Rudy Giuliani takes aim at Michael Cohen's credibility

This is a rush transcript from "Fox News Sunday," July 29, 2018. This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: I'm Chris Wallace.

President Trump takes credit for cooling a trade war with Europe and heating up the U.S. economy.

(BEGIN VIDEOTAPE)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We have accomplished an economic turnaround of historic proportions. Once again, we are the economic envy of the entire world.

WALLACE: But is the spike in our GDP sustainable? We'll discuss that and the president's hard sell to the heartland.

TRUMP: We will not let anybody bully our wonderful American farmers.

WALLACE: With Treasury Secretary Steven Mnuchin, it's a "Fox News Sunday" exclusive.

Then, the confrontation between President Trump and his former fixer, Michael Cohen, escalates over taped conversations and claims the president knew about that Trump Tower meeting with the Russian lawyer. We'll discuss what it means for the special counsel investigation with the president's lead lawyer, Rudy Giuliani.

Plus, getting to the bottom of what happened in Helsinki.

SEN. BOB MENENDEZ, D-NEW JERSEY: Did he tell you what -- whether or not what happened in those two hours?

MIKE POMPEO, SECRETARY OF STATE: Yes, the predicate of your question implied some notion that there was something improper about having a one-on-one meeting. I completely disagree.

MENENDEZ: I didn't ask you a predicate. I asked you a simple question.

WALLACE: We'll ask our Sunday panel about Secretary of State Pompeo's hot seat in a Senate hearing.

All, right now, on "Fox News Sunday".

(END VIDEOTAPE)

WALLACE: And hello again from Fox News in Washington.

The gloves are off in a fight between President Trump and his former attorney, Michael Cohen. The president's lead lawyer, Rudy Giuliani, will be here later to talk about why the joint defense agreement between Mr. Trump and Cohen is no longer in effect.

But, first, the Republican plan to hold on the control of Congress relies heavily on a growing economy, one President Trump took full credit for on Friday. The president says the 4.1 percent growth in GDP in the second quarter shows his policies on trade and taxes and deregulation are working. But some economists disagree, warning these are only short-term gains.

Joining us now for an exclusive interview is Treasury Secretary Steven Mnuchin.

Mr. Secretary, welcome back to "Fox News Sunday".

STEVEN MNUCHIN, TREASURY SECRETARY: Thank you, and it's great to be here with you.

WALLACE: Let's start with the strong GDP numbers, 4.1 percent growth in the second quarter, and some very bullish talk from the White House.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: These numbers are very, very sustainable. This isn't a one time shot.

LARRY KUDLOW, WHITE HOUSE CHIEF ECONOMIC ADVISOR: This is a boom that will be sustainable, frankly as far as the eye can see. This is no one-shot effort.

(END VIDEO CLIP)

WALLACE: So, Mr. Secretary, can we count on 3 percent growth in this year, 2018, which would be the highest annual rate since the great recession, and President Trump talked late this week that he could see 8 percent or 9 percent growth, is that realistic?

MNUCHIN: Well, Chris, we've been very clear since the campaign, the president's economic plan has always consisted of tax reform, trade relief and regulatory relief and we said we were going to achieve 3 percent or higher sustained GDP, and that's where we are. The 4 percent, 4.1, was a terrific order, but we are very focused on the long-term sustained economic growth, which our plans have had.

WALLACE: So, do you believe it will be 3 percent this year and going how far into the future?

MNUCHIN: Well, Chris, we can only project a couple years in the future, but I think we are well on this path for several years. So, I don't -- I don't think this is a one or two year phenomenon. I think we definitely are in a period of four or five sustained -- four or five years of sustained 3 percent growth at least.

WALLACE: As you know, some economists say this 4.1 percent figure in the second quarter is more of a blip than a trend. I want to put up some of their reasons. They point to a surge in farm exports in this quarter before the president's tariffs kicked in and they note that the Federal Reserve projects 2.8 percent growth this year and back to 2 percent by 2020.

Is the Fed wrong, sir?

MNUCHIN: Oh, Chris, again, you've got to go back to last year. Everyone was projecting 2 percent growth, we were projecting 3 percent growth and everybody gave the reasons why we couldn't get to three and we came up with the reasons and the policies. So, I think you are beginning to see projections go higher. Our 10-year projections are at 3 percent and we are comfortable we're hitting these numbers.

WALLACE: Speaking of the Federal Reserve, both the president this week and Vice President Pence today on "Sunday Morning Futures" rather are speaking out against the Fed raising interest rates and potentially slowing growth. Here they both are.

(BEGIN VIDEO CLIP)

TRUMP: I don't like all of this work we are putting into the economy and then I see rates going up.

MIKE PENCE, VICE PRESIDENT OF THE UNITED STATES: We don't want policies, whether Capitol Hill or elsewhere, that diminish the tremendous energy that we have in this economy today.

(END VIDEO CLIP)

WALLACE: Mr. Secretary, what happened to respecting the independence of the Federal Reserve?

MNUCHIN: Well, Chris, I think they do and we as an administration absolutely support the independence of the Fed and the president has made it clear that this is the Fed's decision. So, these are really more just comments saying as interest rates are going up, it's something that the president has a concern.

But let me be clear, he absolutely respects the independence of the Fed, and the issue is the market expects interest rates to keep going up. So, the only question is how far, and for how long? And we think the Fed will be very careful in managing the economy.

