Gary Cohn: Trump to lay out key infrastructure initiatives

This is a rush transcript from "The Story," January 30, 2018. This copy may not be in its final form and may be updated.

MARTHA MACCALLUM, FOX NEWS CHANNEL HOST: Thank you, Bret. We will. We'll see you when you get up here soon. We are overlooking Capitol Hill this evening, where in a short time, we will start to see the buses, and then the motorcade as the government begins to arrive in the capitol behind me to carry out this time-honored tradition of a live address to Congress and the nation by the president of the United States. It will happen less than two hours from now.

In excerpts that have just been released moments ago, we learned the president will promise a safe, strong, and proud America, and a renewed effort to work with Democrats to heal the partisan divide: "I want to talk about what kind of future we are going to have, what kind of nation we are going to be. All of us, together as one team, one people, and one American family." Good evening, everybody.

I'm Martha MacCallum, the White House has said that the president will strike as you there, a bipartisan tone this evening. But we'll hit on several of his key issues, including immigration, a hot debate right now, and the economy which he feels is something that he can put in the plus column for sure right now. This was President Trump talking about what he wanted to do on that front the last time he addressed Congress.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Right now, American companies are taxed at one of the highest rates anywhere in the world. My economic team is developing historic tax reform that will reduce the tax rate on our companies, so they can compete and thrive anywhere and with anyone. At the same time, we will provide massive tax relief for the middle-class.


MACCALLUM: Interesting to look back as he begins tonight and gets ready for this evening. All angles are covered for you tonight on THE STORY. Marc Thiessen, Mollie Hemingway, and Juan Williams standing by, but we begin tonight with the story exclusive, President Trump's Chief Economic Advisor, Gary Cohn, joins us live tonight from the White House. Gary, good to see you tonight. Obviously, a big night for you, your team, and obviously for the president who will be reading that speech as he goes in there this evening. Just looking back at what he promised about a year ago when he gave his first address, clearly the sound bite that we just played is something that you all have in the victory column tonight.

GARY COHN, CHIEF ECONOMIC ADVISOR TO PRESIDENT TRUMP: Absolutely, Martha. Thanks for having us here. And absolutely, the president a year ago, when he was addressing the joint address, talked about the importance of tax reform and what tax reform would mean to the American economy, and more importantly, what it would mean to the American worker. Obviously, the president fulfilled that promise to America. He delivered them tax reform by Christmas of last year, it's signed into action, and we're now seeing the real results of tax reform.

People have not yet seen the lower withholding tax; we'll see that in the beginning of next month. But look at the American workers, we've got over three million American workers receive some type of tax bonus, or wage increase, or pension increase. We've seen 350 companies already make announcements in direct reflection of what we've done with taxes in the United States and becoming very competitive with the rest of the world. So, yes, we are very excited in what the president said a year ago and his ability to follow through on his promise to the American public.

MACCALLUM: So, tonight, he's going to outline what he's wants to do going forward. I know that you all have said regulation was top of the list, tax reform came after that, and then you want to take on the infrastructure issue. Gary, we've heard presidents, as long as I can remember, talk about rebuilding the fallen infrastructure of the United States. The president on the campaign trail promised a trillion-dollar federal direct investment to that. That number has changed now. Now, it's around 200 billion in terms of direct federal investment. That's going to cause a problem with Democrats. They are not going to be happy with that mix.

COHN: Look, as you've said, Martha, we had a three-prong attack. We did do reg reform, and we're not done with reg reform. So, no one should think we're done with reg reform; we're just getting started with reg reform. We've done taxes. We are moving on to infrastructure. The president is going to outline his two key initiatives on infrastructure. Tonight, he's going to talking about investing a trillion and a half dollars in infrastructure.

And equally, if not more important -- I actually think it's more important -- he's going to talk about the arcane approval process that we have for proving infrastructure in the United States. It takes almost ten years to get a normal road approved in the United States. We need to speed that process up to two years or less. There's an enormous amount of money in the system that can be invested in the infrastructure. We're just not allowing it to be invested. We have to allow that money to be invested in the system, and the president is really committed to get that done.

MACCALLUM: Yes. I mean, I think that's something that will resonate with a lot of people. And the lifting of regulations across the board in the corporate sphere has been met with a lot of applause from American businesses to be sure. So, making that path easier for infrastructure is going to be very important. But, you know, in terms of having -- finding a place to get middle ground and to get this infrastructure package approved, does the White House feel like there's anything that Democrats are going to meet you halfway on and allow the president to, you know, have that signing ceremony at the White House and give him that moment? Will they meet him halfway?

