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This is a rush transcript from "The Story with Martha MacCallum," June 12, 2018. This copy may not be in its final form and may be updated.

MARTHA MACCALLUM, FOX NEWS CHANNEL HOST: Good evening, everybody, I'm Martha McCallum. And tonight, THE STORY unfolding is what happens now? Because as of last night, the status quo where North Korea is concerned is now over. The president spoke a short time ago with our first guest tonight, Senator Lindsey Graham. We will also ask Senator Graham tonight about the story that is bubbling at surrounding Deputy Attorney General Rod Rosenstein, and the threat to subpoena people on the House GOP Committee in a meeting that was described as chilling. So we're going to get to get that as well. First, the president tweeting this in midair about the big summit." Anyone can make war, but only the most courageous can make peace." The president making news on a lot of fronts today in particular with this surprise announcement about U.S.-South Korea joint military exercises on the Korean Peninsula.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We will be stopping the war games which will save us a tremendous amount of money unless and until we see that the future negotiation is not going along like it should, but we'll be saving a tremendous amount of money. Plus, I think it's very provocative.


MACCALLUM: That is a word that North Korea itself has used to describe those biannual military exercises that happen near their border. Critics say the cancellation which is not part of the actual written agreement between the two leaders was too big a concession. So, where does this story go now? General Jack Keane, Marc Thiessen, and Marie Harf, all on deck with their analysis tonight. But first, we go to Senator Graham, who did speak with the president just a short time ago. Senator Graham, always good to see you. Thanks for being here tonight.

SEN. LINDSEY GRAHAM, R—SOUTH CAROLINA: Thank you -- thank you.

MACCALLUM: What did you say to the president about how he did?

GRAHAM: Great job, I think it's a good first step. He felt good about it, he said he had a good meeting with Kim Jung-un. And what really struck me is that listen, this has got to come tune in we can't live with this kind of threat. He's got to give up his nuclear program. I want to make it a win-win. A war would be devastating, I don't want to go down that road. He felt pretty good about the initial meeting, we got a long way to go. But what struck me the most is how much the president appreciated how devastating a war would be, but it would be even more devastating to walk away from this nuclear threat. He's going to end it on his watch is what he told me.

MACCALLUM: Fascinating. This is Rand Paul, speaking out about something that you said about all this earlier. Watch this.


SEN. RAND PAUL, R—KENTUCKY: In the midst of a historic opening, President Trump actually having face-to-face conversations with the leader of North Korea. Lindsey Graham, trying to declare a war in the middle of that is -- I don't know, someone living in an alternative universe, but it's not really helpful in the middle of opening to actually talk about, "Oh yes, if we don't like this we're going to -- you know bomb them or declare war on them."


MACCALLUM: Are you trying to declare a war on North Korea, Senator?

GRAHAM: No, I'm actually trying to prevent one. Here's what I believe about North Korea. They wouldn't be talking to Trump unless they believed he was serious about using military force. President Trump has done more in 500 days to deal with North Korea than every president in the last 30 years. Here is what the choices are for North Korea. Column A is economic incentives, security guarantees, a good life for North Korea, and security for the regime. Column B is going to be the destruction of the regime if you don't give up your nuclear weapons program. President Trump wasn't kidding when he said he would use military force, it is the last option. Contrary to what Senator Paul says. The only way you're going to get North Korea to give up their nuclear weapons program is for them to believe they're better off without it than with it.


GRAHAM: And that comes down to Trump, convincing them that they can no longer go on the path they're going without a fight.

MACCALLUM: Yes, that's what I found fascinating last night. Because the one thing that we know for sure --


MACCALLUM: -- is that the status quo cannot stay.

GRAHAM: It is over.

MACCALLUM: And that that's what the North Korean dictator has figured out, no doubt, that's why he showed up to talk about this. Because he knows he's got pressures at home as well.


MACCALLUM: He's got this little small growing elite class which is no minor, but they are pushing back on him. And then, he's got this other choice that if he goes back to what he was doing before firing missiles across the ocean, testing nuclear missiles potentially, that we're going to start firing back at him.

GRAHAM: Can you imagine what would happen if Kim Jong-un to her fit and walked away and said, "You know, I'm done with Donald Trump and fired a missile over Japan." What do you think Donald Trump would do? Donald Trump would see that as a provocative act against the United States, and he would retaliate.


GRAHAM: What Senator Paul, doesn't understand is that you're cutting the legs out from President Trump. When you talk about, you're not really serious about the military option. I don't want it, it'd be devastating it's the last resort. But if North Korea doesn't believe that we're serious about the military option, you're never going to get a peaceful result.

MACCALLUM: All right. Do you hear Dennis Rodman? Because I know you want it.


GRAHAM: Yes. Now, this is the real expert, not me.

