KELLY FILE

Gingrich: Democrats in a state of shock; Megyn Kelly explains decision to leave Fox News

This is a rush transcript from "The Kelly File," January 3, 2017. This copy may not be in its final form and may be updated.

MEGYN KELLY, HOST: Breaking tonight with just over two weeks until President-elect Donald Trump is sworn in and before he takes a single official act of president, Democrats are mobilizing to block delay and obstruct his agenda.

Welcome to "The Kelly File" everyone, I am Megyn Kelly. Today, we witnessed the start of a new era in American government. The 115th Congress convening for the first time. And after Mr. Trump's inauguration, 17 days from today, Republicans will control the White House and Congress for the first time since 2007. For their part, Democrats are trying to ensure that this new unified government gets off to a slow start.

As that party Senate leadership reportedly now planning on holding up the confirmation process for at least eight, eight, top major cabinet post.  Their goal, to drag out a process that normally takes weeks into months, a move that the Washington Post calls unprecedented.

New elected Senate Minority Leader Chuck Schumer taking to the Senate board today, offering this warning to the President-elect. Watch.

(BEGIN VIDEO CLIP)

SEN. CHUCK SCHUMER, D-N.Y., MINORITY LEADER: There are those who suggest that our baseline posture should be to work with the President-elect and having passed his whole agenda. But Mr. President, it is not our job to be a rubber stamp. It's our job to do what is best for the American people, the President-elect Rand is a change agent. He ran against the establishments to both parties.

Since the election, he seems to have forgotten that. Too many of his cabinet picks support the same hard right doctrinaire positions that many in the Republican Party have held for years. Policies that the American people have repeatedly rejected the attempt to adopt their timeworn policies, which benefit the elites, the special interests, corporate America, not the working man and woman. His presidency will not succeed.

KELLY: In moments we will be joined by former House Speaker Newt Gingrich who was a close advisor to the President-elect.

But first we go to Fox News politics editor Chris Stirewalt on these coordinated efforts against the new Trump administration.

Chris, good to see you.

So, I guess it's a war room, they are going to sit. They're going to have little combat helmets on.

(LAUGHTER)

These cabinet nominees. So who do you think is most vulnerable and are you shocked that they don't want Trump's guys?

CHRIS STIREWALT, FOX NEWS POLITICS EDITOR: Well, they've got to do something. They got kicked in the shorts. They had their worst year in a lot of ways since 1988. They were not at all prepared for it. You can't have a war room if you don't have an army. They ain't got no army. And you've got to do something. Schumer is using a little Trumpism here. He's making maximalist threats. He is saber rattling. In hopes I assume that he can get something better down the road. Get some leverage out of this deal. The two week spots. The two most vulnerable.  

I would say probably the two weak spots. One is Scott Pruitt. The Attorney General of Oklahoma who Trump has tacked to be the head of the EPA. Climate change stuff is going to be a big deal there. They will hone in on him, they'll go hard right there. The other one, depending on what Trump does with the intelligence about the rushing hacking could be Rex Tillerson. His pick for secretary of state. That's a big target. That's a real big target. If they go after him, and they get cross ways about the Russians, that is a potential big liability. But we don't know how Trump is going to a play the intelligence stuff yet.

KELLY: Uh-hm. But you heard Chuck Schumer, I am not there. We are not there to be a rubber stamp. You know, we've got to put these nominees to the test and, you know, sort of trying to shore up. I don't know, is he the general? You say you cannot like -- is there an army? Is he the general -- like, who is their leader?

STIREWALT: Well, and that is exactly the issue. And Barack Obama says, he is not leaving. He says he's got to continue to fulfill his role instead of doing what his predecessors have done which is go and get -- quietly.

(LAUGHTER)

KELLY: That's the American way.

STIREWALT: That's the American way. Is that he seems to want to hang out and he's going to continue to live in Washington and he is going to be here and says he wants to take a leadership role as Democrats. They are divided. They don't know which way to go. There are a lot of things that Chuck Schumer and Donald Trump who are friend agree on, like borrowing a trillion dollars and spending on infrastructure. They both want to do that. There are things that Democrats want to work with Trump on. But they're afraid that if they are seen as two accommodation, they will lose their party's base and they will become even more hopelessly divided.

KELLY: Did you get a haircut?

STIREWALT: I did.

KELLY: You look good.

STIREWALT: I had all that time over Christmas. I had to do something.

KELLY: You look like a dapper. Actually dapper tonight, Stirewalt.

(LAUGHTER)

Good to see you.

STIREWALT: Happy New Year, counselor.

KELLY: To you too.

Well, in addition to reports of obstructionism in the Senate, we are also learning tonight that the Democratic National Committee is building a, quote, "war room" filled with former staffers from Hillary Clinton's failed presidential campaign to challenge the new administration every step of the way.

Joining me now, Newt Gingrich, a former Republican Speaker of the House and a close advisor to President-elect Donald Trump and the author of the book "Treason." Great to see you, Mr. Speaker. So, you know --

NEWT GINGRICH, R-FORMER SPEAKER OF THE HOUSE: You say that differently every time I am on. It's amazing how many very variations you have.

