Adm. Mike Mullen on ex-intel officials keeping clearances; Mulvaney on potential storm clouds ahead for Trump economy

This is a rush transcript from "Fox News Sunday," August 19, 2018. This copy may not be in its final form and may be updated.


President Trump puts critics on the intelligence community on notice, as he pulls the security clearance of former CIA Director John Brennan and reviews the status of nine others.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Security clearance is a very important debate. Very, very important, and I've had a tremendous response for having done that.

JOHN BRENNAN, FORMER CIA DIRECTOR: I think he's abusing the powers of that office.

I think right now, this country is in a crisis, in terms of what Mr. Trump has done and is liable to do.

WALLACE: Is it an effort to protect the nation's secrets or an act of political revenge? We'll ask retired Admiral Mike Mullen, former chairman of the Joint Chiefs of Staff, and Republican Senator Ron Johnson, chair of the Homeland Security Committee.

Then --

LARRY KUDLOW, WHITE HOUSE ECONOMIC ADVISOR: Our economy, our investors, our workforce are crushing it right now. We are crushing it.

WALLACE: We'll discuss the state of the Trump economy and escalating trade war and a possible government shutdown with White House Budget Director Mick Mulvaney.

Plus, a verdict is expected this week in the special counsel's case against former Trump campaign chairman Paul Manafort.

TRUMP: I think it's a very sad day for our country.

WALLACE: We'll ask our Sunday panel what the Manafort verdict means for the future of Robert Mueller's investigation.

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


WALLACE: And hello again from FOX News in Washington.

If President Trump wanted to change the subject from Omarosa this week, he certainly did. He pulled the security clearance of former CIA Director John Brennan and is reviewing the status of nine other current and former officials. A former top intelligence figures going back to the Reagan administration reacted with fury.

In a few minutes, we'll discuss whether the president is protecting the nation's secrets or playing politics with the head of the Senate Homeland Security Committee Ron Johnson.

But first, Admiral Mike Mullen, former chair of the joint chiefs of staff under Presidents Bush and Obama.

Admiral, I want to begin with some of the things that John Brennan has been saying about President Trump, starting with him accusing the president of high crimes and misdemeanors after a summit in Helsinki with Vladimir Putin. Take a look.


BRENNAN: This is nothing short of treasonous because it is a betrayal of the nation. He is giving aid and comfort to the enemy.

I think Donald Trump has badly sullied the reputation of the office of the presidency.

Just so reflective of somebody who, quite frankly, I don't want you to use this term may be, but he is drunk on power. He really is.


WALLACE: Admiral, is that appropriate for a CIA director, former CIA director to say about the president?

ADMIRAL MIKE MULLEN (RET), FORMER JOINT CHIEFS OF STAFF CHAIRMAN: Well, I think for John and he -- and John is an extraordinary servant of the country, but I think he has been incredibly critical of the president and I think that has put him in a political place which actually does more damage for the intelligence community, which is apolitical, even as he's retired. So, I really don't support him being as critical of the president as he has been

WALLACE: The question, of course, is whether we are blurring the lines here between politics and intelligence. I want to put up a statement that John Brennan said in an op-ed, an opinion article in the New York Times rather after his security clearance was cleared. Here it is.

Mr. Trump's claim of no collusion -- Trump's claims of no collusion, rather, are, in a word, hogwash.

Richard Burr, chair of Senate Intelligence, wrote: If Director Brennan's statements is based on intelligence he received while still leading the CIA, why didn't he included in the intelligence community assessment released in 2017? If, however, Director Brennan's statement is purely political and based on conjecture, the president has full authority to revoke his security clearance as head of the executive branch.

Can you understand why I say that to a certain degree, saying in an op-ed that the allegation, or the denials of no collusion are hogwash, it blurs the line?

MULLEN: Well, John Brennan knows based on the job he was doing before, an awful lot about what happened with respect to Russia. That said, he's no longer in the job per se, and I worry that what he is saying now puts him in a much more politicized position.

I don't think there's any question the president has a right to pull security clearances. That authority is very clear. That said, I do worry about the fact that that, one, John is now in the political arena and, two, at the same time, I don't agree with the president pulling it. I think I am concerned about the whole issue of free speech.

And as long as John is not revealing classified information that he shouldn't, then I -- then I certainly think he has a right to speak. As far as the Russian investigation is concerned, I think Bob Mueller will get through that, complete it, and we should rely on him for what actually happened.

WALLACE: Admiral, I want to ask you a question a lot of people have asked me this week, which is why should a former official -- I know you have security clearance. Why should a former official, any former official, keep his security clearance when it's been years since he worked for the government?

MULLEN: It's -- for a long time, Chris, former officials have kept their security clearances to be able to advise on critical issues over time. These are individuals typically that have a lot of both wisdom and experience and our entities inside the government. There are contractors who support the government that ask for advice in certain areas.

I don't find it -- certainly, I have my clearance. It's not used that often and the dependence on sort of a deep understanding of what's actually going on is not called for that often. So, it's been going on for a long time. And I think for the most part, it's been very useful and I have found no one that's abused that.

WALLACE: You know, this isn't just about John Brennan, although most of the attention is being paid to him. You've seen the list of one current and eight former intelligence officials whose clearances the president is reviewing and there are reports that the president and the White House have already drafted documents to remove some or all of their clearances.

