Rep. Nunes on the House's Russia investigation findings

This is a rush transcript from "Sunday Morning Futures," March 25, 2018. This copy may not be in its final form and may be updated.

MARIA BARTIROMO, FOX NEWS CHANNEL HOST: Good Sunday Morning. President Trump gets tough with China, sparking fears of a trade war. U.S. foreign policy getting a reboot with incoming National Security Advisor John Bolton and the $1.3 trillion spending bill is expected to revamp America's military might. Good morning everyone, I'm Maria Bartiromo, thanks for joining us right now on 'Sunday Morning Futures'. Your 401k takes a hit after the market fell off last week on fears of a trade war between the U.S. and China. Are those worries over blown? We speak with Congressman Devin Nunes and the White House's top trade policy advisor Peter Navarro. John Bolton shifting things up in the United Nations, now he brings his hawkish views on North Korea right to the White House as the next National Security Advisor. Senator Lindsay Graham on why he's happy about that. Plus, Washington has plans for $1.3 trillion of taxpayer money after Congress passes and President Trump signs into law a new spending bill. General Jack Keane on how this could benefit the military. We're looking ahead right now on 'Sunday Morning Futures.'

President Trump taking on the toughest of foreign policy challenges using the power of the pen to slap sweeping new tariffs and restrictions on China sparking fears of a trade war. South Carolina Senator Lindsay Graham is applauding the president's effort to address what he calls unfair trade practices by Beijing.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM, R-SOUTH CAROLINA: China is a currency manipulator, a thief when it comes to intellectual property. They dump, they cheat and they're going to pay a price. Keep it up President Trump, you will win this fight because China needs us more than we need them.

(END VIDEO CLIP)

BARTIROMO: A lot more coming up from Senator Lindsay Graham later on in the program but first, the stock market reacting to the potential of a trade war even as China calls for cooperation in preventing one. The Dow Jones Industrial Average dropped 724 points on Thursday marking the fifth largest point decline in history. House Intelligence Committee Chairman Devin Nunes joins me now from the World Ag Expo in California. Congressman Nunes is also a Member of the House Ways and Means Committee along with the Chairman of the Intel Committee so a lot to talk to with today with you. Mr. Chairman, good to see you, sir. Thanks so much for joining us.

REP. DEVIN NUNES, R-CALIF., CHAIRMAN, HOUSE INTELLIGENCE COMMITTEE: Thank you, Maria. It's great to be on.

BARTIROMO: And there you are coming from the World Ag Expo with plenty of farmers who no doubt have to be questioning now being forced to pay more to actually get their goods into China. Give us your reaction to the aluminum and steel tariffs and this move this past week on China.

NUNES: Well, China is a big problem. We actually are running an investigation on many aspects of China at the House Intelligence Committee. I think most Americans know that China is, in fact, stealing our intellectual property. They're spreading globally. They continue to manipulate currencies so China has to be taken on. I'm not sure that the aluminum and steel tariffs is the way to do it, however, this is the path that the president has outlined for the American people. And let's remember, every president has said that they're going to get tough on people who cheat on trade. This president is actually doing it and so we're going to have to -- as that happens we're going to have to watch the markets. I think every trade agreement is going to be negotiated. My recommendation to the White House is to not only just look at tariffs but let's look at where we can actually tear down tariffs too. So perhaps we can take this opportunity to strike trade deals with allies like Japan, possibly Vietnam, the Philippines, other places in Asia so that if China does want to get into a trade war, that we can actually begin to open up more trade with their neighbors where they'll take some of our products that we grow here in America, reduce those tariffs and we can bring in some of their products. That's how free and fair trade should be done in this country.

BARTIROMO: That's an important point to look at Japan, Philippines, and Vietnam. I'll ask Peter Navarro about that coming up because of course, he's working on the U.S. trade policies there. But you just said something interesting. You said that you have been investigating Chinese practices. You were going to announce that this week. Are you going to come up with it, the details of that investigation in this upcoming week?

NUNES: Yes, we continue to look at the areas that we're going to -- that we're going to investigate so the way that we're looking at it now, Maria, is first and foremost, we're looking at the military footprint and potential military footprint that China is trying to put around the globe. So this didn't get a lot of fanfare because there's so much attention being paid to the Russian fiasco and Russian collusion. But in the meantime, the Chinese just opened up a base, a military base in Djibouti. Djibouti is at the entrance to the Red Sea in the heart of the Middle East in the Indian Ocean, a long way away from China. We believe that they are looking at investing in ports and infrastructure around the globe, not just for military capabilities but also to control those governments, to have the ability to lobby and manipulate governments, when you invest in things like financial markets or the energy sector.

