Attorney in Steinle case questions fed's interest in Zarate

This is a rush transcript from "The Story," January 5, 2018. This copy may not be in its final form and may be updated.

MACCALLUM: So, good evening, everybody. "The Story" begins tonight with breaking news in the Kate Steinle case. So, a decision has come down, an illegal immigrant and seven-time felon Jose Zarate who shot and killed Kate Steinle on a San Francisco pier walking with her dad was given credit for three years already served on the weapons felony. But he is about to be turned over to the federal authorities now. As it appears, this case is not completely over.

Any moment now, the federal government will him into custody; away from the sanctuary state of California where he will face two new felony charges. Giving the Steinle family one more chance at justice in her killing. In moments, I have an exclusive interview with the man who defended Zarate, Public Defender Matt Gonzales. But first, Trace Gallagher joins from our West Coast Newsroom with what is going on there behind scenes in California with this case at this late hour. Good evening, Trace.

TRACE GALLAGHER, FOX NEWS CORRESPONDENT: Good evening, Martha. Either tonight or this weekend, and Jose Garcia Zarate will be taken into custody by the federal authorities in San Francisco and taken across the bay to Oakland -- where he'll be arraigned early next week in federal court for being a convicted felon in possession of a firearm. And in case you're wondering, despite San Francisco being sanctuary city and California now being a sanctuary state, local and the state authorities can no longer shield Garcia Zarate. He has to be turned over to the U.S. Marshals because he's facing federal indictment.

Remember, the reason he was able to fire the gun that killed Kate Steinle is because when San Francisco law enforcement had him in custody instead of turning him over to immigration agents to be deported for a sixth-time, they decided to set him free. Steinle's death then became a key piece of Trump's immigration enforcement narrative on the campaign trail. Now, in federal court, Garcia Zarate's prominent defense attorney will try to turn the tables. Jay Tony Serra says, he plans to argue that the case against Garcia Zarate should be dismissed because it's vindictive, adding that a guilty vote for Garcia Zarate is a vote for Donald Trump. Listen.


JAY TONY SERRA, CIVIL RIGHTS LAWYER: Shame on the federal government. Shame on the Trump administration. Shame on them in terms of bringing retaliatory, vindictive prosecution. He's being made a martyr to the, from my perspective, the racist perspective of Trump.


GALLAGHER: Garcia Zarate's defense attorneys maintain the shooting of Kate Steinle was an accident, saying he found the gun on the pier and that it accidentally discharged. Although, Garcia Zarate initially claimed that he was shooting at sea lions in the San Francisco Bay. If Garcia Zarate is convicted in federal court, he's facing up to ten years in prison. If he's acquitted, he would be deported for the sixth time. Martha.

MACCALLUM: Trace, thank you very much. Joining me now for an exclusive interview, Matt Gonzales, Jose Garcia Zarate's Defense Attorney. Matt, good evening. Good to have you with us tonight. But those were strong words from Tony Serra who's going to take it from here on the federal case, do you agree with him?

MATT GONZALES, DEFENSE ATTORNEY FOR JOSE GARCIA ZARATE: Well, it's not really a question for me to answer. The question of whether or not it's a vindictive prosecution is one Tony will make in court, and he's committed to fighting the case as strong as he can.

MACCALLUM: So, I mean, I don't understand what he is arguing. I mean, the Steinle family has every right to want to see this through to its federal fruition, and the federal court, certainly, has every right to continue to follow through on these charges, do they not?

GONZALES: Well, I think the point that Tony is trying to make and it's appropriate for the federal court is that typically the federal government doesn't get involved in a case like this. This is somebody with no weapons possession history. You know, he's not a member of a gang. He doesn't just --

MACCALLUM: Well, he may not be, but he's a seven-time convicted felon who's been deported five times, so clearly, he has a prior history.

GONZALES: Right, but it's not a serious history. Usually, the feds get involved in prosecuting crimes that the state has already prosecuted.

MACCALLUM: But if the state has failed to carry out its duty to protect the citizens of the state through their sanctuary status, obviously, there's been a failure here. So, when the state fails, the federal government has to step in to try to, you know, find a way to seek justice, no?

GONZALES: Yes, but I don't think you're following what I'm saying. I'm saying that, typically, the federal government doesn't get involved in a case like this one. Obviously, they're very interested in Mr. Garcia Zarate, but the allegation that Mr. Serra is making is that they're interested in him only because he beat the murder charges. And so, the question is: is that something that they should be allowed to do? They would never have prosecuted this case; they had no indictment until he was acquitted of murder.

