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Kelly File

Fiorina reflects on state of campaign; Charles Koch opens up on 'classical liberal' views

This is a rush transcript from "The Kelly File," October 15, 2015. This copy may not be in its final form and may be updated.

MEGYN KELLY, HOST: Breaking tonight, big headlines from the campaign trail as a brawl breaks out at one rally. Reports bubble up of Republicans getting out and the two clear front-runners in the GOP race for the White House band together and threaten to boycott the next big debate.

Welcome to "The Kelly File" everyone, I'm Megyn Kelly.

Donald Trump and Ben Carson laying down a set of demands in the joint letter to the network hosting the next republican debate. Mr. Trump and Dr. Carson tells CNBC that if it does not change the debate format, then the two men will not participate. The letter reads, quote, "Neither of our campaigns agreed to either the length you proposed or your ban on opening and closing statements. In fact, neither of our campaigns were even consulted. Neither of those conditions are acceptable."

Reportedly, the campaigns of Senators Rand Paul, and Ted Cruz, and Governor Jeb Bush are also calling for changes. But so far, tonight, one republican candidate is not ahead.

We will be joined live by presidential candidate Carly Fiorina whose campaign today suggested that her opponents, lack of, quote, endurance for the three hour debate speaks volumes.

But first up tonight, Chris Stirewalt, our Fox News digital politics editor. And Marc Thiessen, Fox News contributor and former chief speechwriter to President George W. Bush.

All right. Chris, let me start with you. So many of these candidates, but, in particular, Carson and Trump are very ticked off.  About what, exactly?

CHRIS STIREWALT, FOX NEWS DIGITAL POLITICS EDITOR: Well, it's too long. And if you watch the dug on CNN debate, it went on, three hours of a debate. And, by the end, Trump was kind of sleepy. And his -- he was a little lower energy. And it was -- I was sleepy by the third hour.

KELLY: Me too.

STIREWALT: So, I don't really blame any of the candidates. That's a long time to try to do it.

KELLY: Exactly. We were thinking, thank God we didn't make the Fox News debate three hours.

STIREWALT: Of course. But if you have, one could drew candidates who were packed on the stage, you want to ask everybody questions, so they want to make it longer, these guys want to make it shorter. And if you're Trump and if you're Carson, you don't want the debate, you don't need the debate.  You're at top of the polls. You're not great at debates --

KELLY: Ahah!

STIREWALT: -- maybe you're happy if you have to object.

KELLY: Well, that's the question, Marc. Is it any accident that those two are saying we don't want that. And Fiorina is saying, why not?

MARC THIESSEN, FOX NEWS CONTRIBUTOR: Yes, who's the good debater of those three? I mean, look, Trump and Carson both have had pretty bad debates in the first two outings. So, no surprises, they don't want to.  And look at what Donald Trump's objections are. One, it's too long. Two, I can't waste time with opening and closing statements. I mean, in other words, he's basically saying, there's too much time to actually, you know, debate. So he doesn't want to debate. And so, you know, I would be much more impressed if his objection was, look, it's time to window the field a little bit. We have too many candidates -- there's not enough time for us to have a good exchange. That would be a legitimate objection. But he doesn't want to have time for an exchange. Because he doesn't want to have more time for Carly Fiorina to fillet him on foreign policy the way she did in the last one.

KELLY: What is going to happen if neither Dr. Carson nor Donald Trump shows up at this debate, Chris?

STIREWALT: They'll find a waif to accommodate.

KELLY: CNBC will?

STIREWALT: I would imagine they will find some way. But why they had to do this in public, so doing it publicly is what tells me that both Trump and Carson would be more than okay with getting out of these debates.  Remember, the Republican Party changed the regime for debates this cycle in order to try to protect a Faberge egg fragile frontrunner of the Romnesian kind.

KELLY: Okay.

STIREWALT: But now they find that the frontrunner is somebody who needs debate and who if he were subjected to more debates, would be falling down and the republican establishment would like that.

KELLY: All right. I've got the move onto this. Because now there are reports today that Ben Carson, who is the frontrunner, according to some polls, and tied for first in others, is getting out of the race all together. The Carson campaign tonight is furious over an ABC report today that he was putting his campaign event on hold to promote his book. And he's just come out with a statement on Facebook calling this irresponsible and very wrong reporting saying, nothing is on hold.

Chris, what do you make of it?

STIREWALT: Well, this is trying to treat Ben Carson like a non- legitimate candidate. Like he is not for real. And so here you have I believe it was ABC News that had the initial report.