COHN: Look, we've been working quite actively with the Democrats on infrastructure. The Democrats are equally as interested as infrastructure at the Republicans. We need to get a bipartisan bill. We need to get a bill that can get 60 votes in the Senate, and we're working towards that.
The president has given us enormous amount of latitude. The president has made it very clear that he's open to working in a bipartisan way and he's willing to sign a bill with an enormous amount of latitude to bring the Democrats and the Republicans to the table to get an infrastructure bill that works for our American citizens and make this more competitive.

MACCALLUM: Gary, I just have about a minute, but I want to ask one last question. The market down strongly today, down yesterday as well.
Healthcare stocks were down, partly on what we saw in terms of the deal between J.P. Morgan and Amazon and buff it to kind of take some of that health care burden into a corporate environment, but there's also concerns about rising interest rates because the economy is very hot.

COHN: Look, let's not look at two days in the market. We need to look at markets over trends and cycles. We are clearly in a bull market trend.
Since President Trump's gotten elected, the market has been on a consistent upward trend, and upward trajectory. The last two days had been a break from that upward trend. But if you look at the overall performance of markets, markets have performed exceptionally well during the Trump administration.

Yes, interest rates are starting to tick up a little bit, people are debating whether inflation is coming back into the system or not. Actually, what those three companies did today on health care is anti- inflationary. They're merging together into a non-profit health care provider to save healthcare costs. So, when companies do things like that, and are creative, and we're actually encouraging that, and we're encouraging it in small and medium-sized businesses as well, those things are anti-inflationary. So, there is still a big, broad question out there whether inflation will come back in the system or not.

MACCALLUM: Gary, thank you very much. We'll be watching. As you well, I know, from the White House, good to see you tonight.

COHN: You're very welcome. Thanks for having me.

MACCALLUM: So, here now, our all-star panel: Juan Williams, Co-Host of "THE FIVE" and a Fox News Political Analyst; Mollie Hemingway, Senior Editor at The Federalist; and Marc Thiessen, an AEI Fellow who has written two State of the Union addresses as Lead Speechwriter for President George W. Bush, and both of them -- the latter -- are Fox News Contributor. So, good to see you all.

INSTITUTE: Good to be with you, Martha.

MACCALLUM: Marc, I should start with you because you have done this. You know what this process is like. We've started to see some of the excerpts that have come out. What's your prediction? And what can you tell us about how you think we got here.

THIESSEN: So, I mean, I think the State of the Union is the most-watched speech that an American president ever gives. So, this is a huge opportunity for Donald Trump. The last speech that he gave, 47 million people tuned in. So, this is a chance to direct address the American people in more than 240 characters through the fake news media filter, and get directly through those. So, he's got an opportunity to change impressions about himself. The biggest problem Trump has had going into this night is that he's had a huge successful year.

He got tax reform through, he's had regulatory reform, he got a good new justice on the Supreme Country, Conservative judges, drove ISIS from its caliphate. We can go on and on about the different accomplishments. But his approval rating, according to Gallup is at 36 percent. So, somebody, with his accomplishments, should not have that kind of a low approval rating, and it's actually down nine points. He was 45 percent on his inauguration. So, the problem is that Donald Trump has not been, despite all of his accomplishments, expanding his base -- bringing more people into the Trump train.

MACCALLUM: It's so interesting, because when you look at the Obama administration, it was exactly the opposite. There was a lot of positive feeling about him as a person and yet people were not always as happy with the policies or the economy under President Obama. Let's look at a quote from today, from this afternoon at the luncheon at the White House when the president spoke to us about what he was going to speak about tonight. And he said this, he was talking about comparing, you know, being a business guy with governing.

He said, "Having a successful business background and a successful business background is great, but oftentimes, you do things that you would never do in business because you have to also govern with heart," he said. "That is something I've learned maybe more than anything else, you govern with all of the instincts of a businessman, but you have to add much more heart and soul into your decisions." He went on to say, you know, you impact so many people's lives. Juan, your thoughts on that and what we may hear on that front tonight?

JUAN WILLIAMS, FOX NEWS POLITICAL ANALYST AND HOST: Well, that's a very appealing comment coming from the president. I think if his speech tonight is of that kind of unifying scene, if it's about reaching out, if it's about acknowledging -- listen, we have a politically polarized country. I acknowledge that, and understand that basis. I think, then, he can come to some of the unity themes that I think the country is hungering for. That could help him a great deal. Now, the thing is, he has not been a unifying figure. He's been a polarizing figure over the course of the last year.