MACCALLUM: You know -- hold on, this is actually -- I want to play this.
This is James Clapper, praising Dennis Rodman. Watch this.

GRAHAM: You kidding me.


JAMES CLAPPER, FORMER UNITED STATES DIRECTOR OF NATIONAL INTELLIGENCE: I've long been an advocate of an involving Dennis Rodman. He is a unique person since he has a relationship with both Kim Jong-un and with Donald Trump.


MACCALLUM: Lindsey Graham.

GRAHAM: I'd rather have Trump in the room than Dennis Rodman. You know, I hope James Clapper understands that President Trump has brought this historic opportunity the about because he's been strong in the face of aggression. He wants to end this nuclear threat through peace, but if he asked to use force, he will. Dennis Rodman is not the key to a good outcome in North Korea. As Donald J Trump -- President Trump, you've done a good thing, you've done a good service to the country. Maybe to North Korea if they're smart enough to take this deal, I've got your back. Nobody wants a war, but I'm here to tell you, Mr. President, make sure he gives up his nuclear weapons before it's too late.

MACCALLUM: I got to ask you one more question before I let you go about Rod Rosenstein. And this story tonight that basically there are -- there was a shouting match that happened in one of these meetings.


MACCALLUM: And that he's threatened members of the House Intel Committee with subpoenaing them. You know, he said, "I want to see your e-mails, let me turn the subpoena game on you guys."

GRAHAM: OK. We have a duty to oversee the Department of Justice. And here is what I say to Mr. Rosenstein, "If you don't believe that the Department of Justice was off the rails. You clearly not looking at the same Department of Justice, I'm looking at. If you don't believe the FBI was in the tank for Clinton and hated Trump, you're not looking at the e- mails are there to be seen. So don't be upset because we're calling you out on having a Department of Justice as out of control." The House has a duty to oversee the Department Justice. So to the Senate, and we're not going to be threatened by the Department of Justice, we're going to provide professional oversight.

MACCALLUM: Yes, I'm told that was not just one instance that happens on a regular basis in terms of these shouting matches.

GRAHAM: Yes, yes. And just about had it with the Rosenstein approach here.

MACCALLUM: What kind of -- you know, what happens? Does -- I mean, where does this end?

GRAHAM: Just stay tuned.

MACCALLUM: Stay tuned. OK, we will. Senator Graham, thank you very much.
Always good to see you, sir.

GRAHAM: Thank you, thank you.

MACCALLUM: So, here now, retired Four-Star General Jack Keane, Fox News strategic analyst -- senior strategic analyst, and chairman of the Institute for the Study of war. General, good to see you. Your thoughts on what we witnessed last night between President Trump and Kim Jong-un.

GEN. JACK KEANE (RET.), FOX NEWS SENIOR STRATEGIC ANALYST: Well, I think everybody around the president to include himself, I think it's got the impression that Kim Jong-un has made a strategic policy change that he wants to move away as you defined it from the status quo as we know it. There's something fundamentally different to open up maybe peace and prosperity for his country. That remain -- we're in the beginning of that process to be sure, and we've got to get to the facts and the details of it. To me, Martha, the essence of it will come down to this, when I'd -- when our people put in front of them, we need to know where all of your nuclear facilities are located to include your fields -- your fuel sites, your research, and test centers, and your ballistic missiles.


KEANE: We believe unclassified ten to -- 10 to -- 10 to 20 nuclear weapons, 70-80 ballistic missiles. We know where most of that is but not where all of that is. When they put those identification and locations on the table. If they are lying to us, we will know that because we know where most of it is. And that will be very revealing to us. If they are really going to disclose, where everything is, that we're interested in the denuclearizing. That is fundamentally step one to moving towards verification of all of those systems that they identify. So, that step has yet to be taken, and when it does, it will be very revealing to everybody.

MACCALLUM: What did you make of the president saying, "We don't really need to do these exercises, the biannual exercises with South Korea, it's provocative," that was the word the president used and unnecessary. Is he right?

KEANE: Well I think he's -- this is likely came out in negotiation is my take on it. I don't think it was on the table going in. I think it's something maybe Kim Jong-un mentioned about it being provocative that we fly nuclear bombers up to the almost at a border of North Korea. And any senses that, that is an act of aggression in the sense despite the fact of all of his acts of aggression, and that his regime has done for years. So, here's what I think if you listen to what the president said, it's conditions-based. The major exercise that's upcoming is spring of 2019. Martha, we are going to know, by the end of this year if these guys are really serious about denuclearization. And starting up that exercise again, and starting up sanctions again, and started -- and beginning cyber offensive operations at North Korean regime, all of those are things that are on the table if they're not serious.


