This is a rush transcript from "Fox News Sunday," October 1, 2017. This copy may not be in its final form and may be updated.


President Trump faces a growing backlash over the response to the devastation in Puerto Rico


MAYOR CARMEN YULIN CRUZ, SAN JUAN, PUERTO RICO: I am done being polite. I am done being politically correct. I am mad as hell.


The governor of Puerto Rico is so thankful to the great job that we’re doing.

WALLACE (voice-over): We’ll discuss the humanitarian crisis, recovery efforts and allegations the administration moved too slowly with FEMA Director Brock Long.

Then, President Trump pushes his tax plan promising a surge in economic growth.

TRUMP: This can be remembered as the moment we took control of our destiny and chose a future of American patriotism, prosperity and pride.

MICK MULVANEY, WHITE HOUSE BUDGET DIRECTOR: We are reaching across the aisle to see if there’s folks who are reasonable, who want to talk about what’s good for the actual American economy and American families.

WALLACE: We’ll ask White House Budget Director Mick Mulvaney whether getting tax reform passed will be any easier than repeal and replace.

Plus --

ROY MOORE, R-ALABAMA SENATORIAL CANDIDATE: I’ve never prayed to win this campaign. I’ve only prayed that justice will be done.

WALLACE: Roy Moore’s stunning victory in Alabama’s Republican Senate primary. We’ll ask our Sunday panel whether the GOP is headed for a civil war in 2018.

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


WALLACE: And hello again from Fox News in Washington.

President Trump travels to Puerto Rico Tuesday to see the devastation from Hurricane Maria first hand, and it could get awkward, because this weekend, the president picked fights with officials there over recovery efforts. Since the storm hit 11 days ago, much of the island has been without power or communications and critical infrastructure. San Juan’s mayor says people are dying because of the slow federal response. But the president accused the mayor and other local officials of poor leadership.

In a moment, we’ll discuss relief efforts with FEMA Administrator Brock Long.

But, first, let's bring in Mike Tobin with the situation on the ground in Puerto Rico.


MIKE TOBIN, FOX NEWS CORRESPONDENT (voice-over): Wheels down, San Juan. This DC8 operated by the Samaritan’s Purse Foundation just navigated the traffic bringing help to Puerto Rico.

UNIDENTIFIED MALE: It’s very, very busy. There’s a lot of relief flights coming in.

TOBIN: The flight carries a 36 tons of aid, power generators, water filtration kits, plastic tarps, and hygiene kits.

Relative to the government, Samaritan’s Purse is small. They can use their own transportation and work around the bottleneck that has left thousands of containers of aid stranded at the seaport, unable to reach the people who need it.

UNIDENTIFIED MALE: We aren't able to cover the whole island so we work to serve those who might have fallen through the cracks that FEMA can't cover.

TOBIN: Eighty-six-year-old Gladys Legaratore (ph) is one of those people. With no roof overhead, soaked insulation on the floor, she has no ability to even start cleaning up.

She says, everything is destroyed and I don't have a house. I’m going to wait and see if someone will help me.

(on camera): The metal roofing here is pretty similar to the construction of a mobile home and it just didn't stand a chance when that hurricane moved so slowly and so powerfully over Puerto Rico. And the sad thing is, this is not unique, this scene is repeated over and over again, through the neighborhoods here in Puerto Rico, creating tremendous need.

(voice-over): Only 5 percent of power has been restored. The Army Corps of Engineers is trying to lower expectations that the lights will come back on soon.

(on camera): Two hours outside of San Juan is the Guajataca Dam, weakened by the hurricane, stressed by continued rain. Last night, Governor Ricardo Rossello gave an order to evacuate communities below that dam, fearing it could fail.

Chris, back to you.


WALLACE: Mike Tobin reporting from San Juan -- Mike, thanks for that.

Joining us now live from FEMA headquarters here in Washington is the head of that agency, Brock Long.

Mr. Long, I want to start with the disconnect between what the Trump administration is saying and what the situation on the ground in Puerto Rico seems to be. Here is the acting head of the Department of Homeland Security on Thursday and the mayor of San Juan on Friday.


ELAINE DUKE, ACTING DHS SECRETARY: It is really a good new story in terms of our ability to reach people in the limited number of deaths that have taken place in such a devastating hurricane.

MAYOR CARMEN YULIN CRUZ, SAN JUAN, PUERTO RICO: Dammit, this is not a good news story. This is a people are dying story. This is a life or death story.


WALLACE: With millions of people clearly still struggling as we just saw in Mike Tobin's report, is it a mistake for folks in Washington to say this is a good news story?

BROCK LONG, FEMA ADMINISTRATOR: You know what? I’m just going to say that I think the secretary's words are being taken out of context. Look, we’re not going to be satisfied until the situation is stabilized. And the bottom line is, is this is the most logistically challenging event the United States has ever seen and we have been moving and pushing as fast as the situation allows.

Every day, we make progress. Every day, we have some setbacks. For example, you don't just bring the commodities in. You have to be able to pump them down the roadway systems that we have been working desperately to get them open. We've opened up 11 major highways.

But this morning, there are over 3,200 different problems reported with the roadway systems, from bridges missing to roads being blocked by floodwaters, to roads just disappeared because of landslides. So, we’re having to work for all that.

Not only do we have enough commodities, and a massive amount of commodities coming in every day, we’ve also established 11 regional distribution hubs to where we have great communication with 77 mayors within Puerto Rico where we are operating with the governor and those mayors in unified command to be able to coordinate the dissemination of these commodities. And it's not only the commodities that we are having to push forward. We’re also having to work with the private sector to get them back up to speed, because this response defends far more than what FEMA can do.

