This is a rush transcript from "The Story," November 9, 2017. This copy may not be in its final form and may be updated.

MARTHA MACCALLUM, HOST: This story breaking tonight, Roy Moore is defiant and his would-be fellow senators are "disturbed and horrified" as the allegations of sexual misconduct hits the Senate candidate. The Alabama seat has been Republican, last four decades, but this could throw that into question. The evangelical conservative firebrand, now the Republican candidate for U.S. Senate in Alabama is the subject tonight of an explosive new report that he says is a hit job.

It was just released by The Washington Post. The report says this: "Nearly 40 years ago, the then 32-year-old made unwanted sexual contact with a 14- year-old girl." The Post says, "Three other women, who say that Moore also pursued them as young girls." Moore, who became famous for his fight to keep the 10 Commandments on this play in his court house, called the whole thing a baseless political attack by The Washington Post.

Here's a statement from his campaign: "Moore has endured the most outlandish attacks on any in the modern political arena, but this story takes the cake. This garbage is the very definition of fake news and intentional defamation." Still, a bipartisan course on Capitol Hill is calling for him to step down from his nomination." Chief national correspondent, Ed Henry, joins us live with the late-breaking details tonight on this from Capitol Hill. Good evening, Ed.

ED HENRY, FOX NEWS CHANNEL CHIEF NATIONAL CORRESPONDENT: Martha, great to see you. Brand-new this hour: Roy Moore has just gone on a tweet storm charging that this is what he calls the "Obama-Clinton machine" coming after him in Alabama. He is vowing he will never give up the fight so he is pushing back hard, and caught in the middle is the Senate Republican Leader Mitch McConnell who has been warning Steve Bannon and others to be careful with these antiestablishment Republican candidates who can win GOP Primaries, but might lose in the general election. And then put President Trump's agenda in further peril.

McConnell, though, can't celebrate tonight for being right about that because he has to do deal with the practical reality that Moore is now facing a December 12th special election that Republicans must win in order to protect the president's agenda. Moore insisting tonight as I noted that this is fake news, a report by The Washington Post that a woman, Leigh Corfman, claims that when she was 14-years-old Moore was 32 at the time, he took her to his home and took off her outer garments and touched her bra and panties. Plus, guided her hand over his pants.

As you noted, Moore's campaign put out a statement: "National liberal organizations know their chosen candidate, Doug Jones, is in a death spiral and this is their last-ditch Hail Mary. The Washington Post has already endorsed the judge's opponent, and for months, they have engaged in a systematic campaign to distort the truth about the judge's record and career and derail his campaign." The Washington Post insists that the woman did not come to them looking for publicity.

The newspaper says they found her after hearing rumors about his behavior decades ago, and that they found three other women who accused Moore of pursuing when they were between the ages of 16-18. That led several Republicans today to say if the allegations are true, Moore should step aside. Susan Collins, John McCain, and others are saying it doesn't matter, they don't even want an investigation. McCain saying, "the allegations against Roy Moore are deeply disturbing and disqualifying.

He should immediately step aside and allow the people of Alabama to elect a candidate they can be proud of." Here's the thing, if Moore ends up quitting, his name would probably still stay on the ballot for the early December a special election to fill Attorney General Jeff Sessions' old seat because Alabama law holds that new ballot can't be reprinted within 76 days of a special election. Some Republicans are already talking about the possibility of recruiting Luther Strange, the former Senator, who are backed by the president and McConnel that lost to Moore on the primary with the backing of Steve Bannon, who just yesterday told Fox that it's McConnell who should step aside.


STEVE BANNON, FORMER WHITE HOUSE CHIEF STRATEGIST: I think Mitch McConnell ought to tender his resignation. What he ought to do is offer to resign as soon as taxes are done. We can't do it in the middle of tax. But I think Mitch McConnell, tomorrow, should tender his resignation and say, hey, after we get taxes done, I will step aside and we'll have a revote on majority leader.


HENRY: So, you see this is part of a bigger struggle between the upstarts and the establishment weighing within the Republican Party. And the bottom line, though, is if Republicans lose this seat in Alabama, Martha, Democrats could win, get that seat, and then all of a sudden, tax cuts and other key parts of the president's agenda in much bigger danger, Martha.

MACCALLUM: We've already got a very slim margin, 52 in the Senate, and this would be problematic for that to be sure. Ed, thank you so much. Ed Henry on Capitol Hill tonight, good to see you.

HENRY: You too.

MACCALLUM: So, here now with more, Attorney David Wohl; and A.B. Stoddard Associate Editor and Columnist for Real Clear Politics. Welcome to both of you. Good to have you here. David, you're defending Roy Moore in this situation?