KEANE: So, I think the media is not facts but is overreacting to this. It-- in many senses that we made a major concession, we really haven't made any concession whatsoever. We've thrown them a bone so to speak, provocative it's probably a poor choice for the president to use because it's likely Kim Jong-un's term. The money involved in it is not significant.

MACCALLUM: All right, and as you say, that's a great point general that when you say that we're going to not -- you know, continue with these exercises, it gives you leverage. When you get around to that point next spring if things aren't going the way that you like. I want to play something interesting for you that the White House put out. This is the video that was put together by the administration to play for Kim Jong-un, and it's interesting to play this video with the fact in mind that Kim Jong-un's father was a big film buff, and very involved in the film industry such as it is in North Korea. And in making these kinds of trailers, so perhaps, that was the reason behind trying to reach him this way. Let's play a little bit of it.


ANNOUNCER: There comes a time when only a few are called upon to make a difference, but the question is, what difference will the few make? Be part of that world where the doors of opportunity are ready to be open. Investment from around the world where you can have medical breakthroughs, and abundance of resources, innovative technology, and new discoveries. What if? Can history be changed?


MACCALLUM: What do you think about that, General?

KEANE: I think that's fundamentally based on our intelligence, and our understanding of where Kim Jong-un's head is as best we can determine it educated in Switzerland, traveled around Europe has an understanding of the West. He's got 40 to 50 years in front of him in power. He wants something different for himself, for his family, for that country. The status quo we currently has which is tension and crisis, it's something he -- I think he wants to move away from. And that is why that video was produced.

MACCALLUM: Yes, it's an interesting carrot to dangle. General thank you very much. Great to see you as always. So a lot of comparisons tonight between President Trump's efforts in North Korea, and President Obama's with the Iran deal. This as the Iranian government just warned North Korea not to trust President Trump. Joining me now Marc Thiessen, American Enterprise Institute scholar, former chief speechwriter for President George W. Bush and a Fox News contributor. And Marie Hart, former CIA officer, former State Department spokesperson, and also of Fox News analyst. Good to see you both tonight.


MACCALLUM: Marie, you were involved -- and in the Obama administration during that deal. As you look at what happened last night compared to that, is that criticism fair in your mind?

MARIE HARF, FOX NEWS ANALYST: Well the process in North Korea that we've seen over the past 24 hours has really turned what we did on its head, right? They started in this administration with the leaders meeting. Not any of the substance being worked out, but with the leader meeting to try and get some momentum. We started at the bottom working through all this substance and worked our way up to Secretary Kerry and Foreign Minister Zarif, but what I think is instructive about the Iran. Example, Donald Trump pulled out of that deal because he claimed that the nuclear pieces of it, inspections, verification, monitoring, timeframes, that those were not strong enough. So, in effect, he has set a bar for himself. He has to cross that bar on every single one of those issues he talked about on the Iran deal if he's to get something done with North Korea. And those are pretty high bars, and we'll see if he can do that but he has set a standard for himself that is extremely high, particularly, in a country like North Korea that already has nuclear weapons.

MACCALLUM: Yes, it's a very interesting point because President Obama never ended up doing the sit-down. It went to the level of John Kerry and Foreign Minister Zarif, as Marie said, Marc. But you know, this is such a different kind of administration, such a different president. He really wanted to get in that room and size this man up.

THIESSEN: Well, first of all, I mean, President Obama wanted to meet with the President of Iran. The problem was the President of Iran didn't want to meet with him. They tried to set up a meeting and it never happened. But I agree with Marie, on her assessment that President Trump has set a high bar. I think he strengthened his position going into these negotiations by pulling out of the Iran deal because he's six -- he set an expectation for Kim Jong-un of what was unacceptable in a deal. So, now it's all you know we have a floor of what's -- where -- of what is acceptable going, and this deal. A lot of people who are criticizing where would the agreement so, and so, that we've -- there is no agreement, it's a communique. The two met -- two leaders met, they had a statement about what they discussed, and what they -- what they agreed on. That's not the final -- the final agreement. But Marie is 100 percent right that they get a President Trump. What was his critique of the of the Iran deal? There was weak verification, the sanction -- the money was front-loaded, planes of cash going to -- going to Iran.

MACCALLUM: And he didn't like that part at all.

THIESSEN: And the nuclear infrastructure was not dismantled. So, it's a terrible deal. President Trump -- if President Trump cut a deal like that, he'd lose his base very quickly, and I don't think he has any intention of cutting a deal like that.

MACCALLUM: Quick response Marie.

HARF: I think what's interesting is that President Trump is talking so much about providing economic relief to North Korea, that one of the criticisms he had of Iran is that we gave them sanctions relief.

MACCALLUM: I don't think he's talking about providing relief.

THIESSEN: Except for nothing.