KELLY: I want to read it. All right. So, this is, I mean, what about the lecture we got when Barack Obama took office that we are supposed to root for our president and work together and the shock and awe that was expressed when Mitch McConnell was saying, you know, their top goal was to defeat his agenda? And you know, what are you talking about? It's America. It's a different message now.

GINGRICH: Well, look, I think the Democrats are in a state of shock. I am old enough that I couldn't help but think of Charlie Hallock, who used to be the Republican House Minority Leader when John F. Kennedy was president, when Lyndon Johnson was president. And -- although he's from Indiana. So, the accent was different but it's, "no, no, no, stop, stop, stop" nothing shrinks your party faster than learning the word no.

All of your allies know that they all come and give you money at the fundraiser, they all applaud but the rest of the country will look at you like you are nuts. You know, you do a couple of things that I mentioned I think either you or Greg that are really amazing. If you think about it, about Stirewalt rather, if you think about it, taking on Tillerson, who had the largest manufacturing company, ExxonMobil, deals in 80 countries or so, stunningly successful, ego scout et cetera. Why would you want to pick a fight with him?

I mean, I understand picking a fight with the Attorney General of Oklahoma.  You almost have to for their Sierra Club. But I think the Democrats are just floundering right now. They know that they have to appear to their base to be saying, no. But that is going to drive moderate and middle- class America away from them at a very rapid pace.

KELLY: Now, you reportedly when you were speaker, you know, like this kind of thing too. And there was a 2000 book, 2012 book by Draper, "Do Not Ask What Good We Do." That suggested that, years ago, you sat down and said, this is, let me see, this is a strategy to take back the House in 2010, so you weren't a speaker and the Senate in 2012 when you said, at the end of a meal, you will remember this day, you will remember this day as the seeds of 2012 were sown. And that you, like, you know, most Republicans wanted obstructionism when there was a Democrat in the White House.

GINGRICH: Well, what I said was, if Barack Obama governed based on his inaugural address and on his speech at Grant Park and on his speech the Saturday before the election, that he was so moderate, he was so much in the center of the country. If he governed like that, he would be Eisenhower. He would split the Democratic Party, he would be re-elected.  He would grow the Democratic Party. And we couldn't do anything about it.  But if he went to the Left, Pelosi and Reed and did exactly what they did do, he would set up a moment for real polarization.

And that's what they decided to do. And that set the stage for 2010 and beyond. And my advice to Trump is to learn a really deep lesson for that.  I mean, here is a chance to reach out to Democrats. And as Stirewalt mentioned, it's very real is the notion of a bill for infrastructure. He should be able to have at least one-third of the Democrats to decide that they want an infrastructure build.

KELLY: But what about this cabinet? Like President-elect Donald Trump definitely has some agenda items that are, you know, in the middle ideologically that should be appealing to some of these Democrats. But the cabinet picks are clearly conservative which is his right, he won.

GINGRICH: Right.

KELLY: But they seem to be really digging in. And do you think that somebody like, some has also said, you know, Mnuchin, they're going to dig in on because he was behind his group, was behind a lot of these foreclosures on this mortgage backed securities and do you think Scott Pruitt who we just discussed for EPA? I mean they are really going after Pruitt. Do you think they will stop these guys from getting through and how many capitals that that spend when the Supreme Court justice fights come up?

GINGRICH: Look, well, I think first of all, the Democrats are going to be under enormous pressure. There's a spring session of the court. We already know that Trump is going to name one of the people on his list that he released months and months ago. They are all solid conservatives but they're all widely respected jurists. I mean, nobody is suggested any of these aren't valid as Supreme Court nominees.

KELLY: Uh-hm.

GINGRICH: So they'll bring that out very early and at the clock will start running and of the country is going to watch the Democrats twist themselves into pretzels. But let's take your deeper point. And I do think some of these guys are going to have to sort of earn their approval by doing really well in hearings and going to see senators and doing all of the things you do in this process.

But remember, Trump is not, he's not a normal Republican versus Democrat, Right versus Left guy. The example I tweeted about today is, you know, jobs in Michigan's by the Ford Motor company which is now going to invest $700 million in Michigan instead of Mexico and the president of Ford said, look, we are doing this because we believe in the regulatory tax reform that Trump is talking about. Now what I twitted today is so how many Democrats in Michigan care enough about Michigan jobs? To vote for the reforms that Ford says are essential to keep those jobs in Michigan?

KELLY: Uh-hm.

GINGRICH: And that's going to oppose -- this is going to be very different than anybody expects. This will not be a normal right versus left presidency. This will be a very innovative, very pragmatic presidency.

KELLY: Happy New Year, Mr. Speaker. Good to see you.

GINGRICH: Happy New Year!

KELLY: Well, as the former speaker just mentioned, there is no reaction tonight to President-elect Trump calling out General Motors. Trump's critics are now, and now GM itself are hitting back. Anthony Scaramucci and Julie Roginsky are here next to debate.

And as Chicago's former top cops suggests the Black Lives Matter movement has led to an uptake in crime, will take a look at some suggestions in federal intervention in cities like Chicago under a Trump administration.  What's going to happen to all of these DOJ investigations?

Plus, after sound issues resulted in a disastrous -- I don't think that's too strong -- I think that's probably correct. New Year's Eve performance in Times Square, could Mariah Carey face legal drama for how she handled it?