DAVID WOHL, ATTORNEY: Well, look, the timing of these allegations, one month before the election makes them highly suspect. I mean, let me get this straight, these acts allegedly took place in 1979 and her first disclosure is 38 years later, not to law-enforcement, but to a newspaper that has endorsed Roy Moore's opponent and is hell-bent on taking him down. I'm sorry, the credibility is completely zero. Mr. Trump -- President Trump went through the same thing during the election, three, maybe four made out --

MACCALLUM: Yes, but they weren't 14-year-old girls.

WOHL: One was, one said it happened when she was 13. She didn't show up at a press conference and mysteriously dismissed her complaint against him shortly thereafter. So, I mean, she -- the girl also admits, Martha, during this time that she was suffering from drug addiction, alcohol abuse. She was basically --

MACCALLUM: But that's not the point, David. It's not a question of her character, it's a question of his character, he was the adult, he was 32 years old. And so, the question is whether or not --

WOHL: Understood. Understood, Martha, but --

MACCALLUM: -- and she said, I went along with it, I went to his house a couple of times. It's really not, you know, that question of her going, it's a question of whether or not he did this. And I'm not hearing in what his statement is saying. I understand, you know, that this is, obviously, a hugely politically charged environment. His opponents are looking for anything they can possibly can find to take him down, this is a long-held Republican seat. Everybody gets all of that. The question is: whether or not this happened and whether or not voters are going to hold that against him. A.B.?

A.B. STODDARD, ASSOCIATE EDITOR AND COLUMNIST FOR REAL CLEAR POLITICS: Yes. I mean, this is an impossible situation for the Republicans who are calling for him not to run or to step down from his nomination, because this is not something that can be proven, it's not saying that can be prosecuted. So, they'll say that -- you see the Senators in Washington saying the Senate is no place for someone like this. He should step down; his candidacy is not sustainable if these allegations are true. We have no way of knowing how to prove that true.

And then, you have Alabama Republicans defending him, and you have his campaign basically saying, it's all, you know, a plot from Jeff Bezos, The Washington Post, and the Democrats. Of course, Steve Bannon will blame Mitch McConnell. All of this coming out, and as Ed pointed out, under -- within the 76-day mark, so he's really protected legally and he obviously is to fight; he's not going to step down. This is not a situation that Republicans are going to be able to get out of. I think they're going to have Roy Moore in the Senate on December 13th, unless this suppresses Republican votes, energizes Democrats, and he loses the election.

MACCALLUM: Up by six percent right now in the Real Clear Politics average, David. Some people, Lisa Murkowski among them, who was a right in candidate herself in 2010 is suggesting that people ride in Luther Strange.

WOHL: Well, I think it's absolutely outrageous for these Senators like John McCain to be presuming Moore guilty under these circumstances; that's not America. You know, this is something that is a politically opportune accusation, I get that. But, look, the allegations do not hold water at this point. And it's more likely that Moore's supporters are going to be energized, just like Mr. Trump were under these allegations -- when allegations like this are made that appear to be political -- a political witch hunt. I guarantee you, Martha, they're not going to give up and he's going to win probably by more than six percent and it's going to be another failed attempt by The Washington Post to take down somebody that they object to politically.

MACCALLUM: An ugly story in an ugly political season, to be sure. Thanks, you guys. A.B. and David, good to see both of you tonight.

WOHL: Thanks, Martha.

MACCALLUM: So, also breaking tonight, one party with two different plans. The House and the Senate, each releasing their tax reform bills tonight. There are some very big differences, so what do they mean for you? Are you actually going to get a tax cut from either one of these programs or what they come up in the middle? White House chief economic advisor Gary Cohn joins me on that.

And Donna Brazile's dismantling of the Democratic Party is a fever pitch as the former DNC Chair makes a surprise admission about the leaked debate questions -- we're going back there on this, it is something else. Plus this, the Air Force defending the big mistake that might have allowed the church shooter to get his hands on those weapons.


UNIDENTIFIED FEMALE: The offenses for which the shooter in Texas was court-martialed should have been reported. And that's why we launched a full-scale review of this case.



VICE PRESIDENT MIKE PENCE: President Trump believes the time has come to cut taxes across the board for working families, small businesses, and family farms.


