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This is a rush transcript from "Your World," July 23, 2020. This copy may not be in its final form and may be updated.

CHARLES PAYNE, FOX NEWS ANCHOR: The new push to defund cities that want to defund the police.

For the first time, a Republican and Democrat are teaming up to do it, and both will be here on it.

But, first, violence continues to escalate in Portland for 56 nights. And now the city is banning the police from working with federal officers.

Welcome, everyone. I'm Charles Payne, in for Neil Cavuto. And this is "Your World."

To Dan Springer in Seattle with the very latest -- Dan.

DAN SPRINGER, FOX NEWS CORRESPONDENT: Yes, Charles, it was some of the worst violence yet in Portland.

For several hours, hundreds of protesters battle with federal officers. And right in the middle of this was the city's mayor, Ted Wheeler. He was there for solidarity, for what he is calling or what he called last night a listening session.

But when he started talking, he was shouted down with obscenity. He was called a Nazi. Someone spit at him, and he was told to resign by many people.

Then he was hit with tear gas, not once, but twice. After the second guessing, his security detail, well, they got him out of the area to a sheltering in a city building nearby.

Federal police were firing tear gas and flashbangs for hours, as hundreds of fireworks were shot at the federal courthouse. Arsonists also threw Molotov cocktails. They broke through a fence around the courthouse, set fires and tampered with a fire hydrant.

But when asked about his tear gassing, Wheeler told a reporter that he saw nothing that would provoke that kind of response.

The Department of Justice Office of Inspector General has opened a review of the conduct of the federal officers in Portland. Several lawsuits have been filed claiming civil rights abuses.

But the federal agencies are pushing back, saying that three of their officers may lose their sight after getting hit in the eyes with laser beams. At least 38 officers have been doxed, their identities revealed on social media.

And now the Portland City Council has passed a law banning the Portland P.D. from helping the federal officers in any way.

(BEGIN VIDEO CLIP)

CHAD WOLF, ACTING U.S. SECRETARY OF HOMELAND SECURITY: It does not allow local law enforcement to coordinate or support, even in perhaps life- threatening situations, federal officers. That is dangerous.

(END VIDEO CLIP)

SPRINGER: Portland police did eventually declare a riot last night, but they never engaged. Not a single arrest was made -- Charles.

PAYNE: Dan, thank you very much.

Defund cities that defund the police, well, that's what two lawmakers, a Democrat and a Republican, are proposing.

With me now, New York Democrat Congressman Anthony Brindisi, along with Pennsylvania Republican Congressman Brian Fitzpatrick.

Welcome, Congressmen.

Let me start with you, Congressman Brindisi. How exactly would this work?

REP. ANTHONY BRINDISI (D-NY): Well, what the bill says is that, if a city moves to defund the police department, if they want to abolish the police department or significantly cut funding to a police department, then they - - that would put them at risk of losing certain federal grants.

And I think we have to step back and acknowledge that our law enforcement does, by and large, very good work. Most officers serve with dignity and respect. And these are very difficult times that our country is going through right now.

We should be having conversations about how we reform policing and improve relations. However, I don't think we should be doing that at the expense of cutting back at -- on things like community engagement programs, or body cameras, which hold bad actors accountable, or on training, which police need to be able to protect and serve.

PAYNE: Representative Fitzpatrick, we have already seen where individual cities have already taken the initiative, New York City, a billion-dollar cut, AOC actually asking and demanding a lot more.

Do you think this will be enough of a disincentive, or do we need a bigger public relations campaign?

REP. BRIAN FITZPATRICK (R-PA): Well, this is all part of the whole push, Charles.

I'm a career FBI agent, I spent my entire adult life in law enforcement. And my goal was to build a bipartisan coalition here in Washington, D.C., to make sure that we have a voice defending our police officers.

They are under assault right now. And they need our support. Do we need to make reforms? Of course we do. And our coalition believes that that should happen. And we will do that in a responsible manner.

But these calls to defund the police -- Mayor de Blasio cut $1 billion out of a $6 billion budget of the NYPD, at a time when they need more help than they ever have. We need some voices of reason. And they need to start speaking up. And that's what we're going to do.

And like everything I do, we're going to do this in a bipartisan manner to make sure we get the whole country on board.

PAYNE: Representative Brindisi, you have got some very powerful voices in your party, your political party.

I'd be interested in a couple things, first, the kind of pushback or agreement that you're seeing and talking about behind closed doors, and also the images that we're getting out of Portland, where, clearly, elected officials are making the police and the federal law enforcement agents the bad guys.