BARTIROMO: Yeas, this is a really important --

NUNES: And last and I think most--

BARTIROMO: Yes, go ahead.

NUNES: Well I think most importantly also, they're stealing our intellectual property so either it's through the internet or it's through investing in educational systems here or think tanks. They're bringing people here. I believe that they are stealing Silicon Valley blind and in just a few years the American people are going to possibly be looking to China for new coding and new programs because of everything that the Chinese are stealing from here in America.

BARTIROMO: That's right because they're trying to transfer technology from America to China on some of the most important industries of the future. What I was struck by speaking with you before this interview is you have called China a growing national security threat, so I want to turn to the FBI investigation in a moment but go through why you see China as this growing national security threat in particular building those military bases all over the world.

NUNES: Well, I mean yes, let's start with that. So I just mentioned that they're building a military base in Djibouti. They are also continuing to put more and more submarines into the -- into the oceans. They took over the South China Sea so they built islands that are essentially I call them stationary aircraft carriers all over the South China Sea. So you know, why does that matter? Why does that matter to people here in California or all over the United States of America? Well, it's because almost two- thirds of the world's global trade goes through that area, and so if they control the entrance to the Red Sea and they control the South China Sea, very strategic locations I might add, they effectively could cut off world trade if they wanted to. And so I don't see them, you know, I don't -- nobody wants to have a fight or a war with China or a trade war with China but the fact of the matter is that they are a communist dictatorship. Most of the major companies are state-owned enterprises. If you're an American and you go try to invest in China, you have to make a deal. Some part of the communist party is going to own that deal. If you're not part of the communist party in China, you're not going to own a business. So these are the types of things that we have to be concerned about especially as they begin not only to advance their military capabilities but also to steal our military secrets and then furthermore, if you look at smaller countries around the globe they've really made investments into major infrastructure so I mentioned that a little bit earlier but if you come in and the Chinese loan you billions of dollars to build a railway or a port, what countries in Africa have found out that comes with a price. They then want your vote in the United Nations. So these are the types of things in why China is such a national security threat and why I think what you're seeing is if the president can kind of move off of the steel and aluminum threats directly, tariffs directly and move in to more holding China accountable and bringing them to the table, we might be able to strike a deal that we haven't been able to strike in many, many decades.

BARTIROMO: Well, this is a really unreported story an underreported story. I'm glad you just broke the news that you're actually working on an investigation of all of this and you will have more details for us on that coming soon. So we'll keep following that Congressman. I know that there are ten industries in China that are deemed off limits for foreigners. You can't even own a joint venture in things like defense and financial services and we don't do any of that here in the U.S. So we'll keep watching that. But I want to get your take on the other major investigation that you've been working on and that is, of course, looking at the FBI and its handling of the Hillary Clinton e-mail investigation as well as this Russia collusion story. Last week, we had one of your colleagues on the program Chairman Bob Goodlatte of the Judiciary Committee and here's what he said. Listen to this.

(BEGIN VIDEO CLIP)

BARTIROMO: Congressman, let's be clear, there are 1.2 million documents you've only seen 3,000 of them, you've been stonewalled for five months.

REP. BOB GOODLATTE, R-VA, HOUSE JUDICIARY COMMITTEE: We have seen some documents. We've seen more than we saw from the Obama administration Justice Department but we need more documents and we need them now and we need them unredacted by the way, Maria.

BARTIROMO: If you keep getting stonewalled and you don't get these documents, are you going to subpoena these documents?

GOODLATTE: Well the answer is yes.

(END VIDEO CLIP)

BARTIROMO: OK, Congressman, obviously we got the subpoena. It went out late last week. Bob Goodlatte broke the news on this program last Sunday. If you don't get those documents, then what?

