This is a rush transcript from "Fox News Sunday," October 2, 2016. This copy may not be in its final form and may be updated.
CHRIS WALLACE, FOX NEWS ANCHOR: I’m Chris Wallace.
With new reports Trump may have paid no federal income taxes for years, he and Clinton plot their strategies for the campaign's final five weeks.
(BEGIN VIDEOTAPE)
DONALD TRUMP, R-PRESIDENTIAL NOMINEE: The Clintons are the past. We will be the very bright and clean future.
WALLACE: Trump threatens to go after Bill Clinton's sex scandal.
TRUMP: Impeachment for lying. Remember that? Impeach.
WALLACE: And doubles down on attacking of former Miss Universe.
TRUMP: A lot of things are coming out about her. I’m not going to say anything. I couldn't care less.
WALLACE: We'll talk with New Jersey Governor Chris Christie, a top adviser, about Trump's controversial comments and how it affects his standing with women.
Then, Hillary Clinton takes a victory lap after the first debate.
HILLARY CLINTON, D-PRESIDENTIAL NOMINEE: One down, two to go.
WALLACE: We'll ask Democratic Senator Claire McCaskill how Clinton plans to keep her momentum.
Christie and McCaskill, it's a "Fox News Sunday" exclusive.
And we'll ask our Sunday panel about the state of the race with just 37 days until the election.
Plus, our power player of the week. One of America's greatest ballerinas takes on a new role.
UNIDENTIFIED FEMALE: The next best thing to creating beautiful art is watching it.
WALLACE: All right now on "Fox News Sunday."
(END VIDEOTAPE)
WALLACE: And hello again from Fox News in Washington.
Donald Trump faces a new controversy today with a report in The New York Times, he declared a $916 million loss in his 1995 tax returns, a loss so big the paper says he could -- repeat could -- have avoided paying any federal income taxes for up to 18 years.
Meanwhile, Trump has opened a new line of attack on the Clintons' marriage, and he continues to fan a storm of criticism over comments about a former beauty queen.
In a few minutes, we'll talk with Clinton supporter Senator Claire McCaskill, but we begin with New Jersey Governor Chris Christie, the head of Trump's transition team.
Governor, let's start with this new report that Trump had a billion dollar loss in 1995 that could have meant he paid no federal income taxes for years, maybe as much as 18 years. One, what does that say about him as a businessman? And what does that say about him failing to pitch in like the rest of us to pay for our military and our roads and other services?
GOV. CHRIS CHRISTIE, R-NEW JERSEY: Well, first of all, Chris, what it shows is what an absolute mess the federal tax code is, and that's why Donald Trump is the person best positioned to fix it. There's no one who's shown more genius in their way to maneuver about the tax code as he rightfully used the laws to do that. And he's already promised in his tax plan to change many of these special interest loopholes and get rid of them so you don't have this kind of situation.
I think the worst part, Chris, is this is a tax code that people in America suffer under every day. And so, it's an awful thing.
Second thing is on The New York Times report -- you know, fact is that even their own tax expert, after a big splashy headline, said there was nothing in there that was outside the law or outside the ordinary.
Last point I want to make on this, Chris, you know, the late 19 -- the early 1990s was a difficult time for lots of folks. We went into a recession, as I know you'll recall, and Donald Trump wrote the book "The Art of the Comeback." This is a guy who when lots of businesses went out of business in the early 1990s, he fought and clawed back to build another fortune, to create tens of thousands of more jobs. This is actually a very, very good story for Donald Trump.
WALLACE: Wait. You're saying it's a good story for Donald Trump that he failed to pay any federal income taxes -- first of all, that he took a billion-dollar loss, and that he failed to pay any federal income taxes for years. That's a good story?
CHRISTIE: Chris, first of all, you don't know he didn't pay for federal income taxes for years. All the story said was that kind of loss can be used for up to 18 years. But if Mr. Trump made $600 million the next year, $600 million, that loss would be wiped out.
So, let's be precise about what it said. The New York Times does not have any information in that story that says Mr. Trump did not pay taxes. Aw all they did was quote the law which says if you have that kind of loss, you can use that kind of loss to offset income for up to 18 years.
What we have said is that Mr. Trump has paid millions and millions and millions of dollars in taxes, state and local taxes, property taxes, and federal income taxes over time.
WALLACE: If I may --
CHRISTIE: But, Chris, that's not what the report says. You can't come on TV this morning and say that Donald Trump did not pay taxes for years and years when that's not what the story says.
WALLACE: Well, in fact, the Trump campaign issued a statement last night that was a classic nondenial denial. Here's what he put up. He has, Trump has, a "fiduciary responsibility to pay no more tax than legally required."
It’s in effect what he said in the first debate, if he paid no taxes, that makes him smart. I mean, I assume that if he had paid lots of taxes over those years, he'd have told us so.
CHRISTIE: Well, that's a big assumption on your part, given that the advice he's gotten -- by the way, this proves the advice he's gotten from his lawyers and accountants is the right advice, because if you're talking about a tax return from 1995 and all of you in the media have been saying, why don't you release the tax returns that aren't under audit? Well, they're all connected, because of the byzantine tax laws.
And the genius that Donald Trump has been, to make sure he follows the law, which is exactly what he's done, and politically he has said that he's going to change these laws and that there's no one who's better suited to change these laws than someone like him who's been subjected to audit by the IRS year after year after year.