They're turning them into villains in a public relations campaign that I think is making this worse. They're emboldening those folks out there who - - it's not just a peaceful protest, not all 56 nights.

BRINDISI: Yes, you're exactly correct.

And I think that the point behind this legislation -- and I commend Congressman Fitzpatrick, and I'm proud to work with him on this -- is to really build a bipartisan coalition here, because, by and large, if you poll the majority of Americans, they will tell you, yes, we do have to see some reforms to policing.

Yes, we have to improve relationships between police and the communities that they're charged with protecting and serving. But, by and large, the Americans on both sides, I think, are against abolishing police departments, defunding police departments. And that's what this bill is meant to address.

PAYNE: All right.

BRINDISI: And we're building this bipartisan coalition.

I have talked to a number of members on my side of the aisle who are interested in this legislation. And we should have respect for law enforcement. As I said at the top, it's a dangerous profession. These men and women risk their lives every single day when they go out there to defend us.

I have heard some of the heartbreaking stories of the officers in Portland and other cities. And it's tough right now to be a police officer.

PAYNE: I want to just follow up, Representative Brindisi, about the presidential candidate for your party, Joe Biden.

He hasn't used the word defund, but he has used the term redirect. Maybe it's a game of semantics. It means the same thing to me, if money is not going into the police departments, which, by the way, could use extra funding for these improvements in the training that everyone is -- everyone agrees that they should have.

BRINDISI: Well, if you look at -- when you start cutting back -- and many police budgets are already under strain -- when you start cutting back, the first thing the departments will start cutting are things like community policing, community engagement programs, training, things like that, gear that is necessary for officer safety.

And these are all things that are important, body cameras, that are important to help protect and improve relations between the police departments and the communities that they serve.

And I'm all for investing in mental health and education. I think our officers are being asked to do way more than they have to right now. They're becoming educators, health care professionals, mental health counselors.

PAYNE: Right.

BRINDISI: So, they do need some help. And we do need to be making investments at the local level, the state level, and the federal level in mental health and education, but not at the expense of taking away things like community engagement programs and training for police.

PAYNE: All right.

Representative Fitzpatrick, what I'm concerned about, of course, is the -- is the message that's coming from very highly regarded politicians. Again, I would love to see Vice President Biden come out and not use terms like redirect, and claim it's not the same as defund.

And, by the same token, the American public overwhelmingly is against this idea. So, do you think they will -- maybe we can stem the tide of this crazy notion of defunding the police?

FITZPATRICK: That's exactly what we're doing down here, Charles.

That's why I'm building a bipartisan coalition that, as Anthony mentioned, is growing.

PAYNE: Yes.

FITZPATRICK: There are a lot of people that are interested in joining this.

And we will be the voice to have the backs of the men and women that serve our communities. We all see the terrible images on television. They have -- they have always had a hard job. Their job is especially hard now.

PAYNE: Right.

FITZPATRICK: And they need our -- they need our support, and they're going to get our support.

PAYNE: It's extremely hard. And we salute both of you. It's rare we see bipartisanship, particularly on something like this.

Thank you both very much.

FITZPATRICK: Thank you, Charles.

PAYNE: Meanwhile, folks, the question, is Washington so focus on extra unemployment checks running out, that they're ignoring the debt clock that's running up?

White House Budget Director Russ Vought joins me. He's next.

(COMMERCIAL BREAK)

PAYNE: Stocks falling on signs that a coronavirus relief push Washington may be stalling, but maybe not.

Senate Majority Leader Mitch McConnell is on the Senate floor, speaking about the new push for a new bill.

Let's go to Chad Pergram with the very latest -- Chad.

CHAD PERGRAM, FOX NEWS SENIOR CAPITOL HILL PRODUCER: Well, this is coming right off the presses as we speak here.

The Senate majority leader was expected to release a framework for this coronavirus bill this morning. That did not happen. We got nothing but radio silence. But here's what he said in just the past couple of minutes.

He says he will release a framework for this bill next week. And it will include three major tenets. He says kids, jobs and health care. Now, there seems to be a lot of dissonance on the Republican side of the aisle. And the reason this is taking a long time to get together is that not all Republicans are in agreement here.

And this is why Chuck Schumer, the minority leader, says that the GOP is in disarray.

(BEGIN VIDEO CLIP)

SEN. CHUCK SCHUMER (D-NY), MINORITY LEADER: They have been so divided, so disorganized, so unprepared that they have struggled to even draft a partisan proposal within their own conference.

They can't come together.

(END VIDEO CLIP)

PERGRAM: The secretary of the Treasury, Steve Mnuchin, today announced the administration would drop its demand for a payroll tax cut.