KELLY: Yes.

STIREWALT: That they come out and say, well, this guy is just a joke.  He is suspending his campaign for a book tour. When it's clear as you read what Carson says, what his campaign says, I talked to an unpaid advisor to the campaign, and you thought everybody, here's what happened, they were making it very clear. There will be no co-mingling of the book tour and for political, for legal reasons, you can't co-mingle the stuff. And they were just trying to make it clear that there's going to be no hanky panky.  They're not going to be having book advance paid for by the campaign or campaign events paid for by the book tour.

KELLY: Uh-hm.

STIREWALT: And they were trying to make that clear. And boom, you get a story that says, Carson is dropping out. Why would the guy who was tied for first drop out?

KELLY: I know. Well, ABC News didn't report that he's dropping out but that's been the media speculation today in the wake of the report that he's putting his winning campaign thus far on hold for two weeks to promote his book. If he was then, why on earth would you do that? And the hence speculation tonight Carson says, nonsense. But there are other reports about Rand Paul possibly getting out of the race. And they led to somebody who was doing this live streaming event yesterday. Where cameras followed him all through Iowa. And he just took everybody through his entire day.  And he got to answer some questions that were being offered to him. And here, we apologize in advance for some of the language. But here's what he said.

(BEGIN VIDEO CLIP)

SEN. RAND PAUL, R-KAN., PRESIDENTIAL CANDIDATE: The third question, most popular question, from Google is Rand Paul still running for president and I don't know, we wouldn't be doing this damn ass live streaming if I weren't. So, yes, I still am running for president. Get over it.

Where is Rand Paul in the poll? This is not live. We can't edit this, right?

(END VIDEO CLIP)

KELLY: Right. But it's available. Marc, Rand Paul. Likely to get out?

THIESSEN: Yep. We better have opening statements in the debate so he can stand there and say, who am I? Why am I here? Because that's what he's basically saying. I mean, first of all, it's pretty bad when you have to stand in front of the American people in the live stream and say people are asking. Are you still running? I mean, that's not a sign of success.  You know? And this is a guy who, unfortunately, the rationale of his campaign has disappeared with the rise of ISIS and the return of the Taliban in Afghanistan. Nobody is looking for an isolationist libertarian.

KELLY: He doesn't like live stream. And doesn't find an intelligent way of communicating his message. Great to see you.

THIESSEN: Thanks, Megyn.

STIREWALT: You bet.

THIESSEN: Well, Carly Fiorina is taking shots at both Donald Trump and Ben Carson for threatening to boycott this debate. The republican presidential candidate is here next to explain why. And then, President Obama has said repeatedly that the war in Afghanistan is over. We're out.  Everyone is coming home. Until he said something very different today.  Colonel Tony Shaffer served two tours there, and he'll tell us what's really behind this news.

Plus, in the 2014 election cycle, the Democrats produced over 50,000 ads attacking two private citizens. And tonight, one of them joins yours truly in an incredibly rare television interview. Charles Koch, just ahead.

(BEGIN VIDEO CLIP)

KELLY: Do you believe that the Democrats including the President have tried to make bogeymen out of you and your brother, David?

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KELLY: Breaking tonight, the only republican woman running for president shows today she's not afraid to throw a few sharp elbows. After the two republican front-runners wrote an open letter complaining about among other things. The long amount of time planned for the next GOP debate, as we just discussed. Carly Fiorina's deputy campaign manager throws a virtual grenade at three big GOP competitors. In just one tweet, writing, "Seems Jeb Bush isn't the only low-energy guy. Looks like Donald Trump and Carson don't have endurance to debate Carly Fiorina for three hours."

Joining me now, the former CEO of Hewlett-Packard and republican presidential candidate Carly Fiorina. Great to see you tonight, Carly.  So, what's your take on these gentlemen's objections to the length of the CNBC debate?

CARLY FIORINA, R-PRESIDENTIAL CANDIDATE: Well, I think apparently they're worried about answering questions for three hours. For heaven sakes, we have ten candidates on the stage. I don't think three hours is a long time. And I think the American people actually like these debates.  Maybe the establishments wants fewer debates. But I think the American people really like them. And I think we ought to stand and answer as many questions as we can. They also apparently ask for prepared statements.  You know, prepared statements are what politicians do. So, honestly, here are two outsiders supposedly. Donald Trump and Ben Carson they sound a lot like politicians tonight to me.