WALLACE: So, just to sum this up, because I want to move on to other subjects -- as a top Trump adviser, as the head of his presidential transition team, your reaction to the story in "The Times" today is no apologies?
CHRISTIE: Oh, for gosh sakes. No apologies for complying with the law. And, by the way, taking a bow for the fact he's said well before this story ever came out that we need to change the tax laws because they are harming Americans every day with their complexity and favoring people that they shouldn't favor.
And Donald Trump has been the one person who against his own personal interests has said that he wants to change those tax laws and as president he will. That's the kind of leadership America needs.
And one last thing, Chris, you know, about the losses -- the fact is that this is a guy who rebuilt his entire business empire after the recession in the early 1990s, wrote "The Art of the Comeback." Let me tell you, America needs a comeback, and we need somebody like Donald Trump to lead that comeback.
WALLACE: All right. Here we are six days after the first debate. Donald Trump is still talking about the former Miss Universe, Alicia Machado, and her weight gain.
I want to put up the tweet he wrote at 5:30 a.m. on Friday morning, "Did crooked Hillary help disgusting, check out sex tape and past, Alicia M become a U.S. citizen so she could use her in the debate?"
And here was Clinton's response.
(BEGIN VIDEO CLIP)
CLINTON: Who gets up at 3:00 in the morning to engage in a Twitter attack against a former Miss Universe?
(END VIDEO CLIP)
WALLACE: Governor, if you believe the polls, Trump's two biggest problems right now are questions about his temperament and the fact that he has a 20-point gender gap when it comes to women. So why on earth is he still talking about a beauty queen's weight?
CHRISTIE: You know, I have to tell you the truth, Chris. The stuff you guys focus on amazes me. At the same time --
(CROSSTALK)
WALLACE: Wait a minute. He put out the tweet at 5:30 in the morning. We didn't.
CHRISTIE: Well, you know, Chris, lots of tweets get put out all the time by this candidate and by other candidates as well.
Here's the thing, Chris. You look at what's happened here, you're talking about why is Donald Trump after six days tweeting about that. Why is Hillary Clinton still attacking -- and we now have evidence of her attacking Bernie Sanders supporters, calling them people who live in their parents' basements. This is to add to the basket of deplorables that she referred to Donald Trump's supporters as.
This is a woman who if you're not a part of the Northeast elite, she apparently has no use for you. Yet, we're talking about a tweet about a beauty pageant.
I mean, I just -- I got to tell you the truth. With ISIS on the rise, with the problems that we have with our economy and job creation, as a governor who's practical enough to worry about solving problems every day, I really can't believe I’m spending time on a Sunday morning program talking about it.
WALLACE: Well, I’m a little surprised that Donald Trump sent out the tweet.
Let me ask you about something else he said in an interview with The New York Times, which is that he's going to go after the Clintons' personal scandals. Here's what he told The Times: "Hillary Clinton was married to the single greatest abuser of women in the history of politics. Hillary was an enabler, and she attacked the women who Bill Clinton mistreated afterward."
Governor, that's what he was telling The New York Times on Friday. Wasn't talking about ISIS. Wasn't talking about taxes. He was talking about the way the Clintons treated women.
CHRISTIE: Listen, you saw Hillary Clinton on the debate stage talking about these very issues. And you saw Hillary Clinton about women. And you saw Hillary Clinton on the debate stage essentially accuse Donald Trump of being a racist.
Yet, I don't see any outrage from the mainstream media about that. The fact is that Donald Trump's entire life has been towards making sure that everyone in America has an opportunity at a great job, everybody in America has an opportunity to build wealth. That’s what he’s been about during his career.
Yet, you have Mrs. Clinton on stage talking about and essentially saying that Donald Trump was a racist. Yet, we don't have any outrage about that. But every time there's an utterance that somehow offends the Northeastern liberal elite, we have outrage towards Donald Trump.
Where's the outrage towards Hillary Clinton calling a successful businessman and the Republican nominee for president a racist? I mean, you know, Chris, there's got to be fair play here. I haven't seen it, and I’m not going to jump to every piece of bait that people throw up when nobody is spending time talking about the outrageous things Hillary Clinton said on that debate stage less than a week ago.
WALLACE: Governor, you were prepared -- you were involved in preparing Trump for the first debate, and afterwards seven unnamed admittedly -- even unnamed campaign advisers talked to The New York Times about the fact that they think that Trump did not prepare adequately for the debate.
Let me put up some of their criticisms. They say Trump campaigned instead of rehearsing. There were too many people on his prep team. And Trump found it, quote, "hard to focus".
Will he prepare any differently from the second debate? And I guess most importantly in this regard of just preparation, is he going to actually hold mock debates this time?
CHRISTIE: Listen, I love when seven unnamed sources are talking about things. You know what I’m going to be willing to guarantee, Chris? Is that none of those seven unnamed people were in the room during debate prep. And they speak, most of the time, because they're jealous that they weren't in the room.
You know how this game is played. I love Monday morning quarterbacks. I can guarantee you that most of those, if not all of them, have never been on a stage and debated under that level of pressure and scrutiny. I have, and I can tell you this -- Donald Trump prepared well for his debate the last time, and he will decide how he prepares for the debate on Sunday night.