And the bottom line is, is that we’re trying to get the private sector in an up and running. Over half the grocery stores, according to Governor Rossello, and retailers are beginning to operate now at a baseline level. Over 300 pharmacies are beginning to operate over a baseline level. These are signs that routine is going back and that progress is being made.

Do we have a long way to go? Absolutely we have a long way to go.

WALLACE: I want to pick up on something you just said because I have not heard this before. You say this is the most logistically challenging relief effort ever in the history of this country?

LONG: Yes, absolutely. I mean, I think people have to take a step back and understand what's happened over the course of basically the last 40 days. We -- you know, FEMA has led the response of the federal government on behalf of governors from Texas to Florida to North Carolina to South Carolina to Georgia to the Virgin Islands, and the bottom line is, is that we’ve registered almost 3 million people for disaster assistance and most likely many of those were uninsured and we've been able to get, you know, well over a billion dollars in their hands to support.

It’s not only a logistically complex event, just getting to the islands and being able to support an island that was hit not just by one major hurricane but two within basically a 10-day period. The bottom line is, is you can only shove so much into an island pre-storm because if you pushing too much stuff, the storm may damage it. So, we had to pull back, not only equipment and staff, because we don't want to soak up vital shelter space, we want to continue to push forward after the fact and move more equipment in.

The ports were damaged. The airports were damaged. This morning, you know, somebody was saying, we’re not seeing flights in San Juan. We are not using San Juan near to the degree we were. Our goal was to open up incident support bases and other airports and we have three of those operating so that commercial flights can come back up in San Juan.

So, the problem and the frustration is, is the way information is being misrepresented across the board. I don't have time for that. What we have time for is being laser-focused to help Puerto Ricans. And that’s what we’re doing.

WALLACE: I do want -- I do want to pick up a little bit on the question of misinformation, because some people would say it's not surprising that you are having trouble, but that isn't being reflected here in Washington. And so, you have this disconnect between statements, claims of great news in Washington, and as you say, and understandable, but nevertheless a really tough situation continuing 11 days after in Puerto Rico.

LONG: Right (ph).

WALLACE: If I may, I just want to pick up on this and the president in particular. Between September 19th, the day before Hurricane Maria hit, and last Sunday, he sent two tweets on Puerto Rico and 12 on sports and the controversy over the national anthem. And yesterday, after Mayor Cruz complained about the response, the president tweets this: The mayor of San Juan, who was very complimentary only a few days ago, has now been told by Democrats that you must be nasty to Trump. Such poor leadership ability by the mayor of San Juan and others in Puerto Rico who are not able to get their workers to help.

I know you don't have much patience for this politics, but frankly, it was the president who started talking politics.

LONG: Right. So, what I don't have patients or is the fact that what we are trying to do and what we have successfully done is we have established a joint field office within San Juan and you should go there. You should go see that operation, where we are having daily conversations with all the mayors, we’re working with the governor and his leadership, to be able to create unified objectives.

If mayors decide not to be a part of that, then the response is fragmented. And the bottom line is, is that we’re pushing everybody --

WALLACE: Let me ask you directly --


LONG: -- in there.

WALLACE: I was going to say, is Mayor Cruz not participating in the FEMA effort?

LONG: You know, there was a good article that aired this morning in The Washington Examiner, and Mayor Otero out of Guaynabo, if I’m not pronouncing that correct, is basically saying, look, there’s been excellent communication with not only the governor but also FEMA and the way that we are trying to tackle this.

You know, we can choose to look at what the mayor spouts off or what other people spout off, but we can also choose to see what's actually being done. And that's what I would ask.

WALLACE: FEMA got high marks for how you responded to the hurricanes in Texas and in Florida. Is part of the reason that you had problems -- I understand the logistics, an island is different than just shipping stuff across a state -- but is part of the reason that you've had more problems and more pushback in terms -- and lower marks, in terms of Puerto Rico, because the first responders, and we all learned this after Katrina, the first responders are not FEMA, it’s state, in this case, commonwealth and local officials, that they weren't as prepared as they were in Texas and Florida?

LONG: Well, Puerto Rico and the Virgin Islands both, it’s different than what goes on in the Continental United States. I mean, in some cases, you know, the infrastructure was incredibly fragile. That's not an excuse but the reality is that the infrastructural was incredibly fragile. And then you also had to understand that both of these territories were hit by two major hurricanes, two, not just once. So, a lot of the infrastructure was damaged, you know, by Irma, and then Maria comes in and finishes it off completely.

So, by the time you go back in after Maria, a lot of the local responders, a lot of the local officials, a lot of the citizens have disaster fatigue. The capacity is diminished. Not from a disrespecting standpoint of local leadership but from a truly -- they've taken a big hit. And the bottom line is, is that a majority of the response, an overwhelming majority of the responses on the federal shoulders.

So, you know, we are trying to push in and push forward. You know, we have nearly 13,000 people working in both islands. You know, both island territories right now trying to do everything they can to push forward and push forward. And that capacity grows every day, but there are, you know, more and more success stories coming out where we, you know, provide a few the other day to over 700 different gas stations. We know that there’s 1,100 gas stations roughly on the island. But, you know, we've gotten 700 of them back up and running.