(LAUGHTER)

A revised Kelly's court appears tonight. We'll take up that debate coming ahead.

(COMMERCIAL BREAK)

KELLY: Breaking tonight, President-elect Donald Trump employing a unique tactic during his transition. A penchant for calling out big business practices he objects too over Twitter. And in some cases, getting results.  But tonight, one of those companies is pushing back with General Motors correcting President-elect's claim of automobiles build overseas.

Anthony Scaramucci and Julie Roginsky are here whether Mr. Trump continued twitter, critics may be bad for business. But first we go, we go to Peter Doocy live at Trump Tower with the latest on today's fight with the auto giant.

Peter, what is the story?

PETER DOOCY, FOX NEWS CORRESPONDENT: Megyn, he did it with Carrier. He did it with Boeing, he did it with Lockheed Martin. So now the President- elect is trying his luck with GM, now using Twitter to put pressure on the carmaker to try to fall in line with his policies. He did tweet this this morning. "General Motors is sending Mexican mode model of Chevy Cruze to U.S. car dealers tax free across border making USA or pay big border tax."  Mr. Trump has previously threaten a 35 percent tax for American companies he thinks are trying to make money here with products produced cheaply elsewhere, but it's rare for him to use this much detail and GM quickly recognize they may have a problem on their hands.

So, they put out a defensive statement that explains quote, "All Chevrolet Cruze sedans sold in U.S. are built in GM's assembly plant in Lordstown, Ohio. GM builds the Chevrolet Cruze hatchback for global markets in Mexico, with a small number sold in the U.S."

Well, Ford has been there GM is right now before. Candidate Trump used to go after Ford hard on the trail for planning to move some production down to Mexico. But now that there are critics as President-elect, the company has an announcement. They are pulling the plug on a factory project in Mexico. And investing $700 million in the Michigan plant, something happening impart because of something the President-elect said.

(BEGIN VIDEO CLIP)

MARK FIELDS, PRESIDENT AND CEO, FORD MOTOR COMPANY: When we look at some of the tax and regulatory reforms that he's been talking about, that gives us a lot of confidence and this is a vote of confidence that he can deliver on those things.

(END VIDEO CLIP)

DOOCY: And he's not just tweeting, the President-elect is ready to take questions. A long-awaited general news conference was announced tonight for January 11th. That is one week from tomorrow -- Megyn.

KELLY: Peter Doocy, thank you.

Joining me now with more, executive committee member of the Presidential Transition Team, Anthony Scaramucci and FOX News contributor and Democratic analyst Julie Roginsky.

Good to see you both.

JULIE ROGINSKY, DEMOCRATIC ANALYST: Great to see you.

ANTHONY SCARAMUCCI, EXECUTIVE COMMITTEE MEMBER, PRESIDENTIAL TRANSITION TEAM: Thanks.

KELLY: So, I mean, President-elect Trump defenders will say, so, he is using the power of his office to try to obtain results for the American people.

ROGINSKY: Well, the right that he is using the power of his office, I remember back in the day, Anthony, you might remember this too.  Republicans didn't like to pick winners and losers. They like to have the market place --

SCARAMUCCI: What are you talking about Solyndra?

ROGINSKY: I'm talking about -- exactly, you to complain about Solyndra quite a bit. And I am happy to see that you are following by picking winners and losers on twitter. Look, if he's able to accomplish this -- if he is actually able to accomplish this true regulatory reform and broad- based reform, that's one thing. If he's picking companies, naming them by name, where he is saying if you do X, I will do Y.

For Carrier for example, where Carrier got a few million dollars to save a couple of hundred jobs, 800 jobs that they will now use the money to automate most of those jobs anyway but that's something the President-elect doesn't want to talk about, that's different, that's picking winners and losers and that's something that I think people -- Republicans at least, who love the free market, don't necessarily support and have it until --  

SCARAMUCCI: So, Julie has tough adversaries, what she's missing about the President-elect, he's become the blue-collar advocate in chief among so many other things that he's doing right now.

KELLY: But how is that different from being the green advocate in chief that Barack Obama was?

SCARAMUCCI: It's very different. Because in the case of General Motors or Ford, they are existing companies. They have an existing capital allocations structure. And they're making a decision whether to produce here in the United States or produce off the shores of the United States.  And Solyndra was the -- where the President-elect or President Obama was making a decision about the environment. In this case, it's the focused that's on American workers, Megyn, and rising middle class wages and working class wages and so a very, very big difference --  

ROGINSKY: So the priority is we have an issue with -- it's not the philosophy, it's the priority.

SCARAMUCCI: It's actually not just the priority. What the Democrats also understand which we both understand is that we've got to get the middle- class rising wages, we've got to get the working class which is turning into the working poor in the United States into the aspirational zone like my --

KELLY: What about that? What about the argument Julie that all we need to do is pick a couple of these? Right? And like threaten, and that, you know, the belief by some that the other companies who are thinking about moving their plants to Mexico will then be shamed. They know he is going to come after them, they don't want that. And they say, you know what? Is it really worth it?