MACCALLUM: Well, dual sovereignty doctrine allows for them to do this without there being an issue with double jeopardy. There's still a felon of possession of a firearm charge and an immigrant in possession of firearm charge that they're pursuing. I want to play your co-counsel, Francisco Ugarte, was another person who tried to --

GONZALES: But just to address that, Martha.

MACCALLUM: Go ahead.

GONZALES: Just one second.

MACCALLUM: All right.

GONZALES: The point isn't whether or not the federal government has a separate sovereign can prosecute someone. The answer is, yes. But the question is: what happens when they treat an individual completely different than they treat everybody else? And that's the point that Tony is making.

MACCALLUM: But you're talking about their feeling toward this case. I'm talking about whether or not they have the right to pursue it. And you don't argue that they don't have the right to pursue it, correct? You're saying that you don't like their feeling, that you believe it's vindictive, or that they have some other kind of agenda. But I'm saying, obviously, they have the right to do what they're doing.

GONZALES: Well, if it's a selective prosecution, if they never go after anybody for their very first gun possession case, that would be peculiar, and it would be something to try to highlight in the federal court.

MACCALLUM: Yes. I hardly think that this is a case where this is a person who, you know, is not someone who has dealt with the law. He's a seven- time felon. He's been five times deported from the country. So, to say that he's just sort of this, you know, innocent person who doesn't deserve this kind of scrutiny by the federal government, I think, is a bit of a stretch. I do want to talk about the political nature of this. Let me move on. This is Francisco Ugarte, your co-counsel, talking about what he sees as a political agenda in this case. Let's play that.


FRANCISCO UGARTE, IMMIGRATION ATTORNEY: This case was used as a means to foment Kate, to foment division, and to foment a program of mass deportation. It was used to catapult a presidency along that philosophy of hate of others.


MACCALLUM: Do you believe that Mr. Zarate has a right -- had a right to be in this country?

GONZALES: Well, I think the point that Francisco Ugarte was making was that this was a case from the outset was a ricochet, so the bullet struck very close to where Mr. Garcia Zarate was seated. We've never seen a murder case in San Francisco that was based on a ricochet. And so, it only came to the forefront because our current president elected to use it in his campaign. I think that's the point he was trying to make.

MACCALLUM: So, I think the point that he was trying -- the point that has been made about this case is that this is an innocent woman who was walking on a pier. How this did not turn out to be a manslaughter case is something that is a large question for anybody who observed it closely. He picked up a gun, an illegal firearm as an immigrant; the gun went off and Kate Steinle is dead because of it. So, you know, I guess, you know, this supposition that this is a partisan, sort of, big anti-immigration agenda seems to belie the actual facts of what happened.

GONZALES: There's no question Kate Steinle is innocent. I mean, this is a tragedy. We all wish it wouldn't have happened. But the question of somebody's immigration status when the prosecution is trying to prove premeditated murder, in effect the courts say somebody's immigration status isn't relevant to that determination any more than an American citizen being charged in another country who say, let's say, overstayed their visa, that that wouldn't be an issue in a case about whether or not there's going to be a crime.

MACCALLUM: Overstaying a visa is very different than being kicked out -- he was supposed to be removed from the city of San Francisco and that was completely overshadowed and overlooked. You know, he was not handled in a legal manner by the city of San Francisco or -- and he completely managed to fall through all the cracks five times after he was kicked out of the country. I can't imagine how you would feel if it happened to someone that you loved or someone in your family.

GONZALES: Let me just say this, though. This isn't -- when we talk about sanctuary city and what caused Mr. Garcia Zarate to be released, it's not the city of San Francisco fighting ICE and Homeland Security that wanted to put a detainer on him. The federal courts have actually made it very clear that they want these federal agencies to have a probable cause determination that somebody is not a citizen and can be deported prior to allowing the agencies just to call up a city and say hold this person for us. So, it's really federal agencies refusing to follow federal courts in California, Nebraska, North Dakota, Utah, Rhode Island. That's really what this is about.

MACCALLUM: Well, I mean, this is clearly a case of someone who fell through the cracks and many hinged to pull off a heinous release of this gun that ended in her death. And I know that you represented him to the best of your ability, now it goes on to the federal -- to the federal system and we'll see what happens from there. Mr. Gonzales, thank you very much. Good to have you here tonight.

GONZALES: All right. Thank you.