What's the danger here? Why are you and the 14 or so other former senior intelligence and military officials, why is everybody so upset about this?

MULLEN: Well, I mean, one of the things for somebody of my age, it immediately brings back the whole concept of the enemies list for -- you know, under President Nixon and even before that in the early '50s, the McCarthy era where the administration starts putting together lists of individuals that don't agree with them and that historically obviously has proven incredibly problematic for the country.

So, it's that -- you know, it's creating a list of political enemies, in particular those who have worked in a government and some very specifically who spent their life in government and I think hearing from Bill Webster and Bob Gates is a pretty strong signal that doing this would really be off-base.

WALLACE: The one current official, member of the Justice Department who security clearance is being considered is Bruce Ohr, who along with his wife had links to Chris Steele, the man who wrote the Russia dossier.

Here's what the president said on Friday about them.


TRUMP: I think that Bruce Ohr is a disgrace with his wife Nellie. For him to be in the Justice Department and to be doing what he did, that is a disgrace. That is disqualifying for Mueller.


WALLACE: How big a role do you think the Russian investigation plays in all of this and what if -- because it has been speculated -- what if the president were to pull the security clearances of Robert Mueller and the other members of his special counsel team?

MULLEN: Well, again, I think that the president has the authority to grant clearances and to pull them. I think pulling Bob Mueller's clearance would create, you know, a real political firestorm for him and I would hope that the president would just let Bob Mueller get through that investigation. There is -- in the case of Bruce Ohr, who I don't know, but there is a process that the president is concerned about what he did, to have the inspector general look at it and then there's an appropriate official that could take appropriate action based on the investigation.

WALLACE: Finally, President Trump wanted to hold a big military parade in Washington in November, as you well know, and it has now been canceled because of skyrocketing costs. As a former chairman of the joint chiefs, what do you think of the idea of this country holding a big celebratory parade for the military?

MULLEN: Well, I had a great privilege of serving for over four decades with the greatest young men and women that the country has. One of the things that our country has done is honor them in so many ways.

But I'm not one that thinks we need a military parade. And in fact, whatever the costs are, and there have been varied estimates, I think those costs, those funds can be put to better use. The military is the best military in the world. It's the best I've ever seen and support of them in terms of their pay and their benefits, et cetera, and what they are doing is what's really critical.

I don't think a parade does much for them in that regard.

WALLACE: Admiral Mullen, thank you, thanks for your time today. Always good to talk with you, sir.

MULLEN: Thanks, Chris.

WALLACE: Let's turn now to the chair of the Senate Homeland Security Committee, Republican Senator Ron Johnson.

Senator, I want to start with Sarah Huckabee Sanders reading the statement from President Trump this week explaining why he was revoking the security clearances of John Brennan and reviewing the clearances of nine others. Here she is.


SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: As the head of the executive branch and commander-in-chief, I have a unique constitutional responsibility to protect the nation's classified information, including by controlling access to it.


WALLACE: Question, sir, how does the president's action protect the nation's secrets? What evidence is there that any of these ten people have misused classified information?

SEN. RON JOHNSON (R-WI), SENATE HOMELAND SECURITY COMMITTEE: Good morning, Chris. I'm not sure there's evidence that anybody has misused it but I do believe that former CIA Director John Brennan abused his privilege. When you're an ex-CIA director and you are going on all the cable news shows and acting as partisan as he is and accusing the president of the United States of treasonous behavior, high crimes and misdemeanors, last time I checked, treason was punishable by death. You just crossed the line.

And there's a difference between being eligible for receiving classified information and gaining access to it. Let's face it. Nobody was going to be consulted with John Brennan. He didn't need access to any classified information, not during this administration.

So, I have no problem with the president pulled his clearance.

WALLACE: But as I just discussed with Admiral Mullen, we're not just talking about John Brennan. There are nine other people who were on the list that Sarah Huckabee Sanders read in the White House briefing room. Ten people in all, including Brennan, and the one thing they all have in common is to varying degrees they all have been critics of this president.

Here's what Senator Mark Warner, the top Democrat on the Senate Intelligence Committee, had to say about this.


SEN. MARK WARNER, D-VA, SENATE INTELLIGENCE COMMITTEE VICE CHAIR: These people were being singled out to have either their clearances revoked or in the process of being revoked, to me smacks of Nixonian type practices of trying to silence anyone who is willing to criticize this president.


WALLACE: And he compared it, as Admiral Mullen did, to an enemies list. If you want to clean this up, why not reformat and take away all the security clearances of all former officials? Why go after your political critics?

JOHNSON: Well, first of all, I don't want to see this become routine. I don't want to see it be politicized and the reason you don't want to pull security clearance is exactly what the Admiral Mullen was talking about, is being able to, you know, provide access to those individuals you want to consult with. So, the best way handling this is if you don't have confidence in former CIA officials or other government officials that you're not going to be consulting with, just don't give them access.

You know, you gain access when you have a need to know and if you're not going to be consulting, you just don't have the need to know. So, again, I don't want this to become routine. But, again, John Brennan really did cross a line.