ROGINSKY: You know, I am old enough to remember 2008, Barack Obama was riding high when he was coming into office. Everybody thought, you know, it was a Kumbaya moment. And then reality hits. And what ends up happening is, these companies are going along now, because he's not yet president, they're not sure what he is going to do. The minute his number starts to tank a little bit inevitably you know they will because nothing is going to last forever. They are going to do what's best for their bottom-line. And at the end of the day, what's going to end up happening is that they're going to make business decisions based on partially on the regulatory environment, partially the tax environment but also partially what's best for their --  

(CROSSTALK)

KELLY: I mean, he's really put a 35 percent tariff on --

SCARAMUCCI: He's not going to do that.

KELLY: You're not because he has said that.

SCARAMUCCI: Well, I think that is a bargaining chip on the table to get the understanding among, you know, whether it's Mexico, other countries, China --

KELLY: Because you know if he puts a 35 percent tax on those products that are crossing the key borders in the United States --

SCARAMUCCI: I understand that --

KELLY: That the American people are going to have to pay.

SCARAMUCCI: But Megyn, what the American have to know since 1945, we made State Department and Treasury, a concerted effort to uneven the trade deals. Goods and services flows freely into the United States. Our good and services --

KELLY: That is true.

SCARAMUCCI: -- into other countries.

KELLY: That is a fact.

SCARAMUCCI: Okay, Megyn. We did that to create economic interdependence.  It was a bipartisan thing. Both Democrats and Republicans. All Mr. Trump is now saying his timeout, let's have the dilatory side effect of hurting working class --

KELLY: Dilatory. Look at you. Delete with ory at the end.

SCARAMUCCI: ACT's for the young people out there. SATs for the old people.

ROGINSKY: What are you looking at me for?

(LAUGHTER)

What's your point looking at me for old people?

SCARAMUCCI: No, no, no, no --

(LAUGHTER)

(CROSSTALK)

It's nothing to do with you. Sorry brother.

KELLY: But your point is, he is like enough is enough. Let's even the playing field?

SCARAMUCCI: And let's even the playing field because let me tell you something, the last best hope for globalism is Donald J. Trump, I'm going to tell you why, you created a burgeoning market for the middle class and the working class families, where 23.6 percent of the GDP of the world and we will see an increase --  

KELLY: It's similar with what he's doing with China. I mean, this is not --

(CROSSTALK)

KELLY: Okay. Great to see you.

SCARAMUCCI: Julie is worried, she is worried.

ROGINSKY: I am not worried.

KELLY: Okay. Coming up. A not-so-subtle message from the President-elect to President Obama's former chief of staff after Mr. Trump suggests that Chicago Mayor Rahm Emanuel may need the Feds to help tackle historic levels of violence in his city.

And wait until you hear Rahm's response. We'll debate what it all might mean for the future of U.S. policing.

Plus, the debate over Gitmo detainees still continues. Eight years after President Obama promised to empty the prison as the very first thing he wanted to do upon becoming president. We will show you how the president-elect just inserted himself into this debate earlier today when former Congressman Pete Hoekstra and Matt Bennett joins us right after this break.

(BEGIN VIDEO CLIP)

PRESIDENT-ELECT DONALD TRUMP: This morning I watched President Obama talking about Gitmo, right? Guantanamo Bay, which by the way, which by the way, we are keeping open. Which we are keeping open.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KELLY: Breaking tonight, the Obama administration and President-elect Donald Trump at odds over the controversial detention center at Guantanamo Bay. For more than eight years, the President has vowed to close this facility. And just with 17 days remaining in office, the White House is suggesting that Barack Obama's Gitmo legacy could still be evolving.

For more on that, we go to chief intelligence correspondent Catherine Herridge, live in Washington. Catherine?

CATHERINE HERRIDGE, FOX NEWS CHIEF INTELLIGENCE CORRESPONDENT: Megyn though we're still more than two weeks away from taking office today, Mr. Trump inserted himself into the controversial detention of alleged terrorist of Guantanamo Bay, writing in a tweet, "There should be no further releases from Gitmo. These are extremely dangerous people and should not be allowed back onto the battlefield."

FOX News has visited the detention camps more than any other TV network and today, only 49 detainees remain. And the Obama administration still plans to transfer as many as 19 men to other countries before the inauguration.  The White House spokesman said today their policy remains on track and Mr. Trump can do what he wants when he is in charge.

(BEGIN VIDEO CLIP)

JOSH EARNEST, WHITE HOUSE PRESS SECRETARY: He'll have an opportunity to implement the policy for -- that he believes is most effective when he takes office on January 20th.

(END VIDEO CLIP)

HERRIDGE: The Obama administration's decision to transfer this detainee Ibrahim al Qosi remains controversial and underscores the risk. After leaving the Gitmo camp in 2012, al Qosi became the public faith of al Qaeda's most dangerous affiliate that was behind the attempted bombing of a U.S. passenger jet. The five 9/11 suspects including the self-described architect of the attack Khalid Sheikh Mohammed are still held at Gitmo and already in the military legal system. So they are not eligible for transfer.

But the case has essentially stalled out over them in CIA detention and interrogation that critics call torture. One of his first access president in 2009 with the signing of an executive order to close the Gitmo camps within the year. That effort is failed with President Obama and his team, now blaming Congress for throwing up roadblocks -- Megyn.

KELLY: Catherine, thanks.

HERRIDGE: You're welcome.