MACCALLUM: Joining me now is David Wohl, Attorney and Conservative Commentator, who has very strong feelings about this case as well. David, you heard my conversation with Mr. Gonzales, your thoughts?

DAVID WOLH, ATTORNEY AND CONSERVATIVE COMMENTATOR: Yes, well, first of all, counsel completely ignored the issue of illegal re-entry into America by someone convicted of a felony. That crime alone is prosecutable and results in a ten-year sentence. Forget about the gun charges that were also a sentence that the feds would go after and go after righteously. They're seeking justice; Jeff Sessions has been involved in this. He knows what's going on, and he's going to do what the state authorities did not do.

And by the way, this issue, Martha, what they're talking about across the feds jumping in after the state fails the prosecution, these very same lawyers when the cops and the Rodney King beating case were acquitted and the feds jumped in and filed charges and got a conviction on them, they stood on the chairs and they were cheering like you couldn't believe. So, this is all about who's being prosecuted, not the feds jumping in after a failed state prosecution.

MACCALLUM: All right. So, what do you think happens now?

WOHL: Well, what's going to happen now is he will be detained by the federal authorities. There will be an arraignment on the charges of illegal reentry to the United States by a felon. The gun charges possibly civil rights charges. He will end up probably taking a plea. He'll be convicted. He'll be sentenced to federal prison. And in reaction to this, I have the good news I think from a victim's perspective, Martha. I spoke to a friend, State Senator Jeff Sessions today, who's a conservative warrior in Sacramento, one of the few.

And on Monday, he will introduce a bill in Sacramento to add a sentencing enhancement for those who commit a felony in the state of California while being in the United States illegally. So, that could add three, five, ten years to the sentence. This is the first, this a novel approach. This is something that takes a lot of courage to do in California. But this guy, Jeff Stone, is the guy who can do it. And believe me, he's fully committed after seeing this Kate Steinle verdict, and after seeing my client's case, the Sandra Duran, of course, my client's fiance being run over by an illegal who had been deported five times and killed. So, this has got to stop, and he appreciates what it's going to take, and so I give him a lot of credit.

MACCALLUM: Yes. And we spoke to your client in that case as well. But that criminal enhancement will have no impact on the Zarate case, correct?

WOHL: No, it will not impact the Zarate case and it's going to be a very uphill battle in Sacramento, because, obviously, you know, he faces a top liberal opposition, people who view people like Mr. Zarate as important to them maintaining the power. But Jeff is going to be giving his best shot. And I'll tell you what, you may want to have him on next week because this could get very, very interesting.

MACCALLUM: We will watch it. Thank you very much, David, good to see you.

WOHL: Thank you, Martha.

MACCALLUM: So, coming up this evening, the buzz about the book "Fire and Fury," now putting its author under some scrutiny. A look at the tactics and the background of Michael Wolff. Get you caught up to speed on that past and present. Chris Stirewalt, Molly Hemingway, and Emily Tisch Sussman are here with their take tonight.

Plus, there's a growing body of reporting and the latest from the New York Times says Mueller's case for collusion may be very thin if not falling apart, which is what the president has long argued. Former DOJ Attorney Jay Christian Adams, says Attorney General Sessions should not have recused himself. He joins us with his big story tonight coming up next.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: What has been shown is no collusion, no collusion. There's been absolutely -- there's been absolutely no collusion. So, we're very happy.



MACCALLUM: Breaking tonight, Fox News can confirm that White House Counsel Don McGann was one of the three senior Trump administration officials who tried to keep the Attorney General Jeff Sessions from recusing himself in the Russia inquiry. The other officials included Former Chief of Staff Reince Priebus and Former Press Secretary Sean Spicer; however, Sean Spicer is now telling us this evening that that is not the case. Still, this contradicts a blistering New York Times piece that claimed that the president was the one who personally lobbied to get Sessions to stay on the case to protect him from charges. Here now on this and other things related, Jay Christian Adams, Former Justice Department Attorney, it's good to see you tonight. Thank you so much for being here.


MACCALLUM: You know, in and of itself, regardless of what happened, there's a couple of different stories here. Whether Don McGann was the one who went to Sessions and said, you know, we really don't want you to recuse yourself and whether these other individuals were involved, is there anything wrong with that inherently?