WALLACE: All right. Let's turn to your day job as governor of New Jersey and some real things. I want to talk to you first of all about that terrible commuter train crash in Hoboken this week that killed one person and injured more than 100.
What's the latest on the investigation? Can you tell us how fast the train was going and why it didn't brake?
CHRISTIE: Chris, we don't know the answer to that question yet. The NTSB has taken over the investigation, as is the normal course. The state attorney general's office is cooperating and providing resources to them.
Because of the damage inside of the Hoboken train terminal, which Chris, I know you know that terminal, it's a historic building. It's over a hundred years old. Because of the damage, they have not yet been able to access all of the train cars. So, we can't get all the information we need yet.
I'd also caution that the NTSB inspector herself, when she came on Friday, said that this was going to be at least seven to ten days before they had anything to say. I think it's safe to say, as I’ve said before, and governor Cuomo has said, that the train came into the station too fast. We don't know why that is. We don't know if it was error by the engineer, whether there was a medical emergency with the engineer which caused him to lose control, or whether it was some other type of mechanical failure.
But let's take a deep breath. Let's let the NTSB, who does a great job on this stuff, do their work. And we have crews there right now removing debris to make it possible for them to be able to access the train cars, the recorders, and all the information on the train.
And we'll get to the bottom of this, as I said to the people of New Jersey last week. This is an awful tragedy, but it's one where I remember my time as a prosecutor you don't jump to conclusions. You let the facts lead you to the appropriate conclusion.
WALLACE: Governor --
CHRISTIE: And we'll participate with the NTSB in every way on that.
WALLACE: Governor, got to ask you about one last question. While all of this is going on, that two of your former aides are on trial for their alleged role in Bridgegate, allegedly shutting down lanes leading to the George Washington Bridge to punish a Democratic mayor who refused to back your re-election.
David Wildstein, another of your former advisers who's pleaded guilty, says that at this meeting -- we got a couple pictures up on the screen -- at a 9/11 event in 2013 during the lane closures that you and he and one of the defendants were joking about the lane closures. Your response to this, sir?
CHRISTIE: Chris, nothing that's happened in that courtroom has proven anything different than what I said on January 9th of 2014, nearly three years ago, which is that I knew nothing about these lane realignments either prior to or during their occurrence, that I had no role in authorizing them, that I had no role in anything regarding these lane closures.
And so, the fact is that there's going to be all kinds of stuff that's said in a courtroom, especially by someone who has already pled guilty to a crime. So, I’m not going to comment beyond that except to repeat what I said before, that we've now had three investigations, two of them led by partisan Democratic appointees, and none of them have come to any conclusion other than that I had no role, no knowledge, and no participation in this.
And so, we'll let the trial go. We'll let the jury make determinations as to the people who are on trial. And when it's over, there will be more I’ll be able to say.
WALLACE: Governor Christie, thank you. Thanks for your time today, sir. Always good to talk with you.
CHRISTIE: Chris, always great to be on your program. Have a great Sunday.
WALLACE: Thank you.
Up next, Senator Claire McCaskill, a top Clinton supporter. Why is she calling for Donald Trump to do daily weigh-ins?
(COMMERCIAL BREAK)
WALLACE: A look outside the Beltway at Manheim, Pennsylvania, where Donald Trump was campaigning this weekend.
Joining us now from St. Louis, Missouri, Senator Claire McCaskill, one of the first members of Congress to endorse Hillary Clinton.
Senator, you've seen the story in The New York Times. You've heard my discussion with Chris Christie. Donald Trump apparently declared a billion dollar loss in 1995, which The Times says means legally he could have paid no federal income taxes for years.
Your reaction?
SEN. CLAIRE MCCASKILL, D-MISSOURI: Well, if you look at the way Donald Trump has conducted business, he crashes businesses into bankruptcy, leaving scores of businesses unpaid, people really hurting with the losses his companies have suffered, but he walks away unscathed. It appears he walks away with a golden ticket that allows him under the tax code to avoid taxes for decades.
I think that the key here is, how is he going to fix it? Well, look at his tax plan. Guess who his tax plan benefits -- billionaires. His tax plan benefits Donald Trump.
That should be no surprise to anyone since that is the way he sees the world. He doesn't care about those small businesses he didn't pay. He doesn't care about the people who lost millions of dollars in all of his bankruptcies. He cares about Donald.
WALLACE: Well, let me ask you, because The Times said they talked to lawyers, and if he did have a billion dollar loss, that all of this would be legal. They also don't know that he actually did it. But assuming he did, do you know anyone who pays more taxes than they have to?
MCCASKILL: Well, that's not the point. The point here is his idea of fixing the tax code is to take care of billionaires, and his losses were something he used to avoid taxes, but those losses represent real pain to many people who never got paid, who, he did -- you know, he said that he uses bankruptcy as a business tool.
This is -- this is a guy who thinks stiffing people, working people -- I mean, it's so ironic that he's trying to lift himself up as some kind of champion of working people. Look at his record of how he's treated working people throughout his life and business. It's not a good record.
WALLACE: Senator, as we discussed with Chris Christie, Trump in an interview with The New York Times has made it clear he's going to go after the Clintons' sex scandals. He says that Clinton was an abuser and that Hillary Clinton was an enabler. And here is Trump on the campaign trail this week.
(BEGIN VIDEO CLIP)
TRUMP: The Clintons are the sorted past. We will be the very bright and clean future.