MACCALLUM: I don't think he's talking about sending money. He's talking about opening them up to investment, talking about condos on the beach and all this stuff that they should be able to take advantage of.

HARF: Right. But that's what the Iran deal did. The Iran deal gave Iran back their own money to open up investments so I think it will be very interesting to watch --

MACCALLUM: Which they ended up funneling money to terrorism in Yemen and Syria. We will see if he can get a better deal in North Korea. The devil is in the details and there are no details in that communique that we saw last night.

THIESSEN: He's looking to do something bigger with this deal. He's looking to do something -- the Iran deal was freezer program in exchange for all this money. Trump wants to actually end the program in exchange for a change -- a change in the relationship with North Korea.

MACCALLUM: The Iranians are watching this whole thing very closely and now you will see as the President says because either it's going to work or it's not. It's going to be pretty clear. Thank you, guys. Great to see you tonight. So still ahead this evening, we are all -- where we all watching the same thing last night.


JEREMY BASH, FORMER CIA CHIEF OF STAFF: A summit is not an accomplishment for the American President, Brian, it is a major accomplishment for Kim Jong-un.


MACCALLUM: Plus Dems turned to Hollywood to help them message for 2020 and reach independent voters and conservative voters. President Trump's 2020 campaign manager Brad Parscale joins me on that and more next.


HILARY CLINTON, FORMER U.S. SECRETARY OF STATE: I inherited nothing from the Democratic Party.

UNIDENTIFIED MALE: What do you mean nothing?

CLINTON: I mean it was bankrupt, it was on the verge of insolvency, its data was mediocre to poor, non-existent, wrong.




CLINTON: Going to like Obama 3.0, you know, better targeting, better messaging, and the ability to both turn out our voters as we identified them and to communicate more broadly with voters.


MACCALLUM: Hillary Clinton saying that her data was a holdover from the Obama days in 2016and that the GOP outmaneuvered with what she called questionable tactics. So now Democrats are promising to get their data mining game in fighting shape. They are even turning to Hollywood stars, the executives trying to find out how they can message better. This was Robert De Niro's attempt at that at the Tony's.


ROBERT DE NIRO, ACTOR: I'm going to say one thing (BLEEP) Trump. It's no longer down with something (BLEEP).


MACCALLUM: Lovely right. Here now Brad Parscale, Campaign Manager of the Trump 2020 Campaign. He previously served as -- served as digital director of the Trump 2016 Presidential Campaign. Brad, good to see tonight.
Thanks for being here.


MACCALLUM: So you heard what Hillary Clinton is saying in that tape which was essentially that she said that their data was you know, not workable. It wasn't what it should have been and that the data that you guys were using was basically fake news and data mining that she thought was questionable.

PARSCALE: Yes, I mean, here's the thing is once Obama won, they became complacent a little bit. And so after that, they formed the OFA and when they did that they really kind of split up everything. And in doing so, they really got themselves behind. I mean significantly behind and the Republican National Committee got ahead.

MACCALLUM: And what about the charge that it was fake news and nefarious data mining.

PARSCALE: Well, I don't think it was fake news. I mean, I definitely think -- oh, fake news with data mining? I mean, look the Democrats were definitely behind us. I mean, we -- what we did is build with the Republican National Committee and build up a voter file that had accurate information that we could use and that information came from the party and it comes through surveys.

MACCALLUM: In terms of Hollywood, the Democratic National Committee Members of Congress are turning to Hollywood to help them with voter turnout and messaging. They have conference calls and work on their e-mail list. In one recent week meeting, a Midwestern Senator sought advice about how to discuss gun control with conservative leading voters in her state and -- according to multiple participants. So they're trying to talk to folks in Hollywood, directors in Hollywood, actors are also part of this group and say how can we reach these middle voters and get them to not vote for President Trump.

PARSCALE: Well, this is the thing. I think Hollywood elites are just behind, they're not connected to the American people. The American people are -- saw in Donald Trump someone that saw you know, what they're about. These are the guys that take showers sometimes after work, not just before work. And the Democrats and these liberal elites just -- they're just not connected. They're not connected to the American people. And what he's saying -- I just think America has moved on. Donald Trump and President Trump has connected with the people in a way that you know, just previously these other people haven't undone. And then these liberals and Democrats have tried to connect with Hollywood, they try to do these things and I they're just out of touch. And the problem is Donald Trump is communicating with people. He's making these things move forward, the tax cuts and all the other things he's done, he's making the average day Americans life and their you know, their personal economy, their personal security is getting better. I mean, look at what he just did with North Korea.