And if you notice, there are cars driving around in some cases. There were 16 deaths. Sixteen deaths confirmed right now. My US&R teams have been all over Puerto Rico, even into some of the roughest areas. That's not to say that number won't climb, but in Katrina there were over 1,800 deaths.

So, I think we have to put a lot of the stuff -- we have to filter out the noise and we have to continue to push forward. My guys back here have been busting their rear ends day in and day out for almost 40 days now to help Americans. And it’s been incredibly complex. There's not a person in this country that would change jobs with me right now.

WALLACE: I got about 30 seconds left. Can you give us a projection to the folks that are down there in Puerto Rico, a week from now, two weeks from now, how much improved will things be?

LONG: Weeks from now? Well, you know, the key is, it's a couple of factors. Right now, you know, many days ago, we mission-assigned the Army Corps of Engineers to do one very important job, emergency power but also begin rebuilding the grid. So, getting power back is obviously the most important thing.

In conjunction with that, we’re trying to work with the private sector to get telecommunications backup. The governor's reporting this morning that about a third of the telecommunications has been put back up after two major hurricanes and all the equipment that was damaged, telecommunications is about a third, you know, back up and running.

So, we have to get the power up. We have to get communications backup. And then the bottom line is, that that takes a long time because it was almost a total loss when it comes to the power grid. And so, it’s going to be multiple -- multiple months before power is restored to many of these areas and that's just a reality.

That's what we were saying before the storm hit and I think people have to remember that. Going into the storm, we were -- we were setting expectations by saying this is going to be a nightmare for Puerto Rico.

WALLACE: Mr. Long, thank you. Thanks for your time. And in addition to relief efforts, you also got to deal with the politics here in Washington. Thank you very much, sir.

LONG: Thank you.

WALLACE: Up next, we’ll bring in our Sunday group to discuss the situation in Puerto Rico, and also the resignation of HHS Secretary Tom Price over his use of chartered flights on the taxpayers’ dime.



DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We’ve saved a lot of lives. We've done a really good job. And now, we’re bringing the people for distribution.

MAYOR CARMEN YULIN CRUZ, SAN JUAN, PUERTO RICO: We are dying and you are killing us with the inefficiency and the bureaucracy.


WALLACE: President Trump and the mayor of San Juan getting drastically different pictures of the situation in Puerto Rico.

And it’s time now for our Sunday group, Josh Holmes, Mitch McConnell's former chief of staff and the GOP strategist, Charles Lane of The Washington Post, former Democratic Congresswoman Donna Edwards, and the head of Heritage Action for America, Michael Needham.

Well, Congresswoman Edwards, you could hear the frustration and exhaustion in Brock Long's voice. He makes some good points. It's obviously a lot tougher providing all these resources, to an island, and also an island where a lot of the roads on the island have been wiped out.

How fair do you think that the criticism of the administration's response is and what do you make of President Trump's tweets over the weekend?

DONNA EDWARDS, D-MD., FORMER U.S. CONGRESSWOMAN: Well, first of all, I think we have to realize that Puerto Rico was already in a very fragile economic state because -- and its services, and I think that combined -- I understand Brock Long's point, but I also understand the mayor of San Juan and I think anytime you have a crisis like this, which is a real humanitarian crisis, and infrastructure crisis, that you would expect that there would be different vantage points through which people would see that.

And unfortunately, I think for the president, he continues to punch down. I mean, there’s not -- I mean, you understand the mayor's frustration. There's no reason for him to have tweeted like that and also implying that the people of Puerto Rico are like lazy and not paying attention to their own needs.

I just -- I don't understand the president punching down. I think that he should seek higher ground and he could do that by continuing to just lend their support and just get the job done on the ground.

WALLACE: Michael?

MICHAEL NEEDHAM, CEO, HERITAGE ACTION FOR AMERICA: Yes. I mean, look, we know that this is a president, when he gets punched, he's going to punch back. And whether he should have in this instance or not is a completely separate subject from the response to this hurricane.

The reality is, as the congressman just said, this is a small island. It was hit by a hurricane and then hit directly by a major hurricane. Communications were put down. Even knowing what needs to get in was challenging for FEMA.

I think they did a fantastic job. They are doing a fantastic job. And in the light of a tragedy, and one that will need to come together and figure out how to deliver both compassion and relief to the people of Puerto Rico, that's where the focus should be on. And there have been -- not necessarily from the mayor of San Juan -- but there had been a lot of opportunistic attacks on what has been an incredibly difficult and tragic situation. But I think you saw from the FEMA administrator, somebody who is doing the absolute best taken.

WALLACE: I certainly agree with that. But you think it’s a mistake? And you haven't heard this from the FEMA administrator, but from the president and from the acting head of DHS, for them to say things are great, we’re doing well, when obviously it isn't. Is that just a mistake and obviously adding to a frustration and Puerto Rico?

NEEDHAM: Sure. It's obviously adding to frustration. I think similarly, the president and the head of DHS, and I think you just saw the FEMA administrator, are frustrated and opportunistic attacks when they are doing absolutely everything they can.

There was one person who said recently, why didn't they preposition support and relief efforts in Puerto Rico? Well, where you reposition things in an island that’s about to get hit by a major hurricane?

And so, I think there is a frustration from people who are making attacks on them that aren't grounded in the reality of an incredibly difficult logistical situation. And that's causing all sorts of people to say things that they probably shouldn't say.

WALLACE: I want to return to another story, and that’s the resignation late on Friday of HHS Secretary Tom Price after revelations that he spent close to $1 million on either private planes or government chartered planes and dozens of flights in just a few months he's been HHS secretary.