ADAMS: Absolutely, not. Don McGann didn't do anything wrong. There's a lot of reasons why, Martha, but among them are the fact that Jeff Sessions wasn't implicated in anything relating to the theory of this Russian investigation. It wasn't alleged that he was involved, that he directed it, that he knew about it. He just happened to be in the same building without any specific information. So, Don McGann was doing absolutely nothing by urging him to stay on the case, something I believe he should. He would do a much better job of keeping Mueller from going out of control than Rod Rosenstein is doing as the deputy.

MACCALLUM: Yes. You know, it doesn't seem to me that the attorney for the president, going to the attorney general, and saying these are the reasons why we think there's a legal case for you to not make this decision, that seems to be, in my mind, just looking at it, a fairly appropriate role. And you know, when you add to that, the fact that Jeff Sessions didn't; he didn't listen to them. You know, I mean, he listened to their case. They made their case, whether it was one of them or three of them or even if the president also suggested it -- we know his feelings are pretty well-known on the subject. You know, Jeff Sessions decided not to go that route and went his own way. So, it's not like he was pigeon-holed into doing something he didn't want to do.

ADAMS: Well, that's right. But the question is, Martha, what is the scope of the recusal? I mean, if it related to an investigation involving Russia, that's one thing. But so far, we've seen from Mueller that this investigation involved such Earth-shattering events like Paul Manafort laundering money through an Alexandria, Virginia rug store or Mike Flynn not telling the truth on a question which is the -- the sort of a Gotcha Law, 18-USC-1001. So far, it doesn't have anything to do with Russia, and so it really raises questions as to why Jeff Sessions is not involved, why he's not making sure that they turn documents over to Congress regarding how they relied on the phony dossier. There's all kinds of questions that seemingly only Jeff Sessions can fix.

MACCALLUM: Yes. You know, in terms of the broader investigation, there's a feeling now that Trump allies are pushing these other investigations, re- opening the Hillary Clinton and the like, and trying to downplay this Russia probe. And there's a battle going on between Republicans and the Democrats on the Hill over whether they think that that's proper, what do you think?

ADAMS: Well, right. Chuck Grassley, the Chairman of the Judiciary Committee in the Senate today called for a closer look at the Hillary matters. But, Martha, there's a reason for this. There's a growing perception in the country that the Justice Department is biased, that law enforcement is based on who you are, what your party is, who you agree with politically. And when you learn the details of what happened in the campaign where the dossier, this phony insane dossier, was possibly being used by FBI officials to do national security surveillance on Americans and then unmasking the surveillance, it becomes a frightening story instead of a ridiculous one. And I think Congress is on to it, and that's why people like Holder and Comey are so nervous because the bad behavior last year during the election is really a frightening one.

MACCALLUM: Yes. You know, with regards to the relationship of the attorney general to the president, this is something that you saw first- hand in the prior administration when you were seeing things that were going on that you didn't like. There's a lot of, sort of, I don't know -- "hysteria" is too strong a word. But concern about whether or not the president should be protected by the attorney general. I just want to put up a quote from Eric Holder in terms of the way he spoke of his relationship with President Obama when asked if he was going to be leaving the administration. He said, "Well, I'm still enjoying what I'm doing. There's still work to be done. I'm still the president's wingman. So, I'm there with my boy. So, we'll see." What do you think?

ADAMS: A great find by your producers. That's a perfect example of the lawless sort of political allegiance between Holder and Obama that led to all sorts of outrages. Fast and furious, the city of Ferguson being lit on fire because Holder stoked a mob there that echoed the president's views on police. I mean look, we had a situation where Holder was running interference all the time for Barack Obama. And now, suddenly, suddenly, when Jeff Sessions isn't even doing it. When it's only suggesting that he ought to people like Holder and Comey and the rest of them go completely crazy. It shows you the bias that we're talking about. People are not treated the same way by this Justice Department and the institution of the Justice Department. The sort of insiders treat people differently based on their political allegiance, and that's what we're learning.

MACCALLUM: Christian Adams, thank you very much. Good to see you tonight.

ADAMS: Thanks, Martha.

MACCALLUM: So, coming up, Monday on "The Story," we have a very good guest for this development. Congressman Trey Gowdy will join me Monday evening. He's going to get a look at the DOJ documents that the House Intelligence Committee has been fighting to get their hands on for some time. They receive some those documents this afternoon; they'll continue to pore over them this weekend and into Monday, including the testimony from the FBI agents who sent the anti-Trump texts. So, Trey Gowdy will join us on Monday night with more on that.