MACCALLUM: That was Vice President Mike Pence just a little while ago in his home state of Indiana. Late this afternoon, the new GOP tax reform bill barely making it out of committee -- a lot of mudslinging in there from what we hear. It is expected to go to the full house floor this time next week. Also, today on the other side of the building, you have the Senate releasing their tax plan and it has some stark differences. In moments, we're going to talk to Chief White House Economic Advisor, Gary Cohn, about the path forward. But we begin Chief National Correspondent Ed Henry, joining us once again tonight on Capitol Hill. Double duty this evening as he looks at the breakdown of these two bills. Hi, Ed.

HENRY: Well, great to see you, Martha. As you said, a busy day up here. And I can tell you that what's happening here on the Hill is being watched very closely all the way in Asia by President Trump.

His spokeswoman, Sarah Sanders, a few moment ago putting out a statement saying that this was a huge step forward today on taxes towards getting the president, perhaps, his biggest legislative victory of his first year in office. Sanders saying, that this will be massive, historic tax relief for our viewers. Here's what happened, the House Ways and Means Committee approved their measure 24-16, that moves the tax package to the House floor, as you noted, after Republican Chairman, Kevin Brady, offered 29- page amendment to fine-tune the plan.

But Senate Republicans led by Finance Chairman, Orrin Hatch, unveiled their version of the package that sent some mixed signals. On one hand, the Senate bill would delay the slashing of corporate taxes that the president has been touting so much and that could turn off conservatives, but the package also offers some improved benefits to the middle-class that could help bring along wavering Republicans and maybe even some moderate Democrats in the senate. Here's what it has, the Senate plan: "Both the house and Senate would reduce the corporate rate to 20 percent from 35, but the Senate would do that after a one-year delay."

That's aimed at satisfying deficit hawks who want to keep costs down, but delaying implementation will slow the impact on the economy. The House wants to cap mortgage interest deduction to $500,000. The Senate would permit deductions up to a million dollars. Another flashpoint is the House would partially repeal state and local deductions, still allowing up to $10,000 for property taxes; the Senate would totally scrap those deductions.

Democrats say that's a huge problem in high tax states like New York and California, and it will put the Republican majorities in jeopardy in the midterms, but GOP leaders insist they'll be fine because they are delivering on a promise to the American people.


SEN. CHUCK SCHUMER, D-N.Y., SENATE DEMOCRATIC LEADER: Senate Republicans are telling House Republicans there'll be no compromise on state and local deductibility. It's a full repeal or bust because Senate Republicans need the revenue raced by ending this popular middle-class deduction.

REP. PAUL RYAN, R-WIS., SPEAKER OF THE HOUSE: This is about actually improving people's lives and making a positive difference. And I fundamentally believe when we do this, make good on our word, make good on our promise, make people's lives better, we're going to be just fine politically.


HENRY: Now, the goal is to get a final bill to the president's desk by Christmas, but that is going to be hard meet with these policy differences, and now this added twist tonight about whether or not Roy Moore can keep that Alabama Senate seat in Republican hands, Martha.

MACCALLUM: Ed, thank you very much. So, Wall Street, obviously, watching all of this very closely. The market has been up dramatically over 22 percent, I think since President Trump took office. But today, it backed off a bit; down, you know, I mean, it's relative when you look at 23,000 Dow Jones Industrial Average, down about 101 points, which is only about -- not even a half of a percentage. But analysts say that investors, obviously, are concerned about whether the Republican legislation can actually pass.

Joining me now, Gary Cohn, Chief Economic Advisor to President Trump. Gary, good evening. Good to have you back. Obviously, a big day for the tax bill that you have worked very hard on. But first, I do want to ask you about this story that is very much in the news that we lead tonight, and that is the question of Roy Moore. Does the White House believe that Roy Moore should continue to run for that seat in Alabama?

GARY COHN, CHIEF ECONOMIC ADVISOR TO PRESIDENT TRUMP: Look, Martha, thank you for having me. I really enjoy the opportunity to be here with you this evening. Look, we have not seen all of the facts yet, and the White House is waiting to get all the facts before we make a decision on this.

MACCALLUM: I mean, Luther Strange was President Trump's candidate. Is there any potential that he may call for the voters in Alabama to write ride him in and to go back to when he pushed for initially?

COHN: Like I said, we're waiting to see the facts. And I'm sure, once we see all the facts, the president will have an opinion on this situation.

MACCALLUM: All right. So, we'll get more on that as it comes out, as you say. In terms of what happened on the Hill today, obviously the market backed off a bit because the market has had a huge run, largely on the notion that corporations are going to get a nice big tax cut to 20 percent. Can you -- how do you feel about the fact that they may now not get it for another year?