President Trump was not happy. Here he is.


TRUMP: I felt very bad night because Secretary Price is a good man, but we are looking into it, and we are looking into very strongly.


WALLACE: And Price is not alone. EPA Administrator Scott Pruitt, Treasury Secretary Steven Mnuchin, Interior Secretary Ryan Zinke and V.A. Secretary David Shulkin have all flown on private or government planes at taxpayer expense.

Chuck, how big a deal is this and how about the fact, as Republicans point out, that various Democrats when they were in positions of power did the same thing?

CHARLES LANE, THE WASHINGTON POST: How big a deal as it? I think if we didn't have this big story about Puerto Rico and the NFL and all the other things, this would have been an even bigger story because it does go right to that perception of the Trump administration, to some extent created by the president himself and his heavy expenditures on Secret Service protection and travel back and forth to New Jersey, that they are a little loose with the taxpayers’ dime when it comes to their own personal comfort.

I think it's very significant that the president axed Tom Price with such speed, because it shows that there was -- in a sense, there was some price, pardon the pun, to be paid for what happened on health care. If Secretary Price had really, you know, performed a lot more dynamically and done a more impressive job in trying to get through that health care bill, he might have had more of a purchase on the president's loyalty, which we know is a fleeting thing to begin with.

But this is also -- this firing is also about the fact that the president was upset about what happened on health care. That's also part of the story and part of the reason it went down so quickly.

WALLACE: Josh, isn't this part of what voters hate about D.C., the idea that public officials are living large on the taxpayers dime, and I want you to pick up on -- or say whether or not this wasn't just about the Price, but also the fact that he failed or at least didn’t -- wasn't seen as being a big player in trying to push ObamaCare repeal and replace across the finish line?

JOSH HOLMES, FOUNDER, CAVALRY: Yes. No, I think there's a good role in government these days, which is if it feels good, don't do it. In this case, flying across the country, and Gulfstreams and everything certainly feels good and it certainly qualifies as something you don't do. You know, look, we’re in a very populist time. And I think the American people, when you think about traveling of government officials, what they think of is, you know, I’m not going to be happy until they are sitting middle seat next to the bathroom.

And the reality is, is that Secretary Price took this way too far, $1 million in private flights, none of which seem to justify that kind of expense from my perspective. But I think Charles is right. I think this has a lot more to do with his overall standing within the administration and how they felt like the repeal and replace effort was managed from a department point of view.

WALLACE: I’m going to -- Michael, in the little bit of time we have left -- go post-Price because with the failure of repeal and replace, one of the things that the administration hopes to do is either through regulations or executive orders, undo some of ObamaCare. One, say what you will about Tom Price, he knew the system pretty well. Is it going to be harder to do that with Price out? And how hard is it going to be to get a new HHS secretary with the battle lines already formed on health care?

NEEDHAM: Yes. I mean, Tom Price obviously knew the health care system, as many people who know the health care system. I don't think they’ll have trouble getting somebody through.

The core problem is that most of ObamaCare is statutory, regulatory authority given to Washington, taken from the American people, taken from the states and given to Washington. The Republican Party spent eight years saying it wants to repeal that regulatory authority. What we’ve learned over the last nine months is that’s actually not true. There's probably 15 or 20 out of 52 senators who want to repeal ObamaCare.

The challenge President Trump is going to have is finding a way, once we move past tax reform, to get the Republican Party to congeal around a plan that follows through on promises that they would make to repeal ObamaCare, which frankly the vast majority of elected Republicans don't actually believe in.

WALLACE: Really quickly, one quick answer. You got a candidate for HHS secretary?

NEEDHAM: You know, I don't. I think you could look like at somebody like Ron Johnson in the Senate who obviously knows health care very well. There’s many people on the outside, but I don't have just one name.

WALLACE: All right. It’s early. It’s such a weekend. Man, that’s the way Washington works, right? He’s out, who’s going to replace him?

Thanks, panel. We’ll see you a little later.

When we come back, seeking a win after the failure to repeal ObamaCare. President Trump rolls off the Republican plan to cut taxes. We’ll discuss it with White House Budget Director Mick Mulvaney. That's next.


WALLACE: Coming up, President Trump's HHS Secretary Tom Price resigns under fire for taking costly taxpayer-funded private flights.


TRUMP: I was disappointed because I didn't like it, cosmetically or otherwise.


WALLACE: We’ll ask the White House budget director about new guidelines for government, next on "Fox News Sunday."


WALLACE: President Trump unveiled the Republican plan for overhauling the tax code this week, calling it a once in a generation opportunity. But there are already serious questions about who benefits from the plan and how much it will add to the deficit. We want to discuss that now with the director of the Office of Management and Budget Mick Mulvaney.

Before we get to tax reform, Director Mulvaney, I want to ask you about the Tom Price travel controversy because you sent out this memo on Friday to all executive agency heads saying that they now need prior approval from the White House chief of staff to flight on the government or private plane and you added this, every penny we spend comes from the taxpayer. Just because something is legal doesn't make it right.

Question, why did you feel the need to write that?

MICK MULVANEY, WHITE HOUSE BUDGET DIRECTOR: I thought it was the clearest way to articulate that the president believes and one of the reasons -- or at least the reason behind why the president was so upset about what happened with Mr. Price.