WALLACE: I mean, in fact, isn't it responsible as the economy heats up, when we've had these incredibly low, artificially low interest rates when the economy was chugging along at one or 2 percent, isn't it responsible for the Fed to increase interest rates?

MNUCHIN: I think it is in the market expects it. The Fed has been targeting 2 percent inflation and obviously with 2 percent inflation, we have to have at least slightly higher interest rates to manage through that.

WALLACE: I want to ask you about another potential drag on the economy, and that is the drop in some tech stocks, especially this week. Facebook dropped 19 percent on Thursday. Twitter fell 20 percent Friday. And Intel and Apple also fell.

Mr. Secretary, are you concerned about investors souring on tech stocks, especially those tech stocks involving social media, which is I think you would agree, have been big drivers of growth in the economy and big drivers of rise in the markets?

MNUCHIN: Well, Chris, I've always believed that diversified portfolios of U.S. stocks are great investments and will continue to be. As you can see, the market is not efficient. The fact that you could have a one-day correction of these magnitudes just goes to show you that in the short term, the market is not necessarily efficient, but I'm not concerned about this at all.

And again, investors should have diversified portfolios. The tech stocks have obviously had an incredible run. And, you know, kind of -- you look at the Nasdaq, you look at the S&P, you look at the Dow, the markets obviously doing very well.

WALLACE: Let's turn to trade. President Trump announced what he called a, quote, breakthrough agreement on trade with the European Union this week. But, sir, isn't he exaggerating a bit?

There were no tariffs removed in his discussions with the European Commission, there were few specific commitments. There was one on soybeans, and there was no timetable. In fact, Mr. Secretary, all that the president and the president of the European Commission agreed on is to start talking.

MNUCHIN: Well, Chris, that's actually not the case and let me just step back for a second. These talks started with the president of the G7 saying let's have no tariffs, no barriers, no subsidies. Those talks continued with the G7.

I was at the G20. I met with my counterparts. And then when we had the Juncker, the president of the E.U., we specifically did go through a detailed discussion. We had several hours of kind of negotiating back and forth on an outline of an agreement and now, we have the hard work.

But we've said, the first step is going to be to resolve the steel and aluminum tariffs and when we do that, the retaliatory tariffs will come off, but this was also an agreement to reduce tariffs significantly across the board and we have about a trillion dollars of trade. So, this is a -- this is a very big opportunity to do things.

WALLACE: But, Mr. Secretary, let me give you one example of where the president and the administration makes it sound like there is a deal and the E.U. makes it sound like there isn't.

Here's what the president said to farmers in Iowa this week.

(BEGIN VIDEO CLIP)

TRUMP: We just opened up you're up for you, farmers. If you are not going to be too angry with Trump, I can tell you.

(END VIDEO CLIP)

WALLACE: But as soon as he said that the spokesperson for the European Commission gave this response. Quote: Agriculture is out of the scope of these discussions. We are not negotiating about agricultural products.

Mr. Secretary, you are at odds, the president is at odds with the European Union before the talks even start.

MNUCHIN: Chris, I was in the room and we had specific conversations about agriculture and the need to break down the barriers on agriculture and have more opportunities for our farmers. We specifically talked about soybeans, but we specifically agreed we'd look at these other markets, and it was very clear that our objective as part of this whole agreement is the Europeans have to open up more opportunities for our farmers and our agriculture.

So, I can't comment on their comment. This will be an important part of any agreement we reached.

WALLACE: But let me just ask you directly because this is on the record. The spokesperson for the European commission said, let me quote it again, we are not negotiating about agricultural products. So, are you right, or is she right?

MNUCHIN: Again, let me be clear, we had specific conversation about soybeans, that was step one. We discussed other areas.

And, again, this is all part of a negotiation. It's -- we will have an agreement, so it will be in accomplishing agreement. We want to drop tariffs and barriers across the board. That's what we are focused on doing.

WALLACE: Forgive my skepticism and the skepticism of other people on this, Mr. Secretary, but I don't have to tell you, there's a big difference between trade talks and a trade deal.

Here you were in May, here on "Fox News Sunday" talking about trade with China.

(BEGIN VIDEO CLIP)

MNUCHIN: We are putting the trade war on hold. So, right now, we have agreed to put the tariffs on hold while we try to execute the framework.

(END VIDEO CLIP)

WALLACE: But within weeks of your making that declaration on their show, President Trump announced $50 billion in new tariffs, or tariffs on $50 billion worth of Chinese goods. So, you know, what looked like a truce one minute can fall apart the next.

MNUCHIN: Well, Chris, you're right, these are complicated negotiations and these have to be turned into a real agreement that's literally hundreds and hundreds of pages. So, we're going to go part by part with Europe.

I was down in Mexico last week. We had a terrific meeting with the new administration. The NAFTA talks are back on track. That's our number one priority now, to get NAFTA done.

We are going to negotiate piece by piece with the E.U. And, you know, we continue to have conversations with China. And we'll see where we get, but you're right, these things have to be negotiated because the president is very clear, he doesn't just want talk, we need our counterparts to follow through and deliver, breaking down barriers and creating better opportunities so that we can reduce our giant trade deficit.

WALLACE: Finally, Mr. Secretary, in response to farmers concerned about getting hit by tariffs, the administration announced this week a $12 billion package in emergency aid. I looked back to the record and you have spoken out several times against corporate welfare.