He's one of the leaders of the resistance movement. I understand why President Trump is pretty frustrated. I've never seen in my life time a president not given any chance, no honeymoon, you know, massive protests of the weekend after the inauguration. I understand President Trump's frustration, but again, security clearance is really split between eligibility and access and the best way to handle all of this, if you don't have confidence with people, just don't give them access to the classified information.

WALLACE: Well, I was going to say, but doesn't mean that they would lose their security clearance. Just because you have security clearance --


WALLACE: -- doesn't mean you get access to the information.

And I want to follow-up specifically on that. You say you don't want to be routine. There's a report in The Washington Post this weekend that President Trump wants to and, in fact, the White House has already drawn up documents to revoke the security clearances of some of those nine other people on the list and is, in fact, being advised to do so at specific times when there's bad, negative news coming out to try to disrupt the news cycle.

If he goes after some of those other nine people on the list, are you going to support him or are you going to oppose that?

JOHNSON: I don't want to see him politicize this.

Listen, when you fire people from agencies their clearances are yanked. But when people retire honorably, I think let them keep their security clearances in place and if you don't want to consult them, just don't give them access to classified material. That's the best way of handling it. Just don't give them access to the material.

WALLACE: I just want to put up one more thing here and that is the backlash which really spread through the intelligence community and a lot of very senior officials.

Let's start here. More than a dozen senior intel officials wrote this. It has nothing to do with who should and should not hold security clearances and everything to do with an attempt to stifle free speech.

Some 60 former CIA officers wrote this: The country will be weakened if there is a political litmus test applied before seasoned experts are allowed to share their views.

And retired Admiral William McRaven who led the special operations command that killed bin Laden wrote this: I would consider it an honor if you would revoke my security clearance as well so I can add my name to the list of men and women who have spoken up against your presidency.

I'm sure, Senator, you agree an awful lot of people on this list -- they go back to the Reagan administration in the case of Bill Webster -- they bleed red, white, and blue.

JOHNSON: Absolutely. These are honorable Americans.

I don't agree that President Trump is stifling free speech. I don't want to see an enemies list, and again, I'll just repeat the west bay to handle this in any administration, if you don't want to consult with anybody, you don't necessarily have to yank their security clearance, just don't give them access to the classified materials. It's pretty simple.

WALLACE: Senator Johnson, thank you. Thanks for joining us today. Always good to talk with you, sir.

JOHNSON: Have a great day.

WALLACE: Up next, what's behind President Trump's stripping the security clearances of his critics in the case against former Trump campaign chairman Paul Manafort? What will the jury decide? We'll bring in our Sunday group to break it all down, next.



JOHN BRENNAN, FORMER CIA DIRECTOR: They are turning a blind eye and making excuses for someone who doesn't deserve to be given this type of leash with the authorities of the office of the presidency.

DOANLD TRUMP, PRESIDENT OF THE UNITED STATES: Many people don't even know who he is and now, he has a bigger voice and that's OK with me because I like taking on voices like that. I've never respected him.


WALLACE: President Trump saying he's given John Brennan a bigger platform and Brennan using that platform to go after Republicans for failing to stand up to this president.

And it's time now for our Sunday group: Rich Lowry of National Review, Mo Elleithee of Georgetown University's Institute of Politics and Public Service, former Democratic Congresswoman Jane Harman, director of the Woodrow Wilson Center, and the co-host of "Benson and Harf" on Fox News Radio, Guy Benson.

Congresswoman Harman, let me start with you, because Brennan and some of those other former top intelligence officials are saying that this is an effort to shut them up, but doesn't the president make a good point there? Brennan has a bigger platform than ever. He was all over cable TV. He was in The New York Times.

Who was being shut up?

JANE HARMAN, D-CALI., FORMER U.S. CONGRESSWOMAN: Well, I'm no shrink but the speculation is that Trump likes a foil, and he's setting Trump up to be this foil, to demonize him.

WALLACE: Brennan.

HARMAN: And, frankly, I think that Brennan's Irish, as he calls it, maybe is not as effective as if he talks more quietly. But be that as it may, he has a right to free speech, and that letter that was discussed by 14 former senior CIA folks, plus the really compelling op-ed by Bill McRaven who was in charge of the takedown of Osama bin Laden. I don't know what political party he is, but he was honored by the Wilson Center for his public services and is a genuine American hero, says I think everything. You don't revoke security clearances when there's no violation of classified material.

I personally have one, by the way, because I'm a member of the Defense Policy Board and --


WALLACE: I'm not sure, you shouldn't tell the president that.

HARMAN: I'm telling you that on a fair and balanced show.

WALLACE: I understand. He may be watching.

HARMAN: Well --

WALLACE: All right. There goes your security clearance.

Rich, what do you think of the president moving against Brennan and according to reports apparently soon moving against at least some of these other nine officials? He seemed to link a lot of this to the Russia investigation, telling The Wall Street Journal, here it is: I call it the rigged witch hunt. It is a sham and these people, the ten people we're talking about here, led it. So I think it's something that had to be done.

Your reaction?

RICH LOWRY, NATIONAL REVIEW: Well, first of all, we're talking about mostly symbolism here, right? I mean, no one -- the reason why former officials have the security clearances is in theory current officials can consult with them, but no Trump official is going to consult with John Brennan over anything.