By the way, I got that memo from the lawyers and it was fairly sanitary, it was very legalese, and those were the two sentences that I -- that I added just to make it explicitly clear that this is the policy. Just because it's legal doesn't mean it's right. My guess is, and there's ongoing investigations in a couple of different administration -- agencies right now, we'll find out that all of this travel was entirely legal. The question is whether or not it's right. And I think that's the lens that the president wants to look at this travel through, not just whether or not it follows the law.

WALLACE: Well, as I discussed with the panel, Tom Price isn't alone. I want to put these pictures up on the screen. Again, at least three other members of the cabinet, as well as the head of the EPA, have all taken either private and/or government flights. They said they needed to get where they were going in a hurry and they got approval from their agencies.

Are they in trouble?

MULVANEY: Let's be clear, there are absolutely times where this type of travel is appropriate. I think you could look at some of the places specifically that Secretary Zinke went. There is no commercial service there. In fact, there's no commercial service anywhere near where he was going. And I think that was the case in many of the occasions.

The question is just this, is that are we doing the best that we can to be good stewards of the taxpayer dollars? Are these particular choices, the private charters, the military flights, are those the absolute last options that we go through or get to? And I think that's -- that's what you'll see. It was unfortunate what happened with Dr. Price. But the president is telling everybody, it's not going to happen again.

WALLACE: Well, let me ask you a direct question, because you're now at a conference in Canada, where we're talking to your firm. Please tell me that you flew commercial.

MULVANEY: Not only did I fly commercial, I paid for it myself. It's not a conference. I'm up here visiting a college with my son.

WALLACE: Oh, OK. I had that wrong. So that's all -- all self-funded?

MULVANEY: Yes, sir.


Let's turn to the tax reform plan that the president and Republicans in Congress rolled out this week. The president told Americans who benefits.


TRUMP: By eliminating the tax breaks and special interest loopholes that primarily benefit the wealthy, our framework ensures that the benefits of tax reform go to the middle class, not the highest earners.


WALLACE: But, Director Mulvaney, independent experts say what the president just said there isn't true. I want to put up this chart. The non-partisan Tax Policy Center did this analysis. It shows the middle fifth of households in America, those earning between $48,000 and $86,000 a year, they'll get an average tax cut of $660 next year. Meanwhile, the top 1 percent, people making more than $730,000 a year, will get an average tax cut of almost $130,000 next year.

Now, I understand that your -- that this isn't done yet, that they're only basing it on the plan as it exists at this point. But according to their analysis, that middle fifth gets 1.5 percent of the total benefit of the tax cut, while the top 1 percent gets 8.5 percent of the benefit. That doesn't seem fair.

MULVANEY: Sure. A couple of different things, and, obviously, I can't see the graph that you just put up, but I think that I have seen in previous to this. And what I think that particular organization did was, number one, they didn't do any dynamic scoring. If you go look at the -- the details of what they put out, they assumed no benefit to the overall economy, which is just absurd to think that there won't be any economic benefit to the overall --

WALLACE: But I'm not talking -- sir, I'm not talking about the economy, I'm talking about the benefit of the -- the benefit -- the tax cut they get.

MULVANEY: No, no, let me finish. I got it, but let me go through. You can't look at the tax cut on a family until you realized how -- how much better off they're going to be in a growing economy. But beyond that, they had to make assumptions because we didn't put any in the framework yet about where those particular tax rates kick in. They're -- there's nothing in the document yet about that. Not because we're hiding it, but because we're working with Congress to try and establish where the different rates kick in.

Keep in mind, there's four rates. There's zero percent rate, and we know that will go up to $24,000. After that it's 12, 25 and 35. But there's been absolutely no decisions made yet on where those -- those percentages kick in, in terms of the tax bracket. It's impossible to do what the National Tax Center just did. So my guess is, and I think that's the one that Jared Bernstein (ph) works for -- it's not surprising that, you know, a former chief economic for a Democrat vice president doesn't like a Republican tax plan. So I don't put very much weight on that particular (INAUDIBLE).

WALLACE: But this is a -- it's a non-partisan -- it's a non-partisan group, first of all, sir. And, secondly, I mean, you know, you can talk about, well, it's going to kick in at this level or that level. But if the middle income person is getting a $600 tax cut and the top 1 percent is getting $130,000 tax cut, I mean I thought the whole point was that the wealthy weren't going to get a tax cut at all.

MULVANEY: It was. And I'm laughing because I was on one of your -- I've been on a -- I've done a couple of these interviews this week, Chris, and I was on one of your sister networks and they were accusing the tax plan of not giving any tax cuts to the wealthy. In fact, they were accusing it of raising the taxes on the wealthy. And then I was on another network and they were accusing the tax plan of giving all of the benefit to the wealthy. So it sounds like the beauty is in the eye of the beholder at this point.

And the real details are this, is that we're looking at the middle class in terms of making sure they can pay less and -- and this doesn't get nearly enough attention -- it's easier for them to pay. Almost 90 percent of American families, not businesses but families, actually pay someone else to do their taxes. So there's another benefit we're trying to give to them.

The second thing we're trying to add to this is that lower corporate tax rates as we try and spur the economy. So that's where the president's attention is. The president's attention is on the middle class, making sure that's simple, fair and better. And then on the corporate tax rate, to try and get folks to invest in America again. His focus has not been on the impact on the top 1 percent.

WALLACE: All right, now let's get to the other issue you were discussing, and I -- I interrupted you and I -- forgive me for that, and that is the issue of cost because the Senate Republican budget plan calls for a tax cut that is going to cost the Treasury $1.5 trillion over the next ten years. And some outside experts say that the plan that was unveiled this week actually will add $2 trillion to the debt over the next ten years.