So, when people are listening tonight, I think lots of people are going to tune in because they love Donald Trump on television and all that. It's like reality T.V. But they're going to be wondering, is this really what is thinking? Is this really who he is? That's why you're seeing, Martha, so many Democrats opting to boycott, to stay away. That's why you're going to have protest outside. This is a different kind of State of the Union. I don't think any other State of the Unions, Marc, wrote or attended by people who are protesting.

MACCALLUM: Mollie, what's important to you as you watch?

MOLLIE HEMINGWAY, FOX NEWS CONTRIBUTOR AND SENIOR EDITOR AT THE FEDERALIST: Well, just -- I wanted to pick up on what Juan was saying. You know, last year, he gave an address to Congress in February that was very unifying, that was very well received. But then, immediately the next day, the headlines were taken over by people who oppose the president. He's never really been given a chance to just exert his leadership without a strong resistance. And so, to some extent, it doesn't matter he says tonight if the resistance is not going to give him a chance to just be president.

And this idea that if he -- you know, this quote that you just read reminds me a lot of that compassionate conservatism that we saw from George W. Bush. Well, if he gives a very traditional speech like everybody else does, where you just do a laundry list of handouts to lure independent voters. It will be well received, by official D.C. for a few hours until the next, you know, thing breaks. But part of his appeal was really breaking out of those orthodoxies and not doing everything the traditional way. And it might not be in his best interest, even if it's well-received in D.C., with what made him so appealing during his campaign and his first year.

MACCALLUM: I mean, he's kind of in a rock and a hard place on that, isn't he, though? Because as Marc points out, his approval numbers are low. So, in order to fix that, he's got to reach out to some people who can't handle the tweets or can't handle some of the behavior that they've seen from him, as much as they might like what's going on with the economy. Marc?

THIESSEN: But he's got to do is he's got to be smart tactically about this. So, what he needs to do is reach out his hand in bipartisan cooperation and dare the Democrats to refuse it. You know, he -- that's exactly what he's doing on immigration. So, in immigration, if you think about what happens since the shutdown, instead of, you know, rubbing it in their faces, what he did is he offered a path to citizenship for 1.8 million people. That is something that is -- that challenges -- it wasn't just legalization, it's citizenship, that's amnesty.

He support -- he announced he supports amnesty. He's going to talk about -- he's going to talk some more about for amnesty tonight. That's challenging your base. That's what real leaders do. Is Chuck Schumer going to take his hand and try to reach an agreement with him or is he going to refuse it? Because right now he's saying "no money for the wall." So, if that's the position, Donald Trump's going to look -- even if the Democrats refuse to cooperate with him, Donald Trump's going to look a lot better for having made that.

MACCALLUM: Exactly right. Marc has thrown out the large marker than President Trump has put down on this. He's saying, are you going to turn those people away, Democrats? You're going to let them not get their right to stay in this country, Democrats? And what are they going to say to that, Juan?

WILLIAMS: I think they said it already, Martha, which is "no". I mean, what they see is that Donald Trump wants to cut legal immigration. He wants to do away with family unification through the lottery system. Donald Trump is anti-immigration, and that's what you're picking up on, Mark. The question is: how does his base react when he says I am for -- and I think that you've seen people already having Breitbart column amnesty done, and the likened heritage that this a non-starter, because they're not even interested in what the president's offering in terms of a pathway to citizenship for the so-called DREAMERS. That's a problem.


HEMINGWAY: Yes, this is the big danger. I mean, we had this thing where Donald Trump was declared the victory is this spat with Chuck Schumer. But if at the end of the day, you don't see substantial changes to our immigration policy -- you know, providing amnesty to people but not doing anything to change the, sort of, structural fundamental problems that have caused people so much anger about our immigration policy, it'll be a win for Chuck Schumer.

WILLIAMS: And the other side of that is you've got a larger need for comprehensive immigration reform. It's not just about the DREAMERS, it's about 11 million.

MACCALLUM: This is exactly where we've been forever on this. You know, where everyone backs into their own corner and then says, oh, forget it.

WILLIAMS: I hope not. I hope this is an occasion for healing, that's what State of the Union -- and I think what this president, particularly given the polarization, he has a chance. There's a very obviously niche. Steven Miller is not Marc Thiessen, let me just tell you.


WILLIAMS: Gary Cohn was pretty good, but Gary Cohn helped him deliver a very positive optimistic message at Davos.

THIESSEN: If Democrats want to get comprehension immigration form, this may be their only chance. Because just like only Nixon can go China, it maybe that only Donald Trump is willing to do that.

WILLIAMS: I agree.

MACCALLUM: I'll leave it there. Thank you very much. Great to see all of you tonight.

THIESSEN: Thanks, Martha.