WALLACE: But let me just pick up on that because there was a world prior to January of 2017 where they did consult and people were brought back in and the idea was you might want somebody who's an expert on Russia or the Middle East or whatever to be able to help you.

LOWRY: The way Brennan has conducted himself forecloses any opportunity to cooperate with this administration and I do think he crossed a line. It's just a really bad idea to have someone who was wielding some of the most sensitive powers in the United States government immediately upon leaving his office reveal himself to be the most hackish political actor, who is making wild and outrageous charges.

Now, if Trump is just going to go through and pick through this list arbitrarily without any process, without any clear standard, I do think it's a bad idea. It seems petty, and it will, even though he has broad powers in this area, will invite some sort of First Amendment challenge.

WALLACE: I want to turn to another big story this week, and that's the trial of former top Trump campaign chairman Paul Manafort, the first prosecution by the special counsel. The jury right now -- not right now because it's the weekend -- but starting on Monday will do its third day of deliberation on the 18 counts of tax and bank fraud.

Here's what President Trump said about the trial on Friday.


TRUMP: I think it's a very sad day for our country. He worked for me for a very short period of time. But you know what? He happens to be a very good person. And I think it's very sad what they've done to Paul Manafort.


WALLACE: Mo, I am old enough to remember when we used to think it was shocking when a president weighed in on a pending case, let alone a case for the jury is in deliberations. What do you think of the president's comments and how important is this Manafort case and the verdict that comes down for the special counsel investigation going forward?

MO ELLEITHEE, GEORGETOWN INSTITUTE OF POLITICS & PUBLIC SERVICE: Well, I think it's remarkable that the president said what he said. I think it was inappropriate, you know? But that can be said about half the things he says these days.

But you're right. There was a time when presidents didn't weigh in in the middle of a jury deliberation. And --

WALLACE: Or if they did, they got hammered. I remember Richard Nixon in the middle of the Charles Manson case, Barack Obama about Trayvon Martin.

ELLEITHEE: Yes, it was inappropriate in those cases and this was inappropriate.

Look, I think if there is a guilty verdict, I think that is going to create a sense of momentum behind the Mueller investigation. I don't think there's any question about that.

WALLACE: But what if there isn't?

ELLEITHEE: But if there isn't, then I think there's going to be further pressure from the president, his allies on Mueller to wrap this up and to just cut the cord. Now, we don't know what Mueller is looking at, we don't know everything that he's got. We know there's 32 at least people who have been indicted or pled guilty so far. So, this is just the first thread in what I think is an intricate sort of --

WALLACE: But you have to agree, he brought the case because he thought it was his best case. If he goes down -- and again, we don't know what the jury is going to decide, it would be very damaging.

ELLEITHEE: We don't know what the jury will decide nor do we know exactly what else he's got in his quiver of arrows. I think most people kind of assume that Manafort was his best foot forward but we don't know everything else that he has.

WALLACE: All right. Speaking of what we don't know or didn't know until this morning about the special counsel investigation, there's a puzzling story, Guy, in The New York Times that it turns out that Don McGahn, the president's counsel, has done 30 hours of interviews with the special counsel, with the special counsel Robert Mueller with the consent of President Trump. According to the story, McGahn was so surprised that President Trump said, no, you can go talk in three interviews, 30 hours, that he and his lawyer worried was the president trying to set him up to take the fall for President Trump?

What do you make of this?

GUY BENSON, CO-HOST, "BENSON & HARF": I mean, it was an astonishing story in a number of ways and that last piece goes to potentially a culture of paranoia inside the White House, but for people who are looking --


BENSON: -- at the headline, or the lead and saying, oh my gosh, this must be terrible for President Trump, there are a few concrete details in the story that I think actually are not totally vindicating but at least interesting. For example, according to the time story, McGahn told investigators, quote, that he never saw Mr. Trump go beyond his legal authorities, and also the very notion that the president said, yes, please, go, speak to Mueller with no restrictions. That did not sound to me like a president who believes that he has deep secrets to hide or that he's done something wrong.

If he's -- at least his initial position was to send the chief White House lawyer to talk to Mueller in an unrestricted way with his permission -- I mean, to me that is a fascinating nugget that does color our understanding of how the president views his culpability or lack thereof on the matter.

ELLEITHEE: Or that the president -- how the president views the White House counsel, right? I mean, the White House counsel is not the president's personal lawyer. The White House counsel is the lawyer for the White House.

WALLACE: But he could have claimed (ph) executive privilege.

ELLEITHEE: He could have claimed executive privilege, but there's also some nuggets in that story about how the president thought that McGahn would go out there and get his back in these interviews, which is I think I misreading of --

WALLACE: I just want -- a final word from you, Rich, on all of this because the president has been on the Twitter tear today about this and he saying that The New York Times, it's a fake story and that they are implying that somehow McGahn turned into John Dean in the Watergate case, who was a rat, and in fact, this was all done with the cooperation and consent of the president and it shows that he has nothing to hide.

LOWRY: Yes, clearly, they could have stopped him if they wanted to. I just think it's malpractice even if you are in full cooperation mode not to try to limit this interview to some extent just to protect the prerogatives of the presidency. But what Guy hit on, if it's true that McGahn was worried that the president was going to throw him under the bus, so he thought he had to go and do the fulsome interviews possible, that speaks to a deep dysfunction at the very heart of the White House.