COHN: I'm not sure that's why the markets been running. Look, the market goes up and down. As you just pointed out, we had less than a half percent pullback in the stock market today. I think the market's been going up because American businesses have been doing better and better as the economy continues to grow. Our tax plan is aimed to make sure that the economy does continue to grow, and we help American businesses compete in a very competitive global environment.

Our plan is to aim to make sure that we lower the business tax rate and our U.S. businesses can compete in a very competitive environment. So, we are very excited about what happened today. As you mentioned, we did get the House plan out of the Ways and Means Committee, and the Senate did introduce their plan today which will go into committee next week.

MACCALLUM: What you think are the biggest bones of contention? What are you most concerned about in the differences in these two bills, Gary?

COHN: Look, I'm not concerned about any of the differences. We are going through regular order, a normal process, going through committees in both the House and Senate, and this is exactly what we told people was going to happen. We're on the schedule that we've said we would be on. Before we leave for Thanksgiving next weekend, we hope and we're pretty optimistic that the House will have voted their bill out and the Senate will be through their committee process. A lot of people doubted that we could be at that place by Thanksgiving.

MACCALLUM: You know, the president said that he likes -- he said you're going to -- to the Senate Democrats, he said, you know what, you're going to like the Senate bill better than what they did over there in the House. Which couldn't help but remind me of the moment during the Obamacare battle where he said to the Senators, you know, the House version is mean, but we're going to do something better in the Senate. That doesn't kind of go over very well with the colleagues over the on the House side.

COHN: I think the president and we at the White House like both versions. We're very pleased with both versions. We're allowing the negotiators --

MACCALLUM: But why is he saying that they're going to like the Senate version better? That the Senate Democrats will like the Senate version better.

COHN: I think the president likes both versions because look at what they do. They really attacked both of his goals. The president set out to primary objectives. Number one, a middle-income tax cut, and number two lowering the corporate tax rate to make our businesses in America more competitive so we can deliver real wage growth to hard-working Americans. Both plans do that, so the president is very supportive of both of these plans.

MACCALLUM: So, Jeff Flake said that he's not so sure about this deal in the Senate; he doesn't like it a lot. There is likely to be more dissent from Senate Republicans as well. Does the president feel he can't catch a break from his own party in the Senate?

COHN: As I said, the president's very optimistic about this tax bill. It does everything he set out to do, everything he told the voters he was going to do with tax reform, both of these bills too.

MACCALLUM: I get it, so he's happy with what it looks like. But so, he thinks he can pass it, is he going to need Senate Democrats to pass it? Does he believe he needs Senate Democrats to pass it?

COHN: We would love to have Senate Democrats. We've been spending a lot of times with Democrats. I think you know that Mark Short and myself, we met with a group of 12 Democrats that Senator Manchin put together earlier this week. We had a very positive meeting with them. We've agreed to meet with more.

MACCALLUM: How many of them do you think you can get on board with this Senate bill?

COHN: Look, we've heard from many of the Democrats that there's a possibility that we could get 70 or 80 votes on this. You know, when we're continuing to meet with the Democrats and we are happy to meet with them.

MACCALLUM: All right. A good part of it as you see it, Gary Cohn, thank you very much for coming back THE STORY. Good to see you tonight.

COHN: My pleasure, thanks for having me.

MACCALLUM: You too. So, still ahead this evening within the hour, President Trump leaves China on the heels of a very high-stakes meeting that he had on trade and on North Korea. He said some very interesting things while he was in China and we're going to talk about it with Karl Rove. But first, Donna Brazile is making her -- doing her best to take down an already splintered Democratic Party with some very fiery new allegations tonight. Our panel, coming up next to take this on when we come back.


BRAZILE: We cooperated with the DHS, FBI, CIA, anyone who would help us, we wanted help --

TUCKER CARLSON, HOST: Yes, but not enough to give them your service.

BRAZILE: -- because of our country, our country was under attack, Tuck. It wasn't just the Democratic Party.


MACCALLUM: So, the Democrats' infighting not cooled by their Tuesday night wins. Donna Brazile is still determined to set the record straight on how the Clinton hijacked the nomination process, and she is upping the ante again as she takes on the Clinton establishment.

Brazile on Tucker Carlson's show last night admitted that she gave not Hillary -- not just Hillary Clinton to bake questions, but she gave them to Bernie Sanders and Martin O'Malley as well, she said. She claims she wanted all the candidates to see the moderator's questions. That is not how it's supposed to work, folks.


BRAZILE: WikiLeaks sought to divide us. These were active measures where you've got to see the things I give to Hillary.