MACCALLUM: So, still to come tonight, one of the big issues, as you can tell from our conversation is this issue of immigration. It is probably the biggest topic other there right now. Congress remains divided, as we have been discussing over DACA and the wall. So, can a deal get done?

Plus, the past two presidents said we won the war in Afghanistan, but violence there is worse now than ever. President Trump's plan to deal with this situation after 16 years; what will he do? When Karl Rove and Marie Harf join us next.


BARACK OBAMA, 44TH PRESIDENT OF THE UNITED STATES: We can say with confidence that America will complete its mission in Afghanistan and achieve our objective of defeating the core of Al Qaeda.



MACCALLUM: So, you can see the lights around the Capitol building as the motorcades and the law enforcement start to clear the way, and the buses bring members of Congress over from their offices to the capitol. So, things are starting to get underway here. An exciting night as we wait for the State of the Union address, and the war on terror will, of course, be one of the major focuses of President Trump's first State of the Union tonight.

During the first year of the Trump administration, the military has made significant progress in the fight against ISIS, to be sure. But more than 16 years after the United States helped overthrow the Taliban, there has now been a new wave of deadly attacks in Afghanistan. New reports surfacing that U.S. ally, Pakistan, continues to allow supplies to be funneled across the border, it's Taliban, and to support the organization that continue the unrest that you see there, despite three presidents at different points in their presidencies declaring that we were very close to winning in Afghanistan.


GEORGE W. BUSH, 43RD PRESIDENT OF THE UNITED STATES: We've seen Afghans emerged from the tyranny of the Taliban and choose a new president and a new parliament.

OBAMA: Tonight, for the first time since 9/11, our combat mission in Afghanistan is over.

TRUMP: No one denies that we have inherited a challenging and troubling situation in Afghanistan. But one way or another, these problems will be solved. I'm a problem-solver. And in the end, we will win.


MACCALLUM: Here now, Karl Rove, served as Deputy Chief of Staff to President George W. Bush; and Marie Harf, a former Obama State Department Spokeswoman, both are Fox News Contributors. Welcome to both of you. You know, I think that for any of us who have watched this war in Afghanistan for 16 years, and both of you lived through it with two different presidents. As President Trump gets up there tonight. He committed 4,000 troops to the fight in August of 2017, and he's now saying we will do what it takes to win in Afghanistan. Marie, what goes through your mind?

MARIE HARF, FOX NEWS CONTRIBUTOR AND FORMER SPOKESPERSON FOR THE OBAMA STATE DEPARTMENT: Well, I think the question has always been what does winning look like? That it's the longest war in America's history now, which is a stunning fact. And there's always been debate inside many administration and there is currently about what the goal should be. You know, everyone agrees that they shouldn't have terrorist organizations that can attack the homeland as they did before 9/11. That's the reason we went there. But beyond that, is it securing the entire country, is it helping the Afghan forces be able to do that on their own? You know, this is a really complicated place; we've now seen the rise of ISIS there. So, we have to settle as a country on what the goal should be? And I hope President Trump talks about it tonight -- he did not mention it last year during his address to Congress, I hope he does this year.

MACCALLUM: Karl, as you look back at your time in the Bush administration and you remember what this fight was like then, are you astounded that we're still having this conversation all these years later?

KARL ROVE, FOX NEWS CONTRIBUTOR AND FORMER CHIEF OF STAFF UNDER PRESIDENT BUSH: Well, President Bush in his first State of the Union in 2003 warned that the fight against terrorism would not be finish on his watch, and would extend into the future. So, you can't predict when this will end.
We'll know it in retrospect, but there's been not only a significant change in the number of troops in Afghanistan. More importantly, there's been a change in their operating rules.

In November of 2016, the special inspector general for Afghan reconstruction said that 72 percent of the country was under government control; eight percent under the control of the terrorists. By November of 2016, it was 57 percent was under control of the government; 10 percent under the control of terrorist. Today, 56 percent of the country is under the control of the government, only one point down from where it was when President Trump inherited it. I think the reason is, not only are there more troops, but the operating rules are, "let's go kill the bastards."
And that's what's happening.

MACCALLUM: But you know what, one of the biggest factors here is Pakistan, and President Trump has made clear that he is not going to support them monetarily in the way that we have as if they were an ally, if they are clearly not an ally. If they are continuing to fuel this fight. That is a big change from what we heard under President Obama, Marie.