NUNES: So if I was Chairman Goodlatte, what I would do quickly because I had to go through this for the last year, fighting Department of Justice and FBI for documents. I think the American people now know that they stonewalled for many, many months so that we could actually figure out that Fusion GPS was paid by the Democratic Party and that Clinton Campaign to collude and interact with Russians to get dirt on President Trump. That took us a long time to find out and what I would recommend to my colleagues on the House Judiciary Committee and I applaud Chairman Goodlatte for what he's doing but don't wait. So when we get back in two weeks, if the 1.2 million documents aren't in the capital, then what he should immediately move to hold Department of Justice and the FBI in contempt and if we have to vote on contempt, then we should immediately move to impeach those officials. That would be using the full power of the Congress. But we can't wait. We've been waiting -- we've been listening for over a year and a half to the Democrats in this country, scare the American people that they have evidence of collusion with Russians which they don't. They can't prove it. They've been saying it, you have these investigations ongoing, you have FBI officials who have been fired. Congress has the -- is a separate branch of government. We created the Department of Justice and the Congress needs those documents and they need them now, they need them yesterday.

BARTIROMO: Well you obviously, for all of those reasons shutdown, closed your investigation in potential collusion because you did not find any but I want to go through the findings that you did come up with and report when you announced closing that investigation. What struck you most, because I find it really incredible that Special Counsel Robert Mueller is not looking at the collusion that we know that has existed between the Democrats and the Russians. Wouldn't that be under his purview?

NUNES: Well I think what -- there's a lot of things that strike me. You asked me what strikes me most about the report that we released. Let me start there. What strikes me most is that we had 70 recommendations and findings yet I think you might be the first person to actually cover our recommendations and findings because all of the media that's essentially part or allied with the Democratic Party ignored. They've went out with there with this narrative that the House Republicans were never interested in doing an investigation, however, the opposite is true. We have 70 findings and recommendations so what I would start with on that is that let's start with paper ballots. Perhaps in this country, we just talked about China, we know that the Russians are always up to no good. We better have you go back to using paper ballots in this country so that we have a way to check and double check that votes are accurate and all votes are counted. I think that's a major finding and major recommendation in our report

BARTIROMO: Yes, I want to talk about that Congressman.

NUNES: So, we also found no collusion between the Trump campaign but we did find a link between the Clinton and Democratic Party to the Russians.

BARTIROMO: Let's go through those links. We're going to take a short break. When we come back, Congressman Nunes, stay with us and walk us through some of those lengths. We will talk more about that and then there's this coming up.

(BEGIN VIDEO CLIP)

GRAHAM: And when it comes to the dossier that was used by the Department of Justice to get a warrant against Carter Page, it was prepared by paid informant of the Democratic Party, a foreign agent with ties to Russia. It is completely unverified and it should never have been used as the basis for a FISA warrant and I want a special counsel to look at all of this like Mueller's looking at Trump.

(END VIDEO CLIP)

BARTIROMO: Senator Lindsay Graham, one of the several powerful Republican lawmakers now calling for a second Special Counsel. How likely is it? Follow me on Twitter @MariaBartiromo, @SundayFutures more with Devin Nunes after this short break as we look ahead on 'Sunday Morning Futures.' We'll be right back.

(COMMERCIAL BREAK)

BARTIROMO: Welcome back. We are back with California Congressman Devin Nunes, Chairman of the Intel Committee, he's the Chairman of the House Intel Committee that just voted to release the Republican majority's report on the Russia investigation which found no evidence of collusion between the president and Russia. And Congressman, I was saying this earlier, if we know that the Democrats and the Hillary Clinton campaign paid for the dossier then the FBI used the dossier to get a warrant to wiretap the president's team, I mean, shouldn't that be under the group of things that the Special Counsel looks at since his mandate, Robert Mueller's mandate was to find collusion with the Russians. Can we ignore it?

NUNES: Well, you would think so, but I have no faith in that process. You know, this -- I supported the Mueller probe in the beginning but I thought originally that they would get into the who did all the leaks, you know, who leaked the conservation between General Flynn and the Russian Ambassador

BARTIROMO: Which was a felony right?

NUNES: And in fact, that was one the things that we found in our -- which was a felony. That hasn't been looked at so this is not, to me, they're just looking at the Trump campaign. This is a further continuation of what the FBI was doing that started mid-summer 2016. It's a continuation of that. And look, there's no collusion. If they don't have any collusion, they ought to come out and say it. If they have some collusion then they ought to come out and say it. But it seems to me like this is -- this is going nowhere fast. And in fact, let's remember too, one of the findings we had is there's an old law on the books that's 200 years old that's never been used called, it's called the Logan Act. This is the reason that they went after General Flynn at least the reason they described to Congress. So one of the findings we have in our report is why do we have the Logan Act on the books when we know that it's selectively enforced. So you decided to use it against your political opponent, General Mike Flynn who is the incoming National Security Adviser to President Trump. However the Obama administration who had people over in Moscow back in 2008 talking to the Russian government which would clearly be a violation of Logan Act, it wasn't enforced then. So this is an outdated law. It's never been used. It should be struck from the books so that political opponents can't use it against each other.