KELLY: Joining me now with more, Pete Hoekstra, former Michigan congressman and advisor to President-elect Trump's Transition Team and Matt Bennett, former deputy assistant to President Clinton. Great to see you both.

MATT BENNETT, CO-FOUNDER, THIRD WAY: Great to be here.

KELLY: Pete, let me ask you, because, you know, Barack Obama has made clear he wants to get rid of these last detainees. Or at least 19 of them.  So, the White House was asked today, are you going to take into account President-elect Trump's request that he not transfer it anymore, that a new administration is coming in and that, you know, Donald Trump had an issue on the campaign trail saying, they're not going to be any more transfers, we're not going to close it. And the White House said, we will not be taking that into account. Your thoughts?

PETE HOEKSTRA, FORMER HOUSE INTELLIGENCE COMMITTEE CHAIRMAN: I think that is exactly right. President Obama is going to try to fulfill his first promise -- one of his first promises that he made when he came into office.  He's going to be unable to do it and at the end result is, with these 19 people that he most likely will transfer by January 20th, many of these are going to be the exact same people that Donald Trump is going to have to go back in his administration that they're going to have to capture. We are in a hot war.

The threat to radical Jihadism today is his greatest any time since 9/11.  ISIS is taking credit for about 1100 suicide attacks in 2016. You've got the attacks going on in Turkey, in Germany, in France, and those types of things. You've got failed states in Syria, Iraq and Libya. The threat is real. We are in a worse situation than we were in 2009 when this president came into office. We should not be letting this people free.

KELLY: But what about it, Matt, should President Obama give any thought to the desires of the incoming commander-in-chief in these 19 detainees?

BENNETT: No, he should not. We have one president and President Obama will be president until noon on January 20th and he has to act like it.

If we somehow decided that between November and January we were going to have two presidents, where that the president, the incoming president was going to do nothing for three months that would be a signal to the world that they can do whatever they like for those three months and nothing would happen.

Obama has to act like the President. And Gitmo has been a super rating sore in the war on terror from the beginning. Do not take my word for it. That's a call on policies. That's what John McCain says.

KELLY: But we've just had this election in which Donald Trump made this an issue.

BENNETT: Right.

KELLY: I mean, he said we are keeping it open, we are going to load it up with some bad dudes. Believe me, we're going to load it up. So, this was at play, an open issue in the 2016 presidential election and the American public sided with Donald Trump.

BENNETT: Well, they voted for Donald Trump to be president. You can't say they cited with him on every single issue that he talked about. In fact, on many if you look at...

(CROSSTALK)

KELLY: That, I'm taking this from Barack Obama who when he was running whenever he got it -- when he got elected and tried to put anything into play, he'd say I disclosed this. I disclosed this (Inaudible) I made this an issue.

So, I don't know, you tell me, Congressman Hoekstra, it turnabout it's fair play and he should be held to that same account that the will of the American people has apparently shifted now if you follow his logic?

HOEKSTRA: Well, the turnabout should be fair play number one because Donald Trump did win on these issues. But turned around should be fair play because bottom line is, the policies of President Obama in fighting radical Jihadism have failed. This president gave the radical Jihadist just about everything and from a perception standpoint they could've asked for, he engaged with the Muslim brotherhood. He recognizes it.

(CROSSTALK)

KELLY: Well, he gave Obama -- Osama Bin Laden a bullet between the eyes.

HOEKSTRA: He gave Osama Bin Laden a bullet but it came to long-term he embraced the Muslim brotherhood, he supported their efforts to change the governments in Egypt and Libya and foster the kind of chaos that we see today. The policy, Trump's policy in his words should be listened to because they set aside a new direction...

KELLY: OK.

HOEKSTRA: ... that enable us to hopefully defeat radical Jihadist.

KELLY: Well, they are not going to be.

HOEKSTRA: They're not -- you're right. They're not going to be.

KELLY: So, we'll see.

HOEKSTRA: Yes.

KELLY: We'll see what happens. It's always a hassle to transfer these guys. And nobody really wants them. And then we get like a promise from Yemen that they are going to watch him really closely. Great to see you, guys.

HOEKSTRA: Good to be here, Megyn. Thanks.

KELLY: Also, tonight after a year that saw nearly 800 homicides in Chicago. Mr. Trump hinting we could see big changes when it comes to policing in America. As the president-elect suggest that Mayor Rahm Emanuel in Chicago might need federal help now to tackle the historic violence in his city, and wait till you hear what Rambo, as Hannity calls him, has to say about that. He calls him Rambo dead fisherman. He's not a fan is the point.

We're going to debate all of this with Kevin Jackson and Eric Guster just ahead.

Plus, could there be legal, yes, I say legal fallout to Mariah Carey's now infamous New Year's Eve performance? Oh, do we have a Kelly's court for you. Coming up.

(BEGIN VIDEO CLIP)

MARIAH CAREY, SINGER: That was -- bring us on, yes. You just don't get any better.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KELLY: Developing tonight, controversy after President-elect Donald Trump opens up the New Year with a tweet about one of the most violent years ever in the city of Chicago. And that, sadly, is saying something.

Without mentioning him by name, Mr. Trump suggesting that if the Chicago Mayor Rahm Emanuel can't get things under control, he should ask a the feds to step in. Some are taking that as a sign that U.S. policing could undergo some major changes in 2017. Normally it's a local matter not a federal matter. Amid some feelings that the timing could not be better on possible changes there.