So, when did handouts to farmers become strong, good, solid, conservative policy?

MNUCHIN: Well, Chris, I don't think these are handouts. So, it would be one thing if we were just subsidizing markets, and that's not what we are doing here. This is a -- this is a short-term solution to deal with the retaliatory tariffs where you have people who put tariffs, which, by the way, are against WTO rules and unfair and targeting our farmers. So, we are sticking up for our farmers so that they don't get hurt in these trade discussions. These are not long-term subsidies for the industry.

WALLACE: And what do you say to some Republican senators who balked at this idea this week and said they need trade, not aid?

MNUCHIN: Well, we agree with that. The focus is trade, not aid, and that's why we're focused on negotiating these agreements.

But again, the president is not willing to live with the status quo where other countries have taken advantage of the rules and had free trade here and our companies and our workers can compete fairly, and it's just not fair that China has complete open access to our markets and we have virtually limited access to their markets and forced joint ventures. And we are focused on, as we said, free and fair trade, let's take down all the barriers.

WALLACE: Secretary Mnuchin, thank you. Thanks for your time. Always good to talk with you, sir.

MNUCHIN: Thank you, Chris.

WALLACE: Up next, we'll bring in our Sunday group to discuss what the good economic news will mean for Republican control of Congress come November.

Plus, Rudy Giuliani thinks someone played with that secretly recorded Trump-Cohen tape. The president's lawyer joins us at the bottom of the hour.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We've turned it all around. Once again, we are the economic envy of the entire world. When I meet the leaders of countries, the first thing they say, invariably, is, Mr. President, so nice to meet you. Congratulations on your economy.

(END VIDEO CLIP)

WALLACE: President Trump in full salesman mode, touting the news of strong economic growth this spring.

And it's time now for our Sunday group. Jonah Goldberg of the National Review, Mo Elleithee of Georgetown University's Institute of Politics and Public Service, Jonathan Swan, who covers the White House for "Axios", and Fox News correspondent Gillian Turner.

Jonah, how big a deal is this 4.1 percent number GDP growth in the second quarter, and is it enough for Republicans to hang their hats on as they try to hold onto control of the House in November?

JONAH GOLDBERG, NATIONAL REVIEW: Historically, normally, you would think it would be, and it is a big deal -- 4.1 is a big number. The problem is, is that for the Republicans are suffering most are among essentially white college educated women in suburban districts. They seem to be immune to the boom in the economy and the gender gap is unprecedented for congressional candidates.

And so, the idea that the economy alone is what these women are going to vote for when they are going to be the ones providing the margins of difference whether or not they are going to hold onto the House I think is unlikely and is probably very worrisome to the White House.

WALLACE: Mo, there has been a lot of talk about a blue wave this November, a big Democratic pickup, may be control of the House, maybe even control of the Senate. But I think you would agree in the absence of where the economy is always the top issue and when you got strong economic growth, when you got historically low unemployment number, isn't that a pretty strong record for Republicans to run on?

MO ELLEITHEE, GEORGETOWN INSTITUTE OF POLITICS & PUBLIC SERVICE: Look, first of all, we should all be celebrating 4.1 economic growth. That's a good number, a strong number. It also would have been the fifth strongest number of the Obama administration, right?

The Obama administration -- this is the continuation of economic recovery that began in 2009 and 2010. That strong economy wasn't enough to save Democrats last time. It's not enough to say it will be enough to say it would save Republicans this time.

I think Jonah's point cannot be overstated that for a lot of these voters, particularly suburban voters where gas prices are going up, where they are a little bit more uncertainty around health care. Add to that, some of these working-class voters who are getting hit by the results of the tariffs on steel and aluminum, who are getting hit by agricultural voters who are getting hit by issues like soybeans. There's enough economic uncertainty that even with the strong number I think Republicans are still facing a headwind.

WALLACE: Let's turn to the other big economic story this week and that was the so-called trade truce between President Trump and his administration and the European Commission and the president and the head of the European Commission, Jean-Claude Juncker, talked about that.

So, here they are.

(BEGIN VIDEO CLIP)

TRUMP: This was a very big day for free and fair trade. Very big day indeed.

JEAN-CLAUDE JUNCKER, PRESIDENT OF THE EUROPEAN COMMISSION: I had the intention to make a deal today. And we made a deal today.

(END VIDEO CLIP)

WALLACE: Jonathan, you heard my conversation just before the last segment with Secretary of the Treasury Mnuchin. What are your sources at the White House telling you about any real dialing down of tariffs with European Union?

JONATHAN SWAN, NATIONAL POLITICAL REPORTER, AXIOS: Well, there is no dialing down of tariffs or intention, I mean, the tariffs all of remain in place, the steel and aluminum tariffs, and the retaliatory tariffs. And if what Secretary Mnuchin told you is true, which is the White House will only accept an encompassing -- I think he used the word encompassing deal, which includes agriculture, well, they're going to have some problems because every country, every bloc of countries has its pet political issues that they don't want to touch.

For Germany, it's the cars. That's why cars weren't in that agreement. They were explicitly excluded. Non-auto industrial goods. Agriculture -- a big issue in Europe. Again, they are protected industries.

So --

WALLACE: And particularly in France. They explicitly said, we do not want to lower agricultural tariffs.

SWAN: Right. So, if the demand is we want zero tariffs across everything, which by the way was the objective of the TTIP negotiations that Obama was --

WALLACE: Explain what that is.