In the meantime, the market closed at another record high. Soaring more than 200 points after a historic climb from 24,000 to 25,000. But watch out, we will be keeping an eye on all of that in a moment. Also, coming up, suspended ABC Reporter, Brian Ross, sort of back at work. He's the one who did false report -- inaccurate report and it crashed the market in a matter of minutes. He's not the only journalists, though, who's under fire tonight for letting some of their personal beliefs, perhaps, get in the way of their coverage. Our power panel: Chris Stirewalt, Molly Hemingway, and Emily Tisch Sussman, coming up next.


MACCALLUM: ABC Investigative Reporter, Brian Ross, is in a way back at work these days. You remember Ross was banished for a few weeks over a false report about President Trump's Former National Security Adviser, Michael Flynn. The story claimed that Flynn asked to talk to the Russians during the campaign. That story turned out to be false. The bosses at ABC expressed "rage and disappointment" in Ross, and they suspended him.

He has reportedly now been put at an ABC outpost in New York. One source says that he will "never be on air again." We will see if that turned out to be the case. In other media news tonight, have you heard about the book? If you woke up this morning and walked out the front door, you've heard about the book. It's called "Fire and Fury." It is about the Trump White House. Author Michael Wolff's credibility is being questioned after he said this on the "Today Show."


MICHAEL WOLFF, JOURNALIST AND AUTHOR: I certainly said what was ever necessary to get the story.


MACCALLUM: Wolff claims he spoke to the president for a total of three hours over the course of this work. He claims that 100 percent of the people that he spoke to in the White House said the president was unfit, childish, and among other things, didn't like to read. But now, Wolff and his tactics are getting a bit of attention. Trace Gallagher live in our West Coast Newsroom with the backstory tonight. Hi, Trace.

GALLAGHER: Hey, Martha, 64-year-old Michael Wolff has been in the New York media world for more than 40 years. He has written seven books, won prestigious magazine awards, and then a columnist and critic for some of the nation's leading publications. But for most of his career he has also been accused of being fast and loose with his facts. Now the accuracy of his new book, Fire and Fury is also being called into question, and it's not just for the unbelievable statement like his contention that Donald Trump didn't know former House Speaker John Boehner even though they had golfed together and spoken many times, but also for his sourcing.

It remains very unclear if Wolff's White House interviews knew they were on the record. Those who know Michael Wolff claiming had a long history of burning sources and printing off-record comments. For example in 1998, Wolff wrote a book about his internet startup in the dot-com bubble years, and 13 people accused him of inventing or changing quotes. The book was also replete with factual errors. Wolff himself has also acknowledged that he's not a conventional reporter. And in the opening to Fire and Fury he writes that many of his accounts provided are, quote, in conflict with one another and may be boldly untrue, saying he settled on a version I believe to be true. But on The Today Show he seemed incredulous to the fact that many are skeptical. Watch.


UNINDENTIFIED MALE: My credibility is being questioned by a man who has less credibility than perhaps anyone who has ever walked on earth at this point.


GALLAGHER: President Trump claims he never spoke to Michael Wolff and gave him zero access to the White House. Wolff claims he has recordings and notes of his 200-plus interviews and we should note Steve Bannon who offered the most explosive statement has not yet argued that he was misquoted. Martha.

MACCALLUM: All right. Trace, thank you very much. Just to add to that, Jonathan Tobin wrote this in the national review today, the proper response to a president you don't like is to campaign against him, not to lobby that he be certified insane. Trump's governing style is unfamiliar and often disconcerting, but his accomplishment are not inconsiderable. Wolff's book is merely political gossip and like the loose talk about the 25th amendment should be treated as nothing more than a momentarily blip on the nation's political radar. So how much sticking power does this whole thing have?

Here now, Chris Stirewalt, Fox News politics editor, Mollie Hemingway, a senior editor at The Federalist and a Fox News contributor, and Emily Tish Sussman a Democratic strategist. Welcome, all great to see you all. Happy New Year. So this book is buzz, buzz, buzz stuff, Chris. In terms of Michael Wolff, sticking up for his own credibility, do you think he has a point or do you think that this marks against him are egregious?

CHRIS STIREWALT, FOX NEWS POLITICS EDITOR: Well, I think there's a bit of broad misunderstanding about what a book like this is actually is. This is a gossipy -- this is salacious. This is Wolff. This is how he does it. And there's a whole category of books like this that are gossipy and you get people to dish on each other and that's what this is. This is not chiseled in granite. This is supposed to be fun or exciting or interesting. Instead it's being treated like this is going to be grounds for impeachment or something.