BRAZILE: You haven't got a chance to see the things I gave to Bernie or Martin O'Malley. What I sought to do, Tucker was to ensure that we had these issues on the table and I made sure that our candidates, I didn't want them blindsided. That's what I'm here to do.


MACCALLUM: How about that? Trace Gallagher joins us live in our West Coast Newsroom with the backstory on this. Hi, Trace.

TRACE GALLAGHER, FOX NEWS CHANNEL: Hi, Martha. You know, Donna Brazile leaked that debate question to the Clinton in March of 2016 -- one day before CNN was airing a Democratic primary debate in Flint, Michigan, a city that was in the middle of a lead-contaminated drinking water scandal. Brazile sent an email to Clinton campaign chair, John Podesta, and communications director, Jim Palmeiras saying, "One of the questions directed to HRC tomorrow is a woman with a rash. Her family was lead poisoned and she will ask what, if anything, will Hillary do as president to help the people of Flint." And now listen to one of the questions at the debate.


UNIDENTIFIED FEMALE: After my family, the city of Flint, and the children of D.C. were poisoned by lead, will you make a personal promise to me right now that as president in your first 100 days in office, you will make it a requirement that all public water systems must remove all lead service lines throughout the entire United States?


GALLAGHER: But Brazile now claims she wasn't trying to give Clinton an edge, instead she was trying to warn her about the topic. Brazile also now claims she never said the Democrat primary was rigged in Hillary's favor, but here's what she wrote: "I had promised Bernie Sanders when I took the position of interim chair of the DNC that I would get to the bottom of whether or not Hillary's team had rigged the party process in her favor so that only she could win the nomination." Brazile goes on to write, "By September 7th, the day I was making this call to Bernie, I had found my proof and what I had found broke my heart." Hillary Clinton was asked about the allegedly rigged primary on late night with Seth Myers. Watch.


HILLARY CLINTON, FORMER SECRETARY OF STATE: I didn't know what she was referring to because as it's now come out, that just wasn't the case.


GALLAGHER: As it's now come out, but we checked Hillary Clinton's statement, and the only thing that has now come out is Donna Brazile, saying she didn't mean to say the campaign was rigged. Martha.

MACCALLUM: Trace, thank you very much. Here now with more on all of this, Lisa Boothe. Republican Strategist and Fox News Contributor; Isaac Wright are a former Executive Director for Clinton-aligned Correct the Record Superpack; And Tezlyn Figaro is a former National Staffer on the Bernie Sanders Campaign. Welcome to all of you, good to have you here tonight. And Tezlyn, I want to begin with you. Donna Brazile said that she also gave questions to Bernie Sanders, is that true?

TEZLYN FIGARO, FORMER NATIONAL STAFFER ON THE BERNIE SANDERS CAMPAIGN: Well, you know, that's breaking news, I'm sure, to Bernie Sanders and Martin O'Malley. You know, she said you don't know what it is that I gave them, I thought that was very vague. And it's really unfortunate to see that how the DNC or Democrats have crucified Donna Brazile for speaking the truth, and she is clearly now trying to go and make amends and pretty much walk back some of her comments.

She also said on Tucker last night that she didn't mean to say, you know, to hell with them, or they could go to hell. She said, she should've went low, and shouldn't went high instead of going low. And it's really unfortunate because this is clearly her motivation, it's because of the backlash that she received from Democrats. And now, Hillary Clinton pretending as if she's completely delusional and doesn't remember the actual agreement and she signed, and it's really sad and unfortunate.

MACCALLUM: Isaac, how can Hillary Clinton claim that she doesn't remember the agreement that she signed?

ISAAC WRIGHT, FORMER EXECUTIVE DIRECTOR FOR CLINTON-ALIGNED CORRECT THE RECORD SUPERPACK: Well, I don't think she claimed that she didn't remember the agreement. The clip you just played said she didn't recognize anything was rigged, and I think that's the same thing Donna Brazile has said. I think that's the same thing.

MACCALLUM: She said Donna Brazile said it was unethical. She did use the word rigged. But she said that it was clear to her that the way the whole thing was handle by the Clinton campaign, taking over the DNC, and then pushing them aside was unethical, and she did use the word rigged.

TEZLYN FIGARO, BERNIE SANDERS CAMPAIGN: And she also said she didn't recall, and so is the other DNC staff. They said they don't recognize the party that Donna was talking about.

MACCALLUM: Isaac, go ahead.