There were only about 10 Republican senators who supported that, and it would explode the deficit to the tune of hundreds of billions of dollars. Plus, there are divides about extending unemployment benefits.

Republicans raised hackles back in March that some people would receive more money off the job than on.

(BEGIN VIDEO CLIP)

SEN. LISA MURKOWSKI (R-AK): And I do think that what we're trying to do is to avoid some of the unintended consequences that we saw with the full-on $600 added to every state's base unemployment.

(END VIDEO CLIP)

PERGRAM: Now, there's kind of an artificial deadline at the end of next week, July 31.

That's when these unemployment benefits, these extra unemployment benefits expire. And Republican and Democratic senators, they have to come to an agreement if they want to have more direct payments to Americans. These are the nitty-gritty details, and the cost of those and the price tag there, that's going to be major -- Charles, back to you.

PAYNE: Chad, before I let you go, the $600, there was a report out earlier, Mnuchin saying 70 percent of people's incomes. That's a big difference for a whole lot of working Americans.

That's a giant gulf to navigate in a very short period of time.

PERGRAM: Absolutely.

And that's why we were hearing numbers of maybe just $100 or $200 there. Republicans are very concerned about the price tag. But just because they say that this is going to be the last bill, there's worry that there might be another bill sometime in the fall or the winter, if this continues to grow.

PAYNE: Right.

PERGRAM: And I talked about the overall cost of that payroll tax cut, which seems to be off the table right now, Charles.

PAYNE: All right, Chad, thank you very much. Always appreciate it.

So, how does not including a payroll tax cut in this next coronavirus release bill sit with the White House?

I want to bring in right now Office of Management and Budget Director Russ Vought.

Russ, congratulations on the job being permanent.

Let's talk about some of the things we -- that was thrown out there, including this payroll -- payroll tax cut. Apparently, it will not be part of the final package. How is President Trump feeling about that?

RUSSELL VOUGHT, WHITE HOUSE BUDGET DIRECTOR: Well, he's obviously disappointed that it's headed in that direction, but he wants to get a bill. We're hard at work trying to get a bill.

Unfortunately, we are dealing with a recalcitrant Democrat majority that is insisting that we fund big government, as opposed to pro-growth economic policies that get this economy back in terms of the V-shaped recovery.

PAYNE: Speaking of the V-shaped recovery, J.P. Morgan last week said that extra 600 bucks was the magic ingredient, that people went out and they spent that extra 600 bucks, and that's why we saw employment come back so quickly, we saw a record-breaking retail sales rebound.

So, they're essentially saying, if you take that away, you really endanger the recovery. How are you feeling about that?

VOUGHT: Well, I think it's important to take a step back and remember that unemployment benefits is going to go on and exist for the entirety of this year.

Most states have about a year's worth of unemployment insurance. That's not going to just artificially sunset at the end of next week. What we're talking about is the additional benefit on top of that, that Congress put in place...

PAYNE: Right.

VOUGHT: ... that has provided a disincentive for small businesses to be able to get their workers back, because they get more money than they had previously worked for.

So, we're trying to make sure we remove that disincentive, still do something to be able to extend at somewhere in the neighborhood of 70 percent, so that you're not -- it's not 100 percent of what you used to make, and be able to remove that disincentive to get people back to work working for small businesses.

PAYNE: And for those who don't have a job waiting for them, but now they're only getting 70 percent of their incomes, it's a heck of a calculation that the White House and Republicans have to make on this.

VOUGHT: Well, again, we're not for not doing any bill. We want to be able to continue to put people -- put money in people's pockets, continue to do -- get a bill done.

We have got to get this economy continuing to be on the mend, approximating a V-shaped recovery. But we have got to do it right, Charles. And we got to make sure we remove disincentives, so that small businesses can get the workers back to work.

PAYNE: What kind of -- speaking of small businesses, what other adjustments can there be for the PPP program?

Eighty-five percent of the applications went to these $150,000 or less, but almost 85 percent of the money went to the bigwigs, you know, these million-dollar bailouts. That did not sit well with the general public.

VOUGHT: Sure.

Well, we have got money that still has not been spent, about $130 billion that can be reallocated. You know, I think, at the end of the day, the PPP program is going to be an incredibly successful program. History will speak kindly about this program.

And I think the examples where it went to those that it was not intended for will be the vast minority, and that this went to diners, and small hardware stores, and small businesses across the country.

PAYNE: Right.

VOUGHT: And I think you're going to see history reflect very well on that important program.

PAYNE: I'm inclined to believe you're 100 percent right.