KELLY: In their defense, don't you think that CNN debate was a little long, three hours -- don't you get tired at all by the end?

FIORINA: Well, yes, three hours is a long time. But when you have 11 people on the stage, this time we'll have 10. And when there are so many issues facing the American people, I think it's actually quite important.  You know, the CNN democrat debate was two hours. On the other hand, they only had five people on the stage.  

KELLY: That long too. Let me ask you about the CNN democratic debate because we didn't --

(LAUGHTER)

I haven't heard your take on it, yet. But I saw in a written statement that you put out. You said, it's going to be a different thing if Hillary Clinton has to go up against you. And you wrote, she won't get away with, quote, "downright lying." What specifically did you hear that you thought was a downright lie in her part?

FIORINA: You know, it's what I've been hearing for months and months.  It wasn't even specific to Tuesday night. Unfortunately Bernie Sanders gave her a big pass by saying, the American people are tired of hearing about your emails and your server. But of course, she lied about both.  She lied about Benghazi, I mean, honestly, when she knew the night of that terrorist attack that it was a purposeful terrorists attack, pre-planned in fact. She, nevertheless, faced the nation the next morning and talked about a video that didn't represent the values of the American people.

Instead of saying, this was a purposeful, pre-planned terrorist attack and we will see a retribution. But I also found it kind of amusing honestly that Hillary claimed she was an outsider because she was a woman.  No, she's not an outsider. She is the quintessential professional member of the political class. But I think what we can expect her to do is play that gender card over and over and over.

KELLY: Now, speaking of women and gender, some of them critical of you. And I confess that I made comments about this myself earlier this week. About whether you need to be warmer in order to connect better with the voters. And I said publicly at the Fortune's Most Powerful Women's Conference. I checked myself on that saying, is this sexist? Am I saying -- and I tell you, I would that I think any political candidate needs to connect with an audience.

And we did a long bio on you when you launched your campaign. You have, you know, a wonderful family story and lots a love in your life and so on. Do you think that is a fair criticism? That perhaps you could do a better job of connecting on a personal level with viewers and voters?

FIORINA: Well, you know, in that debate, Megyn, the vast majority of viewers thought I won it. So I clearly connected. And I'm here in Iowa.  And I just spent the last hour answering questions from voters. And they clearly understood I was connecting. I tell personal stories every day.

KELLY: Uh-hm.

FIORINA: Because of course, we have to connect in an authentic way with voters. But I think you're wrong when I say I'm not connecting with voters. I think that's why my candidacy is rising. I also think this.  There is a time to smile. And there is a time to be serious. And when you're talking about ISIS, it's hard to smile.

KELLY: Certainly not those moments. Certainly not those moments.

FIORINA: When you're talking about the death of your -- when you're talking about the death of your daughter, it's not a time to smile.

KELLY: Of course.

FIORINA: When you're talking about late term abortions in order to harvest body parts, it's not time to smile.  KELLY: But those are strawman --

(CROSSTALK)

KELLY: No one suggesting that in those moments, you should be laughing. And I didn't suggest you're not connecting with voters --

FIORINA: But those were the questions that were getting asked. Those are the questions that were getting asked.

KELLY: Here's why the reason I asked. So, this is a picture of you with your daughters, you know, in the bathtub which is great. And you see this mother and you see the love. And you know, a lot of us have seen this side of you. But we've also seen is you're slipping in the polls even though you skyrocketed after the CNN debate. You were way the heck up there. You know, number two in some polls. Now you're back down. We have a chart that shows, to where you were before even the FOX debate. And so folks have been asking why? Why is that? Why do you think it is?

FIORINA: Well, actually, I don't agree with the premise of your question. I'm number two in New Hampshire today, I'm number three in Iowa.  I'm number two in Nevada. I'm way up there in South Carolina.

KELLY: On the national polls, you're not.

FIORINA: In the places where primaries are going to happen. Well, there's lots of problems with national polls.

KELLY: In the Fox News poll, you're six.

FIORINA: You and I have discussed, there's lots of problems with FOX News polls, frankly. That's something that we discussed many times. The national polls. People are going to go up and down. What I think is important to understand is in the state polls where the primaries are going to be held. I am a clear front-runner. And it's also true that we still have about 40 percent of the American voters, republican primary voters, who say they don't know anything about me. That's in the FOX News poll.

KELLY: Uh-hm.