SWAN: TTIP was the predecessor to this. This was Obama -- the Obama administration negotiating with Europe for a free trade deal. That was the objective. You've got the objective page, zero tariffs on all industries.

This is basically a narrower version of TTIP in the goals. And guess what? It's going to be really hard, like any massive trade negotiation. So, look, I don't have any indication that they are going to withdraw the steel and aluminum tariffs, but I do know that the Republicans on the Hill are putting immense pressure now on the administration quietly because they are worried.

Your whole first conversation about the economy, Republicans on the Hill see the trade agenda as the biggest risk to that for the midterms.

WALLACE: Gillian, I mean, let's take a bigger look at the president's trade policy. There is no deal with European Union. In fact, talks haven't even started. There's no deal on NAFTA with Mexico and Canada, although there has been a report of some progress in that area, and there is certainly no deal. In fact, relations are tense and have gotten worse with China.

So, how do you see the president's trade policy and specifically, his policy on tariffs? How do you see that playing out?

GILLIAN TURNER, FOX NEWS CORRESPONDENT: So, as everyone has now pointed out, not a lot of specifics in the deal with Juncker. But I want to just say that doesn't mean it wasn't a valuable exercise. The whole exercise of him coming here, meeting with the president and doing this joint press conference.

Sometimes conflict resolution 101 tells you that when you have these really contentious negotiations, the two sides are really far apart, they are not agreeing on anything, this battle sort of reaching the tipping point where it becomes a war, the best thing to do is to just to agree to agree later on and to a certain extent, that was what they achieved coming out of this. And I don't think it was in -- a worthless thing.

GOLDBERG: There's a problem with that, in that this entire crisis, to the extent it was a crisis, Donald Trump created it, right? He's like a fireman who goes and sets fire so he can then be the hero. So, he creates this trade crisis and then he talks -- he backs off from it and we get back to the status quo ante that we had before he created the crisis in the first place.

I don't know that there has been anything legitimately productive coming out of this whole chapter, even though I do think Trump should declare victory at this E.U. thing so we can move beyond it.

TURNER: Well, to be fair, they are -- they did agree to hit pause and not institute an escalation.

GOLDBERG: Right.

TURNER: No more new tariffs.

(CROSSTALK)

TURNER: I'm not saying this follows everybody's problems, but it is something worthwhile.

WALLACE: I want to ask you, Jonathan, because the president has been something on a Twitter roll today and he just tweeted, and I got it up here. He said he would be willing to, quote, shut down the government if he doesn't get everything he wants on immigration. He wants a wall. He wants an end to the visa lottery or a change in that. He wants an end to the chain migration.

Is he really willing to see a shutdown, which would be on September 30th, it would be one month before the midterm elections?

SWAN: So, this is -- I mean, I have to say, that sweet kind of shocks me, and that -- not much actually shocks me from this president. But the conversation I've had with his senior advisors as recently as a few weeks ago on this very subject was they were of the impression that they had convinced the president that it was not in his political interest to shut down the federal government six weeks before an election.

So, I don't know if this is just bluster, bluffing that he feels dissatisfied that in the negotiations he's had with members of the Senate that they haven't given him more or said to them is going to get what he wants for his wall. We all know how angry he was with the omnibus bill, the last bill that didn't give him his wall funding. I would still be surprised if President Trump shuts down the federal government that close to an election.

WALLACE: All right, panel. We have to take a break. We'll see you a little later in the program.

When we come back, Michael Cohen once boasted he would take a bullet for his boss. But now, Donald Trump's former attorney and fixer is looking like his biggest enemy. The president's lead lawyer, Rudy Giuliani, joins us next.

(COMMERCIAL BREAK)

WALLACE: Coming up, Secretary of State Mike Pompeo gets grilled on the Trump-Putin summit.

(BEGIN VIDEO CLIP)

SEN. ROBERT MENENDEZ, D-NEW JERSEY: Did the president tell you that he discussed relaxing Russia sanctions or not? Yes or no?

MIKE POMPEO, SECRETARY OF STATE: The president is entitled to have private meetings.

WALLACE: We'll ask the Sunday panel about the criticism and prospects for another summit, coming up.

(COMMERCIAL BREAK)

WALLACE: The confrontation between President Trump and his former fixer, Michael Cohen, continues to build. Cohen leaked a conversation with Mr. Trump he secretly taped about hush money for a Playboy model. Trump's legal team had experts review the tape for tampering and Cohen said he'll talk to special counsel Robert Mueller about the president's denial that he knew anything about that infamous 2016 Trump Tower meeting.

Joining me now, the president's lead lawyer, Rudy Giuliani.

Mayor, welcome back to "FOX News Sunday".

RUDY GIULIANI, PRESIDENT TRUMP'S LEAD LAWYER: Thank you, Chris. Good to be with you.

WALLACE: I want to start with Michael Cohen, Mr. Trump's former lawyer, his former fixer. Here is what you said about him a couple of months ago and the possibility that he might talk to special counsel Robert Mueller.

(BEGIN VIDEO CLIP)

GIULIANI: I expect that he is going to cooperate with them. I don't think they'll be happy with him because he doesn't have any incriminating evidence about the president or himself. The man is an honest, honorable lawyer.

(END VIDEO CLIP)

WALLACE: Honest, honorable lawyer, but now you say Cohen is, quote, your words, a pathological lawyer -- liar --

GIULIANI: Right.