(END VIDEO CLIP)
WALLACE: Senator, your response?
MCCASKILL: Well, first of all, I think that it tells a lot about the character of someone as to what they want to focus on during a presidential campaign. The American people understand that Hillary Clinton and her marriage is not what's important in this election.
And if he really wants to compare his character as it relates to how he has conducted his personal life over his adult life with that of Hillary Clinton, even on that score she comes out ahead, because this is not -- I mean, this is a guy who goes on national radio and talks about his sex life in detail that is disgusting. Who does that? Who does that?
And that's why it's so ironic that he thinks this would be a good idea. This is not somebody who's listening to his advisers. You know, Chris, I have colleagues in the Senate who have been wringing their hands about Donald Trump. And they've said to me, Claire, he'll surround himself with good people and he’ll listen to them.
Clearly not. He's not listening to people around him because everyone around him is saying, "Don't go there, Donald, lay off the beauty queen, lay off the personal marriage situation of the Clintons."
WALLACE: But, Senator, I think -- I think --
MCCASKILL: He's paying no attention.
WALLACE: -- and you can argue whether it's appropriate or not, I think his point with regard to the sex scandal isn't what Bill Clinton did, it's more what Hillary Clinton did and whether she really is a champion of women, because the fact is, over the course of these years, she has gone after a number of women about allegations that turned out to be true.
Let me put a few cases up. She called Monica Lewinsky a "narcissistic loony toon". She said Gennifer Flowers was a gold digger. Here she is.
(BEGIN VIDEO CLIP)
CLINTON: Here's some failed cabaret singer who doesn't even have much of a resume to fall back on.
(END VIDEO CLIP)
WALLACE: And last year, Hillary Clinton at one point said that people who say that they have been raped deserve to be believed, but then she was asked about Juanita Broaddrick, who in 1978 said that she was raped by Bill Clinton.
(BEGIN VIDEO CLIP)
CLINTON: I would say that everybody should be believed at first until they are disbelieved based on evidence.
(END VIDEO CLIP)
WALLACE: Fact is, Senator, Hillary Clinton does have a long record of going after her husband's accusers, at least some of whom were later vindicated.
MCCASKILL: You know, Hillary Clinton may have defended her husband in various situations, but if we want to compare what she has done for women in her life, how she has worked -- I mean, when the cameras weren't rolling, when no one was looking, after a law degree from one of the best schools in the country, she went to work for the Children's Defense Fund. She has said women’s rights are human rights when she was first lady famously. She has lived a life of championing women's rights, a sponsor of equal pay legislation in the Senate.
Meanwhile, Donald Trump is telling hostesses at his golf clubs that they are, you know, telling the people, get them off the hostess deck, they're too fat. This is really not even a close comparison of who's championed women's rights in their life and who has not.
WALLACE: Even you waded into this subject back in 2006. Here's what you said then about President Clinton.
(BEGIN VIDEO CLIP)
MCCASKILL: I have a lot of problems with some of his personal issues.
HOST: But you --
MCCASKILL: I said -- I said at the time I think he's been a great leader, but I don't want my daughter near him.
(END VIDEO CLIP)
WALLACE: Senator, if it was OK for you to discuss then, why is it off limits for Donald Trump?
MCCASKILL: It wasn't OK for me. I regretted it the minute it came out of my mouth. I -- it was mean, it was unnecessary, and I apologized immediately.
That is something Donald Trump doesn't know how to do. If only he would show some humility and the kind of character traits that we need in a president, emotional stability, the ability to be introspective and listen to others.
I regret those things. I apologized for saying that. I don't think we've ever heard Donald Trump say he's sorry for anything.
WALLACE: All right. Well, let's turn to Donald Trump's running feud, which you mentioned a moment ago, with a former beauty queen, Alicia Machado, about her weight gain. You sent out a tweet this week. You said, "The Democratic women senators have talked, and we're concerned about Donald's weight. Campaign stress? We think a public daily weigh-in is called for."
How big a mistake do you think Donald Trump is making?
MCCASKILL: Well, obviously that was a joke, and we were all laughing about it and talked about the tweet before I sent it out. Several of my colleagues retweeted it. We are trying to make light of a situation that frankly is -- has a serious side to it. And that is how he views women, how he objectifies women.
How he has -- and we're not talking about just in this campaign. As I say, it's important to look at people when the cameras aren't on them, before they've gotten into the bright light of a presidential campaign. This is a man who has a history of going after women in inappropriate ways, and frankly even in this campaign.
I mean, what he said about Megyn Fox, your colleague at Fox is absolutely -- that would be disqualifying in most presidential campaigns. Yet, somehow it has not been for Donald Trump. That's why this election is so important.
WALLACE: On the other hand, Hillary Clinton has a record and doubts persist about her honesty. It turns out, and we found out this week, the Justice Department gave some form of immunity to five people involved with her private e-mails, including her State Department chief of staff, Cheryl Mills.
And here's how FBI Director James Comey defended that in a congressional hearing this week.
(BEGIN VIDEO CLIP)
JAMES COMEY, FBI DIRECTOR: You can call us wrong, but don't call us weasels. We are not weasels.
(END VIDEO CLIP)
WALLACE: Senator, if no one did anything wrong, and that's what Hillary Clinton says with the private e-mail servers, although she says it was a mistake in judgment. But if nobody did anything wrong, why are five people that were involved with them asking for and receiving immunity from criminal prosecution?