Now, back when you were in Congress, you were a deficit hawk. What happened, sir?

MULVANEY: Yes, I think that $2 trillion number is coming from that same organization that did not score this dynamically, didn't look at the potential for economic growth. But you're right, the --

WALLACE: That's coming from a bunch of different groups.

MULVANEY: It does, but let's talk about this. I've been very candid about this. We need to have new deficits because of that. We need to have the growth, Chris. If we simply look at this as being deficit-neutral, you're never going to get the type of tax reform and tax reductions that you need to get to sustain 3 percent economic growth. We really do believe that the tax code is what's holding back the American economy.

The reason we've been growing at 1.8 percent for the last eight, ten years, which is way below the historical average, is in large part because of our tax code. It is important to us to get the biggest, broadest tax reduction, tax cuts, tax reform that we can possibly get because it's the only way we get back to 3 percent growth. That's what's driving all of this, how do you get the American economy back on that historical growth rate of 3 percent and out of these doldrums of 1.8, 1.9 that we had of the previous administration?

WALLACE: I want to pick up on this because their -- some of your fellow colleagues in the Trump administration are not just saying that it's going to unleash massive growth, they are saying more than that. Here is Treasury Secretary Steve Mnuchin this week.


STEVEN MNUCHIN, TREASURY SECRETARY: That's $2 trillion of additional revenues. That's $10 trillion of economic activity. And not only will this tax plan pay for itself, but it will pay down debt.

WALLACE: But the fact is, there is no evidence the tax cuts pay for themselves. The Reagan tax cut, back in 1981, added -- added, $208 billion to the deficit over four years. The Bush tax cuts in 2001 and 2003 added $1.5 trillion to the debt over ten years.

Mr. Mulvaney, you can argue whether or not tax cuts spur economic growth. I think that's a perfectly legitimate argument. There is no evidence that they pay for themselves.

MULVANEY: Well, look -- just look at the facts. And you can go back, Chris, and make an assumption and you can run some numbers. You have to make a couple of assumptions about growth rates and so forth. But if we had 3 percent growth, which is what we're trying to get to, what we're at, by the way, right now, we're trying to maintain that 3 percent growth. If we had been at 3 percent growth over the last ten years, the budget very nearly would be balanced this year. That's how big a difference it makes when you grow the American economy that additional 1 percent over ten years.

Over the next ten years, if we can grow at 3 percent instead of the 1.8 percent that the non-partisan Congressional Budget Office says that we're going to grow and has been the average under the previous administration, if we can get to that 3 percent, it is $2 trillion to $2.5 trillion worth of more government revenues. It's 12 million additional jobs. And those are 12 million jobs paying into Medicare, 12 million jobs paying into Social Security. Growth really is what's driving all of this and growth is what our focus is, which is why we're willing to accept increased short-term deficits in exchange for that long-term payoff.

WALLACE: But, I mean, that's the point I want to make, and you seem to be agreeing with me, growth is a great thing and there's no question tax cuts can produce growth, although it isn't just tax cuts. In fact, in the '90s, Bill Clinton had a tax increase and we had the biggest growth we've had in any decade in recent history.

So, I mean, there are a lot of other factors, I think you would agree, other than government fiscal policy. But the -- the chairman of the Council of economic Advisors for Ronald Reagan said that the benefit, the payback from a tax cut is $0.35 on the dollar. So, in other words, he's saying, if you cut taxes a dollar, you add $0.65 to the debt.

MULVANEY: Yes, I'm sorry, I'm not -- not familiar with that -- with that math. In fact, I'm sitting here trying to think of how to respond to it.

But, in any event, there are a lot of other fiscal policies that we have put in place already, Chris, and I don't want to draw attention away from the regulatory reform that we've done.

And, by the way, why -- why do I talk about these things. We're at 3 percent already. I think I was on your show a couple months ago and you had criticisms from some of the same groups saying there was no way that we would get to 3 percent ever during this administration, and here we are already in the first eight months.

Growth works. What we're doing in the administration to spur growth in terms of regulatory form work. And what we're working on right now is to make sure that those tax cuts add to that. We do believe that sustained 3 percent economic growth is possible and that that is the way you can balance the budget long-term. Without 3 percent growth, Chris, you'll never balance the budget at 1.8 percent growth again.

And as the budget director, you asked me an opening question, what happened to me? Why am I -- why am I now interested in deficits? The only way you balance the budget in this country long-term is through sustained economic growth. And that's what everything we are doing in this administration is aimed at that end goal.

WALLACE: Director Mulvaney, thank you. Thanks for sharing part of your weekend with us, especially on a college trip with your son. We'll track the progress of the tax package in congress. Thanks again, sir.

MULVANEY: Thanks, Chris.

WALLACE: Up next, Roy Moore's victory over a candidate backed by President Trump in Alabama's Senate primary sets off talk of a Republican civil war.



JUDGE ROY MOORE, R-ALA., SENATE CANDIDATE: I think the people of Alabama know me and they understand what I stand for. And I certainly support President Trump's agenda. And that, yes, I'm an outsider, not part of the establishment.


WALLACE: Judge Roy Moore saying he supports the president, but not Republican congressional leaders after beating their candidate, Luther Strange, in this week's closely watched Alabama Senate primary.

And we're back now with the panel.