FIORINA: So, I'm actually very happy with where I am. I think we are connecting with voters. And I think we're going to continue to rise in the polls. As more and more Americans get to know who I am and what my story is. And what I will do most importantly as president of the United States.

KELLY: We'll post that, people who haven't seen it, we'll post that bio package that we did on you on our Facebook page at Facebook.com/kellyfile so folks can see a bit about your background. And we appreciate you coming on. Thank you. All the best.

FIORINA: That would be fantastic, thank you.

KELLY: All right. Take care.

FIORINA: Thanks, Megyn.  

KELLY: Well, also new tonight, a new fallout from 180 degree change in course, from a president dealing with the series of foreign policy headaches. President Obama today declaring that the U.S. drawdown of troops in Afghanistan will not happen the way he promised so many times.  There are 9800 troops currently stationed there. The original plan was to cut that in half by the end of 2016 at which point, just a thousand would remain he said to protect our embassy. He's at embassy level. It's a plan that we've been hearing about for years. And what he said would not change. Period.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: Afghan forces now in the lead for their own security. Our troops have moved to a support role. Together with our allies, we will complete our mission there by the end of this year and America's longest war will finally be over. Tonight, for the first time since 9/11, our combat mission in Afghanistan is over.

The date for us to have completed our draw down will not change.

(END VIDEO CLIP)

KELLY: But, today, it did change. A lot. As the commander-in-chief announces that all of those troops he promised would be coming home would likely have to stay.

(BEGIN VIDEO CLIP)

OBAMA: I've decided to maintain our current posture of 9800 troops in Afghanistan through most of next year, 2016. But maintaining our current posture through most of next year rather than a more rapid drawdown will allow us to sustain our efforts.

(END VIDEO CLIP)

KELLY: Colonel Anthony Shaffer is a retired CIA trained Intel Operative who served two tours in Afghanistan which he recounted in his best-selling book, "Operation Dark Heart: Spycraft and Special Ops on the Frontlines of Afghanistan and the Path to Victory."

Colonel, good to see you tonight. And this is an admission by President Obama, an admission of what?

LT. COL. TONY SHAFFER (RET), CIA TRAINED INTEL OPERATIVE: An admission that he's abandoning the plan to abandon Afghanistan. I mean, let's be clear here. The basic reality, what she faces, is one where the Taliban, as much as he does not like them get a vote in the current circumstances. And what's happening simply Megyn is that he recognizes that as much as he wants to walk away, he cannot. The Taliban have been making huge gains. And if we don't stop them now, they will continue to gain ground. And ISIS more importantly, now is in 10 of the provinces in Afghanistan, about 36, seven of which they're in-charge of. So, to abandon the mission now, I think would be a kin to allowing Afghanistan to slip into the same, if not worst chaos, that Iraq is seen. And I think frankly, to be a bit political here, I think this is a mission that made the wrong decision regarding Iraq --  

KELLY: What finally did it? Because the military -- reportedly has been telling him, your plan isn't going to work. You can't do it.

SHAFFER: Right.

KELLY: For a long time. I mean, he's been on camera saying the things we just played.

SHAFFER: I think two things, first, General Campbell, the current commander there is doing a great job. He's doing what's necessary the right way at the right time. And also, we just saw a major change of command at the Pentagon. General Joseph Dunford, Joe Dunford just took over as the chairman. And he's made changes already. He dumped off the $500 million so-called Syrian, the moderate rebel training program which, you know, we trained five people, he dumped that already. And this is another change. And look, I've heard that the White House did not want this. The White House was fighting this tooth and nail. But Megyn, I think that the key here is that the reality we face is simply if we abandon Afghanistan the way we did Iraq, you will see chaos, you will see safe havens instantly pop up. And we will see if not, the same problems, worst problems with the idea of having Afghanistan the another safe haven for ISIS to grow rapidly.  

KELLY: Last question.

SHAFFER: Sure.

KELLY: You served two terms there. You wrote about this in your book. Is this enough? Does he have the numbers right?

SHAFFER: Yes, as a matter of fact, the numbers are correct. We, by putting a hundred thousand troops there --

KELLY: This is you.

SHAFFER: -- conventional troops, we're just in the way. This is a special operations where, always was. We're going back the way we were winning in 2003, 2004. We need to do one thing very well. Kill the bad guys and allow for the political process, the reconciliation between the Taliban and the Afghan government, primarily to happen. We need to oversee that, not force it. So our job now, simply, is to make sure that we kill the bad guys, when we find them, we maintain enough offensive operations to do it.