HARF: Well, there were times in our administration that we also halted some funding to Pakistan because this is one of the toughest things we've faced. That Pakistan on the one hand is the kind of terrorism ally; we worked with them quite a bit, but on the other hand, they funnel extremists into Afghanistan. And you know, I don't think we want to look back 40 years from now and still have troops -- American sons and daughters fighting and dying in Afghanistan. So, when you know, Karl's right, we went there after 9/11 to get Bin Laden, to get Al Qaeda, and that has largely been done. Now, we have new and different threats, but we cannot govern their country for them and we cannot control their country for them. And when you talk to average Americans across the country, they want our sons and daughters come in home.

MACCALLUM: I mean, Karl, at some point, we either have to win -- Karl, we either -- I'm sorry, we either have to win this, and I think that looks like the government of Afghanistan and the military of Afghanistan being in control of the entire country. Or we have to say, this has been a huge -- rabbit hole is too soft a word for the loss of life, $900 billion spent. It may be the biggest mistake since the Vietnam War, perhaps.

ROVE: I totally disagree. This was the place from which the attacks of 9/11 were launched. And if we allow a terror state to grow in this in the part of Central Asia, and allow future attacks to be made on us and our allies, shame on us for having done that. President Obama talked -- when he was campaigning in 2008 talked about this being the good war. But once he got into office, it was the war he wanted to get rid of it. In 2014, we came this close to having no U.S. troops in Afghanistan like we had in Iraq after it started in 2012. And Iraq turned bad when the U.S. withdrew its troops. Afghanistan would turn bad if we and NATO pulled out. The NATO mission was kept alive only by our allies pressuring President Obama to stay there, and good for them doing it. We must prevail in this war. Otherwise, we will see a repeat of what we saw in 9/11 from bases inside Afghanistan.

MACCALLUM: That's what the president said he believes as well. He wants to finish this fight. So, maybe tonight we're going to get a better sense of what that looks like in his mind. Marie and Karl, thank you so much. Good to see you both.

Coming up next, the big focus tonight will be immigration. Among other big topics, we've got a new excerpt of what the president will say about that hot topic tonight. House Homeland Security Chairman, Mike McCaul, joins me next. And we will hear from the mother of Sergeant Brandon Mendoza -- killed by an illegal immigrant in 2014. This is all, of course, very personal for her. And she is not holding back on what she wants to hear tonight.


UNIDENTIFIED FEMALE: This is about tens of thousands of American citizens who have been killed by illegal repeat criminal who've been released back out onto our streets. It's about hundreds of thousands of victims of illegal alien crime.



MARTHA MACCALLUM, THE STORY HOST: We are back live at the capitol. And immigration, of course, may be the hottest anticipated topic of the speech tonight. We did just get a look at some of the excerpts that have been released. And here we see them for the very first times in terms of where the president will go tonight. Quote, struggling communities, especially immigrant communities, will also be helped by immigration policies that focus on the best interests on American workers and American families. So there's just a little bit of a hint of where he will go tonight. Here now, house homeland security committee chairman, Mike McCaul, good to see you tonight.


MACCALLUM: So, obviously, there's a big effort underway to find something that both sides can agree on here. And one of the discussions, the White House has talked about four pillars of immigration. But the one that sounds like is being discussed the most right now on Capitol Hill only has two. It's DACA, a plan for the Dreamers, and then a border security plan out of that. Is that what you think should happen?

MCCAUL: I was in the White House meeting with the president, bicameral, bipartisan. We agreed on the four pillars. That being border security, which is a bill I passed out of my committee. I think everyone agrees with that one. Chain migration, which I think is very important to reform generation the immigration system. But remember the two New York attacks, one sprung out of chain migration, the other out of the lottery system. We want to deal with that reform, close the legal loopholes so we don't have another DACA situation five years down the road. And then finally, the last pillar is to deal with DACA and provide a DACA fix.

MACCALLUM: But that's not what I'm hearing on the senate side from Senator Corker, from Senator Rubio. They're saying there's no way that you will get 60 votes if you include chain migration, which they call reunifying of families, and also the lottery issue which the president feels very strongly about. I know you feel very strongly about. Are you willing -- they call those two things enhancements to this bare-bones bill. How will you find some middle ground there?

MCCAUL: Well, I can tell you house Republicans want to have a generation of immigration reform. We want to fix DACA, but we want the security to make sure DACA doesn't happen again. If we don't close the legal loopholes that exist right now -- secretary told me, for instance, when people come in other than Mexico and Canada, she cannot deport them, and so they stay in the United States. We've got to fix that problem.

MACCALLUM: We make it nothing, you know. I mean, do you think Democrats are going to come to the table and actually make a deal and sign this and stand next to the president with all of you at the White House and say, look, we came together and we did this? Do you think that's going to happen?