MACCALLUM: Yeah. But that's the problem. I mean, either you take it the way you just presented it, you know, on the face of it, you know, sort of People Magazine and, you know, see what you like in there. But Mollie, you know, the question -- the point rather that Jonathan Tobin raises about the 25th amendment. You've got people all over the airways today talking about how the president is obviously unfit because that's what Michael Wolff says people told him at the White House.

MOLLIE HEMINGWAY, FOX NEWS CONTRIBUTOR: Right. Michael Wolff is a great, chatty gossip columnist. He also admits that sometimes he makes stories up. He's said that previously and in this book. People all the way up to Prime Minister Tony Blair saying he completely invented quotes for this book. And there're things that are patently absurd like when he said that policy wonks Stephen Miller doesn't know anything about policy. So at some point it's kind of a gullibility test, how much you're putting stock into this book, apparently, quite a few member of the resistance, whether that's a never-Trump or the media are putting a lot of stock into this and they're quite gullible. And they are having seen the failure of their attempt to oust President Trump or delegitimize him through the Russia investigation, now they're moving on to this. I don't imagine they'll have as much success as they hope for.


EMILY TISH SUSSMAN, DEMOCRATIC STRATEGIST: Look, I don't dispute the fact that this is -- the way Chris categorize a gossipy kind of book. Here's the thing, though, is that it doesn't actually tell us much that's new. It actually pretty much confirms what we hear over and over from reporters and everyone who's coming out of the White House that it is totally chaotic. He doesn't know how to govern. He doesn't know what's going on. He is driven by his own importance of self. They can't control him. People at one point were saying that the chief of staff was a success because he was good at controlling information to the president. That's crazy. A lot of people voted for Trump hoping the fact that he would left these tactics on the campaign, got more serious to actually govern and be the president, and now they're saying that he's really not. Look no farther with his tweets with North Korea. People are concerned.

MACCALLUM: I think you make a good point, Emily, because in many ways Donald Trump was better known to the American people than most people who become president of the United States. I mean, everybody had watched him on TV. Everybody watched him as real estate developer. So, the fact that he's exacerbating to a ton of people, Chris, I don't think it is a huge revelation. The way he works, the way he approaches things. That he handles everything as a businessman and thinks that you should be able to settle problems the way that businessmen do. That he's not a huge reader and voracious devour of policy wonk briefings. And none of that is a big shock.

STIREWALT: Nobody thought he was headed to the American enterprise institute. But, I will stay this. The big question about this book, the narrative that Wolff lays out here, yes, it is very much in keeping with a lot of reporting that we heard during the campaign, during the early days of the White House. The question now is, is it still that way? Has John Kelly, the chief of staff, imposed strictures to make things work better? Are people not back stabbing each other in the way that they were in the time when this book was happening? If this is a chronicle of the way it was, that's not a big of a deal -- or it's a survivable thing for the administration.

MACCALLUM: I mean, the other question does it matter, right? To the American people, what do they care about? At the end of the day they're going to look at the ledger, they're going to look at how they feel they're doing. They're going to look on whether or not they think the country is headed in the right direction. And Mollie, I'm not really sure they're going to care that much about how exuberating or frustrating the president was for some of the people who worked there.

HEMINGWAY: Right. What really separates normal people, I think, from people who lost their head over Trump, and that's whether you are a fanatic or a critic of Trump, is how much attention you pay to the rhetoric versus how much attention you pay to the actual policies. And if you look in terms of the policies of what happened, people are not going to be upset with Donald Trump for what he's done in terms of deregulation or his handling of foreign policy -- corporate tax reform for the first time in 30 years. And there's this segment of the population that still haven't been able to accept the reality that the American electorate chose Donald Trump to be president. So they're flailing about and trying to say, no, really, you have to listen to us. We don't think he's stable. They've been saying that for 30 years, I think. But it's not a message that resonates with a lot of people.

MACCALLUM: I listen to David Bossie and Corey Lewandowsky who wrote a book of their own account of that whole period of time, have a very different take on it, Emily.

SUSSMAN: Look, they're still making money off the White House. So I think it shows there's a lot of good reason for them to have a very different take off of it. I mean, look, every person that has come out of the White House has tried to make money off there, right? Like, everyone is writing a book. And that's partly because of the fact, I have to imagine, they feel like there's something to talk about. I would actually disagree with Mollie the fact that people don't want to know what's going on. People don't want to know how the sausage is made. I think they do. I think there's a lot of people who held their nose and voted for Trump. And I think the fact that Bannon is now leading a revolution of Republicans from within and turning so quickly on Trump, and that Trump is turning so quickly on him really shows a state that a lot of Republicans are very uncomfortable with the fact with what they signed up for in supporting him.