WRIGHT: Donna has said last night, on Sunday, repeatedly, that she didn't believe the system was rigged. That Senator Clinton, Secretary Clinton had a sign agreement to raise money for the national party, that's a pretty common practice. Bernie Sanders had one as well. He didn't raise money into the DNC, Clinton did, so she had input on how that money was spent. I'm sure if Sanders had raised that money to the DNC, he would have input on how that money was spent as well.


WRIGHT: Donald Trump had a signed agreement with the Republican Party.

(CROSSTALK) MACCALLUM: Go ahead, Tezlyn.

FIGARO: I'm sorry. There was an agreement that she had outside of just raising the money that said if I give you the money, I will control the strategy, I will control how the staffing is done, I will control how all of everything takes place before she was even the nominee. What Donna Brazile said was she said she found the cancer. And I lost my mother to cancer last year, who only survive 6 months after being diagnose. So I know pretty well how cancer can be deadly. And the bottom line is the DNC is full of cancer that's been going on for 20-30 years, and they have yet to find a cure.

And the more we continue to back this up, walk this up, change it and be anything different than what it is which is a cancer that is not only corrupting those of the top, but corrupting those of the bottom. If we continue to act like everything is all and well and say, oh, as long as we won in Virginia, all is well, then we'll continue to be hurting people, and this is flat wrong. To walk this back is wrong. I understand Donna Brazile's position as the first African-American female to run a presidential campaign, I respect her.

MACCALLUM: Lisa, go ahead.

LISA BOOTHE, FOX NEWS CONTRIBUTOR: Look, I think whatever your definition of rigged is, the reality is that former DNC chairwoman Debbie Wasserman Schultz resigned on the eve of this convention over the email that surfaced with WikiLeaks, an indication what very much clearly shows that the DNC, including Debbie Wasserman Schultz, herself, favored Hillary Clinton. It was trying to help the Hillary Clinton campaign, and they've very much against Bernie Sanders. Whatever your definition of rigged is, the fact is the former DNC chairwoman stepped aside over this very issue.

And also, with regards to the questions that were leaked, Donna Brazile also had to step aside and resigned from CNN for leaking those emails to Hillary Clinton, so those two things are fact that took place. And for the Democratic Party right now, 2016 election was a really embarrassing chapter for them, so this is clearly reopening that. And it's also reopening the very deep rift in the Democratic Party as you just saw with the two other Democrats on the panel going at it over this very issue.

MACCALLUM: Yeah. I just want to play of the moment from the Democratic convention. I was standing on the floor the time. There are people -- so many Bernie supporters in that room who were so upset. And clearly the look on their face, let's play this, suggested that they felt like the rug had gotten pulled out from under them in an unfair way. Watch this.





MACCALLUM: You can hear them chanting. You know, Isaac, I guess the question for you is, you know, what needs to be done if there's so much bad blood right now over all of this? How do you convince the Bernie supporters and Tezlyn that there's going to be a more fair proper process in the future?

WRIGHT: Well, I think the process worked. I mean, we had an election, the people chose a candidate, and that was our nominee. She won the election by 3 million votes, but unfortunately lost the White House because of Electoral College. I think there's a unity reform committee right now that's working on some ideas like getting rid of super delegates, and changing up the system to modernize it and update it, and we're going to see the results of that in January. And I hope that everybody will come together. We saw when Democrats work together and we get our message out, we win. That's what happened Tuesday night. I hope to see more of that from our party.

MACCALLUM: Tezlyn, last thought?

FIGARO: I hope to see that maybe the DNC can go commit to a 12-step program because clearly we're dealing with the disease of alcoholism, or delusion, or drugs, or something. Let's first start by apologizing to those you have hurt. And the bottomline is the more we keep ignoring this and acting like this didn't happen, that people were not hurt, and disenfranchise, the worse it's going to be. I'm here to tell you that nobody's just going to get over this and move on. You have a lot more stakes to win beside Virginia. So I suggest that people move forward, clean it out, reform it, and the DNC alleged unity commission.

MACCALLUM: All right. You guys, thank you very much, great to have all of you with us here tonight.

WRIGHT: Thank you.

BOOTHE: Thank you.

MACCALLUM: So still ahead tonight, the dramatic new steps that the Air Force is taking to fix the problems that could have led, at least contributed to this, the church massacre. Awful story. And Tony Shaffer and Colonel Waltz are here to talk about that. All of that as President Trump wraps up the very high-stakes time that he spent in China. The future hangs in the balance as to what of any deal was struck with President Xi to try to stop a nuclear North Korea? Karl Rove weighs in with his take, coming up next.


PRESIDENT DONALD TRUMP: My feeling toward you is an incredibly warm one. As we said, there's great chemistry, and I think we're going to do tremendous things for both China and for the United States.