WALLACE: Pathological lawyer, a Freudian slip. A pathological liar who's been lying for years. So what happened?

GIULIANI: Well, here's what happened. I mean I found out, as everyone else did, that he was surreptitiously recording his clients, which is a disbarable (ph) offense. Obviously, I -- obviously if I knew that, I would never have said he was a reputable lawyer. I'd have said he was a scoundrel.

I -- I found of he not only taped lawyers, but he fully intended to deceive because he had a conversation with one of your colleagues, Chris Cuomo, in which he made up big show of putting his phone in a drawer, Cuomo's phone in a drawer, and said, we'll be off the record, no recording. He then proceeded to record two hours of that conversation. It makes him a total liar. I didn't know that.

And now I've listened, unfortunately, fortunately from my client's point of view, to many, many hours of tapes and the man is a pathological manipulator, liar. I didn't know that. I didn't know him well, but I had -- I knew nothing bad about Michael Cohen until all of this started to happen in the last couple of weeks.

WALLACE: Mayor, how angry is President Trump about being betrayed about -- by a man that he worked so closely with? And what does it mean, this talk now that the -- their joint defense agreement is over? What's the practical effect of that?

GIULIANI: Well, first of all, the president feels disappointed. I think the anger is over. You know, we've -- we've assured him, in a very strange way, this is a very good development for us because we do have all these tapes and these tapes are -- completely demonstrating the president did nothing wrong. Cohen is on record over and over again stating his position. It would be hard for him to contradict that now. And he's done so many despicable things, his credibility is not an issue.

I -- I -- the joint -- the joint offense (ph) agreement is in effect over because he's -- he's making it clear that he's going to try to hurt the president. We can't give him information. And he, obviously, isn't going to give us information. That's all that existed.

WALLACE: Cohen's latest so-called revelation is that he reportedly is prepared to tell the special counsel that -- Robert Mueller, that he was witness to a conversation which President Trump knew in advance about the Trump Tower meeting that -- that Don Junior and Jared Kushner, Paul Manafort were going to meet with a Russian lawyer. And that contradicts what President Trump told the New York Times last summer. Take a look.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Did you know at the time that they had the meeting?

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: No, I didn't know anything about the meeting.

UNIDENTIFIED MALE: But you didn't --

TRUMP: It must have been a very important -- it must have been a very unimportant meeting, because I never even heard about it.

(END VIDEO CLIP)

WALLACE: Now, the president repeated this week he did not know in advance of the Trump Tower meeting.

GIULIANI: Correct. He did not.

WALLACE: But let's explore this for a moment.

If, I repeat, if he did know, if, in fact, he did lie to the New York Times" last summer when he said he didn't know, is there anything wrong with that?

GIULIANI: Well, yes, I guess there's something wrong with it on a -- on an ethical, moral basis. Nothing -- if you got prosecuted for lying to the newspapers or the press, my God, I mean Cohen -- Cohen should go to jail for a thousand years. His tapes are filled with lies, including the most basic of all, he wasn't recording it.

But, no, he didn't like to them.

Cohen, I -- is a reported -- this is a leak now, so I don't -- he may change it. Cohen -- you have to pick the day to figure out the story. So Cohen said that he was present at two different meetings. He was present at a meeting with Donald Junior, Jared, a group of other people, in which they talked about the meeting two days later with the Russians. Then he said he was present at a meeting, the day of the meeting, in the president's office, in which either Donald Junior, Jared or a few people came in and told the president. Every other participant in both those meetings say it is not true. There was no such meeting in advance. There was no such interruption. If he taped everything else, why the heck didn't he tape this? It's not on tape. And he's capable, I think, unfortunately, of doctoring tapes. Hasn't done that. It would be hard to do that now since we have an expert all over it. So it's just flat-out untrue.

And what -- are you surprised he's lying? I mean I would have been surprised back then, but now that I know all this about him, it seems to me his default position is to lie. He's a bad liar because he lies in contradiction to tapes and he lies in contradiction to what I just said is probably supported by anywhere from two to five witnesses.

WALLACE: And is it fair to say -- I mean you have not been shy in what you've said here -- that you're at war with Michael Cohen now?

GIULIANI: I don't know. I don't think we're at war with him. You know, obviously the real test here is the investigators, the Justice Department and the American public. He doesn't get to decide this case.

I -- you know, I -- I should say I feel sorry for him, but nobody will believe me. He's destroyed himself, Chris, as a witness. I prosecuted, you know, 5,000 cases. I'd never prosecute a case on this guy's testimony. First of all, he talks to the press. He may be taping me. Second, he's contradicted so many times that, I mean, you began your cross examination by saying, which set of lies are you going to tell today, Michael? Let's go through them now.

WALLACE: All right, let me -- let me pick up because there was another big development this week, and that was the tape that Michael Cohen secretly recorded, a tape, a conversation in 2016 that he had with Donald Trump before the election in which there was a discussion of paying money to buy the rights to the story of Karen McDougal, a Playboy model, who says -- claims that she had a relationship with Donald Trump. Here's a portion of that tape.

(BEGIN VIDEO CLIP)

MICHAEL COHEN, PRESIDENT TRUMP'S FORMER ATTORNEY: And I've spoken to Allen Weisselberg about how to set the whole thing up --

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: So what do we have to pay for this?

COHEN: With funding.

TRUMP: One fifty?