History is going to look kindly on the way the federal government reacted, the White House, the Federal Reserve, and programs like PPP, which -- which makes people wonder, is Mitch McConnell -- are they taking this too slow at this point?

I mean, when Mitch McConnell says, kids, jobs and health care, I'm not even sure what he's talking about. But many are saying, we need to cobble something together before July 31.

VOUGHT: Well, we're at -- hard at work to be able to do that.

I don't think that Senate Republican leadership is in any way trying to take this slow. I think they're working very hard to get a bill that can pass. Our negotiators are hard at work doing that.

On the school front, we want to make sure that we have taken the excuse for schools to open up off the table, and we want to put in policies that...

PAYNE: Right.

VOUGHT: ... help incentivize them to reopen.

And so I think that's what we refer to when we're talking about kids.

PAYNE: OK.

VOUGHT: But we have got to make sure the policy gets right. And that's what we're hard at work doing.

PAYNE: Yes, if kids don't go back to school, there is no economy, because so many parents can't go back to work.

Russ, I want to ask you about the White House rolling back this Obama era, affinity -- Affirmatively Furthering Fair Housing. It's sort of a tongue- twister known as AFFH. It came about in 2015. It was -- President Obama attached this to some of the things for HUD.

Ben Carson pushed hard that this was too complicated, it was too costly. President Trump listened. And now there are howls saying that this is discriminatory and it's racist.

Explain why this should have been taken out of this, out of the HUD's program.

VOUGHT: Yes, it has nothing to do with racism.

And it is a tongue-twister. But, basically, what you saw was a -- President Obama and Vice President Biden's war on the suburbs, where you were using the power of the federal government to bully neighborhoods and localities into changing their zoning restrictions, and to be able to reflect and deal with artificial balances, imbalances that might exist that have nothing to do with race.

And what we have come along and done is to basically say, we believe you can further fair housing by providing affordable, safe, decent, nondiscriminatory housing without the federal government bullying mayors and local officials into changing their zoning restrictions to do away with single family houses.

PAYNE: You know, there's a war on the single-family home. It's an ideological war. And this was part of it.

I believe that the single-family home, the white picket fence -- it sounds corny, Russ -- I still think that's the American dream, and some people don't like that.

Congratulations, again, and it's great having you on the show. We appreciate it.

VOUGHT: Thanks, Charles.

PAYNE: Well, batter up, because, baseball, it's finally opening up.

The pros are ready to play. And something tells me viewers are ready to watch.

(COMMERCIAL BREAK)  PAYNE: Play ball. Opening day is here, and it's just hours away.

Abby Hornacek will join us on just how it's all going to go down.

And we will be back in 60 seconds.

(COMMERCIAL BREAK)

PAYNE: Well, the first pitch of the Major League Baseball season just a little over two hours away, as players prepare for a season without fans in the stands -- well, or at least without real people.

All right, want to go to Abby Hornacek, who is going to fill us in on this brave new world.

(LAUGHTER)

PAYNE: Now, listen, I know robots and androids are taking all of our jobs, but they're going to be the fans now, too?

ABBY HORNACEK, "PARK'D" HOST: They're taking our spots. Yes, they're taking our spots in the stands, Charles. What is going on?

(LAUGHTER)

HORNACEK: No, I actually think that this is a great idea. They are experimenting with virtual fans. And, of course, it's not ideal, but I think it's our best option right now.

And here is why. So, they have been talking about how they're going to pipe in these crowd noises at the games, which my first reaction was, this is going to sound like a really bad sitcom, when people are laughing in the background and there's no one actually in studio.

But when you add in this augmented reality, you're putting life behind those sounds. And, Charles, I don't know about you. But when I watch a baseball game, I'm not looking at the faces of the fans, minus the times where you get that viral video of maybe a guy holding a baby and a beer, and then there's a foul ball and the ball lands in the beer.

Then it matters. But I think people will get used to the fact that these are not real people. And it looks so realistic, they will forget about it altogether.

PAYNE: So -- but we're not at that stage yet, though, where, say, there is a foul ball, that one of these the android-like things gets up and catches it.

I mean, have they gotten that advanced yet?

HORNACEK: Can that happen?

PAYNE: Or will they just -- what's going to happen?

(LAUGHTER)

HORNACEK: Yes. You know, I'm not sure. I think that they just disappear.

(CROSSTALK)

HORNACEK: If they could make some form of augmented -- if they could make some form of augmented reality that could catch balls...

PAYNE: What are the players saying about this?

HORNACEK: So, here's the thing about the players.