BARTIROMO: We are waiting on the I.G. report, the Inspector General. What should we expect from Michael Horowitz's report? It feels like ahead of that report some key people are being reassigned or fired within the FBI as a result of what's coming.

NUNES: Yes, so I mean the main thing that we've learned so far is that the I.G. was able to get these text messages between Strzok and Page and that's really illuminated a lot of the problems and biases that we were able to see in the Justice Department and the FBI's investigation. And so it will be interesting to see. This was only -- remember the I.G. report is only looking at how they handled the Clinton email investigation, so we really need that report. The sooner the better because that information is really pertinent to the investigations that both the Judiciary Committee has going on and the Intelligence Committee because we're still looking into FISA abuse and other matters. We still have a lot of witnesses to bring in from the State Department and from the FBI and DOJ to try to get to the bottom of, you know, was there a conspiracy to go after the Trump campaign? Did people purposely obstruct Congress' investigation? We still need to get those answers and that's what we continue to look at.

BARTIROMO: And we'll continue to look for any new text messages that come out to illuminate further information for us. Congressman, it's good to see you, sir. Thanks so much.

NUNES: Thank you, Maria.

BARTIROMO: We appreciate your time this morning Congressman Devin Nunes. Coming up next, 'Sunday Morning Futures' right here, Senator Lindsay Graham on how President Trump's pick of John Bolton will be the next National Security Adviser changes the game. And then why he voted for the $1.3 trillion spending plan, all that coming up as we look ahead on 'Sunday Morning Futures' right here.

(COMMERCIAL BREAK)

BARTIROMO: Welcome back. Just hours after the threatening to veto a $1.3 trillion spending bill over the lack of border wall funding and the DACA fix and too much spending, the president did sign it into law on Friday. The president says he will never sign a bill like that again.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I say to Congress, I will never sign another bill like this again. I'm not going to do it again. Nobody read it. It's only hours old. Some people don't even know what is there. $1.3 trillion, it's the second largest ever. President Obama signed one that was actually larger which I'm sure he wasn't too happy with either.

(END VIDEO CLIP)

BARTIROMO: And joining us right now is Senator Lindsay Graham, Member of the Senate Judiciary Committee and Senate Arms Services Committee and Senate Budget Committee. Senator, great to have you on the program. Thanks so much for joining us.

GRAHAM: Thanks. Thanks for having me.

BARTIROMO: Yes, good to see you. Let's start off right about this spending bill. Obviously, you and your colleagues have faced a lot of pushback with all of this spending. Did you vote for this bill?

GRAHAM: Absolutely. It was an easy vote for me. It's not a perfect bill by any means but it's $650 billion to our military who desperately needs the money to rebuild the military. The president promised us if he got to be Commander-in-Chief that he would rebuild our military. This is the strongest down payment in rebuilding the military since Ronald Regan, the biggest pay raise for our military service members in over a decade. I am enthusiastically supporting this bill from a military point of view.

BARTIROMO: Well I understand that. The military has gotten absolutely pummeled by sequestration and that's absolutely a fact but did you have to give into so many other things in order to get the money for the military? Supporting Planned Parenthood, more money in infrastructure, healthcare, NIH, lots of stuff in here that you otherwise may not have voted for.

GRAHAM: Well, there's 51 Republicans and 49 Democrats and at the end of the day, they have priorities too. Spending money on the NIH I think makes sense to me but as to deficit spending here's what I would tell the president and anybody else who's listening. We're not in debt because of the discretionary spending, we're in debt because Medicare and Medicaid and Social Security are just exploding in cost at two-thirds of the federal budget, its entitlement spending plus interest on the debt. So if you want to get out of debt, let's do entitlement reform. I like this package from a military point of view. It's a lousy way to govern because four people write a bill in two days so we need to do better there.