KELLY: All right.

SHAFFER: And then do what's necessary to protect the American people.  Period.

KELLY: Colonel Tony Shaffer, great to see you, thank you, sir.

SHAFFER: It's great. Thank you, ma'am.

KELLY: Up next, a high school scuffle blows up into a brawl with police. The entire thing caught on camera and, Mark Eiglarsh is next on the legal complaints we are already hearing about excessive force.

And then, Charles Koch took a fledgling oil company -- wasn't fledgling but it wasn't what it is today, and turn it into one of the biggest firms in America and became target number one for the Democrats in the process. Now, after years of largely ignoring attacks from the Left, he finally breaks his silence.

(BEGIN VIDEO CLIP)

KELLY: Why do you think they've been so relentless in their attacks?  Harry Reid, your brother David pointed out, mentioned the Koch Brothers 289 times from the Senate floor. They have painted you as evil. They actually put you, the White House actually put you on an enemy's list back in the 2012 campaign.

(COMMERCIAL BREAK)

KELLY: Developing tonight, a new claim of excessive force against police. This time from a father in Texas planning to press charges now against the police officer who was called in to break up a fight at a local high school. That officer wound up grabbing the man's 14-year-old son by the neck, dropping the boy to the floor and the whole thing was caught on camera. Watch carefully.

Joining me now, criminal defense attorney and former Prosecutor Mark Eiglarsh. Mark, good to see you. So, this cop --

MARK EIGLARSH, CRIMINAL DEFENSE ATTORNEY: Thanks, Megyn.

KELLY: I'm sorry, this father of this boy wants the cop charged criminally and says, this is an example of excessive force against a 14- year-old boy who had been in dust-up over goggles, sport goggles. And it wasn't like someone's got a gun, let's get the kid down.  

EIGLARSH: Right.

KELLY: Your thoughts.

EIGLARSH: Well, first of all, as a father of three children, one of them being a teenager around that same age, I would be irate if a police officer did this to my son. However, if we're analyzing this objectively, I am 100 percent certain, beyond all doubt that I don't know exactly what happened. There's no audio tape.

KELLY: Right.

EIGLARSH: And if you believe what the officers are saying, this kid was determined to go back and continue the fight that he began with another teenager. So, these officers had to take some action.

KELLY: But here's -- let's just look at the tape. Okay? Take Mark and me off and show the audience the fall screen. Now, watch. Forget this part. Let's just watch what happens in the beginning. The cops put his hands on the kid. The kid brushes it away. Watch. Right there. See, and then the cop takes him down. If you can just rerack it, you can see. So, the cop places his hand on the kid, you got to start it from the beginning.  And then the kid tries to knock the cop's arm away. That is when the cop steps in and takes him down. The police are going to argue that, again, we're not starting it at the right spot, right there, see? The police are going to argue that he was resisting arrest and that he was going to cause more mayhem. Would that do it? Would that justify what we've seen here?

EIGLARSH: It's a fact sensitive decision made by jurors. This is in Texas. We've got to mention that. They're slightly conservative and slightly supportive of police officers like Bill O'Reilly is slightly opinionated. They will never, ever find in favor of this father and his son. This is law enforcement and they give wide latitude for them to take down somebody that they deem as a threat.

KELLY: The kid was suspended for a couple of days for the fight he had. And the cop is under investigation although still on duty as the incident is under review. They say they repeatedly attempted to calm him and stop him from going after the other student and they were forced to detain him for his own safety and the safety of others. Great to see you, Mark.

EIGLARSH: Thanks, Megyn.

KELLY: Well, when we got the incredibly rare chance to speak with Charles Koch, we of course had to ask about his political plans, attacks from the Left and how it feels to be publicly criticized by the President of the United States. But we also wanted to know how you build $110 billion company. Some amazing advice. Everyone needs to hear, next.

(BEGIN VIDEO CLIP)

KELLY: Tell us about the first piece of advice your dad gave you when you took over as CEO.  

(END VIDEO CLIP)

(COMMERCIAL BREAK)  

KELLY: Charles Koch is the sixth richest man in the country. One of the most successful men in the world. Yet, his very name has almost become code for some on the left for what they believe is wrong with big money in politics.

Fifty three thousand attack ads hit him in just the last election cycle. Personal attacked launched against him from the highest levels of government.

Tonight, in a cable exclusive, we introduce you to the man few really know. We'll tackle the attacks, the myths, his politics and look at how Charles Koch became a tycoon of industry whose charitable works go largely unreported.