MACCALLUM: Emily, don't you think it's funny, like, two weeks ago, Steve Bannon was seen as this, you know, neo Nazi, crazy nationalist, but now he's a truth teller?

SUSSMAN: Oh, I mean, I think all of these things can be true? I think 100 percent of those things can be true.

MACCALLUM: Chris, final word. Go ahead.

STIREWALT: Look, I'll just say Steve Bannon is the most overinflated reputation I've ever seen in Washington. He did it himself with leaks to outlets like this. And he has had his big moment. But pop goes the weasel.

MACCALLUM: Pop goes the weasel. All right. Thank you, guys. Great to see you all.


HEMINGWAY: Thank you.

MACCALLUM: All right. Here's a very important question. Is there trouble in paradise, folks? The stunning new report on the rift in the most powerful trio in football as we head to a big, big weekend, is it true? Plus, don't look now but the Dow is off to its best start ever for the market year. Take a look at that. Remember when Paul Krugman said that it would never -- the market would never survive a Trump presidency, it would just fall apart. Charles Payne is here on that and the underreported story of the uptick in jobs for African-Americans in this country, when Charles Payne joins me coming up.



DONALD TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA: Their inner cities are like the forgotten man and the forgotten woman. We've forgotten about our inner cities. No longer. And the African-American community was great to us.


MACCALLUM: So that was then President-elect Trump, roughly, one year later under his tenure the black unemployment rate has fallen to a record low of 6.8 percent. It caps off a week of stunning action for the Dow Jones Industrial hitting another record -- this is unbelievable, right? Charles Payne will be with me in just a second. This is the best start to the year since 2006. To put a finder point of what I said going to the break, Charles Payne host of Making Money on the Fox Business Network joins me now. Charles, very strong numbers we've seen over the course of the beginning of this year. Can it be sustained?

CHARLES PAYNE, "MAKING MONEY" HOST: It's actually going back to the beginning of last year. And absolutely it can be sustained. The fact the momentum is getting stronger and stronger and stronger. And, of course, we have the job reports -- looking for a little bit more, but the underlying data there including unemployment -- by the way, unemployment for all sectors going really well. But black unemployment at the lowest level ever, this goes back to '72 when they started keeping this data, is more pronounced than any other racial group. The participation rate is going up. They're coming back to the labor force. It is absolutely a marvel of what we're seeing in this country.

MACCALLUM: Let's look at the comparison of the black vote for Mitt Romney,
6 percent. For Donald Trump it ticked up slightly to 8 percent. It's typically been a voter group that aligns more with Democrats. Is there any chance that that changes base on any of this?

PAYNE: I think there's a chance that it changes. And I think it's going to continue -- it has to be a continuation of this, this sort of thing that what we're seeing. Keep in mind though, you know, the same tide lift all ships. So, if President Trump does continue with this economic revival that we're seeing, particularly in areas that are hard hit, I call them dirty fingernail jobs. Manufacturing through the roof. Manufacturing jobs have come back like crazy. These are the sort of areas where people will fill in their wallet, all people, but particularly blacks, Hispanics and folks like that. And then, I think, some of the other things, obviously, housing. How they handle welfare reform. Because remember, the main stream media is going to portray him as being cold.

MACCALLUM: That's the ticket right there because, you know, President Obama said these jobs were never coming back, right?

PAYNE: Right.

MACCALLUM: You know, he was supposed to be, obviously, he was a transformational president in many ways as African-American president. But there are people who believe that that group had been sort of catered to and not -- you said the tide lifts all boat, but they're talked to in a different category sometimes by candidates. And that, perhaps, needs to change.