MACCALLUM: So tonight, President Trump is about to leave China as he heads to Vietnam, that's the fourth leg of this very high-stakes Asia trip that he has been on. The threat of course of North Korea looming large over the discussions that you see there on your screen, but the president also at one point opted for some more nuance language, shall we say, in terms of trade that we've seen in the past. Watch this.


TRUMP: Both the United States and China will have a more prosperous future if we can achieve a level economic playing field. Right now, unfortunately, it is a very one- sided, and unfair one, but, but, I don't blame China.


TRUMP: After all, who can blame a country for being able to take advantage of another country for the benefit of its citizens? I give China great credit.


MACCALLUM: So some critics watched that, and they jumped all over the president saying that he had completely changed his tune. Watch this.


UNINDENTIFIED FEMALE: Clearly, he is trying to make himself very popular with President Xi.

UNINDENTIFIED FEMALE: Almost head snapping and how different the president tone is.

UNINDENTIFIED MALE: And this is sort of what bullies do sometimes. When they're actually in the room with the person, all of a sudden, it's a very different tone.


MACCALLUM: Karl Rove is former senior advisor and deputy chief of staff to President George W. Bush, and a Fox News contributor. Karl, good evening, good to see you.


MACCALLUM: So you see he got skewered by some for softening his tone on China, did he?

ROVE: Well, not really, but I did think it was the wrong tone. I think it would have been better being tough on them. The president saying, look, it's our fault, there's a little bit of Obama in there. Is not your fault, it's our fault. We've been weak. It's my predecessors have been weak. I think it would have been better if he had said what he said during the campaign which is, you, China, are not living up to the international standards that you have agreed to. You're engaging in unfair trading practices.

MACCALLUM: He did say that. He said it's been very one-sided and unfair.

ROVE: Yeah. But he also said that's not your fault. It is their fault. It is their fault because they have been engaging in these practices.

MACCALLUM: I didn't interpret it that way, Karl. I just want to say to you. The way that I interpreted it is that he was saying, look, I get it. I'm for America first, it's your country, so, of course, you're for China first, but we need to figure out a way to make this -- something that works for both of us.

ROVE: Well, you know what, though, I disagree, respectfully, because I think -- I don't think President Trump would say I'm seeking unfair advantage with other countries. He's just simply say we want to be treated fairly. If we treat you fairly, you've got to treat us fairly, and you're not treating us fairly. But again, here's the big thing, let's not get stuck up in the language. These things are events, but they're part of a bigger and broader process.

They announced today some trade deals, but even the administration admits that these deals are no substitute for changes in fundamental policy. This was an attempt to further the dialogue about policy changes if the Chinese to stop stealing our intellectual property, get the Chinese to lower the obstacles that they place in the sale of American goods and services inside their country and so forth. This was an event, a visit, that would allow the administration another opportunity to advance its causes, but we won't see the outcomes for days, if not weeks to come.

MACCALLUM: I think you're absolutely right about that. This trip, obviously, laying groundwork, right? I mean, you try to lay the groundwork for future discussions. As you said, they got $250 billion they're saying in trade, in built with technology, aviation, energy, but, obviously, the big issue here is North Korea. Does he come home from that trip, Karl, having made any progress in his private discussions with President Xi that will force their stronger hand with North Korea?

ROVE: Well, again, we won't know for some period of time because there was no announce but a forward action today. I think he did his cause a great deal of good by that speech that he gave in Seoul because it was strong, it was forceful, and it was clear. But we're dealing with a very interesting situation here. We've got some movements. The administration got some really good movement by getting the Chinese Central Bank to begin to draw, in essence, bank accounts from people doing business in North Korea. But that happened before the Chinese Communist Party Congress in which Xi basically consolidated his power.

So we're now in a new chapter in his life, and as a result a new chapter in our relationship with China. Does he think he needs to do two things, one is does he think he needs to follow through on the commitment that they made, and the international agreements have been made through the United Nations sanctions on tightening the screws in North Korea. And second of all, are there other steps that he is willing to take to remove the idea of a North Korea armed with nuclear weapons and ballistic missiles?

The United States has given a very important, if you will, commitment to the Chinese, which is we're not in favor of a united Korean Peninsula under a Democratic regime like we have in the south. We accept that China wants to have a communist buffer state on its border. But the question is how much more are we going to get from the Chinese. And, again, this was an event, it's a process, we've got to watch what comes out of the process.

MACCALLUM: Watch, we will. Karl, thank you so much, great to see you tonight, thanks for being here.