Fox News contributor Kevin Jackson and attorney Eric Guster will join us in a moment, but first we go to correspondent Matt Finn with the latest live in Chicago. Matt?

MATT FINN, FOX NEWS CORRESPONDENT: Megyn, Donald Trump firing off another one for one of his signature direct attack tweets. This time at Chicago Mayor, Rahm Emanuel. Trump tweeting out, quote, "Chicago murder rate is record setting, 4331 shooting victims with 762 murders in 2016. If mayor can't do it, he must ask for federal help."

Mayor Emanuel spokesperson responding saying in part, "As the president- elect knows from his conversation with the mayor, we agree the federal government has a strong role to play in public safety."

Now to give you some perspective on Chicago's shocking crime stats, in 2016, 762 people were murdered. An average of two people killed per day. Imagine that in your hometown. Last year, there are over 4,000 people shot, and year to date, four people already murdered, just three days in.

Chicago's crime problem very complex. Illegal guns, cheap heroine, gang turf wars. All topped off with the police force that's been essentially stripped of the tools of stop and frisk. Chicago top cops say it's time for prosecutors and judges to get tough.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: If you do pick up a gun and you use it, you will be held accountable. And right now, we don't do that.

(END VIDEO CLIP)

FINN: Now notable Chicago activists Fr. Michael Pfleger has helped lead the effort to stop violence where it happens most in African-American communities where his parish is located. Pfleger says he's reached out to Trump so far but has not heard back. Pfleger agrees Chicago needs federal help.

(BEGIN VIDEO CLIP)

MICHAEL PFLEGER, CHICAGO ACTIVIST: When they reach out and really want to really see some substantive changes and making a difference, or they just want to continue to Band-Aid?

(END VIDEO CLIP)

FINN: Now, Megyn, we should point out CPD is under investigation by the Department of Justice for allege misconduct and racism and to be fair to Mayor Rahm Emanuel who received so much criticism, he recently found the funding to add 1,000 more officers to the streets. Megyn?

KELLY: Matt, thank you. Well, the former top cop in Chicago says he knows what's going on in his city and in what he calls a disturbing case of irony. He says the deaths we're seeing are the byproduct of a group that claims to be trying to stop the violence, Black Lives Matter. Listen.

(BEGIN VIDEO CLIP)

GARRY MCCARTHY, FORMER CHICAGO POLICE SUPERINTENDENT: So, what's happening is, and this is ironic, that a movement with a goal of saving black lives at this point is getting black lives taken. Because 80 percent of our murder victims here in Chicago are male blacks. Less than half of 1 percent of all the shootings in the city involved police officers shooting civilians.

(END VIDEO CLIP)

KELLY: Joining me now, Kevin Jackson, Fox News contributor and executive director of the BlackSphere.net, and Eric Guster, an attorney and political commentator.

Great to see you. So, I mean, the numbers are just dreadful in Chicago, Kevin, dreadful, and these the murder surge that we've seen this year is the largest spike in 60 years in Chicago. So, it's bad and when you didn't think it could get worse, it just did. So, what now happens? I mean, should we be sending the feds in to cities like Chicago? And what -- what does that do to local policing?

KEVIN JACKSON, THE BLACK SPHERE EXECUTIVE EDITOR: Well, frost of all, it's no surprise, I mean, we had an administration that's been so bad against law enforcement it's easy to see what the outcome was going to be. And the unfortunate part, Megyn, is it's obviously affecting the black community worse.

As far as the feds go, I think what Trump...

(CROSSTALK)

KELLY: Just to pick up on that, just to clarify, is that the suggestion that the police officers are holding back so that they don't get accused of excessive policing, you know, excessive force?

(CROSSTALK)

JACKSON: Absolutely.

KELLY: And that's leading to...

JACKSON: Yes, absolutely.

KELLY: ... this spike.

JACKSON: Or, it's -- absolutely. And not only that, they don't want to go in there to get in trouble because what's going to happen is as the top cop in Chicago said, they can end up getting in trouble and you know...

(CROSSTALK)

KELLY: The Ferguson effect.

JACKSON: ... being accused of -- yes, being accused of over policing.

(CROSSTALK)

KELLY: That's what (Inaudible) call.

JACKSON: Yes, what Trump did -- yes, what Trump did was amazing because what he did in that one tweet, was what he did for immigration, what he did for you know, to saying we need to vet Muslims. As he brought a problem that has been sick leaked.

This isn't sneaking up on us, Megyn, we've known about this for years. Rahm Emanuel, week after week, the Chicago Tribune reports these, the deaths of these people, every single weekend. And it's multiple people shot, multiple people killed. So, it's not a surprise. And in fact, I suggest that Trump tweets Baltimore, and he tweet D.C., and he tweet Detroit, as well. Because per capita...

(CROSSTALK)

KELLY: But where is this take us. I mean, you tell me, Eric, where this takes us. What is he going to do, send in the National Guard? I mean, I doubt Mayor Emanuel wants that. Is he -- is he going to send in a bunch of federal money to Chicago because I don't know if the American taxpayers want that?