HARMAN: It could be Rudy Giuliani who moved in here and doesn't want McGahn around anymore. That could be the motivation.

WALLACE: It's a little late for that.


WALLACE: He's already done the 30 hours of interview.

HARMAN: Well, he's done the 30 hours, but if he's removed now, he presumably can't do whatever it is that he's doing. I mean, there's too much intrigue. I worked in the Carter White House, which was a lot quieter.


WALLACE: Those were -- those were different times.

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

Up next, the Trump economy has kicked into high gear, but will it last? White House Budget Director Mick Mulvaney joins us next.


WALLACE: Coming up, the White House says the Trump economic strategy is working.


KUDLOW: We have a president who, in my words, is telling folks to take a whip at the ball and they're doing it.


WALLACE: We'll discuss the economy and a possible government shutdown with White House Budget Director Mick Mulvaney, next.


WALLACE: The economy has been a bright spot for President Trump, highlighted by strong growth and low unemployment. But trade wars and a possible government shutdown loom on the horizon.

Joining us now, White House Budget Director Mick Mulvaney.

Director Mulvaney, let's start with the economy, where there are clearly some great numbers. I want to put them up on the screen.

GDP growth in the second quarter, 4.1 percent. Overall unemployment, 3.9 percent. The jobless numbers for blacks, Hispanics and young people are the lowest in decades.

Here's what White House Economic Adviser Larry Kudlow told the cabinet this week.


LARRY KUDLOW, WHITE HOUSE ECONOMIC ADVISER: We are crushing it. And people say this is not sustainable. It's one quarter blip. It's just nonsense.


WALLACE: But, Director Mulvaney, there are other economists who say that we're on a sugar high based on tax cuts and big government spending that won't last.

I want to put up the projection from the non-partisan Congressional Budget Office, recent projection. It growth of 3.1 percent this year, 2.4 percent in 2019 and back down to 1.7 percent in 2020.

Are they wrong?

MICK MULVANEY, WHITE HOUSE BUDGET DIRECTOR: Yes, we -- we think that they are. Keep in mind, all of the folks who are now saying it's -- it's just a short-term sugar high, it's just a blip, it's not sustainable, including the CBO, are the same people who said it was impossible to get to 3 percent in the first place. They have a vested interest in seeing us fail.

One of my favorite lines came, I think, from Paul Krugman who said that -- about the time we rolled out our first budget, which introduced this concept of 3 percent growth, sustainable 3 percent growth, he said you could make him complete dictator of the country and he couldn't get you there. So there's a lot of folks who are interested in seeing us fail because we are proving that if you regulate (INAUDIBLE), you let people keep more of their own money, that the American economy can grow and that that growth is sustainable.

WALLACE: The White House talks, you talk, other top officials, the president, about all the jobs that have been created. But I want to look at the record because I -- I found out and -- a surprising statistic this week, 3.4 million jobs have been added during the first 19 months of the Trump administration, but 3.7 million jobs were added during the last 19 months of the Obama administration. More jobs. So, in fact, there hasn't been a spike in jobs created under this president.

MULVANEY: Right. Keep in mind that when you're coming back from a recession, it's actually easier to do that. It's easier to do what President Obama had done. The criticism we had -- so many of us had, including myself of President Obama, was that he wasn't adding enough jobs. That -- that -- those numbers that you saw coming off of a recession were way below historical American averages. You look at how quickly the economy came back after the recession under the Reagan administration, that the Obama recovery lagged behind all of our historical (INAUDIBLE). So --

WALLACE: But -- but wait a minute, sir. The -- the -- the recession was in 2008. We're talking about 2015 and '16. Eight -- seven, eight years into the Obama presidency versus the first 19 months of the Trump presidency.

MULVANEY: True, but when you come out of a deep recession, as we did in the 1980s, and we did again in the 2000s, you should see dramatically increased growth and increased job creation, which you've seen here with our administration is we're able to started at a fairly high level and continue that growth level. Most folks would expect it to sort of tail off at this point. But we're not. We're actually growing faster. We're adding jobs.

You've -- you've -- you've mentioned a lot of the statistics. My favorite statistic is that for the first time in the history of the country we have more job openings then we have people who are there to fill them. So we've been able to do this at a time that most folks again thought it was not possible to do.

But to get back to your original point about whether or not it's sustainable, and the reason we do think it's sustainable is we're changing sort of the infrastructure of the economy. The things we've done on the deregulatory agenda, the things we've done on taxes are not a sugar high. It's not a one-time sort of pop to the system. It's fundamentally changing the way we create wealth in the country. We do think it's sustainable in the long term. In fact, I think we're already starting to see some folks project that we're going to have maybe again at least 3 percent, maybe 4 percent growth again this quarter. So as you see -- you're seeing it start to build that momentum.

WALLACE: All right, one possible roadblock out there, one big issue for the next few weeks is the possibility the president has threatened a possible shutdown of the government on September 30th if he doesn't get full funding for the wall and doesn't get a number of other major immigration reforms.

Does he have to get all of that by the end of the fiscal year, September 30th, or is he willing to put this confrontation off until after the midterm election?

