ivanka Trump as part of a best and brightest package deal along with President Trump. It seems to be, at least in part of package deal of ethics questions and security clearance hurdles.

JEN PSAKI, CNN POLITICAL COMMENTATOR: That's true. And you never want to hire someone you can't fire, which is why there is nepotism laws in part. But the other fact that hasn't been out there that much is that, when you fill out your security clearance forms, typically, your spouse's contact and their financial ties are also taken into account. So we don't know what her security clearance is, exactly what the status is. But there's no doubt that she would be, her security clearance would probably be impacted by everything happening with Jared as well.

And, if you look at this circumstance, it's actually pretty surprising, reading the story, that she hasn't been pulled into some of the reporting. She's been pretty low-key, as it relates in the Mueller investigation, doesn't mean that she's done anything wrong. But there -- she's been around for a lot of the key moments. And as a daughter, that would be expected but that's another place where it's a bit of a conflict to be a senior adviser and a daughter in this case.

COOPER: So, I mean, this maybe a dumb question because the President doesn't undergo a background check in the way that the people -- other people work in the White House do. But, you know, President Trump when he was a candidate often said Hillary Clinton would not have been able to pass a background check, given that, you know, Jared Kushner, Ivanka Trump had not gotten a full-time clearance. Would the President, if he had to, actually be able to pass a background check at this point?

MUDD: I don't think he'd be able to and, and in effect, he is doing a background check. That's a check on by Robert Mueller and we know Robert Mueller, he's looking at the financial dealings, not only of the kids put potentially of the President.

Let me make this even clear, we're making this like it's an incredibly complicated, it's not. Let me cut to the chase, Anderson, when I was in government, I could not accept a gift from any foreign government more than 200 bucks. That's 200 American dollars. If the reports were accurate, Jared Kushner is negotiating mortgage deals in excess of hundreds of millions of dollars in the White House.

When I was in government, I was kept at how many meals I could accept from one of my friends from foreign security service. And we're talking about people in the White House negotiating deals with foreign governments, including potential in Malaysia and elsewhere while they're in the White House.

We look at this like this is the normal activity of people who are the children of the President. The comparison to what an everyday government official would have to go through is night and day. I would be on my ass so fast if I did any of this, the light wouldn't be out by the time I'd be out the door.

COOPER: And this, I want to point out some of the Jen tweeted today saying, "For context, Norm Eisen expected me to justify that I had prior relationships with people who gave me wedding presents when I got married in 2010 while working at the White House. No one knows ethics rules better." She was referring to your comments on Kushner family business loans. But what happens next in a process and why were you trying to deprive Jen. I mean, new coffee maker or whatever it was --

PSAKI: Exactly, Norm.

EISEN: Well, Anderson, when I attended the Harvard Law School, I did not expect that somebody I would be going over Jen's wedding registry as my most important legal responsibility.

PSAKI: But you did.

EISEN: But we did. And I'll tell you why we did that. It was the opposite of the Trump administration. In the Obama administration, the President believed that tone at the top matters, and you need to set a tone of integrity. And if you have a president who is hovering up foreign government cash and benefits all over the world, who's bringing his children in and that they're doing deals, and there's some cloud of conflict hanging over it all, potential constitutional issues. That sets a tone to everyone, and you very quickly get into the people in the cabinet saying why can't I do it too in and you get Dr. Price's (ph) flights and you get Ben Carson's $31,000 conference table and all of the other banality.

[20:35:15] That's not what the American people signed up for, Anderson. They want a president and a government that will serve the public, not serve yourself like, you know, and all-you-can-eat buffet. It's just wrong. It stinks.

COOPER: Jen, I mean, do you find it all encouraging that the President hasn't just unitarily bypass the protocols and given his daughter and son-in-law the highest level of security clearance? I mean, he can show, you know, Jared Kushner, Ivanka Trump, his president's daily brief if he wants even if they're not, you know, cleared for it?

PSAKI: Well, he can. Now it is -- currently that is the case but he can do a waiver on a case by case basis. So if he wants Jared to be the point of contact with Saudi Arabia on an oil deal, he can do that. So we'll have to watch and see how many waivers he gives in this case and how it's impacted. It is interesting, as you said, that he didn't give an overall waiver or didn't stop Kelly from acting, because it shows he wasn't ready to step in, even for his son-in-law, even though he's supposed to be, basically, his chief diplomat from the White House.