MCCAUL: I think if they want, you know, to fix a DACA situation -- and the president is very generous with 1.8 million children on a path to citizenship, which would be another point of contentious I think with the house. I think the president is a good negotiator. He presented that to the senate. And I think, look, we have to stand pretty firm.

MACCALLUM: But you have to place the bet on getting a deal for the dreamers that has border security, how does that shake out right now?

MCCAUL: Look, for me, the border security piece, I've been trying to get this done for seven terms in congress, before as a federal prosecutor.
We've never had any movement on border security. If I can get out of my bill $25 billion to put down at the border to secure it once and for all with physical barriers and technology and personnel, that's a huge step forward for the American people. We see, again, this is a great opportunity to get things done that we haven't -- have never have done.

MACCALLUM: We'll see if the other side agrees. Good to see you tonight, Chairman McCaul.

MCCAUL: Thank you, Martha.

MACCALLUM: Thanks for coming on. So my next guest has been deeply affected by the issue of illegal immigration. Her son, Sergeant Brandon Mendoza, was on his way home from his shift as a police officer in Mesa, Arizona in 2014, when he was killed in a head-on collision by an illegal immigrant who had been driving drunk for hours in the wrong direction on the roads. She has since become one of the president's most ardent advocates on immigration reform.


UNINDENTIFIED FEMALE: I'm going to tell you what? I'm supporting the man who is the only man who's going to save our country and what we're going to be leaving our children.


MACCALLUM: Here now, angel mom, Mary Ann Mendoza. Mary Anne, nice to see you in person. Thank you very much for being here. So, you hear this debate that's going on, and I know you that say that you don't believe that President Trump will turn his back on people like you who gave him support during the campaign.

MARY ANN MENDOZA, SON KILLED BY ILLEGAL IMMIGRANT: I'm holding on to hope about that. And I want to be able to say to all of these politicians they have to stop importing, protecting and providing for illegal Dreamers. They need to start protecting and providing for American dreamers. There can never be a clean dream act with all the blood of these innocent Americans on it. It just can't happen.

MACCALLUM: Speaking of some of those lawmakers, this is Steny Hoyer and Nancy Pelosi. Let's listen.


UNINDENTIFIED FEMALE: And our dreamers, you are here to say. We will not rest. We will not stop. This will not end, except happily for our dreamers. So again, they are inspirations.

UNINDENTIFIED MALE: And the state of the union is better because of the dreamers. The state of the union will be brighter in the future if we make the right decision for dreamers.


MACCALLUM: What goes through your mind when you hear that?

MENDOZA: I love -- and I know every member of AVIAC would be by my side as we face every one of those politicians and say to them, which child of yours would you choose to lose to support your dreamer agenda? Which child do you want to lose at the hands of an illegal alien? Because that's the price they've made us pay. And they're the very people who are making these laws and telling is that we need to protect these people and have them in our country, and turning their backs on their American constituents. They're not listening to what we're saying. And it's not fair for more American families. And this is the reason why every one of us with AVIAC has taken this fight on. There's no reason why any American has to feel the loss and the pain that we have.

And I told you before, Martha, when I've been on your show, there's hundreds of thousands of American victims every year. They may not be killed, but they're raped and they're assaulted and they have identity theft. And the people who are reaching out to us since they've seen us a lot on the news, is astronomical. And it is not right for our politicians or the liberal media to lie to the American people about what these DACA people are about. They do commit crimes. They don't graduate from high school. They're not all contributing members of society. And to lie to the American public to promote an agenda is just not.

MACCALLUM: Are there any dreamers that you would be OK with staying?

MENDOZA: Yes. But, you know, I don't think you can pass a dream act or a DACA reform until you start restructuring what's going on. Like I've said on your program last week, if they've committed a crime, they're out. If they're on welfare, they're out. They have to have things that are happening that are making sure we are bringing the best of the best into our country.

MACCALLUM: Mary Ann Mendoza, thank you very much. Good to have you here tonight.

MENDOZA: Thank you.

MACCALLUM: So there is breaking news tonight in the abrupt resignation of former FBI deputy director, Andrew McCabe, and reports says that he held back investigating Hillary Clinton during the 2016 campaign. Ed Henry here with the breaking news this evening when we come back live from Washington.


UNINDENTIFIED MALE: I think we may look back on tonight as the Monday night slaughter of the administration of justice and our institutions of justice in the United States.



MACCALLUM: So we have some breaking news tonight in the abrupt resignation yesterday of FBI deputy director, Andrew McCabe, with reports tonight that the number two at the bureau held back investigating Hillary Clinton during the 2016 campaign with regard to the Anthony Wiener laptop and when they got around looking at it. Chief national correspondent, Ed Henry, joins me live on set with the late breaking tonight.