BARTIROMO: Yes, you're absolutely right. The entitlement spending is the problem. When does that become a priority? When do you expect we are in fact going to see programs or proposals to reign in the spending on things like Social Security before they go bankrupt?

GRAHAM: We need somebody to take the role of Ronald Reagan on the Republican side and challenge the Democrats like Tip O'Neill, they adjusted the age retirement for Social Security in 1983. It extended the life of Social Security by about 40 years. President Trump, I hope, will look at entitlement reform and make it a priority for the nation.

BARTIROMO: Let me switch gears and ask about John Bolton. H.R. McMaster is out, John Bolton is in as NSA Director. You're reaction?

GRAHAM: H.R. McMaster served the president well. He helped stop a national security flood under the Obama years. He helped reset the world. President Trump has been a terrific Commander-in-Chief. John Bolton seized North Korea for the threat they are. Two weeks ago he wrote an op-ed piece that the military option should be on the table if diplomacy fails so when President Trump meets Kim Jong Un, his National Security Advisor will be with him and the North Koreans know without a doubt that John Bolton seized their nuclear program as a threat to the United States and will strongly advise the president to use military force if he has to, which means it's less likely we will. When it comes to the Iran deal, John Bolton's been the biggest critic of the Iran deal, it's a terrible deal, so I am very pleased with John Bolton as the National Security Adviser to President Trump. It's going to make the world safer.

BARTIROMO: So the date is May 12. Do you think the president does not renew that Iran deal at this point?

GRAHAM: Unless you change the sunset clause, which says the following in 15 years under this deal, the Iranians can reprocess and enrich uranium without limitation. Basically, over the passage of time, they can march toward a nuclear weapon without having to cheat. What President Trump wants is to say that anytime they get within a year breakout, we will re-impose sanctions. They can't deny inspectors access to military sites where they're doing all their mischief John Bolton has been dead right about this deal. President Trump's been dead right about this deal. To my European friends, if you don't work with President Trump to get a better deal, he's going to withdraw and he should.

BARTIROMO: Wow, that is really fascinating. On the meeting with Kim Jong Un also coincidentally expected in May, what is going to happen at this meeting? Do we believe them that they really want a true meeting? Is this sincere?

GRAHAM: I think it's driven by fear of Donald Trump. That Donald Trump is the first president in my lifetime that's convinced the Chinese and the North Koreans if I have to use military force to protect the American homeland I will and it is a game changer. Here's what I think could happen in North Korea. Now, you've got John Bolton who has been very hawkish on North Korea. I think Kim Jong Un is going to have a choice to make that he's never had to make before. Give up your nuclear program to save your regime. If you keep going down the road you're going, you're going to wind up losing your regime and here's what I think Trump can do. He can bring the Korean War to an end. We're still at war. There's (INAUDIBLE) not a peace treaty. Wouldn't it be magical for Donald Trump to negotiate a peace treaty to end the Korean War between North Korea, South Korea, China and the United States, and one of the benefits of that peace treaty is to have North Korea give up their nuclear program and live on the same terms as South Korea. We have a chance here to change the world and I give President Trump all the credit in the world for making this possible and John Bolton being at this meeting is going to reinforce the message that we're serious about bringing about change.

BARTIROMO: I've got to get your take on these tariffs because what a week it was last week.

GRAHAM: Yes, what a week it was.

BARTIROMO: Markets reacted to the President's moves against China, restrictions on trade and investment as well as tariffs on top of the aluminum and steel tariffs. Your thoughts?

GRAHAM: The aluminum steel tariffs I think were too broad. The dumper is China, it's not Canada, it's not Mexico, it's not Europe. The idea that President Trump is going to hold China accountable for dumping, for currency manipulation and intellectual property theft is long overdue. To my friends in agriculture I know you're concerned because you sell a lot of products to China but in the manufacturing world where I live in South Carolina, China has stolen market shares, not be the side of it. They manipulate their currency, they steal intellectual property, they dump commodities into the stream of commerce and finally, Donald Trump is going to hold them accountable. All we're asking China to do is to stop cheating and we're going to have to be tough. There's going to be some pain involved but if President Trump can pull this off and change Chinese mercantile business practices, then we can have free-trade. Without China changing their practices we're never going to have free and fair trade.

BARTIROMO: All right stay right there. We have much more with the Senator including this call for a special counsel, a second special counsel as we look ahead on 'Sunday Morning Futures' back with Lindsey Graham after this.