MULVANEY: A couple different things. I'm always fascinated with the media, the fascination with this narrative about a shutdown. We're supposedly going to have a shutdown just about every six months according to the media. We haven't had one yet, except for the one --

WALLACE: Well, no, wait, wait, wait, wait, I'm not going to let you put this on the media.

President Trump has been talking about a shutdown lots.


WALLACE: This is not generated by us. It's generated by the White House.

MULVANEY: That's fair. It's just, I'm always fascinated with the folks always want to talk about a shutdown, but the only shutdown we've had since I've been in the Trump administration was actually caused by Senate Democrats.

But come back to your -- to you question, which is, what does the president have to have? I think this is the president's position on this. And we've communicated -- I was in the Oval Office when he communicated this to the leaders in the House and the Senate. It's like, look, we're spending way too much money. Everybody knows it. We had to give the Democrats a bunch of money in order to get the national defense funding that we needed during that last omnibus.

What the president's saying is, one, no more omnibuses. He's not going to do that anymore. And, number two, I don't think he should spend all of this money because we don't need to. But if you do, I'd like to have my priorities funded. That's a reasonable position for the president to take.

WALLACE: I -- I'm asking a specific question.

MULVANEY: So, again, you and I know, I don't --

WALLACE: I'm asking a specific question, though, sir, and that is, does -- is --


WALLACE: Is the drop dead time for that September 30th or is it going to push this off until after the midterms?

MULVANEY: Oh -- and it's a fair question to ask, but as I've told you before in the show, I don't negotiate with you. We negotiate mostly with Senate Democrats.

So, no, we're going to continue to go through the process. The House and the Senate actually spend money under our system, as you know. They've actually done a pretty good job so far. I think the Senate has passed nine of their 12 spending bills. I think the House may have passed almost all of theirs as well. So they're making progress. They're ahead of their schedule from where they were in previous years. So I think all signs are good that we're going to actually get some spending bills passed before the end of the -- the end of the fiscal year.

WALLACE: OK. I want to get in two more subjects and we're running out of time.

The president announced Friday that he is canceling the big military parade in Washington in November because of skyrocketing cost. He tweeted this. The local politicians who run Washington, D.C., poorly, know a windfall when they see it. When asked to give us a price for holding a great celebratory military parade, they wanted a number so ridiculously high that I canceled it. Never let someone hold you up.

The implication there, Director Mulvaney, was that somehow D.C. officials were trying to gouge the federal government. But D.C. Mayor Muriel Bowser came back, she said the fact is, although the president has been talking about this since February, that your office, OMB, never came to them until this last Tuesday to talk about this, that they said it's going to cost the city $20 million and it was the military that said it's going to cost them $50 million and that placing the blame on -- on the city is just wrong.

MULVANEY: A couple different things on that.

First of all, if the parade had been canceled purely for fiscal reasons, I imagine it would have been in the room when that decision was made, and I wasn't. So my guess is there were other contributing factors.

But come back to the relationship between the city and the president.

I mean I like the mayor. She seems like a nice lady. But, face it, this is a city that voted probably, I don't know, 70, 80 percent against the president. So to think that maybe the city council of Washington, D.C., is not trying to help the president accomplish what he wants to accomplish shouldn't be news to anybody.

The $20 million that you've just mentioned to me is a number that I find -- that's a number -- let's put it this way, I'm not familiar with. The numbers that I saw from the city were much higher than that.

WALLACE: All right. I'm going to move on to my final subject, and that is a story in The New York Times this weekend that the Trump administration will propose new regulations this week that will leave it up to individual states to decide how to regulate and even whether to regulate power plants fueled by coal. Isn't this a national problem that needs a national standard, not state-by-state solutions?

MULVANEY: Chris, I don't mean to dodge your question, but I believe that -- that matter is being considered right now at OMB and our internal rules from administration to administration is that we do not comment on anything that's being overseen by the Office of Information of Regulatory Affairs. I apologize. I didn't know you were going to ask that question. But I don't think I can speak to that and I do apologize.

WALLACE: Well, let me just say, the president supposedly is going to announce this on Tuesday. So it sounds like it's been decided.

MULVANEY: Again, you -- I can't speak to that.

WALLACE: Director Mulvaney, thank you. Thanks for joining us today. Thank you for speaking to all the things you could.

And we'll stay on top of all of these developments, sir. Please come back.

MULVANEY: Thanks, Chris.

WALLACE: When we come back, New York's Andrew Cuomo says America was never that great. Our Sunday panel returns to discuss how this may affect his prospects for running against President Trump in 2020.



DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I do want to say that I was your guest at Bastille Day and it was one of the greatest parades I've ever seen. It was two hours on the button and it was really very mighty.


WALLACE: President Trump telling French President Macron he liked the Bastille Day Parade so much he wanted to hold a big military celebration here in the U.S. A project that has now been shelved, at least for this year.

And we're back now with the panel.

So, Guy, no big parade down the streets of Washington this November to mark the 100th anniversary of the end of World War I.

Is that good or bad?

GUY BENSON, TOWNHALL.COM: I don't think it's either. You know, I -- I like the president's instinct here. He's like, you know, Bastille Day, that's a very cool event. Let's honor our military. I think that's a good impulse.