PAYNE: I think it needs to change. I think America and the DNA of most Americans -- it's part of all of us that the idea that we can make it. The idea that we could be anything. You know, when young kids listen to music, they listen to music about being bosses, about owning private jets. So, the American DNA across the color spectrum is about success. And I think that's one of the intangible that's coming back to the equation. It's hard to measure it, but you can see it. You see it with the manufacturing data with the optimism data. Homebuilder sentiment through the roof. One of the reasons why, traffic, this fire foot traffic has spike to levels not seen in almost two decades. So, Martha, it's there for all Americans. And again, you know, I think if President Trump articulates a message to black Americans that's not unlike the message to anybody else, hard work, pull yourself up by the boot straps. If I create the right economic backdrop you can start a business. You can participate is this. So, you know, he's got to worry about that. I would say, law enforcement, that was some rhetoric, particularly, things early in the campaign. Those are areas that can hurt the message to the community. But I really believe on the economic side of it, people -- all people are feeling it. Again, I don't know what kind of survey folks have taken out there, when they come back, let's say 34 percent approval rating, because more, more Americans are feeling and seeing in their own personal lives an improvement.

MACCALLUM: Charles, good to see you.

PAYNE: You too. Thanks a lot. I appreciate it.

MACCALLUM: So coming up next, the New England Patriots are the latest to claim fake news, folks. As an ESPN story says that the storied trio of Brady, Belichick and Kraft are on the rocks as they head to the playoffs. Forecaster Jim Gray knows all and he's up next. Stick around.


MACCALLUM: So depending where you stand this could be good or bad news, but the powerhouse trio behind one of the most dominant franchise in NFL history could be coming to an end if ESPN is right. According to their story they say there's trouble in paradise, folks, among Patriots owner Robert Kraft, Coach Bill Belichick, and quarterback Tom Brady. Fox News sports analyst, Jim Gray, knows all about what goes on behind those doors and he joins me now. Jim, good evening. Happy New Year. Good to see you tonight.


MACCALLUM: The story they put out there is that, basically, there's a rift that comes from a number of things from the Jimmy Garoppolo trade to the 49ers, from perhaps Tom Brady being 40 plus at this point. And perhaps the trainer guru, Alex Guerrero, who he is very close to, that Belichick isn't too crazy about hanging around all the time.

GRAY: Well, all of this has been discussed and re-discussed and now it's a bi-week. So this stirred it up once again. All of these things have occurred. And, you know, the miracle really is that they've kept this together for 18 years for sustain excellence and won five championships and it's been in seven Super Bowls. And now, if they can keep it together for another month or so, perhaps a sixth Super Bowls. So, you know, 18 years is forever. No one else -- this is unprecedented. I mean, Michael Jordan won six championships, but no one has been together for almost a couple of decades to see this happen in the modern era.

So, yes, people said nerves get frayed and the voice wears thin. I remember Al Davis, the great owner of the Oakland and the Los Angeles Raiders, said something to me many, many years ago, and it was with John Madden and he says the voice wears thin of a coach after about eight or ten years. And Madden won a Super Bowl and then he decided that that was enough. And then Tom Flores won two Super Bowls and he decided after ten years that was enough. So just imagine what it's like for the players to go through. Bill Belichick and as tough and as discipline and rigorous as he is, the man is a genius, but that voice it's got to get tired at times. I'm sure for Tom Brady, who is the ultimate soldier, and goes out there and does everything that he's asked to do. You know, it's got to be very, very difficult and hard. And he's 40-years-old. I think he knows what to do. And when you see him screaming at a coach, you know, it's really, really hard to win a game.


MACCALLUM: You think it might be time for Belichick to go?

GRAY: I don't think Belichick to go. Belichick can do whatever he wants. He's ran that organization, but I'm just saying it's a tough circumstance. And what they have been able to accomplished, it's going to end at some point. Will it end in four weeks? Will it end in a year? It will end. Tom Brady is 40-years-old. He just led the league in passing. It's unheralded and unheard of. And by the way about Alex Guerrero, if Tom Brady is happy with it why should anybody else care?

MACCALLUM: I don't care personally.



MACCALLUM: Nothing spurs on Tom Brady like being told that it can't be done. So, we will see. Jim, thank you very much. It's great to see you tonight. We'll see where it all goes.

GRAY: We'll see, Martha. Thank you.

MACCALLUM: All right. Quick break. Quote of the night when we come back.


MACCALLUM: So that ad will air Sunday during the Golden Globes. Also in the Times today an editorial that raise question about the current climate and the lack of due process. Daphne Merken writes that while women are lockstep expressing outrage publicly in private, many recognize that the pendulum of punishment can swing too far, that we live in a moment where an accusation is an indictment. What if he said, she said, she said ends unjustly. Merken writes this are scary times for women, as well as men. There is an inquisitorial whiff in the air, and my particular fear is that in true American fashion, all subtlety and reflection is being lost. Something to think about. Have a good night everybody. Tucker is up next.


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