And I think the reaction with fans, is that OK? Well, this might be a little weird to watch on TV. I honestly don't think that the players care, because I actually watched a really interesting interview this morning with Pete Alonso. And he was saying that, look, these guys come up through the farm system.

So they're not used to playing -- until they reach the majors, they're not used to playing in front of these crowds that you get at Citi Field or Yankee Stadium. So I really don't think they -- it matters -- it matters to them. They just want to play ball.

And, if anything, it'll hopefully return them to the reason that they started playing baseball in the first place, for the love of the game.

PAYNE: Well, all right, I hear you there. But what about the home field advantage, that energy that the home team gets from the crowd, and they're behind, and it's the bottom of the ninth?

And there's something that you feel, right? I mean, no matter what sport it is, you feel it, and it seems to put teams over the top. Is that going to be gone?

HORNACEK: I -- yes, I do think an aspect of that will be gone. But with this augmented reality, they're talking about that they can switch the colors of the people in the crowd. They can switch their jerseys or the colors catering to whatever team is having the home field advantage.

And get this, Charles. They will make the fans leave if it's a blowout.

(LAUGHTER)

HORNACEK: So, people are going to be watching that on TV, but the players aren't going to be feeling that.

So they're just going to have to get over it, I think.

PAYNE: Yes.

HORNACEK: Take it back to the little league days, you know?

PAYNE: Yes. Yes.

What are we looking at now? Who's the favorite? Has anything changed with respect to the who's going to win this year? Have the oddsmakers made any sort of adjustments because of all this?

HORNACEK: Yes, you do see the odds changing a little bit.

But I think that it -- what's going to really change it is seeing opening day and how all of this plays out and how it plays out for fans at home. Who is watching? I do think that a lot of people are eager to get back there. Sports bettors are eager to get back out there and start laying some action all these games.

So I think we will see that shift. And then you have the universal designated hitter, which has been kind of a change, and only 60 games. So, each game matters more. You're not looking at a normal baseball season.

PAYNE: Other sports, so we have got racing, we have got baseball, there's the NBA, everyone under the dome. That's going to be another weird experience.

But there were questions of whether or not sports would continue. And it looks like we're going to make it through, right?

HORNACEK: I think we are, Charles.

And it's good for fans. It's good for the players. I think everyone's just eager to see something. And sports have had a universal effect on bringing people together. So, hopefully, that happens in today's climate as well.

But the NBA, they're working on their bubble. And baseball is different, because there will be traveling, and there is more of a risk with getting on airplanes and all of that. But I do think we will slowly see sports coming back.

NFL season is actually talking about maybe using this augmented reality...

PAYNE: Right.

HORNACEK: ... with their fans as well. So, baseball's definitely laying the groundwork when it comes to that stuff.

PAYNE: All right, well, I want to see these -- this augmented reality crowd in the seventh inning stretch. I want to hear them singing "Take Me Out to the Ball Game."

Abby, thank you very much.

HORNACEK: I actually -- Charles, I heard a rumor that you're actually going to be singing the seventh inning stretch, and it's going to be an augmented reality of you.

(LAUGHTER)

HORNACEK: So, I'm looking forward to seeing that.

PAYNE: I'm working on it. You got it. See you soon.

HORNACEK: Great. Great.

PAYNE: You might see me tonight.

HORNACEK: Thank you. Great.

PAYNE: Hey, in the meantime, we know former President Barack Obama is making a big pitch for Joe Biden's run, but is he also pitching someone to run with him?

We will be right back.

(COMMERCIAL BREAK)

PAYNE: California Democrat Senator Kamala Harris holding a virtual campaign event for Joe Biden.

Now, she is said to be on his short list for a running mate. Today, Biden also releasing his latest this pre-taped talk with Barack Obama.

Could the former president be steering his former vice president towards a certain V.P. pick?

Joining me now, RealClearPolitics' Phil Wegmann.

Phil, apparently, I keep reading where Joe Biden is down to four black women as potential V.P. candidates. When I peruse the news further, I see more names in there. Is anyone sort of moving ahead of the pack here?

PHILIP WEGMANN, REALCLEARPOLITICS: We know that Kamala Harris certainly seems interested. And there are rumors that she's actually putting out opposition research on other candidates.

Those are unconfirmed at this point, but it shows how significant the stakes are. Not only would Biden's V.P. pick obviously be one heartbeat away from the presidency and possibly be his successor, but whoever he picks as a possible vice president, that's going to show us how and according to what ideology a Biden administration would govern from.

So this is going to be something to keep a very close eye on, obviously, as we get closer to the Milwaukee convention.