MCCASKILL: Well, because the FBI was looking at Hillary Clinton as the subject of the investigation. I spent a lot of years as a prosecutor.
By the way, if anybody has worked with the FBI, they would tell you this is not an organization of a bunch of Democratic partisan liberals. This is a "we do not take sides, we go after the facts, and we are determined to get to the bottom of it". That's why dozens and dozens of FBI agents spent months and months doing everything, including giving immunity, which happens frequently in the course of an investigation, to try to find out if there was anything criminal that occurred.
And they came to the unanimous conclusion --
WALLACE: But, briefly, why would they need immunity?
MCCASKILL: Comey said in his testimony -- well, perhaps because they were worried about what, you know -- lawyers say get immunity if you can get it if you're part of providing information in an investigation. It is common to do. And any prosecutor will tell you this is commonplace, and they were trying to look at Hillary Clinton.
They wanted the cooperation of witnesses because they wanted to try to see if Hillary Clinton had done anything wrong. They came to the conclusion she had not. And that is the FBI. That's not some partisan organization.
That's why we need to put this to rest. She's admitted her mistake and realize that Republicans are going to try to use this day in and day out because frankly they want to distract everyone from the fact that their candidate is temperamentally unfit to lead the strongest nation in the world.
WALLACE: Senator McCaskill, thank you. Thanks for joining us. Always good to talk with you.
MCCASKILL: Thank you, Chris.
WALLACE: Up next, we'll bring in our Sunday group to discuss the new revelation Trump could have paid no federal taxes for 18 years.
(COMMERCIAL BREAK)
CHRIS WALLACE, FOX ANCHOR: Coming up, Clinton and Trump attack each other's judgment.
(BEGIN VIDEO CLIP)
CLINTON: A man who can be provoked by a tweet should not be anywhere near the nuclear codes.
TRUMP: Everything you need to know about Hillary Clinton, follow the money.
(END VIDEO CLIP)
WALLACE: We'll ask our Sunday panel about the candidates' strategies for the home stretch.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
CLINTON: Maybe he doesn't want the American people, all of you watching tonight, to know that he's paid nothing in federal taxes.
TRUMP: That makes me smart.
CLINTON: If he’s paid --
(END VIDEO CLIP)
WALLACE: Well, that's an exchange from Monday's debate, which has new resonance after "The New York Times" reports Trump took a billion-dollar loss in his 1995 returns and may, I repeat may not have paid any federal income tax for up to 18 years.
Time now for our Sunday group. Michael Needham, head of Heritage Action for America. Bob Woodward from The Washington Post, author of "The Last of the President’s Men," which is coming out in paperback next week. Julie Pace, who covers the White House and the campaign for the Associated Press. And "Washington Examiner" contributor Lisa Boothe.
Well, Lisa, Mitt Romney, as we all remember, got hammered in 2012 when he put out his tax return and it turned out he'd paid an effective tax rate of 14 percent. What do you think the reaction’s going to be to the idea, the possibility, that Donald Trump made no -- paid no federal incomes taxes for years?
LISA BOOTHE, WASHINGTON EXAMINER CONTRIBUTOR: I don't think it hurts him as much as it did with Mitt Romney. I mean Donald Trump has been very honest about the fact that he's taken advantage of the system. He even mentioned it in the first debate. He's also said that he tries to pay as little taxes as possible. And let's be honest about both of these candidates. Neither one of them are candidates of the people. Donald Trump is a billionaire. Hillary Clinton has lived in a rarefied world as first lady. She's admitted to not driving a car for 18 years. She's made, collectively with Bill Clinton, over $100 million from paid speeches to the likes of Goldman Sachs. So neither candidate is really a candidate of the people.
WALLACE: Let -- let me turn to you, Michael, because, first of all, we should point out that Trump, according to The Times, did nothing illegal. That if he had this kind of huge loss, you're allowed to carry that over to shield income in -- in following years. But the argument that Claire McCaskill makes, here's a guy who says he's the -- the champion of the working man, and yet he's paying no taxes for years and years.
MICHAEL NEEDHAM, CEO, HERITAGE ACTION FOR AMERICA: Well, first of all, we don't know whether he paid taxes or not and there's many forms of taxation under --
WALLACE: I -- I will say, he did make a statement that was conspicuous and not denying it.
NEEDHAM: Right. So the -- so the federal government, in 1995, brought in $1.4 trillion of tax dollars. This year it brought in $3 trillion. There's plenty of tax revenue. The problem is that Washington, D.C., squanders it. It’s inefficient. It’s corrupt. If you don't like the manner in which distribution of the tax system, then we need a new tax code. And I think if you look at these two candidates, Hillary Clinton has a tax plan that keeps the currently very complex tax system, eight different tax brackets, actually adds a ninth tax bracket on top of that with a surcharge, and Donald Trump has an incredible pro-growth tax plan that's been written by my colleague Steve Moore at The Heritage Foundation, by Art Laffer, by Larry Kudlow. And so if you don't like the distribution of who's paying what, the problem isn't Donald Trump, the problem is Washington, D.C. The problem is the Capitol Building. And that's where we need -- we need new ideas put in.