COOPER: Yes. Well, thanks everyone. Good discussion.

Up next, and we'll continue our times reporting to Jared Kushner's company received loans from executive. The two companies who visit the White House, no denial the loans were indeed made. Question is, were they ethically OK?

(COMMERCIAL BREAK)

[20:40:24] COOPER: Before the break, we laid out the latest reporting from CNN, the "New York Times" on Jared Kushner in our own exclusive reporting on Ivanka Trump, now as the breaking news rolls on, I want to focus more on the inner play or potential inner play between money and politics.

Joining us for that is Berkeley Professor of Public Policy, Robert Reich, author of the upcoming book "The Common Good" and Stephen Moore, former Senior Economic Adviser to the Trump campaign.

Secretary Reich, I mean you've been sounding the alarm about conflicts of interest in this White House. The fact that Kushner's family business was granted $500 million in loans after meeting with Jared Kushner and his official capacity, what do you make of that? Because, you know, the Kushner's lawyer and everybody is, you know, and the companies say there's no there, there. There's no connection.

ROBERT REICH, PROFESSOR OF PUBLIC POLICY, U.C. BERKELEY: Well, first of all, Anderson, it's not just the conflict of interest. It's also the appearance of conflict of interest. I mean, the reason that we have these ethics laws in government. The reason even the constitution talks about no emoluments from foreign governments is because the public has got to have faith in our governing institutions. And if you got someone at the highest riches (ph) of government whispering into the President's ear, who is also at the same time getting money for a family business, then the public cannot be confident that advice is going to be in the public's interest.

COOPER: Stephen, do you agree with that? I mean, the optics of this? STEPHEN MOORE, FORMER SENIOR ECONOMIC ADVISER, TRUMP CAMPAIGN: Well, first of all, I mean, I knew we were going to talk about this, so I did call the White House today to find out, you know, what Jared's position is, what his response is to this, and it's just three sentences, but I'd like to read it to you and your audience, because he needs to be defended.

And this is the statement from his lawyer, Jared Kushner has had no role in the Kushner companies since joining the government and has taken no part of any business loans or projects with or for the companies after that. He has followed the ethics advice he has received from all of his work, which includes the separation from his business and recuse those one appropriate.

Now, that is his position. I'm not in a position to judge who's right or wrong here. I do think that Robert Reich has a point, that there is an appearance. I think, you know, the appearance of impropriety is I think is a problem here. And I do think that Jared needs to -- you know, there's a "Wall Street Journal" article today saying that maybe he should step down from his official position.

But I want to say this that I think is the more important point. Why did Donald Trump win this election? Because he was a non-politician, he was a businessman. We've had for 10 years -- look, I don't think that there were any ethical problems with Barack Obama. I just don't think he knew anything about business. I don't think he knew anything how -- about how to run an economy. I think that what attracted so many millions of voters to Trump is he is a businessman. Jared Kushner is a very good businessman.

COOPER: We know that, but you have no ethical concerns about the fact that business is still being done, that they still, you know, they all have stakes in their business, I mean Jared Kushner, yes, he put a lot of this in a trust that I think benefits his siblings right now.

MOORE: OK, yes.

COOPER: But he still has an economic interest.

MOORE: But look, I'm making a bigger point here, because I don't now what the truth is on all these allegations. What I'm saying is, are we saying that people were successful in business cannot be in government because they have conflicts of interest. It seems that's what my friend Robert Reich is saying

COOPER: So Reich, is that what you're saying?

MOORE: By the way with this --

COOPER: Professor Reich is that what you're saying, because it sounds like what you're saying is --

REICH: No.

COOPER: -- they just have -- it's great if they're successful in business, but once they're in government they shouldn't still be conducting business.

REICH: Exactly. I mean, we've got to keep business and government separate. There's too much big money in politics as it is. Donald Trump came to Washington promising to clean up the swamp of Washington, drain the swamp of Washington, and what we have instead is that in the White House, Donald Trump himself, Jared Kushner, we also have lobbyists all over Washington who are now in the White House, and these people are making decisions that are helping them personally, they are profiting personally off of his decision.

MOORE: -- Robert, that's just an allegation. That's the point.

REICH: Steve, wait a minute, let me just finish my point.

(CROSSTALK)

MOORE: OK, go ahead.

COOPER: -- and I'll go for you.