MACCALLUM: You know, it's so interesting because last night I had Garry McCarthy on who's running for Mayor in Chicago and he's a Democrat. He's running against Rahm Emanuel who is also a Democrat. And Garry McCarthy saying, look there are Democrats out there who are like me. And he is you know, is someone who really finds himself sort of more in the middle politically. But then you've got you know, Robert De Niro as we showed you the other night at the Tony's with the profanity-laced tirade against the President and then here's what he said today which was supposed to be some sort of apology. Watch.


NIRO: I just want to make a note of apology for the idiotic behavior of my President. That's a disgrace and I apologize to Justin Trudeau, to -- and the other people of the G7. It's disgusting.


MACCALLUM: Your thoughts.

PARSCALE: I mean, again these guys were just disconnected. I mean, Donald Trump is fighting for the American worker. Canada has raised 270 percent you know, tariffs on dairy, done things, people don't understand that these countries take advantage of us every day and Donald Trump's fighting for them. American trade is one of the most important things we have and we need to fight for our workers. We need -- our jobs have been moved overseas and President Trump is doing the things needed to fight against these things. He's standing up, he's standing strong and that's what the American voters voted for, was someone like President Trump who would stand up to them. And the Hollywood elites don't like it. They don't like President Trump's success. They don't like seeing what's happened in the last 510 days and they're trying to do anything they can to just make crazy comments, to just get this story off to something else. They don't want to hear -- they don't think -- they think they can shift the story away from the successes. And unfortunately, some of the other media outlets are doing that.

MACCALLUM: Brad, thank you very much. We have some breaking news. We're going to go but thanks for being here. Great to see you as always.

PARSCALE: Thank you.

MACCALLUM: Brad Parscale,2020 Campaign Manager for President Trump. And this Fox News Alert just crossing seconds ago. Lawyers for former FBI Deputy Director Andrew McCabe have sued the Justice Department and the FBI. Ed Henry is going to be joining us with this breaking news in a moment.
And more breaking news out of Capitol Hill tonight as conservative House members are three signatures away from bringing immigration to a vote despite basically going behind Paul Ryan's back to do it. One of the key players leading that fight Representative Jeff Denham is up next.


REP. PAUL RYAN, R--WISCONSIN: Hopefully we can find a path that is consistent with the four pillars that the President laid out and avoids a pointless discharge petition.



MACCALLUM: Breaking tonight on Capitol Hill, what is shaping up to be a stunning rebuke of House Speaker Paul Ryan by members of his party, but maybe not. Conservatives in the House signing what is known as a discharge petition to bypass Speaker Ryan to allow a vote on immigration, on DACA, what to do with the recipients of DACA, something that Paul Ryan has not wanted to see past in terms of the discharge petition, which is now three signatures short. Kristin Fisher joins us now live on Capitol Hill with the back story here tonight. Hi, Kristin.

KRISTIN FISHER, CORRESPONDENT, FOX NEWS: Hey, Martha. Well, Republicans who just left an hour long meeting in Ryan's office safe they are making good progress. They say they are optimistic that they will be able to find a path forward to avoid this discharge petition, but as of now, there is still no deal and the time is really running out. Now a discharge petition is a fairly obscure, a relatively rare legislative maneuver. It's being put forward by about two dozen moderate Republicans, moderate Republicans like Congressman Carlos Cabello and Jeff Denham who are trying to force a vote on DACA. They want to find a permanent fix for the DREAMers now. They don't want to have to wait for a big comprehensive immigration bill. That's one side. Then the other side, you have conservatives and the House leadership including House Speaker Paul Ryan and House majority whip Steve Scalise. They do not want a vote on DACA because they say the bill does not include certain enforcement measures that President Trump wants to secure the border. I think it would be devastating at something like the DREAM act passed because number one it actually threatens national security. It does not secure the border. What we want to do is get a real agreement that secures the border.


REP. STEVE SCALISE, R--LOUISIANA: I think it would be devastating if something like the DREAM Act passed because number one, it actually drags national security, it does not secure the border. What we want to do is get a real agreement that secures the border.


FISHER: Now if these renegade moderate Republicans are able to get the 218 signatures that they need and right now they are only three signatures short, if they are able to do that it would force a vote on DACA as early as June 25th. It would also, as you said, Martha, it would be a huge embarrassment for the House leadership, especially Speaker Paul Ryan. The leadership has already warned its membership that all of this infighting on immigration could really cause the party its majority in November, but these moderates are arguing that these DREAMers deserve answers about their future now.

MACCALLUM: Kristin, thank you very much. So here now with more, California Congressman and one of the leaders of the discharge petition, Jeff Denham. Thank you very much for being here tonight, sir. So you don't have the 218, is that done?