Finally, we'll find out why he's willing to risk everything even his personal safety, to, in his words, make the country better for everyone.

Charles Koch, captain of industry, innovator, and some say GOP king maker, which has made him a target of the democrats for years.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: What is un-American is when shadowy billionaires pour unlimited money into our democracy to rig the system to benefit themselves and the wealthiest 1 percent.

UNIDENTIFIED MALE: They don't care what anybody says, except for themselves and the corporate masters like the Koch Brothers. They have one master and that's the money.

UNIDENTIFIED FEMALE: When people hear the name, Koch Brothers, it has a negative connotation.

HILLARY CLINTON, D-PRESIDENTIAL CANDIDATE: I will stand up to all the attacks from the supper PACs and the Koch Brothers every chance I get.

KELLY: Even President Obama has joined in. Putting Charles and his brother David, who, together, employ nearly 60,000 Americans on a so-called enemies' list during campaign 2012.

OBAMA: When you start seeing massive lobbying efforts backed by fossil fuel interests or conservative think tanks or the Koch Brothers, that's a problem.

KELLY: The Koch Brothers seen they donate to republicans and they support fossil fuels, among other forms of energy. They own pipelines and lots of successful products you likely know very well.

Koch grew up in Wichita, Kansas. The son of Fred Koch, who struck it rich in the energy business, and who, along with wife, Mary, raised four sons on the family ranch. Charles married wife Liz four decades ago, they've raised two children and appear devoted to one another.

Charles eventually took over his father's business and grew it into the second largest private firm in America. The company, worth $21 million in 1961, is now worth $100 billion.

Charles and David have donated hundreds of millions to help fight cancer, poverty and to encourage entrepreneurship in addition to their political donations.

So, how exactly did Charles Koch, a man demonized by the President, the former Senate Majority Leader, and the House Minority Leader, to name a few, become so feared and so successful.

For the first time, he tells us from his home in Wichita, banked up a little, thanks to foot surgery and wearing a cast decorated by his wife, ready to talk about life, politics and his new book, "Good Profit."

So, your book, "Good Profit," reads to me like a love letter to your father. How big of an influence was he on you?

CHARLES KOCH, KOCH INDUSTRIES CO-OWNER & CEO: Both my parents were tremendous influence for me. And my father's influence came from -- he decided, well, probably before we were born that as he put it, I'm not going to have any kids who are country club bums.

KELLY: He worked you.

KOCH: He wanted to instill the work ethic. And, because he knew if you don't learn to work to be more productive to improve your efficiency, to cooperate with other people at an early age, you may never learn those habits.

So, you can't make a contribution, you can't be successful. Then, years later, when I asked my father, I said, pop, why were you so much harder on me than my younger brothers? He said, son, you plum wore me out.

KELLY: Later, Koch kept up the hard work landing at the prestigious MIT. His plan was not to take over the family business.

KOCH: My father, going back at working for him, he was such a disciplinarian growing up, I had no idea I would do that.

KELLY: But things changed.

KOCH: He called me. He said, son, my health is not good. I don't have that long to live. Either you come back to run the company or I'm going to have to sell it.

KELLY: Tell us about the first piece of advice that you dad gave you when you took over as CEO.

KOCH: His first word when I arrived is, son, I hope your first deal is a loser, otherwise, you'll think you're a lot smarter than you are. But he had tremendous values, tremendous integrity, humility, work ethic and terrific thirst for knowledge.

KELLY: You warn in the book about the trap of overconfidence, in a business and a person?

KOCH: Oh, absolutely. Yes. Hubris arrogance is just one step ahead of loss of integrity. Because if you think you're better than other people, you know more than you're going to think, as many leaders have, that the rules don't apply to them. So, they lose their integrity.

KELLY: His new book, "Good Profit," emphasizes integrity. Arguing it's fine to make lots of money. But how you do it matters.

You say you've always prized values over talent in your hiring decision. Really?

KOCH: Absolutely. I've had the philosophy that John Adams expressed in the kind of system they were trying to create in this country, that this is a system for moral people. It will work for no other.

KELLY: You're telling me some hot shot salesman from New York who come down, top of his game, and, you know, I'm sure, he may bend the rules here or there, but he's a producer. You won't hire that guy?

KOCH: No, absolutely not. This is going to bend the rules, we won't have it. And in our interview process, that's what we look for.

KELLY: How do you figure out someone's value, their integrity, in a job interview?