ED HENRY, FOX NEWS CHIEF NATIONAL CORRESPONDENT: Martha, great to see you again. We've teed it up last night when we spoke that Andrew McCabe was ousted at the FBI because of something in that report by the nonpartisan justice department inspector general. We're expecting to see that report in the next few weeks. Now, the Washington Post is reporting that late in
2016 campaign, McCabe for about three weeks sat on information that another batch of Hillary Clinton emails had been found on Anthony Wiener's laptop.
This is exactly the type of conflict the president has been pointing too to the fact that McCabe was covering for Clinton at various times because the FBI official's own wife had gotten campaign money from Clinton intimates.

On top of those texts messages between Peter Strzok and Lisa Page which showed they were nervous about being too tough in the questioning of Clinton in her FBI interview because they feared she was going to win the White House. Plus, those texts that talk about a meeting in McCabe's office about an insurance policy in case Trump wins. Now, McCabe also under fire because of that memo written by House Intel chairman, Devin Nunez, and his staff which names McCabe as one of the senior officials who may have approved Obama administration surveillance of Trump officials. And once Republicans voted last night to release that memo to the public, White House critics have gone off.


UNINDENTIFIED MALE: it's a really disgraceful act of my view to make partisan and political the declassification process, and I think it's what you see when you have a flawed president infecting the whole of government.

UNINDENTIFIED MALE: I have to say, I'm really appalled by our Republican colleagues in reference to this. They've always been defenders of the FBI and protagonists of Putin. And they seem to have flipped. They remind me of the movie, the silence of the lambs.


HENRY: White House spokeswoman, Sarah Sanders, pushing back hard tonight on a CNN report claiming the president is pushing to release the memo ASAP, quote, contrary to public report there are no current plans to release the house intel committee's memo. The president has not seen on been briefed on the memo or reviewed its content, that from Sarah Sanders. I'm told White House are going through this very carefully right now, the memo, we're very likely to see it by the end of the week, Martha.

MACCALLUM: Here's what I don't get, so this four-page document that everyone.


MACCALLUM: It's in the White House, but the president didn't grab it and say, let me see.

HENRY: I've talked to a very senior source familiar with all this, who told me a short time ago that part of this is the White House really -- the top staff starting with General Kelly, they want the president to focus on the state of the union, which is why you're here. And they thought that if the president started looking at this memo, starting debating with the staff, do I release it today, do I release it tomorrow? Obviously, it would step on the state of the union message. The second thing is, if you put this in the president hands, he's liable to tweet it, he's liable just stay and call into a radio show and say, you're not going to believe what's in this.

So, the bottom line is, in all seriousness, they're trying to let the lawyers handle it first, deal with the questions that the president's own justice department has about. What kind of classified information is in here? Would this be damaging to national security? Do they have to black out some of the material or can they release the whole four-page memo? And deal with that. I mean, one source told me, be ready on Friday night. Don't go anywhere Friday night because the five days are now ticking for the president to either say, we're not releasing it, or, it's OK for the house to release this. And so, by Thursday or Friday we're very likely to see this memo.

MACCALLUM: You know, as I was watching your report, you remember back to that moment when we all got the news that Anthony Wiener's laptop had been found.

HENRY: Yeah.

MACCALLUM: That's when James Comey came back out and said, we're going to reopen the investigation.

HENRY: Yeah.

MACCALLUM: And so I'm wondering now, you know, if Andrew McCabe was sitting on it for a few weeks did James Comey then get word that Andrew McCabe was sitting on this information, and then is that when he burst out and said, we're going to reopen the investigation?

HENRY: And is that why James Comey once later said it sickened him, the thought that maybe he impacted the election in some way. Maybe there were people beneath James Comey who were holding back. Maybe James Comey knew for three weeks as well. We're saying we don't know. He's been out there tweeting all these platitudes and quoting LMK and everyone else, and Buddha, James Comey.

MACCALLUM: And himself sometimes.

HENRY: And meanwhile, we may need to hear from him instead of Buddha to find out what really went on.

MACCALLUM: What really happened. Ed, thanks.

HENRY: Good to see you.

MACCALLUM: Great to see you. So coming up next, some special guests will join first lady, Melania Trump, in the gallery tonight, including parents, sadly, of MS-13 gang victims, to some of our nation's heroes as well. And Bill Bennett in two Republican administration, as you know, joins us with his unique take on the big night from his own experience, next.