WALLACE: So -- so, Julie Pace, I got to ask you, are they -- Republicans going to be able to -- to -- and the Trump campaign be able to sell that argument? Here's an -- I know the tax game and if there's anybody who can fix it, it's me.
JULIE PACE, THE ASSOCIATED PRESS: Well, I think that's going to be their argument. It -- it -- it's not a bad argument. The one that got -- I just keep thinking about, is this really just argues for transparency and presidential elections. If Donald Trump had put this information out himself in, say, may of this year, he could have dealt with any negative coverage, he could have answered these questions. If he put out his -- the rest of his tax returns, we would know whether he was paying federal income taxes or not.
And I think what you're going to see the Clinton campaign do is not just focus on what we learn from these new documents, but try to use it to paint a broader picture of Donald Trump. Someone who is running on his business record but suffered a billion-dollar loss. Someone who may not have been paying contractors, people who worked for him, and yet isn't paying potentially income taxes. And I think that that could be damaging when we're talking about going after undecided voters five weeks from Election Day.
WALLACE: Then there is Hillary Clinton, who certainly acted after the Monday debate as if she was the clear winner. Here she is.
(BEGIN VIDEO CLIP)
CLINTON: Did anybody see that debate last night? Oh, yes.
(END VIDEO CLIP)
WALLACE: She was enjoying herself.
Bob, you say that you were on the road this week in North Carolina. You talked to a lot of people, and that kind of, I think it's fair to say, gloating didn't set too well?
BOB WOODWARD, THE WASHINGTON POST: Yes. That -- you know, she won the debate. I think there's universal agreement on that. I’m -- I -- I guess Trump would not agree. But she really did. But, you -- you know, that clip shows this kind of self-congratulations, this self-satisfaction. And as we know, and as we try to teach our children, when you win something, don't gloat. Humility works. And the problem for her is this feeds the notion that she's in this for herself. There was -- I mean you -- you see that, that she was overjoyed with what she did. Fine, take a victory lap, but there is, you know, something like that doesn't get dialed back, and it probably should.
WALLACE: Lisa, I mean it is worth remembering, and I think at least the polls indicate and the Fox poll had it three to one, 60 percent to 20 percent that Clinton won the debate. She apparently got a bump, not a huge bump, but a bump in -- in the polls. But there’s still lots of vulnerabilities out there for Trump to go after. I mean people still have considerable questions about Hillary Clinton.
BOOTHE: Well, absolutely. And I think Hillary Clinton's biggest problem right now is she represents the status quo. What is she going to do differently than we haven't seen for the past eight years? And if you look at CBS's battleground polling, 55 percent of voters want big changes in terms of the economy, in terms to politics. You look at Quinnipiac, which has asked the question about, do you want changes, to states like Pennsylvania, Ohio, and Florida, 70 percent of voters in those states want radical change.
There is no bigger destructor in this election than Donald Trump. He's running as the outsider. And there's information there in data points to show that voters want the change. Now he just needs to answer the question about temperament, which I don't think he did himself any favors during the first debate but I think he still has time to address that with 36 days out.
WALLACE: Well, I -- I want to just ask -- follow up on that with you, when we’ve got to move on to the next segment. That's a very strong argument that you make and I think that's why a lot of people thought he did very well, if not won the first half hour of the debate. The argument, you've been here for 20 years or 30 years, and you haven't done anything about this. I'll change it. And then he continues to talk for a week about Miss Universe.
BOOTHE: Right, which is complexing. It doesn't make sense. And he -- perplexing, rather, and he shouldn't have done that. I mean the problem is, he went right in and took the bait of Hillary Clinton. They had an ad cut. They were ready to go with this messaging strategy. And he took it.
What he should have done was taken all those opportunities, instead of defending his business practices, instead of going after Miss Universe, what he should have done is taken those opportunities to attack her on Benghazi, attack her on her private e-mail server, which draws into question her own judgment and her own temperament. Attack her on the Clinton Foundation and use all those opportunities to go after her vulnerabilities, which there are plenty of.
WALLACE: Well, as we always say, reporters are all frustrated campaign advisers and we -- if they'd just listen to us.
All right, we’ve got to take a break here. When we come back, a look ahead to the final five weeks of this race with two debates in the next eight days.
Plus, what would you like to ask the panel about Trump's plan to dig into the Clintons' personal history? Is that fair game? Just go to Facebook or Twitter @foxnewssunday and we may use your question on the air.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
TREY GOWDY, R-SOUTH CAROLINA CONGRESSMAN: When you have filed immunity agreements and no prosecution, when you are allowing witnesses who happen to be lawyers, who happen to be targets, to sit in on an interview, that is not the FBI that I used to work with.
JAMES COMEY, FBI DIRECTOR: This is the FBI you know and love. This was done by pros in the right way.
(END VIDEO CLIP)
WALLACE: FBI Director James Comey defending the decision to grant immunity to five people in the Clinton private e-mail investigation.
And we're back now with the panel.
Michael, how potent is the Clinton e-mail issue at this point? Is it already priced into the polls, people already know what they think, or do you think it still has the capacity to hurt her with undivided or swing voters on the trail?