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BARTIROMO: Welcome back. We are back with Senator Lindsey Graham.

(BEGIN VIDEOTAPE)

BARTIROMO: We just heard from Devin Nunes this morning and we know that you and your colleagues and judiciary, as well as Devin Nunes' Committee, have been stonewalled for months and months. Obviously, Bob Goodlatte and your Committee have subpoenaed the documents in the Hillary Clinton investigation. What do you want to see? I mean, 1.2 million documents is what you've requested. You've only gotten 3000 from the FBI.

GRAHAM: Well, I want more information. I want to be able to prove that the FBI investigation of the Clinton e-mail scandal was a sham, that the lead investigator, the lead FBI agent hated Trump, supportive of Clinton, they whitewashed the e-mail scandal. If you'd done what she had done, you'd probably be in jail now and to hold the FBI accountable for not doing their job correctly, that Comey, I think the fix was in and when it comes to the dossier that was used by the Department of Justice to get a warrant against Carter Page, it was prepared by paid informant of the Democratic Party, a foreign agent with ties to Russia, it is completely unverified, and it should never been used as a basis for a FISA warrant and I want a special counsel to look at all of this like Mueller's looking at Trump.

BARTIROMO: Yes, I mean, they used that dossier as a reason to get the warrants to wiretap and they didn't tell the FISA judge that in fact, the Democrats paid for it, that it was a political opponent paying for that dossier.

GRAHAM: And here's the question. How much effort did the FBI put into verifying the dossier? I can tell you the answer none. Steele had worked with the FBI in the past. They took the dossier for face value. They never did anything to verify it and we can tell you now in March of 2018 it is still unverified. It is a bunch of political garbage fed to Steele by the Russians to embarrass the President. It was used to get a warrant and every American should be concerned about how the FISA process was abused here.

BARTIROMO: You would think so. At this point, the Michael Horowitz I.G. report, we're waiting on the I.G. report, what is it going to tell us?

GRAHAM: I think it's going to tell us that the Department of Justice and the FBI ran a lot of stop signs when it comes to the FISA process, that the Clinton e-mail investigation was unprofessionally handled, that it was a bias, that the FBI got off track, the Department of Justice used information to get a warrant that was highly unreliable and they need to reform their business practices, but he can't subpoena people outside the Department of Justice. He has no ability to prosecute people and I really believe that Mr. Steele may have committed a crime here. He told the British court that he shared the dossier with the world press. He told the FBI he never shared the information with media outlets.

BARTIROMO: Right.

GRAHAM: What I want to know is did the FBI agents in question who are outliers in terms of the FBI, did they come up with an insurance policy to help guarantee an outcome of an election? If that's true, if they were even thinking about doing that, that scares me as much as anything Russia has ever done.

BARTIROMO: Well, that is an incredible abuse of power. Do you think we're going to see any accountability here, Senator?

GRAHAM: If we don't it will be a terrible day for the system. The Department of Justice cannot investigate itself. You're going to have to have somebody come in with fresh view of this, has nobody to reward, nobody to punish, the Inspector General is limited institutionally as to what he can do, but I am really intent on having new eyes look at what happened to the Department of Justice and the FBI because they can't do -- investigate themselves.

BARTIROMO: So when will we know whether or not we're getting a second special counsel?

GRAHAM: I can't believe it has taken this long. Look what we know. We know Steele lied about the role he played in handling the dossier. We know that the FBI agent in charge of the Clinton email investigation was a complete political hack. We know that information was whitewashed and we know that Comey had made a decision to letter off long before he said he did, so there's a political bias here that needs to be looked at and there's potential crimes. I'm not saying take Lindsey Graham's word for it. I'm saying pick somebody independent of the Department of Justice to do what we're doing in the Mueller case.

BARTIROMO: Let me go to the Taylor Force Act, you introduced this act. It's obviously important in terms of the Palestinian authority and what they're doing. Tell us about the Taylor Force Act?

GRAHAM: The best way to tell you about the Taylor Force Act is to tell you about Taylor Force. Taylor Force was a West Point graduate, his parents live in South Carolina, he served a tour of duty in Afghanistan and Iraq. He was studying in Israel as a graduate student, went out to dinner one night, came out of the restaurant, stabbed to death by a Palestinian terrorists. The man who stabbed him was killed by the Israeli defense forces. The body was sent back to Ramallah in the West Bank. He was welcomed as a hero, his family, the terrorists family received a lump sum payment from the Palestinian authority free benefits free education for life for his family members, and this bill stops all taxpayer-funded assistance, American tax dollars will no longer be given to the Palestinian authority until they change their laws rewarding their young people for killing Jews and Americans.