REICH: Steve? Steve, I really -- I love talking to you, but I have to let me finish my point. To be in business doesn't mean that when you go in the government you have to continue to stay in business in that same business and rake in money. What you have to do in government, this is true, and this is true even when I was in government. You've got to separate yourself, clearly and distinctly from that business, not only --

MOORE: I agree with that. I'm in total agreement with you. I'm in total agreement.

REICH: And also doing absolutely not even meeting -- but not even meeting with people who are going to be giving your business loans. Going out of your way to look and act as if there's no person benefit at all.

[20:45:06] MOORE: But he is saying that he recused himself of that. But then there's this other point that you were making earlier, Anderson, about nepotism and I'm listening to this and I'm saying, wait a minute. You know, who ran John F. Kennedy's campaign? Who was his closest adviser on every decision? It was his brother, Robert F. Kennedy. I mean, who ran the White House during the last year of Woodrow Wilson when he had a stroke? It was his wife.

COOPER: But, Stephen, are you telling me --

MOORE: I mean, this is very common, the family members --

COOPER: OK.

MOORE: -- of a president who are competent to be, you know, very close, strategic advisers for presidents.

(CROSSTALK)

COOPER: Right, but I'm just not sure that running a real estate business in New York means you're competent to handle Middle East peace, relationships with China, Mexico.

MOORE: Well, he -- I got to say --

COOPER: I guess my question is, if Hillary Clinton was president --

MOORE: Maybe not, but, Anderson --

COOPER: -- let me ask you Stephen, if Hillary Clinton was president am Chelsea Clinton and her husband Marc Mezvinsky, I'm not sure how to pronounce his last name, who has many business dealings, some of which have failed or not done so well, if they were running around the world representing the Clinton administration, are you telling me that you would not be raising some concerns?

MOORE: No, I -- look, I agree that there is an appearance of impropriety issue hire. But, Jared Kushner is someone I worked very closely on the campaign. That guy is brilliant. And to say that he doesn't know anything about Middle East policy, I think it's just wrong.

COOPER: No, I didn't say he didn't know any thing.

MOORE: I don't think Donald Trump would have won the election without Jared's wise counsel. So it's national for Donald Trump to want him as chose as possible. And I do think President should be able to have the advisers that he wants.

COOPER: Professor.

REICH: May I suggest something here. We're mixing several different issues. One issue is family members. And I agree with Steve that some presidents who have had family members were advisers. There's nothing inherently wrong about that. But we do have nepotism rules that try to control that at least to some extent in terms of appearances again, trust in government.

We also have the issue of business people who have high roles in business, who are having business connections and doing business in the White House that looks like it's benefitting them in terms of their personal business life. That is a problem. It's a problem whether it happens. It's a problem if it looks like it happens.

And, Steve you agree that an appearance of impropriety is a big, big problem. Jared Kushner to be out of the White House. Get him out. I agree with the Wall Street Journal.

MOORE: But there is a big difference, Robert between the appearance of impropriety, right?

COOPER: Right.

MOORE: I mean, so I think that's what all of these allegations are made, but we don't really have any evidence. What you do have is an appearance of impropriety.

COOPER: Right. MOORE: And I think, Jared has to be much more careful.

REICH: Do you agree that he should be out of the White House?

MOORE: No. But I think these official roles maybe, probably are not a -- probably not the wisest thing right now.

COOPER: All right, let's leave you there. Stephen -- Secretary Reich, appreciate it -- yes, Stephen Moore, Secretary Reich --

MOORE: Thank you.

COOPER: -- appreciate it.

REICH: Thank you.

COOPER: Breaking news on the White House, gun policy plans that never got rolled out today because of the President's statements yesterday plus of all the talk by the President and array of arming some teachers and incident in the Georgia school involving a teacher and gun is making headlines. We'll explain ahead.

(COMMERCIAL BREAK)

[20:52:21] COOPER: Breaking news tonight, sources telling CNN that the White House is postponing its announcement of specific policy proposals about guns and school safety, after that remarkable and surprising meeting between President Trump and law makers just yesterday.

One source told CNN, that meeting, the one where the President suggested taking people's guns away and figuring out due process later threw a wrench into the White House plans.

Meantime, today another American high school went on lockdown. Students terrified, sheltering in place. But this time nobody was hurt and the shot fired came from a teacher's gun. The story is out of Georgia. It's now part of the national conversation about the Presidents proposal to arm teachers. Gary Tuchman has more.