KOCH: We put the candidate in different situations. Like we have somebody that the candidate doesn't think important, we take him down to the cafeteria, we see how the candidate treats that person, how they the staff at the cafeteria. And we see how they answer questions.

We ask them, gosh, did you have any problems where you work? Did you make any mistakes? If they say, no, oh, no, but the company was so screwed up and they wouldn't listen to me. We don't want that person.

(CROSSTALK)

KELLY: What is the inability to admit mistakes tell you about somebody?

KOCH: They don't have any humility and probably don't have any integrity.

KELLY: Humility in hiring also served Koch well.

Don't you want all the hot shot MBA's from Harvard and Wharton and elsewhere?

KOCH: We find we do better from community colleges, from rural colleges, like after I was president of Koch Industries, our next president were -- well, one didn't graduate from college. And the current president is from Emporia State.

KELLY: At Koch Industries, even you get evaluated. Is that true?

KOCH: That's true.

KELLY: How does that work?

KOCH: That works great. I learn a lot.

KELLY: Aren't you afraid of a bruised ego?

KOCH: No. Like here's the thing. And that I think all of us need this attitude. Do you want to have your feelings hurt a little bit because you've got some negative feedback. Or do you want to continue down the disastrous track you're on and have a huge disaster? Talk about a bruised ego. It may ruin your career.

KELLY: Is it true that any employee at Koch can earn more than his boss?

KOCH: Oh, absolutely. It's -- we try to reward people according to the value they create. Value they create in society and the value they create for the company.

KELLY: And that you will hire based on talent? Even if you don't have an open spot, necessarily?

KOCH: well, on values, yes.

KELLY: How can you hold to a budget under those circumstances?

KOCH: Well, we're not big on budgets.

KELLY: The other message you want to send your employees in your book is try new things. Experiment and don't be afraid to fail or make mistakes.

KOCH: Right. If you never failed, then you're probably not doing very much. You're certainly not innovating. You're not improving. Because the only way you improve is to try new things.

KELLY: What if you're a big success and you don't want to risk it?

KOCH: That's one of my principles. Success is one of the worst enemies of success. Because success tends to breed complacency and lack of humility.

KELLY: When companies aren't successful, Koch says Uncle Sam should stay out of it, dismissing government subsidies, loans and tariffs as, quote, "Corporate welfare."

KOCH: Well, "Corporate welfare," I think, is a disaster for this country. It's crippling our economy. It's contributing to a permanent underclass and corrupting the business community.

KELLY: Critics say what the Koch's really oppose is government assistance that could hurt Koch's bottom line. A charge Koch denies.

KOCH: We oppose all corporate welfare, whether we benefit or not. You will find that our policy positions mainly hurt our profitability rather than help it.

KELLY: What about China? We've heard one of the presidential candidates, Donald Trump talk repeatedly about how they are devaluing their currency and that the next president needs to put a stop to that by, perhaps imposing a tariff on their goods.

KOCH: Well, I mean, tariffs are a disaster. The way -- the principle way that human beings had gotten out of extreme poverty is free trade.

(END VIDEO CLIP)

KELLY: When we return, Charles Koch addresses the attack from the left, the death threats and why he is still working so hard at the age of 79. Don't go away.

(BEGIN VIDEO CLIP)

KELLY: Not long ago, President Obama himself came out and attacked you. It's not the first time, but he said that the Koch Brothers are trying to prevent new clean energy businesses from succeeding.

You came out, and, in a rare public statement, said you were flabbergasted by that accusation. Why?

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KELLY: The Koch's are behind a number of political action groups which have been demonized by the left. Donors may remain anonymous under the law, a source for consternation for Koch's critics including President Obama.

(BEGIN VIDEO CLIP)

KELLY: Not long ago, President Obama himself came out and attacked you. It's not the first time, but he said that the Koch Brothers are trying to prevent new clean energy businesses from succeeding.

You came out, and, in a rare public statement, said you were flabbergasted by that accusation. Why?

KOCH: Because the opposite is true. All of our policies are based on whether it will make -- enable people to improve their lives or it will make their lives worse.

KELLY: On the comments made by President Obama beneath the dignity of the office?

KOCH: Well, I think it is to misrepresent what a company stands for and attacking private citizens for trying to help people improve their lives.

KELLY: Do you believe that the democrats, including the President have tried to make bogeymen out of you and your brother David?