BARTIROMO: Well, will you be able to say categorically there will be no more payments to terrorists coming out of the Palestinian authority, will we even know?

GRAHAM: We have two laws in place if martyr payments are deducted against the aid we already provide but Taylor Force is suspended all Palestinian authority aid until they change their laws enticing their young people to commit acts of terrorism. The Palestinian authority as a government entity pays people to kill Jews and Americans and holds them up to be martyrs. This is probably the biggest change in 20 years in terms of how the American government relates to the Palestinians and it's long overdue.

BARTIROMO: All right, we will leave it there. Senator, it's always a pleasure to see you. Thanks so much.

GRAHAM: Thank you.

BARTIROMO: Senator Lindsey Graham.

(END VIDEOTAPE)

BARTIROMO: So what is next between the U.S. and China? Are we on the verge of a trade war? We'll talk with White House's top trade policy adviser Peter Navarro up next live right here as we look ahead on 'Sunday Morning Futures.' We'll be right back.

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BARTIROMO: Welcome back. Trade fears rocking stock prices after President Trump announced new tariffs and restrictions against China. Peter Navarro is the Director of Office of Trade and Manufacturing Policy and he joins me now. Peter, it's good to see you, sir. Thanks for joining us.

PETER NAVARRO, DIRECTOR, OFFICE OF TRADE AND MANUFACTURING POLICY: Good morning, Maria.

BARTIROMO: Tough week for markets on these policies. What are -- what are people missing, Peter?

NAVARRO: I do think it was an over-reaction based on incomplete information. You have a virtue us cycle of global synchronized growth. As you talk about earlier, you have an incredible policy of the Trump administration. I mean, let's look at the four points of the compass. We've got tax cuts of President Trump orchestrating one of the most brilliant tax cuts in history. What we're going to see from that is strong investment in 2018 and 2019 driving a productivity growth and it will be non-inflationary so that's growth-inducing. You have a supply-side positive stimulus with the great deregulation efforts that President Trump has orchestrated and we have the energy unleashed here so we'll have lower manufacturing cost lower consumer cost. Then you go to trade. Now, before we get to China which is important, let me just point out that President Trump, this is brilliant, he's getting NAFTA renegotiated, we're going to get a good deal out of that. He's renegotiating the horrible Korean deal and it looks like we're going to get a very good result on that and he had a 201 investigation on solar and washing machines in January where we imposed tariffs. And what President Trump got out of that, guess what, a flood of new foreign investment here to build American factories to make things with American hands. The 232 which was for the aluminum and steel industries absolutely necessary to defend our aluminum and steel industries against the flood of imports, and that's important both through national security and economic security and we succeeded there. And now, we've tackled interestingly enough a problem which there appears to be widespread agreement on right and left. China stealing out stuff--

BARTIROMO: Should you have done this first? Should you have done China first instead of aluminum and steel? Because aluminum and steel most people say was too broad and that's what's creating all of the uncertainty.

NAVARRO: You -- look, in terms of sequencing, this is unfolding the way the President sees it strategically. I mean, think of all of the balls that are in motion that are pointing to a great rebalancing of our trade. The fundamental problem structurally which we've had for the last 15 years around the world is massive trade imbalances fueled by unfair and non- reciprocal trade practices not just by China but by many of our trading partners.

BARTIROMO: But you said -- you said we weren't going to see any retaliation. You told me on my morning program on the Fox Business Network, we're not going to see any of these countries retaliate. They're not going to mess with their surpluses and yet we did see that. China came out last week and said yes, we're going to retaliate on $3 billion worth of products.

NAVARRO: And that retaliation as some people have described it is muted. But at the end of the day, China's a Sovereign nation and it has to make a choice about how it wants to proceed in the global economy. I think it's important to recognize here that it's not just the United States who is tired of having China steal our stuff, tired of having their foreign corporations go into China, and have force technology transfer occur. And all we're trying to do, the president's vision here, it's stunningly brilliant because what he's trying to bring about is the fundamental reordering of the global trading system in a way which focuses on free markets, fair trade, and reciprocal trade and that's not what we have there. So for the markets, when they look at the chess board here, it's really important to understand that everything the president does, every morning that he goes to work is all centered around driving economic growth and creating jobs, not just here in America but around the world.