If you look at the price tag attached to it. You look at a lot of people in the military at the upper echelons of it saying this isn't a terrific idea. I think the American Legion weighing in at the end of this decision-making process and saying, maybe we can use that money and help veterans get health care, that seems like a pretty sensible counterpoint to all of this.

So it has been postponed indefinitely and I'd be perhaps a little bit surprised if we ever see it during the Trump years.

WALLACE: But as somebody who likes a parade, along with the president, I will ask you this, Congresswoman Harman, some people, I think it's fair to say mostly on the left, are saying, we don't hold military parades in this country. They do it in France, Bastille Day, every year and they do it every year without breaking the bank. So why -- what's wrong with holding a parade?

JANE HARMAN, FORMER U.S. CONGRESSWOMAN (D-CA): Well, with great pride I participated in the parades in my district on patriotic holidays. And I also was responsible for the law that allows us to fly the POW flag on patriotic holidays. Very proud of that.

But I -- but in this case, right now, I'm glad he pulled it. We could use the money better elsewhere. And there's a lot to celebrate in this country, but I think we -- we could and should do it in a more varied way.

WALLACE: All right, I'm going to turn to another story, certainly more interesting. The story of New York Governor Andrew Cuomo, who decided this week it was a good thing to say this.


ANDREW CUOMO (D), NEW YORK GOVERNOR: We're not going to make America great again. It was never that great. We have not reached greatness. We will reach greatness when every American is fully engaged.


WALLACE: Rich, how damaging for Cuomo, who's running for re-election this November, and one hears, at least considering, keeping the options open for running for president against Donald Trump in 2020?

RICH LOWRY, NATIONAL REVIEW: Well, it was a ghastly and contemptible comment and it will haunt him for years and speaks to a temptation on the left. You look at surveys. Liberals self-identify as less patriotic than conservatives. They say they're less proud of the country. And that's because elements of the left, they have a cosmopolitan view of the world or they're focused, as in those Cuomo comments, on the sins of the country or they're -- they love the country more than the ideal rather than a lived reality. And this is -- if -- if they run on anything like this message against Trump in 2020, they're throwing away a huge opportunity to appeal to the middle of the country.

WALLACE: All right, let me -- let me -- let me just put up because the president, not surprisingly, jumped on this. Let me put up the tweet that he sent. And you can tell he has a history with Andrew Cuomo.

He jumped on this with this tweet. Can you believe this is the governor of the highest taxed state in the U.S.? Andrew Cuomo having a total meltdown. And then let's put up the next quote, the tweet from Cuomo, who tried to dig himself out of this on Friday afternoon. The expression I used the other day was inartful, so I want to be very clear, of course America is great and of course America has always been great. No one questions that.

Moe, did Cuomo dig himself out of the hole? Some people are comparing it to Hillary Clinton calling some Trump voters deplorables.

MO ELLEITHEE, GEORGETOWN INSTITUTE OF POLITICS AND PUBLIC SERVICE: Well, first, having the president weigh in on this, the guy put the phrase American carnage in his inaugural address, so I'm not sure he is the best arbiter of this.

But having said that, this was a boneheaded comment by Governor Cuomo. There is no question. I understand the point he was trying to make at the end, right, that there are still too many people out there who are feeling left behind. That is not a unique perspective. That is the perspective that President Trump ran on, that there are too many people who are being left behind.

But the way -- but the way you do that is by leveraging -- pulling them out is by -- by leveraging American greatness. We are the greatest country in the world. For a person -- this is not going to impact his gubernatorial race. I don't think it's going to impact his re-election. But if there is any chance that he is going to think about running for president, this is going to haunt him. I agree with Rich, this is going to haunt him for years. You cannot -- you cannot go out there and say America is not a great country.

WALLACE: Mo, let me -- let me suggest one reason, which has to do with his gubernatorial race, why Andrew Cuomo might have done this. I'm speculating here. He is running in a primary in New York right now against Cynthia Nixon, the former actress and a self-proclaimed socialist who is very much running against Cuomo from the left. Do you think that this may have been Cuomo, who is leading in the polls by 20 or 30 points, but somehow maybe feeling pressure to show, I'm good with the left too. I'm --

ELLEITHEE: But the left doesn't believe this. The left does not believe that America is not great.

Look, I am on -- I am on the left.

HARMAN: Right, I --

WALLACE: Wait a second.

ELLEITHEE: I am on the left. Please don't tell me that I don't believe America is great.

BENSON: I didn't tell you that.

ELLEITHEE: Right. People --

WALLACE: All right, go ahead -- go ahead, Guy.

BENSON: I think that there are elements of the hard left who do believe that the founding of this country is fundamentally problematic and he was, in my view, pandering to that element of the left. Of course the entire left doesn't believe it. You're criticizing him rightly. But there are folks -- you -- you see them all the time and the hard element of the party, and the left generally, who do not believe this is a great country.

WALLACE: All right, Congresswoman Harman?

HARMAN: I think -- I so strongly disagree with that. I'm -- I'm a centrist Democrat. So I'm not on the left either and I was opposed by people on the left. We're all patriots. And demonizing any section of the electorate is a huge mistake. And he's 33 points ahead of Cynthia Nixon in the last poll, so I don't know why he would think he has to pander in any way to the left.

But I'd just like to make one other comment.