NEEDHAM: I think it could be a major issue. Donald Trump has to make it one and -- and should bring it up in future debates. But, look, this gets at just absolute recklessness with national security information that she got in, but it's also just judgment. Who on earth looked at this situation, says I’m going to put a private server in my house, and who surrounds themself with the type of staff where not one person felt comfortable saying to her, madam secretary, this is a really bad idea and it risks national security. And so I think it gets both at the national security credential, but also this question of competence and -- and who are the types of people that she surrounds herself with and do they have the judgment to help her when she gets into the White House and be a good -- so I think it's -- it’s an important issue. There's a number of important issues. And it will be important for Donald Trump to bring it up.
WALLACE: We asked you for questions for the panel, and we got a bunch on Trump's plan to go after the Clinton sex scandals, which he announced in effect in "The New York Times" on Friday. This is on Twitter from Bill Kuhlmann. "He," Trump, "needs to focus on Hillary’s flawed policies, not on a past action of her husband."
Lisa, do you -- do you share the misgivings of, I’ve got to say, a lot of our viewers who responded to our question, that this is not helpful for Trump to bring up?
BOOTHE: Well, I -- I think that both candidates need to be held to the same standard. And Hillary Clinton is going back 20-something years to attack Donald Trump. She should be equally scrutinized. And The Wall Street Journal had a great article about a year ago titled "The Clintons' War On Women." And essentially what it said is, Hillary Clinton can't use her gender as a political shield and a sword. And it is hypocritical the fact that it's been well documented that she has gone after these various women, in criticizing them, dragging their names through the mud, but yet she wants to stand there and say that each victim deserves to be heard, deserves to be believed. I think in the minds of a lot of voters, that's hypocrisy, and it does muddy the waters to go after her.
That being said, I don't think Donald Trump is the best messenger and the best vehicle here and it needs to be handled delicately. I think it needs to be -- it’s better done by a super PAC or some sort of outside influence, not Donald Trump himself.
WALLACE: Somebody else throwing the mud.
BOOTHE: Exactly. But let’s -- but let's be honest, no candidate -- there's no moral high ground this election cycle, sadly.
WALLACE: No, that -- there is no high ground. That's gone.
BOOTHE: Gone. It’s gone.
WALLACE: That's all been chipped away or bulldozed.
BOOTHE: It does not exist, yes.
WALLACE: We were talking in the commercial -- you want to know what we do, we were talking in the commercial and Bob Woodward was saying he has a theory about how to connect all the issues that Donald Trump is having these days.
WOODWARD: It's about isolation. That he -- you don't have to do much reporting. You read the stories and you see he makes his own decisions, really is not listening to somebody. And the excellent "New York Times" story this morning, it’s very important, on -- on the tax question, but why wasn't this examined a year ago? Why didn't Trump trust somebody enough to say, here my vulnerabilities are, here's the business record, here are the taxes, because people want straight talk. We should have learned that a long -- long time ago from him.
WALLACE: You certainly could -- you could certainly say that about Hillary Clinton too.
WOODWARD: Yes. Absolutely. And the theme here is, we've got two candidates who seem to be running their own show. And if -- if you look back at presidents -- go back to Nixon or through Obama, the disease here is this isolation, this sense of, no one can come in and slam their fist down and say, come on, come clean on the taxes, come clean on the e-mails. Hillary Clinton, in the debate Monday, said she made a mistake about the e-mail server and that -- all of that business. Well, the fact is, she was making the mistake every day for years on that. And top secret information flowing around. We're probably, before the election, going to get another dose of her e-mails. This all could have been straightened out a long time ago. If you had a candidate, or, in the case of Trump, people have said, hey, you know what, we have a kind of, as candidates, a responsibility to trust the public with the truth.
NEEDHAM: So I'm sure there's an element of isolation with Trump. There is with anybody. But Trump, I think also, when he's at his best, has been one of the first Republican candidates to break out of the bubble of kind of the -- the focus on the past and the problems of the 1980s that plagues the Republican Party. Trump, at his best, talks about both the economic and the social disconnectedness of the working class. That's an important issue to talk about. Trump, at his best, talks about real issues of national identity and where are we going as a country that I think don't only apply to America, but you saw with Brexit. Trump, at his best, talks about the kind of corruptness of Washington, D.C., which I think Hillary is the poster child of.
WOODWARD: But -- but what -- you say Trump it is --
NEEDHAM: And so -- so there's kind of bubble in politics that Trump has also pierced when he's at his best, and that’s why getting into the mud on this other stuff is problematic.
PACE: The problem -- the problem for Trump --
WOODWARD: We see him at his worst also.
PACE: Right. No, but the problem --
NEEDHAM: (INAUDIBLE).
PACE: The -- the problem for Trump is that I think now he actually does have a team around him that is pushing him to those messages. It's written into his stump speeches now. When he sticks to the teleprompter, he’s -- he’s delivering that effectively. He did that in the first debate.
But the reality is, Donald Trump is who he is.
NEEDHAM: Right.
PACE: Whether he is in a small isolated group of advisers, or a larger group of advisers. If you look at his history, for decades in the public eye, he is a man who will chase the shiny object. And the Clinton campaign has learned that very well.
NEEDHAM: Yes.
WALLACE: I -- I want to -- in the time we have left here, take -- kind of take a 30,000-foot view. Because there was a big milestone and that was the debate. We have five weeks left. There are going to be two debates in the next eight days. The vice presidents on Tuesday, the second president's town hall next Sunday. Clinton clearly got a bump from the first debate and is ahead, but it's still well within reach.
Julie, your -- your perspective on where this race is right now.