BARTIROMO: Yes -- no I understand the China stuff. I mean, there are 10 industries robotics, A.I. that China wants to be number one in, and so I understand that but do you need to do deals with Vietnam, the Philippines, and Japan as Devin Nunes just said earlier in the program, to offset what we could lose from China?

NAVARRO: As part of the overall trade strategy and Ambassador Robert Lighthizer is basically the architect of this with President Trump, we are going to be doing great deals bilaterally with countries around the world. That's all part of the canvas of trade that President Trump is painting in a beautiful picture. But look at all of the things that we already engaged in, NAFTA, (INAUDIBLE), it's amazing. We got aluminum and steel defended. We basically are using the 201 to protect ourselves from unfair import surges. And this 301, I mean this section 301 that Ambassador Lighthizer and the president are moving forward is brilliant. We're finally attacking a problem which will basically help guarantee our economic future and our national security feature because lot of those --

BARTIROMO: All right, we're going to be watching this. I guess with all of the uncertainty markets first sell and then they analyze later. Peter we'll keep following it. We're going to speak to you soon and thank you so much for weighing in this morning.

NAVARRO: Thank you.

BARTIROMO: Peter Navarro. So why did they spend all that money, the massive spending bill? It is benefiting the military. Where will it benefit most? General Jack Keane will join me next live to discuss that.

(COMMERCIAL BREAK)

BARTIROMO: Welcome back. President Trump touting the benefits the military will receive from that massive $1.3 trillion spending bill. Joining me now Fox News Senior Strategic Analyst, Retired Four Star General Jack Keane. General, it's always a pleasure to see you.

GEN. JACK KEANE (RET.), FOX NEWS CHANNEL SENIOR STRATEGIC ANALYST: Great to see you, Maria.

BARTIROMO: We've spoken a lot about the underfundedness of the military. Your reaction to this plan?

KEANE: Well, first of all, our troops do need a pay raise and that's important. We haven't had one of this size in you know, about a decade. And so that's going to be a great shot in the arm for them and their families. And getting to the actual military capacity, the first thing we've got to fix is our equipment. We've got to get our airplanes flying again. We've got to get our vehicles rolling again, and that's actually due to a lack of repair parts. In other words, we have to buy repair parts to fix that equipment. And that's why 50-60 percent of our airplanes are just not flying. We just have not had the money to buy those parts. The next thing is the training of our troops regardless of the service. The reason why pilots are having more accidents is because they're not flying sufficient amount of hours every month to maintain their skills. The same thing with navy ships banging into commercial vessels. We've had a lack of training and preparation of those crews on those ships and we have the same problem with our ground forces but it's not just as obvious. So what we will do is increase the time for training and that takes money and that money is going to be very important. Then the third thing that's going to be very important to us is the Russians and the Chinese have closed the technology gap on us and in some cases, have advanced beyond our capabilities in certain categories, so we have got to spend money on future readiness which is what, it's new equipment. We need offensive missiles, we need better missile defense, we need a long-range bomber, we need more submarines, we need more tanks, a laundry list out there. Now we're going to be able to make a down payment on getting these capabilities that we have desperately needed for a long time, but they have been on hold for more than 10 years.

BARTIROMO: Real quick sir, do you think John Bolton brings value to the table here?

KEANE: Sure, of course. This is about President Trump primarily. He's on the job 14 months, he's comfortable with the job, he knows with this role of being president is all about. He didn't know for sure until he started doing it and now he's figured out who he wants around him. You know, he's gone through this issue with other people who have served him well but maybe not quite in the capacity that he wants. He's the president, he's got the agenda. So it's all about picking people that he wants to have with him like Larry Kudlow, like Mike Pompeo over at State, like a John Bolton. And there may be other changes down the road as this presidency involves. I think this is a normal thing and maybe there's more change here because he didn't grow up in a political class, he grew up in business and he didn't have a working familiarity with these issues, so yes. I think this is all positive.

BARTIROMO: General, thanks so much for joining us this morning. Great to see you, General Jack Keane. I'll see you next week on Fox Business Network. Have a great Sunday everybody.

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