Well, Josh, we mentioned earlier that you used to be the chief of staff to Mitch McConnell, the Senate Republican leader. And most observers read Moore's victory as a slap at McConnell and the establishment, the party leaders in Congress, and a sign that the populist movement that propelled Donald Trump to victory isn't done. Are they right?

JOSH HOLMES, FOUNDER, CAVALRY: Well, I think it's a lot more complicated than that. And, you know, this whole effort's being led by Mr. Bannon, who, of course, was at the right hand of the president for the better part of the last eight months and didn't accomplish a whole lot. And so, you know, eight months later, after he's fired, it's got to be somebody else's fault.

And so what he's done is his first target is go down to Alabama and target somebody who has a 100 percent voting record with President Trump's agenda in -- in Luther Strange and replace him with somebody, quite frankly, who's already said that he wouldn't support Graham-Cassidy, which is the repeal and replace measure supported by this president and would have some trouble voting for a budget that ultimately you need to -- to vote for the tax reform package. So it's unclear what they're trying to accomplish here. It certainly isn't in support of making America great again as far as the president sees it. It seems like it's more like --

WALLACE: But would you agree -- because Mitch McConnell was one of the targets of the Moore campaign and the whole idea of the Senate leadership. I mean Mitch McConnell was seen as a detriment to the party and an advantage to Roy Moore.

HOLMES: Well, it's going to come as a great surprise to Roy Moore and everybody else that the one person who's working as hard as he can possibly work to accomplish the Trump agenda is Mitch McConnell. And there's no separation between the president and McConnell on that. If they -- if they're going to focus on something, honestly, on a legislative side, we've had this never Trump caucus of legislators, four or five of them, that each and every time we're talking about either repeal and replace or now maybe tax reform. They're -- they're, frankly, not quite on board yet. And if we're -- if we're talking about somebody to target, you know, I think that's the right spot.

WALLACE: Michael, you're -- I think it's fair to say -- from the more insurgent wing of the party. At Moore's victory party on Tuesday night, the aforementioned Steve Bannon said they're not done yet. Here he is.


STEVE BANNON, FORMER WHITE HOUSE CHIEF OF STAFF: The question was called today in the state of Alabama, who's sovereign, the people or the money? And Alabama answer today, the people.


WALLACE: How much trouble are Mitch McConnell and his colleagues in?

MICHAEL NEEDHAM, CEO, HERITAGE ACTION FOR AMERICA: Well, I think Josh's answer right there shows you everything that's wrong with the Republican Party right now. There is always, from the Republican establishment, somebody else who is to blame for the problems that this party has. Right now it's Steve Bannon. Four years ago briefly it was me.

At the core of the problem right here is that the Republican Party primarily is speaking for its donor class right now. Its donor class thinks that economic opportunity is going great in America. The donor class thinks that social issues and issues of American identity are a problem. The donor class is very good at navigating Washington, D.C.

That's not what Republican voters are feeling right now. Republican voters are economically anxious in a world of globalization. Republican donors think that Washington, D.C. is deeply corrupted and accessible to them. Republican voters think that most of our nation's elites think of themselves more as citizens of the world than citizens of this great country.

We are not going to be healthy as a party until the Republican establishment, the leadership of the Republican Party, starts to understand that there are real and legitimate concerns which keep popping up and costing Eric Cantor their seat, make Donald Trump the president of the United States, get Roy Moore elected and Alabama.

Similarly, my side of the aisle, we have to understand institutions matter. We need to have a functioning Republican Party. We need to have functioning senatorial committees and campaign committees within that party. But until the Republican establishment says that the voters of this party have the right to be told the truth and have a seat at the table, and we come together and work together, we're going to keep having this. And Josh seems to fundamentally misunderstand that.

HOLMES: Well, if you're talking with a truth here, who's talking about the truth, right? Is it -- is it Mitch McConnell who's the one who's preventing repeal and replace from getting across the finish line?

NEEDHAM: Mitch McConnell isn't. Do you think that there's 52 Republican senators who authentically want to repeal ObamaCare?

HOLMES: I don't. And I think we've demonstrated that. But the point is, if you listen to Roy Moore --

NEEDHAM: So when those people ran -- when those people ran and said that they wanted to repeal ObamaCare, where they lying?

HOLMES: Oh, listen, I think we have a lot -- we could do a whole show on what we think about Republicans not holding up their -- their end of the promise.

NEEDHAM: I'm up for it.

HOLMES: But the point is, what Roy Moore and Steve Bannon are talking about is a reality that simply doesn't exist. And that reality is that somehow Mitch McConnell is the one that is shortcoming the Trump agenda and the overall agenda of the Republican Party.

WALLACE: Let me -- let me ask you, Michael, is Mitch McConnell part of the solution or part of the problem?

NEEDHAM: I think that Mitch McConnell's done a very good job on judges. I think that this year, on ObamaCare, Mitch McConnell does deserve credit. I don't think Mitch McConnell is a percent responsible for everything. Mitch McConnell's a leader of the party. And the buck stops with leadership.

And when you look at this party, it is a party that does not understand that the economic opportunity that their donors feel is not shared by Americans across the country who have anxiety on their wages and see all of their prices going up. Mitch McConnell does not understand that just because K-street lobbyists know how to navigate Washington, D.C., doesn't mean that the American people feel that they have access to the halls of power. And so Mitch McConnell is part of the leadership of this party that is grotesquely out of touch with its base.

And if want -- if you don't believe that, look at the 2012 Republican autopsy, which was heroically wrong on everything about what the party needs to -- to get right. Look at the fact that 16 out of 17 people who ran for president were going to be, you know, serious candidates, and Donald Trump won because he's in touch with what voters of this party believe.