(BEGIN VIDEOTAPE)

GARY TUCHMAN, CNN NATIONAL CORRESPONDENT (voice-over): For those who support arming school teachers, Jesse Randall Davidson would not be the role model they are looking for.

UNIDENTIFIED MALE: Oh, my god.

TUCHMAN: A 53-year-old social studies teacher in Dalton High School in North Georgia locked himself in his otherwise empty classroom and then is accused of shooting his handgun.

TUCHMAN (on camera): This is the classroom where the teacher was at and this is the window where he fired his gun. And it's now boarded up.

TUCHMAN (voice-over): The school principal says he went to the classroom door twice after hearing Davidson was not coming out.

STEVE BARTOO, PRINCIPL DALTON HIGH SCHOOL: He told me he had a gun and shortly after that I heard a gunshot.

TUCHMAN: Nobody was hit by the single gunshot, but panic ensued. The 1,900 student school actually went into lockdown.

KATE HABELIN, STUDENT, DALTON HIGH SCHOOL: I was shaking and crying and just like holding one of my best friend's hands and strangers hands and just -- we were just communicating with everybody trying to see what happened.

UNIDENTIFIED FEMALE: All you hear is like the footsteps and we didn't know who it was in the hallway. So, we were scared every time we heard footsteps because we didn't know who was going to come to us, if it was good people or bad people.

TUCHMAN: The teacher is not unknown to local police. In March of 2016 a Dalton police report stated that Davidson had come to the police station to confess to having someone killed. Police eventually determined he made up the story. They found no murder victim. He wasn't arrested but received medical treatment. The school says it is aware of his medical history.

TUCHMAN (on camera): Sir, according to a police report this teacher had said he was involved in a murder of a person who turned tout be a fictional person. Did you know about that and if you did, why would he be allowed to continue teaching here?

BARTOO: I'm aware of the police report, but as far as I'm aware he was fit to be at work yesterday.

TUCHMAN: But does that concern you knowing the specifics about that police report if you didn't know those --

BARTOO: Again, I'm aware of the report but he was fit to be at work yesterday.

TUCHMAN: But, why would he have been fit if that was in a police report --

[20:55:00] BARTOO: I can't answer why.

(OFF-MIC)

TUCHMAN: But the police report is not medical information.

UNIDENTIFIED MALE: But any information about his condition is. And that's your question, sir.

TUCHMAN (voice-over): Many of the students say, Davidson is a great teacher.

CHONDI CHASTIAN, STUDENT DALTON HIGH SCHOOL: He was probably my favorite.

TUCHMAN (on camera): Your favorite teacher?

CHASTIAN: Yes.

TUCHMAN (voice-over): Sixteen-year-old Chondi Chastain wrote a tweet that is now been read by tens of thousands of people. "My favorite teacher at Dalton High School just blockaded his door and proceed to shoot. We have to run at the back of the school in the rain. Students were being trampled and screaming. I dare you to tell me arming teachers will make us safe."

TUCHMAN (on camera): You're telling me after Parkland, after the shooting in Florida, that you're part of a discussion with him and he told you what?

CHASTIAN: He said that he didn't think that was a good idea for teachers to have guns.

TUCHMAN: So, he just told you that within the last two weeks?

CHASTIAN: Yes, sir.

(END VIDEO CLIP)

COOPER: And Gary joins us now. And folks, I said it happened today, obviously, this happened yesterday. Do we know anything about why this happened, any kind of motive?

TUCHMAN: Anderson, we don't have any idea why it happened. We talked to students, we talked with administrators, they all say it's a mystery. Now, police might know the motive. If they do, they're not saying anything publicly. We've reached out to Davidson's attorney, we have not heard back from him. David is in schedule to make his first appearance in court next week on Tuesday. Anderson?

COOPER: All right, Gary Tuchman, thanks very much.

Coming up next, much more in the breaking news out of the White House, possible big departure, breaking news on Ivanka Trump potentially problematic business deal, the reporting on Jared Kushner, Jeff Sessions and more.

The question hanging over, of course, all this is the White House in turmoil. Stay tuned.

(COMMERCIAL BREAK)

COOPER: Welcome to the second hour of 360, the second hour of breaking, all of it, they're coming straight from the White House or revolving around it.

[21:00:00] On the table whether it's the possible departure of the President second national security advisor, the departure of Hope Hicks and others or are we looking at a White House in chaos. And what about the President's feud with his own attorney general and the White House Press Secretary carefully recons -- are carefully constructed answer. The question, is he going to be fired?