ERIC GUSTER, ATTORNEY & POLITICAL COMMENTATOR: Of course, Trump is the master of tweeting something that has no meaning behind it. But 80 percent of the arrests in Chicago are down. It's down 80 percent. And that is a major statistics that we have to pay attention to.

When the stop -- when the cops stop working because they claim that they have a low morale so they are not doing their jobs, that's the problem, Megyn. And we need to hold them accountable.

(CROSSTALK)

KELLY: Well, isn't that the former superintendent police is suggesting, that's what he seems to be blaming that on Black Lives Matter.

GUSTER: No, the former police is suing some George Wallace standing in school of house of George talking points. That's what he's doing. Because if these police officers are afraid of being held accountable, that's a problem on them. Because Black Lives Matter and other social justice groups just want them to be held accountable to make sure they do the right thing.

KELLY: But the accountability that we've seen in the Obama administration, Kevin, which is includes some 25 investigations by the DOJ, they are right now enforcing 19 agreements with law enforcement agencies. The Washington Post did a study on this and said these kind of overhauls that come from these DOJ investigations have unintended consequences.

One took 11 years and eight police chiefs, one took $300 million of taxpayer's money, so what is a likely had the President Trump continues that? And should he, given the cost that we see?

JACKSON: Well, first of all, I want to address something that Eric said, which is around you know, what's happening in the black community. You're talking about people calling cops pigs in a blanket. Do you remember when I...

(CROSSTALK)

GUSTER: That is one -- hey, stop telling a lie.

JACKSON: There was a girl.

KELLY: No, it's not a lie, it did happen.

(CROSSTALK)

JACKSON: Hey, Eric.

GUSTER: But the more it keeps playing...

JACKSON: Eric, Eric, I didn't interrupt you. I didn't interrupt you.

KELLY: Hold on. Hold on.

JACKSON: I didn't interrupt you.

GUSTER: Go ahead, Kevin.

JACKSON: I let you talk.

KELLY: Go ahead, Kevin.

GUSTER: Go ahead.

JACKSON: So, the point is, there were girl -- there was a girl in that audience that said they didn't even want police in black neighborhoods. So, what do you want? Either you want cop presence, but here's the bigger issue. The bigger issue is, we shouldn't be killing each other. We should be a civil society and that isn't going around killing people to the tune of 762 people.

(CROSSTALK)

KELLY: getting to the root cause of that is a much bigger effort.

JACKSON: That is exactly right.

KELLY: I'll give you the last word, Eric. I'll give you the last word.

GUSTER: It takes a community of policing, it takes communities working with police officers. And cops just need to do their jobs.

JACKSON: Now we ask.

GUSTER: Black Lives Matter and other groups just want them to do their job and be fair, just we're all asking. Be fair and civil to all people regardless of race and economic conditions.

KELLY: All right, guys, we got to leave it there. Good to see you.

GUSTER: Thank you.

KELLY: Coming up, after her New Year's Eve performance, and she lashed out at the executives at ABC. Did you hear about this, and Dick Clark Productions, right? Were you -- I mean, I don't know if you're watching. I was watching Kimberly and Eric.

But the question is whether Mariah Carey could be facing a defamation lawsuit? Attorney Mark Eighlarsh and Andell Brown will be here to discuss next.

(COMMERCIAL BREAK)

MARIAH CAREY, SINGER: Well, Happy New Year. We can't hear but I'll just go through the motions, OK? We didn't have a check for this song so we'll just say it went number one and that's what it is, OK?

(END VIDEO CLIP)

KELLY: OMG, OMG, secondhand embarrassment. Developing tonight, new questions about the legal implications - legal implications I'd say of Maria Carey's reaction to her New Year's Eve performance. The singer's bad performance on New Year's Eve becoming a viral sensation. But the drama did not stop when the show ended.

And that's we'll be doing by attorneys Mark Eighlarsh, Andell Brown and the potential legal fallout. But first, we check in with Trace Gallagher who volunteered to be on the story all day long. Go ahead, T.G.

TRACE GALLAGHER, FOX NEWS CORRESPONDENT: I did, Megyn. Mariah Carey's team says she was singing to track, meaning parts of her performance are lip- synch, and other parts she sings live. Either way, her manager says, Carey needs to be able to hear the music and she couldn't because her earpiece did not work.

But production sources told Entertainment Weekly that part of the problem was that Carey skipped rehearsal. Carey's people denied that saying she had stand-in dancer but she did the sound check and complain the audio was coming in choppy.

Carey's manager says the production company assured the singer that everything would work once they went live. It didn't. Watch.

(BEGIN VIDEO CLIP)

(MARIA CAREY SINGING)

CAREY: It just don't get any better.

(END VIDEO CLIP)

GALLAGHER: Yes, a little up, Mariah Carey walked off stage. And shortly after tweeted, quote, "blank happens. Have a happy and healthy New Year everybody. Here's to making more headlines in 2017."

But when the disastrous performance also aired three hours later on the West Coast feed, Carey's team accused Dick Clark Productions of sabotaging the performance to improve ratings.

The production company responded, quote, "To suggest that Dick Clark Productions would ever intentionally compromise the success of any artist is defamatory outrageous and frankly, absurd."

But today, Mariah Carey told Entertainment Weekly that Dick Clark was an incredible person and quote, "I'm of the opinion that Dick Clark would not have let an artist go through that and he would have been as mortified as I was in real time."