REP. JEFF DENHAM, R-CALIFORNIA: We have until 9.30 tonight. We are keeping the House open. We may keep it open until midnight but ultimately tonight is our deadline to meet the June 25th deadline. Now there are still Monday's left where we could bring this up, but our goal has been to empower the speaker not only with the role that I initially authored, but by the discharge to give him the leverage to actually get with the president is asking for. Not only the two pillars which I support, border security and a permanent fix for DREAMers, but a four-pillar solution. But he's got to sell that to the rest of our conference and they've got to be willing to pick up a bill and as of right now we do not have an agreement yet.

MACCALLUM: So, I thought I heard you say the other day that you felt like you had the 218, that they were going to come around. So are they being pressured by Paul Ryan or Kevin McCarthy not to get on board with you?

DENHAM: We have members standing by in the House waiting to sign depending on what happens. Ultimately, with the freedom caucus and whether or not they are going to support President Trump and his four pillars.

MACCALLUM: So who does this help? Why are you fighting for it so hard? In terms of the midterm election, you know, what's your argument versus what Paul Ryan is saying in terms of the impact on the party?

DENHAM: Look, I believe we've got to have a solution here. Not only do we need a certainty for DREAMers, the president gave us our first official deadline on immigration, that was March 5th and we've done nothing on the issue. So I think that we've got to have certainty for DREAMers, but also means we got to have border security as well. The president has talked about his four pillars. Our conference has talked about it. We had a two hour conference last week. We've been continuing to have these negotiations and meetings, but ultimately we got to have something that is willing to come to the floor. I don't think that Republicans should be afraid to face this in the election. We ought to be -- we ought to be championing, not only fighting for certainty for DREAMers but we ought to be championing the fact that we are going to secure our border.

MACCALLUM: What about Paul Ryan and what about the charge that this is to embarrass him, to humiliate him as a leader by going around his back?

DENHAM: It's not going around his back. I talked to the speaker almost every day and we continued to empower the speaker to bring this up, to let him know when people are signing and how many people are signing each day, but ultimately, the speaker has always known that this is our deadline, you know, the speaker is going to have to work with the rest of our conference to find enough support for the president's own policies.

MACCALLUM: Jeff Denham of California, thank you very much, sir. Good to see you tonight. Thanks for being here.

DENHAM: Good to see you, thank you.

MACCALLUM: So Fox News alert breaking moments ago, former FBI director Andrew McCabe back in the news tonight. He is suing the Justice Department and the FBI where he used to work, saying that he was unjustly fired and that he can prove it.

Ed Henry live with the brand-new twist that tonight breaking news, right after this.


MACCALLUM: Tonight, former FBI Deputy Director Andrew McCabe back in the news this evening. He is now suing the Justice Department and the FBI. He says he was unjustly fired and that he can prove it. Ed Henry joins us now. He is still in Singapore tonight with the very latest on this story. So, Ed, why is he suing them?

ED HENRY, CHIEF WHITE HOUSE CORRESPONDENT, FOX NEWS: Well, Martha, for a number of reasons. Just breaking now, Fox has obtained, this 36-page lawsuit from Andrew McCabe, the former number two official, of course at the FBI. What is he saying? Well, he is saying that he was unfairly fired. We know that already from March but that he has been wanting to get documents from the Justice Department, from the FBI to explain more about his firing. Well, he was fired in March, remember for leaking information improperly to the media and then more importantly perhaps lying to investigators about it. That's the allegation. So why is he suing now? Well, number one, there have been reports that James Comey, his former boss, the top guy of course at the FBI, has been called in to talk to a U.S. attorney in Washington because they are considering criminal charges against Andrew McCabe about lying to investigators.

They are trying to square his stories with James Comey's, so both McCabe and Comey under the microscope but then the other big thing you mentioned I'm here in Singapore, White House was obviously focused before the president a few hours ago he got on Air Force One on all this diplomacy with North Korea. But they were also I can tell you from talking to senior officials looking very closely at what's happening in Washington on Thursday, which is that this finally, finally we are going to see this inspector general report from the Justice Department. There are reports out saying that it's going to be devastating for Andrew McCabe and James Comey because this is the report that's looking at their conduct in terms of the FBI investigation of Hillary Clinton's e-mail server. So we've been talking with us for weeks, for months. This report is going to be devastating. People are wondering where is it. It's finally coming out Thursday, so interesting that Andrew McCabe about to take it again pretty hard on that report, already facing potential criminal charges, already fired from the FBI in March, is now trying to get ahead may be of this I.G. report and trying to get his side of the story.

MACCALLUM: Probably exactly right. We know it's a 400-page report and a couple of things have leaked out that at one point there is a suggestion that James Comey was insubordinate in the way that he dealt with the e-mail investigation and a lot more is going to come out on that.

Another story that is percolating out there tonight is an inside look at some of the sort of small group meetings between the House intel committee leadership and Rod Rosenstein's folks, including Rod Rosenstein himself, that these have, I'm hearing on more than one occasion, in fact on many occasions, devolved into shouting matches that sometimes last as long as 30 minutes.