WALLACE: Congressman Edwards, how much are you enjoying this fight inside the Republican Party?

DONNA EDWARDS, FORMER U.S CONGRESSWOMAN, D-MD.: Wow. It's like the dismembering of the Republican Party. And, I mean, I'm not enjoying -- I mean it's good television.

WALLACE: Yes, you're enjoying it.

EDWARDS: I am very -- very --

WALLACE: Come on, be honest.

EDWARDS: But I'll -- I'll tell you something. I mean I looked at the race in Alabama, but I also started looking at down ballot races in like a handful of states where Democrats won by overwhelming margins. This does not bode well and this right here does not bode well at all for the Republican Party going into 2018.

WALLACE: Well, let -- let me -- let me bring in Chuck, because if you get now -- because Bannon is basically saying, we're going to go into some of these other states and we're going to impose the incumbent with somebody more of a conservative hard-liner. We saw that play out in 2010 and sometimes races that seemed winnable for Republicans ended up being unwinnable when they got someone who was too far to the right.

CHARLES LANE, THE WASHINGTON POST: Well, Steve Bannon loves to stage dramas and put himself in the center of it. And the current one I guess is this civil war in the Republican Party drama.

But let me just throw a little cold water on it in the following sense. This race in Alabama had a lot of very powerful local factors having to do with Luther Strange and his -- what was perceived to be sort of corrupt or insider --

WALLACE: Well, also his ties to Governor Bentley, who was (INAUDIBLE).

LANE: Exactly, that's what I'm talking about, his ties to Governor Bentley played a huge role in that race and really tied him down with a Republican electorate in Alabama. And I'm not sure that the Roy Moore formula necessarily translates in every other state.

I will say, though, that it is absolutely the case that there are a lot of Republican voters -- and this has been true for many years -- whose -- whose goal in the ballot box seem to be, send a message to my party. And they're going to keep on doing that. And there will be some surprises along the way. What it means for actual results in Washington, of course, is very unclear.

WALLACE: All right, we have to take a quick break here. But when we come back, as we get ready for some football, the nation is still divided over NFL protests during the national anthem. We'll get our Sunday group's take. That's next.



TRUMP: You cannot have people disrespecting our national anthem, our flag, our country, and that's what they're doing. And, in my opinion, the NFL has to change, or you know what's going to happen, their business is going to go to hell.


WALLACE: Well, as we get ready for another week of football, President Trump continuing to criticize the NFL, saying owners should fire players who kneel in protest during the national anthem.

And we're back now for some overtime with the panel.

Congresswoman Edwards, where is this controversy headed and as all the back-and-forth this week among the president, the players, the league, the owners, has it accomplished anything?

EDWARDS: Well, I just want to tell you, I want to get back to the center because when Colin Kaepernick took the need first, it was about drawing attention to racial injustice, to police brutality, to what was happening with black citizens around the country and it didn't have to do with dishonoring the flag, disrespecting the country. And I think there has to be room at the table for people to voice their feelings about the country and express themselves in whatever way they choose. It may not be the way that I choose, but it's the way that some do.

And the president actually should recognize that that's kind of the fundamental to the country, you know, our free expression. And, you know, and I want to bring us back home to where it started when Kaepernick first took his knee.

WALLACE: Let me pick up on that, Michael, because the president says that this whole controversy, at least his involvement in it, is not about race, it's about respect for the country, respect for the flag and the national anthem. But the protest, as Congresswoman Edwards pointed out, started out about racial injustice and police brutality and here was the comment this week from one leading athlete.


LEBRON JAMES, CLEVELAND CAVALIERS: The people run this country, not one individual, and damn sure not him.


WALLACE: Can you really separate this from race?

NEEDHAM: Look, I think that it's very tragic that our nation right now is coming apart on these types of civic issues. It's certainly something that the way President Trump has encased this issue has not helped our nation heal on it. It's torn it apart. Let's not pretend like Barack Obama didn't help tear our nation apart on some of these issues. There is nothing unifying in this nation about making catholic nuns buy birth control. There's nothing unifying when parents of goodwill are trying to have a conversation about balancing the rights of transgendered students versus legitimate fields of privacy and security. And Barack Obama goes from the Department of Education and imposes a progressive view of how those questions should be answered.

It is deeply concerning the way our nation is coming apart. We need a civic reawakening where we come together on all of these issues. It's probably not going to start with politics. It's going to start with each of us. But both parties and both of the past presidents have taken actions that have further brought us apart rather than brought us together.

WALLACE: I want -- we've got about a minute left and I want to, Josh, go to you first. And you've got 30 seconds. People keep saying to me, did the president just dropped off on this or was this a political strategy? How do you answer?

HOLMES: Well, I don't know if it's a strategy, but he certainly highlighted something that's of great concern to a lot of Americans and a lot of football fans, frankly. I think it's simultaneously extremely useful to be concerned about civic injustice, racial inequalities, but also respect the American flag and respect what it says to service members when you're kneeling during the national anthem. And I think that's what he was highlighting. Frankly, it looks like he's winning.

WALLACE: Chuck, 20 seconds.

LANE: Well, I don't want to say it's making the flag a political football, but it is. And that has only happened, in my memory, in the 1988 campaign to this degree, if even that wasn't as anguishing as this one.

WALLACE: All right, thank you panel for putting in some extra work. We'll see how the players on the crowds respond during the playing of the national anthem.

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

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