By the way, Jenny McCarthy who co-hosted the show said it's the background dancers were in sync, which they were and could hear the music blaring from the speakers, why couldn't Mariah Carey? Megyn?

KELLY: She raises a good point. I hadn't consider that myself. Good to see you, Trace.

Joining us now is Mark Eighlarsh, a criminal defense attorney, former prosecutor, and Andell Brown, a defense attorney on this important matter. Thank you for being here counselors.

Mark Eighlarsh, let's start with whether the Dick Clark Production company can sue Mariah Carey for what it is alleging where her representatives defamatory statements about them setting her up to fail.

MARK EIGHLARSH, CRIMINAL DEFENSE ATTORNEY: Absolutely not. They would have to prove actual malice because we are dealing with public figures. It's a very high burden. That means they have to prove that at the time she made the statement, she knew they were false or a reckless disregard of the truth.

Megyn, as we sit here today, she still believes that they sabotaged her. They have no case.

KELLY: Well, she doesn't though end up. Because it wasn't Mariah who said that, it was her rep who apparently said something off the record to somebody. And was -- it may or may not have been that they set her up intentionally but you know, that they didn't set her up to succeed in any events. Your thoughts?

ANDELL BROWN, DEFENSE ATTORNEY: Setting her up to fail is very strong words. Could they bring lawsuit? Absolutely. Will they bring a lawsuit? I don't think so. I don't think it made sense for them to do that. That would be kicking an artist when they're down. This production company...

(CROSSTALK)

KELLY: But they are using a strong words, defamatory strong.

BROWN: Very strong.

KELLY: I mean, I was surprised to see that the Dick Clark statement.

BROWN: Setting someone up to fail is very strong as well, I think we all saw Mariah Carey's performance breakdown and keep steadily breaking on down in front of our eyes on New Year's Eve.

Her team they are doing damage control, and they are trying to pass the buck. Nobody is buying it. Dick Clark and his company's reputation is intact and that's the problem they are going to have. So, yes...

(CROSSTALK)

KELLY: So, here is the question. Can she sue them? Can she sue them, Mark Eighlarsh for saying you did set me up to fail, you cause a public embarrassment, but then there is a question of why the backup singers could hear the music and Mariah could not?

EIGHLARSH: Yes, listen. Anyone can sue anyone for anything, we've learned that. My analysis is the same if we flipped it and we make her the plaintiff. She is a public figure, they are public figures.

KELLY: But she wouldn't be suing for defamation.

EIGHLARSH: It's not going to go anywhere.

KELLY: They publicly humiliated her.

EIGHLARSH Wait, you know what, Megyn, hold on. Hold on. There is something wrong with my earpiece. I can't hear, perhaps -- perhaps, Megyn, we should let the audience finish this analysis.

KELLY: I love you bring the props. You know, I will say this, Andell, I have anchored in Times Square on New Year's Eve with hammer, you know, wee hours in the hours, and it's really loud and I too have had that choppy audio. I -- I can relate to her.

BROWN: These things happens, she's a great artist, she has a great career. She just had a bad night and I'm sure she did her all to have that performance back.

KELLY: I think it would have been more damaging...

(CROSSTALK)

EIGHLARSH: There is no damaging.

KELLY: ... if she had been caught lip-synching, but she wasn't. She was trying to sing it live. It was clearly, you know, just parts were on the track. But the reason there were long bouts of silence is because she couldn't hear. But she I think it's worse when they get caught lip- synching. That's what I thought happened not...

(CROSSTALK)

EIGHLARSH: I agree, Megyn, here is the problem. There is no damages here on either side. They're all going to watch the show next year.

KELLY: That's true.

EIGHLARSH: And she's going to have completely a very successful career.

KELLY: But they shouldn't use the scary legal word because you wind up in Kelly's court.

EIGHLARSH: Agree.

KELLY: Bye. We'll be right back, don't go away.

(COMMERCIAL BREAK)

KELLY: Finally tonight, a personal and professional note from me to you. After more than a dozen years at Fox News, I have decided to pursue a new challenge.

This is a tough decision for me because I love this show. Our staff, my crew, my colleagues here at Fox. And you. All of you. Those who write me the lovely hand written notes asking about my kids, and even those who very rarely complain on Twitter about our coverage after a show or a presidential debate.

Now, I don't actually know most of you so perhaps it's not true love, but it's the kind of feelings that that makes one feel connected to another human being. And that after all is why I believe we're here. Human connection.

The truth is, I need more of that in my life. And in particular, when it comes to my children, who are seven, five, and three. So I will be leaving Fox News at the week's end and starting a new adventure.

Joining the journalists at NBC News, who I deeply admire. I'll be anchoring a daytime show there along with the Sunday night newsmagazine, and you'll see me there in the big nights, too, for politics and such.

I am very grateful to NBC for this opportunity and I am deeply thankful to Fox News for the wonderful 12 years I have had here. I have grown up here. And been given every chance a young reporter could ever ask for.

The Murdoch family has been kind and good to me at every turn and my colleagues are like a second family to me. So, I will miss them and this show and you. And I hope our human connection continues. I'll be at over a different line. Thank you for watching with love.

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