MACCALLUM: And that he has basically threatened to subpoena them for their e-mails and their documents because he's angry--


MACCALLUM: -- that they are asking him for so much, Ed.

HENRY: Well, look, our colleagues Catherine Herridge has been all over the story so I'm picking up the ball there. Rod Rosenstein, somebody who has been on the firing line. The president and others going after him because he oversees Robert Mueller. He oversees the documents at the Justice Department there since Jeff Sessions has been recused and hamstrung, if you will. He's the one overseeing those documents that Devin Nunes and other top Republicans want to see about whether there was a spy embedded in the Trump campaign or not. All of that, and you are right, from our reporting it seems that Rod Rosenstein under pressure to turn over documents has warned Kash Patel, one of the senior aides to Devin Nunes and others, you know what, we're going to will subpoena your e-mails. We're going to try to get some documents from you. And Devin Nunes and others have been put off by this saying, look, we are trying to do legitimate oversight of the FBI and the Justice Department and you were basically threatening us and coming after us and making a mockery of the oversight process.


HENRY: This ties right back to McCabe and the investigations of the investigators basically, which is the president trying to change the narrative about Mueller in saying what about Rosenstein, what about Comey and what about McCabe?

MACCALLUM: Something's got to give in the situation and we'll see what it is. Ed, thank you very much. Good to talk to you tonight.

HENRY: Good to see you, Martha.

MACCALLUM: Have a great trip home. Great job over there, awesome reporting.

HENRY: I appreciate it. I appreciate it.

MACCALLUM: All right. So joining me now via Skype on the Andrew McCabe issue is Alan Dershowitz, Harvard Law professor emeritus and author of the book "The Case Against Impeaching Trump." Alan, good to see you tonight. Your thoughts on the suit that was just brought by Andrew McCabe against DOJ and FBI in his firing?

ALAN DERSHOWITZ, PROFESSOR, HARVARD LAW SCHOOL: Well, I'm surprised it took so long. Of course he was right to bring the lawsuit. No one is above the law, but no one is beneath the law. He's entitled to see the documentation that resulted in his reputation being destroyed. He is entitled to see what evidence they really have against him. He's entitled to challenge the report of the inspector general. He's entitled to due process just like everyone else is entitled to due process. You know, in a hyper-partisan age in which we live, people want to get due process only to people who are on their side and not people on the other side. I don't care about sides. I only care about due process and the Constitution. And he's entitled to a matter of due process to see the evidence against him, to confront witnesses against him and to be treated fairly.

MACCALLUM: Fascinating. You know, in terms of this other Rod Rosenstein issue that Ed and I were just discussing, and the fact that he appears to be bullying the leadership on that House intel committee and threatening them with subpoenas themselves or he would like them to produce their e- mails and their evidence and their communications, what do you think about that, Alan?

DERSHOWITZ: Well, this is a classic dispute between separation of powers. The legislature has the power, obviously, to oversee and investigate the executive branch, and a member of the executive branch, which Rod Rosenstein is, shouldn't be able to bully the legislative branch. He should be transparent. He should turn over the documents. He should be cooperative and Congress should be cooperative with the executive branch. You know, we have so much dispute today, partisan dispute. Dispute between the legislature and the executive branch. You know, they are all Republicans. They shouldn't be fighting with each other. It's one thing when you have the House under the control of the Democrats, which may have been the end of this year, or the Senate in control of the other party. But here we have everybody--


DERSHOWITZ: -- who are (Inaudible) and yet, they are fighting each other like children.

MACCALLUM: It's crazy. Alan, thank you very much. Thanks for helping out on the Skype. Good to see you tonight.

DERSHOWITZ: Thanks, Martha.

MACCALLUM: Quick break and we'll be right back.


MACCALLUM: Homelessness in Seattle is a big problem, but Amazon cried uncle when they were asked to put the bill. Weeks after the city passed what is called a head tax, the city council now saying never mind after Amazon threatened to leave the city. The bill would have forced businesses that pull in over $20 million to pay $275 per employee. For Amazon, the city's largest employer, that would have been more than $12 million a year, but smaller businesses with tighter margins would have felt it even more. Here now Bill Bennett, the host of the Bill Bennett podcast and a Fox News contributor, and Steve Hilton, host of The Next Revolution here on FNC. Bill, you take the first crack at this, what do you make of it?

BILL BENNETT, CONTRIBUTOR, FOX NEWS: Well, you know, this is a kind of a liberal shock of recognition. Amazon and Starbucks figured out their companies, their businesses. Can you imagine how bad things must be for Amazon and Starbucks to threaten to leave Seattle? I mean, talk about a mother ship, a liberal community, but there they were. Boy, they flexed their business muscle, reminded people that they are a business and boy, the city council turned around on a dime.