PAYNE: So, Phil, I'm looking at the names, Val Demings, Keisha Lance Bottoms, Kamala Harris, Karen Bass, Susan Rice. And I get, OK, he's going to be able to check the box black woman, but the younger part of this political party, where the energy is, the more progressive part of it, does anyone fulfill that area?

Because, listen, Bernie Sanders was very close to winning this thing, if it wasn't maybe for a last-minute pushed by Clyburn.

WEGMANN: No, you're absolutely right.

And while Biden has said that he's going to pick a woman as his vice president, he needs to be able to put someone in that position who's going to maintain African-American support through the general election. Remember, it was black voters who brought Biden's campaign really back from the dead in South Carolina.

And then the second part here, which goes to the heart of your question, is, he's got to find someone who is going to make younger voters enthusiastic. Not long ago, during the primary, a lot of millennials, a lot of younger voters were literally saying, please don't make me vote for Joe Biden.

So those are two considerations that he has to take care of with whoever he picks.

PAYNE: Let's throw out a third one, the enthusiasm gap.

Now, of course, there's no doubt a black V.P. would energize the black vote, particularly black women, who really know how to get the entire community out to the polls. But we have seen a tremendous lack of enthusiasm for Joe Biden, and, more recently, his unfavorables have begun to skyrocket.

So is there something to be said about a certain spark, a certain kind of energy that could also get more people out? Because I think that's one area that probably won't change for him.

WEGMANN: And that's a reflection of the type of campaign that Joe Biden has run so far.

He's been running a campaign that has been in self-isolation because of the coronavirus. I think that a vice president pick who could really energize people with newer ideas, folks on the left, that would do his campaign quite a bit of good.

David Axelrod talked about this problem in a recent piece, where he pointed out that whoever Biden picks needs to be able to help him win the election, but then the larger question is, not only help him win the election, but be a lieutenant who is ready on day one to really go brawl with Republicans on Capitol Hill, because it is going to be a fight for him to get anything that he has proposed to the finish line.

PAYNE: Right. Right.

I mean, with this list, he doesn't get a state that he wasn't going to get anywhere and those kinds of things.

Barack Obama, former President Obama, is there any -- who's he leaning towards? Is there someone that he might be out there pushing?

WEGMANN: Well, we know that President Obama has kept close ties within the party. He was close to Senator Harris. And he was complimentary of a lot of the things that she did.

I think that Obama is clearly a voice in Joe Biden's ear right now. He has a tremendous amount of sway.

PAYNE: Right.

WEGMANN: And not only is he able to sort of bring back some of the nostalgia among Democratic voters by being on stage with Joe Biden.

I think that he is a powerful counsel for his former vice president. The two trust each other, and I think he's going to have a significant influence on who Biden picks.

PAYNE: Next time, I want the gossip. Who's throwing who under the bus? I will let you off the hook this time.

Phil, thank you very much.

WEGMANN: Thank you, sir.

PAYNE: All right, more cities rolling back their reopenings, as coronavirus cases keep climbing, but are these new lockdowns keeping the economy locked down?

(COMMERCIAL BREAK)

PAYNE: Well, you're looking live at Chicago and Baltimore, where restrictions are being reimposed tomorrow, as both cities continue to see an uptick in coronavirus cases.

So, the question, of course, is, are all these rollbacks holding the economy back?

I want to bring in market watcher Heather Zumarraga.

Heather, today we got initial jobless claims, the first uptick after 16 straight weeks of decline. A lot of that can be attributed to the fact that many places where we saw reopenings, then they stalled, or they closed, or they reversed.

Just how much havoc is this going to create with the economy?

HEATHER ZUMARRAGA, FINANCIAL ANALYST: Well, I think this is already creating a lot of havoc in the economy.

Now, the stock market is a completely different animal, or has been, at least. When you look at the jobs data, if there is one silver lining, it's that continuing claims have come down, still over a stunning 16 million people filing for continuing claims over and over again.

But the number is coming down. And that matters more than the 52 million that originally have filed for unemployment, but not continue to do so.

PAYNE: Right.

And, Heather, here's the thing. We know that these start, stop, start stops, one of the thing that this V-shaped recovery needed is momentum, because it's -- against all the odds, it's done so much better. Our economy has done so much better than any expert thought it would.

But now these experts are back saying, OK, now we're going to be right. Now the V-shape starts to plateau. Now we go back down.

And it bothers me, because a lot of these places that are reclosing, I feel, sometimes, it's as much a political decision as a health decision. And if that's the case, they're deliberately harming the economy.

ZUMARRAGA: Absolutely.