I think it was totally boneheaded. I agree with all of you. He was trying to contrast his language with the Trump statement, make America great again, and I think he needs to keep apologizing for this. And I think he will pay for it in the primary to some extent. And I think --

WALLACE: Well, would you agree -- would you agree that there are some elements on the left will do believe that the country wasn't that great and are -- when they see the country, they think of all the things in terms of race, in terms of gender, in terms of participation.


WALLACE: And instead of thinking of the accomplishments, it's mostly about grievances?

HARMAN: And I think there are some elements on the right that see the same thing. The white supremacist, for example, think it was a huge mistake, I don't, to include not just the African-Americans, but women among voters in America. So I think there are estranged parts of our electorate on both ends and a lot of them are in the middle of the country.

LOWRY: But it's more than just estranged part of the Democratic Party. You see brewing among -- in the Democratic Party, among the base of the Democratic Party, what will be the most radical and stinging and broad-based indictment of America that we've seen in the modern era. As fundamentally racist with a broken constitutional system that needs to be overturned. That -- that is coming. You see it coming.

HARMAN: I disagree.

ELLEITHEE: And there was some applause. There was some applause for what he said in the room.

HARMAN: Yes, well --

WALLACE: There were also some gasps, I have to say.


WALLACE: All right, we're going to have to leave it there. Thank you, panel. See you next Sunday. We've got lots of time to talk about this. Maybe three years.

Up next, our "Power Player of the Week." How one man's hobby led to a discovery 100 million years in the making.


WALLACE: Dinosaurs, space flight, a time machine. This story has it all. Is it this summer's blockbuster movie? No. As we told you back in February, it's our "Power Player of the Week."


RAY STANFORD, ARMATURE PALEONTOLOGIST: It was almost unbelievable. I couldn't sleep for two nights. It's like you've walked into the twilight zone and you -- you can't believe what you've seen.

WALLACE (voice over): Ray Stanford is an 80-year-old amateur paleontologist.

STANFORD: Well, that's interesting.

WALLACE: And he's talking about what he saw in the summer of 2012 after having lunch with his wife Sheila who worked at the Goddard Space Flight Center.

STANFORD: From my car, about 90 feet away, I spotted a smooth, light brown rock sticking out. And it looked like the kind of material that we sometimes find tracks in.

WALLACE: When he says tracks, Stanford is talking about dinosaur tracks.

STANFORD: Much to my surprise, the nicest, nodosaur track that I've ever seen anywhere, I think. Then it dawned on me, this is Goddard Space Flight Center. They're looking out into space millions of years ago, I'm looking down at the earth 110 million years ago. And I thought, wow, this is a wonderful paradox. I want to write some poetry.

WALLACE: Stanford's excitement is understandable because he's been hunting dinosaur fossils and tracks for the last quarter century. And he's made hundreds of finds.

STANFORD: Yes, this is a mammal footprint from 110, 112 million years ago.

WALLACE: One of them is in the Smithsonian.

STANFORD: It was the first hatchling nodosaur, an armored dinosaur, that had never been found in the whole world.

WALLACE: But there was a problem with his latest discovery. The Gotthard Center was putting up a new building there, so they excavated the 4 tons stone and made a fiberglass cast of it, which Stanford got to study in his basement. And that's when the excitement really started.

STANFORD: Well, this was the nodosaur track, the first find with the baby walking right -- right across it.

WALLACE (on camera): So this is the big dinosaur and this is a baby?

STANFORD: That's the baby of the same species.

WALLACE (voice over): But along what appears to have been a prehistoric floodplain, there were more than 70 tracks of eight different species.

STANFORD: Mammal tracks here, some scratching around over there, mammal tracks here. You had theropods flesh eating small -- flesh eating dinosaurs walking across here.

WALLACE (on camera): So the theropods are here tracking the mammals?

STANFORD: That -- well it certainly would appear because they're walking so slowly.

WALLACE: How do you know that they're walking slowly?

STANFORD: Because they're so close together.

WALLACE: They're creeping?

STANFORD: Yes. And we've -- we've -- we've done a calculation. They're moving less than a half-mile-per-hour.

WALLACE (voice over): That's what Stanford says was so exciting. Fossils show how these animals died, but tracks showed how they lived.

STANFORD: I was looking into a time machine and could see these big flying reptiles landing and the little theropods sneaking around, looking down at these little mammals digging in. And maybe that wouldn't affect most people that way, but it sure affected me that way.

WALLACE: Stanford's find was announced in January. He calls it a snapshot created before more animals had a chance to cover the tracks.

STANFORD: I suspect that a flood came after this had had a chance to dry out just a little bit. A flood came and covered it and preserved it.

WALLACE (on camera): So Washington really was a swamp?

STANFORD: Oh, indeed. It's been a swamp for over 110 million years.

WALLACE (voice over): Stanford will keep looking for signs of dinosaurs. But he knows where this discovery ranks.

STANFORD: If anybody tells me I'm going to find anything more interesting and important than this, I'll tell them they're probably crazy. It's absolutely like hitting the jackpot. Not monetary wise, but in the wonderful satisfaction of contributing something the world of scientists and paleontology has never seen before. That, to me, makes my 80 years' worth living.


WALLACE: Ray Stanford refuses to sell any of his finds. Instead, he donates them to be studied by scientists and share with the public.

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


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