MACCALLUM: It's so interesting, Steve. And as Bill has just pointed out, to watch this dynamic at play, because its, you know, taxation, taxation, taxation and they finally said no. I love this quote from the Amazon vice president and spokesman Drew Herdener who said the city does not have a revenue problem; it has a spending efficiency problem. Now that pretty much says it all, doesn't it, Steve?


STEVE HILTON, HOST, FOX NEWS: I think that's right, and I think that frankly nobody comes out of this well. What a ridiculous way of trying to solve the problem of homelessness with this stupid tax. The reason that you got this homeless problem is because of their stupid policies that make housing so expensive, the regulations that make it so expensive to build a house. The environmental regulations, the zoning regulations, it's their own policies that contribute to homelessness. And so the idea of slapping a tax on Amazon can solve the problems. It's ridiculous. But frankly, I don't really like the way that these big corporations bully their way around elected governments and say look, you may want to tax us but we decide what taxes we pay, not you. So I think everyone comes out of this bad.

MACCALLUM: Yes, but they are more than, you know, they have a right to move with their feet--

HILTON: That's true.

MACCALLUM: -- and choose a different state if they think that that state is going to be better for them. I do want to squeeze in this story about chicken shaming. We heard about fat shaming. This is chicken shaming. Poor Jack Dorsey, the Twitter and Square CEO took a picture of this cash back program that he got at Chick- Fil-A and boy, did he get pounced on because the CEO of Chick-Fil-A in the past has said that he is not in favor of same-sex marriage, so then Soledad O'Brien jumped in and said this is an interesting company to boost during pride month at Jack. Jack quickly came back and said of O'Brien's tweet, you know, I'm so sorry, I complete -- you're right. I completely forgot about their background.

BENNETT: Well, the president there of Twitter inadvertently came upon the truth, which is that Chick-Fil-A is a great thing. It's a great meal. The only time you apologize or say you're sorry for having Chick-Fil-A is if you find a bone in it, which has never happened in the history of the franchise.

MACCALLUM: It's boneless.

BENNETT: Go to Atlanta airport. Go to, you know, shopping centers, we go up and down interstate 95. Where is the longest line? Chick-Fil-A. You know, I don't much approve of Amazon's politics either. Like Steve was saying. But I sure use them. This is just crazy. It tells you about the same time the bullying aspect that Steve referred to, but also how they can be intimidated by forces of political correctness. This craven behavior is really shameful.

MACCALLUM: It's amazing, Steve. I mean, you can send a tweet and the forces just come in and next thing you know you were spinning your way out of it.


MACCALLUM: I mean, this is unbelievable.

HILTON: So I found out something very interesting, Martha, the day before this tweet by Jack Dorsey that brought down the wrath of the loony left tweets hate mob, he also sent out another tweet. This was from the Dalai Lama. He re-tweeted the Dalai Lama. Remember that Dalami Lama not that long ago said this about gay marriage, which is the reason for the frosted Chick-Fil-A. They, he's talking about his California followers, want me to condone homosexuality. But I am a Buddhist. And for Buddhist the relationship between two men is wrong. More recently, he said people who have belief or have special traditions then you should follow according to your tradition. I didn't notice the Twitter hate mob from the loony left that send on Jack Dorsey for re-tweeting the Dalai Lama despite his views on homosexuality.

MACCALLUM: Fascinating.

HILTON: And it must make you think this is not really about defending traditional -- against being traditional views of marriage, it's really about being anti-Christian. That's what we used to call bigotry.

MACCALLUM: Quick thought, Bill.

BENNETT: Yes. Jack Dorsey may next need to be careful. He may order a cake from that Colorado bakery. Watch him. This man bears watching.

MACCALLUM: Thank you, guys. Great to see you both tonight.

HILTON: Good to see you, Martha.

MACCALLUM: Thanks, Steve. Thanks, Bill. And still to come, former President George H.W. Bush celebrates a big birthday today. Stay tuned for the quote of the night.


MACCALLUM: Finally tonight, President George H.W. Bush celebrating his 94th birthday today. It's the first birthday since the passing of his beloved wife of 73 years, Barbara Bush, but he is celebrating with family and friends at his home in Kennebunkport, Maine. He very much wanted to get back to Maine, as we remember after the funeral. And in honor of the occasion, tonight's quote of the night is from President Bush's 1989 inaugural address.


GEORGE H.W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: I do not fear what is ahead that our problems are large, but our heart is larger. Our challenges are great, but our will is greater. And if our flaws are endless, God's love is truly boundless.


MACCALLUM: George H.W. Bush now officially the oldest president. Our story continues tomorrow. Tucker is up next.


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