COHEN: Yes. And it's all the stuff --

TRUMP: I was thinking about that.

COHEN: All the stuff. Because here you never how where that company -- you never know what he's going to be --

TRUMP: Maybe he gets hit by a truck.

COHEN: Correct.

(END VIDEO CLIP)

WALLACE: You say that Cohen violated attorney-client privilege by secretly recording a tape of his own client and then making it public, but -- but Cohen's lawyer, Lanny Davis, came out last night and said, well, you've been talking about the tape and since you talked about the tape you have waived any attorney-client privilege.

GIULIANI: Well, you've got to get the cart before the horse here. I mean the reality is they -- they leaked the tape and then we quite clearly responded, which we're allowed to do under the court order. And the New York Times reporters who got the leak have confirmed that, which is unusual for them to do that. Maggie Haberman and Mike Schmidt. That leak did not come from us.

The court order allows us to respond without waiving any privilege. Well, it's not my privilege, it's the president's privilege. If we have to defend him. That's exactly what we were doing. And it has been very helpful to us because now we've been able to put out the whole transcripts, which contradicts several things that Lanny Davis says.

He's almost as bad as Cohen. I mean he's said that Cohen didn't intend to deceive when he did these tape recordings. What is it to take a phone, put it in a drawer and tell somebody you're not recording them if it isn't an intent to deceive? I mean these people tell Quentin-like lies, lies that can be contradicted by tape recordings.

WALLACE: I want to ask you about this -- it's going to seem a little off topic, but I will get -- it will -- it will become relevant, Mr. Mayor, about Brett Kavanaugh, who is President Trump's nominee now for the Supreme Court. In 1999, Kavanaugh said of the case in which the Supreme Court ordered Richard Nixon to turn over the White House tapes, quote, maybe Nixon -- the Nixon versus U.S. case -- was wrongly decided. In a 2009 article, Kavanaugh wrote this, like civil suits, criminal investigations take the presidents focus away from his or her responsibilities to the people. And a president who is concerned about an ongoing criminal investigation is almost inevitably going to do a worse job as president.

Question, is Judge Kavanaugh out right the law?

GIULIANI: You know, I've looked at the law and I don't -- I really can't say those are legal opinions. Those are really just things he's saying. We don't see the authority. We don't see -- I mean I believe that the Constitution is clear that the president cannot be subpoenaed, or if he is subpoenaed he has a right to challenge it on the grounds that they haven't exhausted all other possibilities, that they don't have other ways to get the information. There's a case, the Espy (ph) case, closest one that you can find. He was a cabinet officer. And they said he could only be subpoenaed, in essence, taken away from his duties if there was no other way to get the information. So the president would at least have that privilege.

Where he has the complete privilege and therefore can't be investigated at all, I really would have to do more research. I mean there's a good argument that that's the case. Other law review articles have said that. It does exist as the law in most countries, the head of state has immunity, until after he's out of office. But other countries it does. So that requires more analysis.

WALLACE: So given the fact that that is Judge Kavanaugh's opinion and given the fact that a legal dispute between President Trump and the special counsel might end up before the Supreme Court, would it be useful to have Judge Kavanaugh be Justice Kavanaugh?

GIULIANI: No, I don't know Brett very well. I just know he's a person a very high integrity. I was a law clerk to a federal judge. I argued in the Supreme Court. And I know that these off-the-cuff opinions like this, when somebody sits down and starts looking at the law as I was just doing, he may very well go in the other direction. So I wouldn't count on Kavanaugh's vote on this. This is a question of first impression.

And the Trump situation is very different than the Nixon situation. So I don't think we get an edge one way or the other. I think the Supreme Court is about as straight as you're going to get in our country. And this is going to be a case that they're going to have to decide in the first instance. And it doesn't happen if they don't subpoena him. And no president has ever submitted to a subpoena. Even Clinton, who was subpoenaed, they had to withdraw it before he would testify.

WALLACE: Mayor Giuliani, thank you. Thanks for sharing your weekend with us.

GIULIANI: Thanks, Chris.

WALLACE: Please come back, sir.

GIULIANI: Thank you. Thank you, sir.

WALLACE: Up next, Michael Cohen gives increasing signs he's ready to cut a deal with the special counsel. What would you like to ask the panel about Cohen potentially flipping on President Trump? Just go to Facebook or Twitter, @foxnewssunday, and we may use your question on the air.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MICHAEL COHEN, PRESIDENT TRUMP'S FORMER ATTORNEY: When it comes time for the financing, which will be --

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: What's that (ph)? What financing?

COHEN: We'll have to pay (INAUDIBLE) --

TRUMP: Well, we'll pay with cash.

COHEN: No. No, no, no, no, I got this. No, no, no.

(END VIDEO CLIP)

WALLACE: A portion of the 2016 conversation between Donald Trump and Michael Cohen that Cohen secretly recorded about a potential payment for a Playboy model's story.

And we're back now with the panel.

Jonathan, this Trump-Cohen story is part Shakespeare, part soap opera, part Kafka. From what you hear, how angry is the president about Cohen apparently flipping and how worried is the president?

JONATHAN SWAN, NATIONAL POLITICAL REPORTER, AXIOS: I can't speak to his level of worry because it's not something that he would project to people that I talk to there. He might have that conversation with, you know, Melania or someone like that. His anger level is probably 12 out of 10. And if you take Rudy Giuliani as a vessel for that anger and sort of, you know, going out and calling Cohen a pathological liar, et cetera, et cetera, I mean that's a pretty good proxy.