KOCH: Oh, definitely. That's a full time job on their part. I mean -- and that's why I've never been that fond of politics and only got into it recently kicking and screaming. Because I don't think politicians are going to reverse the trajectory of this country.

I think it's going to depend on the American people understanding what is fair and what makes our lives better.

KELLY: Why do you think they've been so relentless in their attacks? Harry Reid, your brother David pointed out, mentioned the Koch Brothers 289 times from the Senate floor.

They have painted you as evil. They actually put you -- the White House actually put you on an enemy's list back in the 2012 campaign.

KOCH: Well, I mean that's very sad that -- that's what where -- what we've come to. Because in fact, what we're trying to do is the opposite.

KELLY: Is it dangerous? I know you've gotten death threats.

KOCH: Yes. I get a lot of death threats but the way I look at it is, I feel I have a moral obligation to do the best I can to make the country better for everybody. And that threatens certain people because they're going to have much less power. I want the power to go back to people making decisions over their own lives rather than some experts making it.

KELLY: Are you a libertarian?

KOCH: No. I'm a -- I have been a libertarian in my past but now I consider myself a classical liberal.

KELLY: Classical liberal. What does that mean?

KOCH: Classical liberal is someone who wants a society that maximizes peace, civility, tolerance and well-being for everyone. One that opens opportunities for everyone to advance themselves.

KELLY: Koch didn't want to reveal his opinions on individual candidates. But we tried. So the "L" word will have people asking is he going to vote for Hillary Clinton.

KOCH: Well, I mean, putting aside all the things that are said about Hillary today, my main difference with her is on the vision of what kind of society will make people's lives better.

So, this is a vision of society in which people are too evil or stupid to run their own lives, but those in power are perfectly capable of running everybody else's lives because they're so much smarter.

It's what I call the fatal conceit or William Easterly called the "Tyranny of experts" because that's what it is, its tyranny.

KELLY: This discussion will now have people thinking, ah-ha, he likes Rand Paul. He has libertarian leanings. He wants government out of our lives. Is Rand your guy?

KOCH: No, I don't have a guy. I have these principles and what I'm trying to accomplish, and what we need, to me, is a candidate that will help change the trajectory of the country from all this wasteful, irresponsible spending that's heading us for a financial cliff, not just by the democrats but by the republicans.

The reason we tend to support republicans is they're taking us toward the cliff at only 70 miles an hour and the democrats are taking us 100 miles an hour.

KELLY: They say you're going to spend $900 million on the presidential race this cycle. Is that true?

KOCH: No, not even close.

KELLY: Koch says it's actually more like $300 million, and not all will go to a presidential race. As for the democrats' charge that Koch's donor network is shady.

KOCH: Everything I give is pretty much as public. Now not every donor wants to -- or is willing to get the kind of abuse and attacks that we do, or death threats, so they're not willing to have their names out. And I think the other side is pushing for that because they want to intimidate people so they won't oppose it.

KELLY: But Charles Koch is not intimidated. And not slowing down any time soon. At 79 years old, you still work nine hours a day.

(CROSSTALK)

KOCH: Well, more than that.

KELLY: You come home and have dinner with Liz. And then you work again.

KOCH: Well, OK. Now do you find it hard?

KELLY: Find it there, we got there.

KOCH: Sorry, thank you so much.

KELLY: Why? Why do you still work so hard?

KOCH: Because I feel a passion for what we're trying to do. I mean, why does somebody who's old as a writer keep writing? Because that's who they are. That's their nature. And to be happy you have to fulfill your nature.

That's what Aristotle taught so many centuries ago, that the road to happiness isn't to go drink more or consume more. The road to happiness is fully develop your abilities, and then apply them to do good.

KELLY: And speaking of happiness, Koch's father left his sons a bit of money upon his death. Along with one final piece of advice.

KOCH: If you choose to let this money destroy your initiative and independence, then it will be a curse to you and my action in giving it to you will have been a mistake.

I shall regret very much to have you miss the glorious feeling of accomplishment. Remember, that often adversity is a blessing in disguise and is certainly the greatest character builder. That's tough.

KELLY: The glorious feeling of accomplishment.

KOCH: Yes.

KELLY: Charles Koch, thank you.

KOCH: Well, thank you, Megyn. I appreciate it.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KELLY: Getting lots of feedback online with Charles Koch, like this one, quote, "Such a disappointing lack of evilness! Imagine that."

What did you think? facebook.com/thekellyfile. On Twitter @megynkelly. Thanks for watching. This is "The Kelly File."

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