But, look, it should not be political. The economy should remain open, but not at the expense of people's lives or people getting sick. But you wear a mask, like Baltimore mayor and governor of Maryland is enforcing now, and you social distance.

The news that we got about the bar in Chicago closing permanently, for good, they're not alone. You're seeing businesses across the board having to shut their doors because we're shutting the economy down. According to Yelp, for example, almost 70,000 small businesses have just given up and they're saying, I can't do this anymore.

And so it shouldn't be a matter of a political debate, of Democrats wanting to shut down the economy to save lives and Republicans wanting to keep it open to keep the economy going. There should be a middle common ground that we can take safe measures and cautious measures to keep the economy open.

PAYNE: Well, and the realization is that, until there is a vaccine that is -- we have to learn how to coexist, even prosper, amid the virus.

So, this is not a long-term option, in my mind. At some point, every state, every municipality, every city has to reopen their economies to a certain degree, or the carnage is going to be so much more than you could believe.

ZUMARRAGA: Oh, yes.

And I think what's important to most Americans now is not just that $600- per-week unemployment supplemental insurance that's wearing off, but what are we going to do with PPP? Democrats are all in favor of doing another round, as are most Republicans, but this time it will be targeted more towards small businesses.

Secretary -- Treasury Secretary Steven Mnuchin has said that. Those that were hit at least 50 percent by COVID will be helped to keep businesses going, and open not those big Harvard endowments or the Potbellys are the Ruth's Chris or those that may not need it.

We want to help the people that were shut down due to no circumstance of their own, that this was a self-inflicted shutdown.

PAYNE: Right.

Heather, you mentioned the $600 additional money, the federal money on top of the typical state unemployment claims. What number should be out there? What is the ultimate number that they should agree on, understanding that a lot of that could probably immediately go back into the economy, but also pile up on the debt?

It's a difficult conversation. But we do see where the markets are becoming concerned about this. And that seems to be one of the major battlegrounds between the two parties.

ZUMARRAGA: Oh, absolutely.

I mean, that's what the fight is about right now. What is that number going to be? Democrats want to extend the benefits at $600 per week. And Republicans are saying, how about $200, maybe $300? Or what Steven Mnuchin is saying is that we give 70 percent of your income. So you target the number to what people making before, because the biggest problem would be that you're receiving more income by staying at home than going to work.

And some may deem that an insensitive comment to those that have lost their jobs, but it's really not, because in order to sustain the economy over the long run, you want people to be working and to be employed. And so you can't make more unemployed than you are when you're working.

And that's why that's 70 percent of your income prior to COVID number is being looked at by the GOP.

PAYNE: Do we need a deal by July 31? Some are arguing that's an artificial deadline, although we do know that's when those extended benefits expire.

ZUMARRAGA: Well, if you look at Speaker Pelosi saying that we definitely need a bill by the end of the month, and Larry Kudlow is pretty optimistic. He's running Economic Council over at the White House.

PAYNE: Right.

ZUMARRAGA: But then you have House Minority Leader Kevin McCarthy saying, oh, we might not get it by the end of the month.

But I think those 52 million Americans that have filed for unemployment do want some type of extension.

PAYNE: I think so too. And I think we saw the market, the Dow off over 300 points.

ZUMARRAGA: Yes.

PAYNE: It will down a lot more than that, putting a lot of pressure on all those folks.

ZUMARRAGA: Oh, yes.

PAYNE: Heather, thank you very much. Appreciate it.

ZUMARRAGA: Thanks, Charles.

PAYNE: All right, folks, with tensions with China flaring up, now Secretary of State Mike Pompeo is about to deliver a major speech smacking them down. Where is this showdown heading?

We will be right back.

(COMMERCIAL BREAK)  PAYNE: You're looking live at the White House.

President Trump is about to hold a news conference on reopening schools, among other things. When he takes the podium, we will take you there.

Meanwhile, Secretary of State Mike Pompeo about to speak at the Richard Nixon Presidential Library in Yorba Linda, California, as tensions continued to rise between the United States and China.

Rich Edson on what Secretary Pompeo is saying -- Rich.

RICH EDSON, FOX NEWS CORRESPONDENT: Hi. Good evening, Charles.

And Secretary of State Mike Pompeo is going to justify the U.S. closing the Chinese Consulate in Houston because he says it was a hub of spying and intellectual property theft. That's according to the prepared remarks for the secretary's speech that he's about to give at the Nixon Presidential Library in Yorba Linda, California.