But as a -- as -- as regards how much exposure he has, the one thing I will say is, people do misconceive Michael Cohen's role in Trump world. He was this sort of off the books kind of lawyer, as you can see from that tape recording, but it's not like he had full visibility over everything. I often see it stated as fact that Cohen knows where every body is buried. Actually, he doesn't. He knows where like, you know, maybe like 20 bodies are buried. But -- but there's probably, you know, whatever -- however many more. It's really Weisselberg, the lawyer who's been with Trump for decades, who actually started working for Trump's father, Fred Trump, who's just been subpoenaed, he's the guy who really has visibility. So on the hierarchy of concern, he -- he should be much higher.

WALLACE: We asked you for questions for the panel and we got this on Facebook from Danny Thibeaux who writes, if Cohen is telling the truth, how bad could this be for President Trump?

Jonah, how do you answer Danny?

JONAH GOLDBERG, NATIONAL REVIEW: Well, it depends what the "this" is and what -- what Cohen is saying. I think, you know -- whether or not, you know -- as you said, when you're subbing in for "Special Report" this week, whether or not you lie -- lying to the New York Times is not a crime, right? But when Cohen says that Donald Trump knew about the meeting in Trump Tower, what that does is -- and also when we have this stuff about the payments, this wipes away a vast swath of the defenses at the White House and its biggest supporters have been making for a very, very long time. They can't keep saying things are fake news when the media is not even part of it, when it's a taped -- taped interview or a taped phone conversation and it -- it shrinks the circle of plausible deniability across a vast array of things. But, at the end of the day, it still depends what Mueller actually finds. And I don't know that Cohen is this -- is the silver bullet that a lot of anti-Trump people want him to be.

WALLACE: Let's turn to the continued fallout from the Trump-Putin summit.

Secretary of State Mike Pompeo testified before a Senate committee this week and I think it's fair to say he got hammered about President Trump's failure to confront Putin, at least publicly at that news conference, about Russian meddling in the 2016 election.

Take a look.

(BEGIN VIDEO CLIP)

BOB MENENDEZ, D-NJ, RANKING MEMBER, SENATE FOREIGN RELATIONS: In his conversation with Putin, I hope the president laid out the consequences of interference in the 2018 election. But I know you can't tell me that. So you actually --

MIKE POMPEO, SECRETARY OF STATE: Actually, I can tell you that --

MENENDEZ: Oh, you want to share that one with me?

POMPEO: I can't -- no, I can't --

MENENDEZ: That one you want to share with me?

POMPEO: No, senator, I can tell you that because the president has disclosed that.

MENENDEZ: OK.

(END VIDEO CLIP)

WALLACE: And it went downhill from there.

Gillian, while the Trump team is still trying to clean up from what happened in Helsinki, Russian Foreign Minister Lavrov was asked about it this week and I want to -- I don't know how you say it in Russian, but he described the Helsinki summit as, quote, "better than super." So I'm not sure that's particularly helpful for President Trump when the Russians seem to be so happy with how it went.

GILLIAN TURNER, FOX NEWS CORRESPONDENT: It's not a good sign. And I think particularly on the topic of election meddling, which was the exchange we just saw back and forth there, that is still the administration's -- the weakest spot in the administration's apple because whenever you've got the secretary of state and the president disagreeing on a -- on a policy issue, it creates a major problem. I'm referring specifically to President Trump saying that he wasn't sure if he was going to take the intelligence community's assessment at face value that they -- that the Russians had interfered in the election. Pompeo said in that hearing a few moments after that exchange that the president did take the intelligence community's assessment at face value. That's a major sticking point.

On the bigger issue of the Helsinki summit, he's almost having -- the president's almost having a little bit of a Barack Obama moment. Remember, in 2011, 2012, nobody wanted President Obama to be talking to the mullah's in Iran. Nobody in Congress. Nobody -- the American people didn't want this. And he wanted a deal. And he said, I'm going to do this anyway. I'm going to court Iran anyway. And I think that's what President Trump's doing now, amidst all this blowback he's saying, I want a deal with Putin, I'm doing this.

WALLACE: Mo, there was a curious development on the whole Putin-Trump relationship this week because the White House, which had invited Putin to come for a summit in November, which it seemed surprisingly quick, John Bolton, the national security advisor, announced that, no, they're going to put it over until at least early next year until, as he put it, the witch hunt, by which he meant the Robert Mueller special counsel probe, is over. But then Putin announced on Friday or Saturday, he was in South Africa, that they have invited -- the Russians have invited Trump to come to Moscow and have a summit at the Kremlin. I don't know whether the sequence is that that would be before or after the Washington summit, but that just makes things even as clear as mud, doesn't it?

MO ELLEITHEE, GEORGETOWN INSTITUTE OF POLITICS AND PUBLIC SERVICE: The president invites Putin. The Russia's formal response was, ah, don't know. This might not be the best timing. So the president rescinds the invitation and then the Russians say, well, you know, you can always come to us. It's like Putin's just sitting there like a cat playing with a toy, right? He's just -- he's -- he is having the time of his life with this president of the United States.

When the president -- and Gillian's point is right -- when the president is out there saying that he doesn't necessarily accept the intelligence community's assessment, and forced them to backpedal on that and say, no, I do, but then tweets within days that once again that it is a hoax, Putin is getting everything he wants out of this relationship and that is not a good thing for the United States.