PACE: I think that despite a lot of the volatility that we see in the race day to day and these various issues that pop up, the race actually has been fairly steady if you look at the fundamentals for months. I think that Clinton has a well-organized campaign. She has more pathways to the 270 Electoral College votes that she needs. She has strength with certain demographic groups. She still struggles with her honesty and trustworthiness. She's struggling to energize young voters. And that gives Trump an opportunity.
His challenge right now is that while he has coalesced a large segment of the Republican Party, it's not enough. And he is not, right now, doing what he needs to do to bring in women, some younger voters, some minority voters to really flush this out and give him a -- a pathway to 270.
WALLACE: Michael, let me -- let me turn to you on that, because I think we all would agree that -- that his Twitter storm and continuing this fight with Miss Universe was -- was highly counterproductive. You know, move on to policy. Does he, in these next five weeks, have the opportunity to turn that around? Because I think he probably did clearly hurt himself with women, with Hispanics, with a lot of people who have questions about his temperament. Does he -- can he, in these five weeks, make a second chance to make a first impression?
NEEDHAM: Yes, I think that there's still enough time for him to -- to win. I think he needs to focus on those messages that I brought up, which are about talking about the real issues people feel today and how he can take us on a path to the future.
But there's truth in what Julie said. I mean this is a race that Hillary has kind of had a three, four percentage point lead in, in the steady (ph) state. Hillary had a good June. Trump had a good July. Hillary had a good August. Trump had a good September. We'll see what happens in October and whether there's enough time for Trump to get -- to get back on that message. But it requires a discipline in talking about real issues, not kind of the silly stuff from 20 years ago.
WALLACE: Bob, 30 seconds.
WOODWARD: Real -- real quick. I’m -- in -- the -- what does the voter want? The voter wants honesty. And I think you look at the next debate, and whoever wins is going to be somebody who conveys the feeling through what they say addressing serious issues and says, hey, you know what, I’m really coming clean. And we have two candidates who are not coming clean enough.
WALLACE: And beyond honesty, I think they probably also want people -- a candidate who they feel is in it for them and not in it for themselves. And there's been a feeling that too much of this has been about the two candidates and not about the American people.
Anyway, thank you, panel. See you next Sunday.
Up next, our "Power Player of the Week." One of America's greatest dancers retires and brings her next act to Washington.
(COMMERCIAL BREAK)
WALLACE: For decades, she was one of America's most celebrated dancers, but now she's starting a new chapter of her career. Here's our "Power Player of the Week."
(BEGIN VIDEOTAPE)
JULIE KENT, THE WASHINGTON BALLET: Leaving the stage was traumatic, heartbreaking. One of the most difficult, wonderful things I've experienced in my life.
WALLACE (voice-over): Julie Kent is talking about the moment in 2015 when she decided to retire after 30 years as a star of the American Ballet Theater. At age 45, she could feel her skills declining, and there was another sign.
KENT: At the end of the day, when Derek Jeter retired, I guess I figured I had to go too. And Mariano.
WALLACE (on camera): Yes, it’s true.
KENT: They were my guys. So if they're not going to play, I guess I can't either.
WALLACE (voice-over): The question was, what to do next. The Washington Ballet asked her to become its artistic director.
KENT: As I’ve said to some of the dancers, the next best thing to creating beautiful art is watching it.
WALLACE: And so Kent now spends hours in the studio helping dancers realize their dreams, just as she did.
KENT: It's home. It's just -- it's at home. The bar, the mirror, the floor, the smell, the piano, the ambience, to me it's just home.
WALLACE: Kent wants to expand the company and its repertoire of ballets.
KENT: My goals are to take this company to a place where it hasn't been before.
WALLACE: Part of her job is also to oversee the Washington School of Ballet, which has more than a thousand students.
WALLACE (on camera): Is that a concern of yours, that being such a great dancer yourself, you -- that may not translate into being a great teacher?
KENT: I always say to them, I -- I -- I don't want you to do what you think I would do because I'd really rather do it myself. I want to see what you're going to do.
I have no memories in life before dance.
WALLACE: Kent started dancing as a child. At age 10, her first professional performance was alongside a master.
KENT: To be this close, sharing a wing with Baryshnikov, it was incredible.
WALLACE: She would go on to be one of the most celebrated dancers of her generation.
WALLACE (on camera): How is it to be a prima ballerina? Fun, glamorous, or just hard work?
KENT: It's the whole -- it's everything.
WALLACE (voice-over): While she's now retired, she doesn't close the door entirely on a possible encore.
WALLACE (on camera): Are you going to perform with the company?
KENT: That's not on the plan. No. If it made sense for me to perform, then I'm a very logical person as far as method. And if it makes sense, then it makes sense.
WALLACE (voice-over): But Julie Kent understands, after 30 years in the spotlight, she's taken on a new role.
KENT: I loved it. I still love it. I would still do it if I felt like it was the right thing to be doing, but you have to give the light to the next generation.
(END VIDEOTAPE)
WALLACE: This week, The Washington Ballet celebrated its 40th anniversary with a performance at the Kennedy Center, and they officially welcomed Julie Kent as the new artistic director.
Now a program note. Tune to Fox News Channel all day Tuesday for special coverage of the vice presidential debate, "The Battle in Virginia."
And that's it for today. Have a great week. And we'll see you next "Fox News Sunday."
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