The secretary mentions President Nixon's historic 1972 visit to China and says engagement with the Chinese government has since failed to live up to the change Nixon had hoped to create. He says democracies must abandon blind engagement with China and -- quote -- "General Secretary Xi Jinping is a true believer in a bankrupt totalitarian ideology. We can no longer ignore the fundamental political and ideological differences between our countries."

Pompeo floats the creation of an international alliance of democracies to induce change in China's government.

Just yesterday, the State Department ordered the Chinese government to vacate its consulate in Houston. China is warning the U.S. to reverse that decision, and, if not, promising to retaliate.

The FBI claims China's consulate in San Francisco is protecting a Chinese researcher who prosecutors have charged with lying about her military background to get a visa to come to the United States.

State Department officials say there's been a marked increase in Chinese spying activity in the United States over the past few years. And in just the past month, there has been a significant deterioration in U.S.-China relations. The United States has authorized and enacted sanctions on Chinese government officials and businesses that were involved in massive human rights abuses in Northwest Xinjiang, China, and, of course, revoking that special trading status that Hong Kong once enjoyed -- Charles.

PAYNE: Rich, thank you very much.

And you're looking live, as Secretary of State Mike Pompeo is going to give the speech right now, this, of course, as China is threatening retaliation for the closure of its Houston consulate, while it harbors what the U.S. says is a military-linked fugitive in San Francisco.

So, where's all this going?

I want to go to former State Department senior adviser Christian Whiton, who joins us now.

Certainly, the cold war is heating up, Christian. What's the next step?

CHRISTIAN WHITON, FORMER U.S. DEPUTY SPECIAL ENVOY: Well, the next step is waiting to see what the Chinese will do.

This looks like the U.S. ratcheting up tensions, but what really it is, is, frankly, just the U.S. finally getting its head in the game. President Trump throughout his administration has been tough on China, particularly on trade, trying to bring some equity and some fairness to that relationship and putting tariffs on more than half of what we import from China.

But the political pushback on the criminal realm and now the diplomatic realm has been a little slower coming, but now it's coming full force.

What Secretary Pompeo is going to say today really is, frankly, Reaganesque. It's language we haven't really seen this starkly from the administration, so I think a good turn.

But as for the embassy -- or -- excuse me -- the consulate closure in Houston, the Chinese presumably will retaliate.

PAYNE: Right.

WHITON: I sort of doubt their ability to retaliate as strongly, but that's probably coming.

PAYNE: So, when they said Houston consulate was a hub of spying and I.P. theft, no one's surprised, per se, and yet they keep feigning this, wow, you guys are pushing us around.

And I think, to a certain extent, Christian, they get a lot of help from the U.S. media, which seems to take China's side or seems to be sympathetic that President Trump once again pushing China around.

Isn't it about time we took this kind of stand?

WHITON: Absolutely, it is.

But, absolutely, you're right that our media, the mainstream media, is doing China's bidding. The Washington Post editor who covers east Asia yesterday said this move to close the consulate was just President Trump trying to distract from coronavirus.

Well, The Washington Post actually takes money from China Daily, millions of dollars to run content from China Daily in its newspaper. That is a propaganda organ of the Chinese government.

PAYNE: Right.

WHITON: So, you can understand why maybe The Washington Post isn't as excited about this.

But you're seeing, I think, a very strong turn in the executive branch and also on Capitol Hill, where you have bipartisan support for a tougher approach on China. And Senator James Risch, the chairman of the Senate Foreign Relations Committee, just introducing a new bill today that would codify a lot of what President Trump has been talking about.

PAYNE: Right.

Christian, it's so appropriate this is at the Richard Nixon Library. In 1972, our GDP was 900 percent higher than China's. Last year, it was 30 percent higher. All that theft has paid off big time for China, in addition to not having to live by the same trade rules as everyone else.

WHITON: It has.

And, if President Nixon were alive today, I think he would be in favor of reevaluating the opening of China that he commenced back in 1973. And Henry Kissinger, who is alive today and who did recently meet with President Trump, I think would also be in favor of taking a look.

PAYNE: Right.

WHITON: When we engaged China first, the idea was to separate from the Soviet Union. And we did. And that was effective.

But we're in a very different environment today.

PAYNE: Yes, a lot has changed since 1972.

Christian, always appreciate it. Thank you, my friend.

WHITON: Thank you, Charles.

PAYNE: Hey, folks, real quick, did you see this, Lady Liberty standing tall as lightning strikes, as she is fully charging?

You know what? So am I. You got to check me out every weekday 2:00 p.m. on FOX Business. You do not want to miss "Making Money." It's my main job, but, sometimes, I have got to save your money as well.

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