WALLACE: Jonathan, does the president still think, after all the blowback from Helsinki, does he still think that he can make progress with Putin?

SWAN: My understanding is yes. I mean that's what I'm told by senior officials there, that he has always believed that and he still continues to believe that. He thinks that he can get a deal in Syria. I don't know what the deal looks like. Obviously, the official U.S. position is they want to get Iran as far out of Syria as possible. Whether Putin's willing to provide pressure, I think we should all be pretty skeptical about that.

The one country that's actually quite happy with Trump's conversations with Putin is Israel. The Israelis are actually pretty happy with them having these discussions and they are wanting to push the Iranians as far away from their border as possible. And, of course, Bibi Netanyahu, the Israeli leader, actually has a pretty decent relationship with Putin.

So, look, I think it's going to be very hard both -- because of domestic politics and, you know, the general public, but also Capitol Hill. These members are now getting pretty aggressive on Russia and wanting to sanction them further. So I think Trump's going to have a lot of trouble cutting anything that's --

WALLACE: And, Jonah, we've got less than a minute left.

There was an announcement of a meeting, I think it was Friday, that the president had with the National Security Council and we were told this was a meeting about election meddling in 2018. And -- and what surprised me is to the best of my knowledge -- there may have been other meetings -- but this is the first one that they had announced. One would think that they would have done this some time ago.

GOLDBERG: You would. You would. And I think that might be in part to provide some political cover because this is going to be a bigger issue and they need some more talking points to push back on it.

I also think that one of the lessons of the week from the Pompeo testimony on down is that there are a bunch of very committed, serious people in the Trump administration who want to say the real policy is what we're doing, not what the president is saying.

WALLACE: Well, it's interesting -- interesting times. (INAUDIBLE).

Thank you, panel, see you next Sunday.

Up next, our "Power Player of the Week," the remarkable woman who took these powerful pictures on the front lines.

(COMMERCIAL BREAK)

WALLACE: If you ever read the New York Times or National Geographic or Time magazine, chances are you have seen her work. As we told you last December, she takes riveting photographs that bring the savagery of the front lines into your home. Here's our "Power Player of the Week."

(BEGIN VIDEOTAPE)

LYNSEY ADDARIO, PHOTOJOURNALIST: I never consider myself brave, I just consider myself very sort of committed to the story. And that takes me to places that are dangerous.

WALLACE (voice over): Lynsey Addario is one of the great photojournalists of the last two decades. Just listen to where she's worked since 9/11.

ADDARIO: I've covered Afghanistan, Iraq, Libya, Darfur, Congo, South Sudan, Somalia.

WALLACE (on camera): Question. Why?

ADDARIO: There are great injustices that go on in war zones and its fundamental for someone to be there to document that.

WALLACE (voice over): Darfur, 2004.

ADDARIO: There were skeletons across the desert. People fleeing for their lives. We witnessed villages that had been burned to the ground.

WALLACE: With U.S. troops in Afghanistan's Korengal Valley in 2007.

ADDARIO: I woke up, I put on my night vision, took this picture and fell back asleep.

WALLACE: In Pakistan's no-man's-land tribal area with the Taliban in 2009 for a story that won the Pulitzer Prize.

ADDARIO: If they invite you to their home, they will not kill you. They will protect you with their lives. So we knew that -- or we hoped that once we got there, because we had been invited, they would not kill us.

UNIDENTIFIED FEMALE: The New York Times says four of its journalist reporting on the conflict in Libya are now missing.

WALLACE: But Addario's luck almost ran out when she and three colleagues were taken prisoner by Qaddafi's forces in 2011.

ADDARIO: They were about to execute as and we're literally -- at one point I looked over and I saw each one of my colleagues literally begging for -- for their lives. And I remember, I could barely speak, and I just said, please. And at that moment a commander came over and said, you can't kill them, they're American.

WALLACE: Addario and the others were beaten and held for six days, but then finally released. Two months later, she went back to work, not on the front lines, but still in Gaza and Afghanistan and Senegal. And by now she was pregnant.

WALLACE (on camera): Did your family, did your friends, did you question what the heck you were doing?

ADDARIO: The fact is, I was pregnant and I was surrounded by pregnant women and, oh my God, it was the most natural thing.

I always feel like I'm in the wrong place. When I'm here, I want to be there. When I'm there, I want to be home.

WALLACE (voice over): Addario's son, Lucas, is now six. When she comes home, he sits on her lap while she edits her pictures, sometimes of war refugees.

ADDARIO: And he asks about war. And I say it's fighting and some people get killed. And he said, well, then, mommy, can't you get killed. And, to me, that's like, how do I answer that, because I can't just lie to him. And so I just say, I'll be fine.

WALLACE: So why does she do it? Why has she risked her life these last two decades? Why does she keep risking her life with Lucas waiting for her back home?

ADDARIO: I don't need to take pretty pictures anymore. It's not at all about the -- you know, just being there to travel and take a picture. It's really about the storytelling, about journalism, about truth, about telling people stories about making people care about things that they wouldn't necessarily care about. You know, I just keep working. I think that this, for me, is my calling and my mission and that's what I believe in.

(END VIDEOTAPE)

WALLACE: This fall Addario will release her first book of photography. It's called "Of Love and War."

And that's it for today. Have a great week. And we'll see you next "Fox News Sunday."

END

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