MACCALLUM: So, about an hour and ten minutes before the president will be gaveled into the room. And you can see the lights flashing outside the capitol building. Pretty soon we'll probably see the motorcade start to move its way from the White House over to the capital. And we have seen some of the buses coming in. And as a tradition, the president and the first lady have invited several special guests tonight. Melania Trump tweeting just a short time ago, I will be joined by an honorable group of Americans. Sitting with me are heroes who have served our nation in times of need, families who have suffered at the hands of evil and citizens who have embraced the American dream. Here now, Bill Bennett, served on two Republican administrations, knows a thing or two about how it all works tonight.


MACCALLUM: He's also a Fox News contributor. Bill, good to see you in person.

BENNETT: Good to see you, too.

MACCALLUM: So, talk to me a little bit about the importance of tonight, the importance of these guests that are chosen for this big night.

BENNETT: Well, I think it's a great night. You know, I was listening to someone say, we don't really need this. We don't need it, but I think it's a good idea. Otherwise, when do all the branches gather together under one roof? You know, at inauguration, at a few state funerals. Otherwise, they don't. And I think it's good. When the camera pans tonight, you see the president, the vice president, the speaker, the generals, the Supreme Court, members of the house.

MACCALLUM: Crested moment.

BENNETT: It's pretty cool. It's pretty impressive.

MACCALLUM: So, there's always one cabinet member who's missing.


MACCALLUM: And that person is the designated survivor, just in case, God forbid, something happens in that chamber, and that was you.

BENNETT: That was me a couple of times. I began to feel picked on a little bit.

MACCALLUM: I want to go.

BENNETT: Yeah. And I said where are we going? And they said, we're going -- we can't tell you. We went to Albuquerque and back. Yeah. I don't know why. But here's the story, I said to the guy who's taking care of me, who's that guy? He said he's the military aide. I said what does he have?
He said he has the nuclear codes. I said I'm the secretary of education.


MACCALLUM: I don't want to push the button, necessarily.

BENNETT: And then he said any other questions? And I said do you have Mrs. Thatcher's phone number, just in case. But it's amazing to think about.


BENNETT: It was terrifying, but you focus on it. But a couple of times I was in there and it's a great event. And, you know, this is the way we do it in this democracy. And it's nice when the president walks down. And I'm interested to see how many Democrats reach out to extend the hand.

MACCALLUM: It's always fun to watch that part.


MACCALLUM: Because a lot of people sort of muscled their way over the aisle, they want that moment with the camera with the president shaking hands. And we'll see who is looking for that. In terms of the guests in the house, it says something about the priorities of each administration in terms of who they choose.

BENNETT: Right. And I think -- and heroes I think is what Mrs. Trump was talking about and what the president will be talking about. And there should be heroes because it's a heroic first year in many ways. Look, go back to the campaign, think about the promises. And one of the promises was get this economy going again. Check. Take on ISIS. ISIS has been driven out in Iraq. Check. Immigration, he's taking on the issue big time, but already we see those numbers at the border down. Judges, the Supreme Court, we have a new Supreme Court justice. The federal courts. Check. And these are actions that this man as a candidate said he would take and as president has taken them. These other people are there for stories because in addition to policy, you need a narrative. There's nothing quite like, once upon a time. And each of the people whose been selected to be in the gallery has one of those, once upon a time, stories, some of them uplifting, some of them very sad, but all Americans -- quintessential American stories.

MACCALLUM: The president was asked today and they release this from the luncheon that we attended. So this is on the record, you know, that he talked about the thing that had struck him the most about the job was that governing requires heart. Business requires head. He said it's all about the dollars. But this job, the first time he's done it, of course, and then the year has required more heart than he might have anticipated.

BENNETT: I think every president has probably thought about the American people and their judgment of them at some point and wanted to say, as Donald Trump might say, you're fired, to the American people, but you can't. And yeah, I think this is occurring to him and I think his appreciation of the job is deepening. I still want to see Donald Trump, the guys whose here to change things, and to change the tenor of things, the tone of things, as well as the policy, but some leveling that's fine.

MACCALLUM: But what's the one thing you would tell him for tonight?

BENNETT: I would tell him to be strong and to be affirmative, to remind people of what it is he promised and what it is he's delivering, because I think it's very, very important. Remember, people are watching this. Most of the people watching this do not watch Fox News Channel five hours a day like I do, and you a couple of times.


BENNETT: But they have an impression of it. And for a lot of Americans, we know that's a negative impression or indifferent impression. So, he needs to come across to them as if he's meeting them for the first time.

MACCALLUM: Bill Bennett, thank you for coming.

BENNETT: Thank you. Good to be here.

MACCALLUM: We'll be right back with some final thoughts as we count down to the president's first state of the union address live from our nation's capital.