ROVE: Great. Thank you, Martha.

MACCALLUM: So coming up next.


UNINDENTIFIED MALE: How did this happen? How did the Air Force not report the Texas shooter criminal history to the database?


MACCALLUM: That question haunting the families of the 26 victims of Sunday's church massacre in Texas. Tony Shaffer and Michael Waltz on the alarming failures of the government in this situation and what, if anything, can be done to fix them.


MACCALLUM: So we now know the names and the faces of 25 of the 26 victims of the nightmare Texas church massacre. One of the victims was the unborn child of Crystal Holcombe who was slaughtered along with seven of her family members, who we have told you quite a bit about over the course of this story. This, as the pastor of the church now says his small white clapper place of worship is, quote, just too painful a place now. He hopes to demolish it and build a memorial garden there and rebuild elsewhere. These heartbreaking developments as just a short time ago, the Air Force addressed its failure to report information that could have prevented this gunman from ever walking into that gun store and purchasing his weapon.


UNINDENTIFIED MALE: How did this happen? How did the Air Force not report the Texas shooter's criminal history to the database?

UNINDENTIFIED FEMALE: That's what the review will find out. Our responsibility is to look at what happened here and then why.


MACCALLUM: So there's that. Here now, Lieutenant Colonel Tony Shaffer, a CIA train intelligence operative, and Lieutenant Colonel Michael Waltz, former Green Beret commander and a Fox News contributor.

Welcome, gentlemen. Good to have you there. You know, this is such a really tough side of this story. This is a man who pointed a loaded weapon at his wife, throttled her and the baby, a little boy, and he admitted that the force with which he came at that child could have killed him. So this is a man who the military justice system gave one year in confinement, then they released him, and in error, didn't even let the NCIS know that he was out there, and that he definitely should not be someone who should be permitted to have a gun. Tony?

TONY SHAFFER, CIA TRAINED INTELLIGENCE OPERATIVE: Well, look, this is not a single point failure. Yes, the Air Force is in the hot seat here, but this man showed tendencies long before the conviction. We need to be able to see a composite picture of these folks. And Martha, I argue, we don't need new gun laws, we simply have to have better information sharing that is commiserates with the level of technology. Look, I work, as you would talk about, before I work with local law enforcement in Virginia. I've worked with something called a HIDTA, high intensity drug trafficking area. And they're using an amazing software called Tetra, which actually is a middleware that helps in aggravate and alginate data in real-time from different databases. So I would argue, Martha, yes, terrible here, but this man was showing a pattern and nobody had a composite picture of this guy.

MACCALLUM: He was, Tony. But the point is that there was a checkpoint that should have happened. And put up the numbers that we have from the Pentagon. This is a Pentagon inspector general report which says that if criminal cases fail to report, the navy, 94 percent of the time, the army, 79 percent of the time, USA at 50 percent of the time, which -- on this, begs the question are they covering for their own?

SHAFFER: Well, I think it's more of a lack of oversight -- I'm sorry, go ahead.

MICHAEL WALTZ, FOX NEWS CONTRIBUTOR: No, I was going to say, and to add to your point, Tony, these databases are only as good as what you put into them.

MACCALLUM: That's right.

WALTZ: And there's so many of them, right? So, I'm also -- I'm glad to see Secretary Mattis ordering a broader DOD, the entire Department of Defense I.G. investigation because we're seeing some systemic problems here, right? We saw the same thing similarly where the coast guard, in the case of Bowe Bergdahl, rejected him for psychological problems, but then that wasn't communicative with the army who then accepted him. Tony, I'm sure you know as well, when you're discharged from the military and your entire career of medical issues from combat overseas, that database doesn't talk to the Veterans Affairs database. So, you know, it's a broader systemic problem. I doubt that this was just a one off on this particular airman. And, you know, Secretary Mattis, the secretary of the Air Force, and the entire system need to get to the bottom of it because there is an entire separate military judicial system where you have criminals, you have Leavenworth, you have prisons, and if that's not being communicated to the FBI, and these guys are kicked out of the military and then are free to go buy assault rifles, that is a huge problem.

MACCALLUM: I mean, we all have great respect for our military, and that goes without saying, I hope. But I'm saying it because I know that I'm being a bit critical here, but I think its cold comfort to hear that, you know, the databases.

WALTZ: These families deserve answers.

MACCALLUM: They absolutely do.

SHAFFER: Michael and I agree with you on this, Martha.


MACCALLUM: Let me ask you one more question about this because there was a piece this morning in USA Today where the Air Forces former top prosecutor basically said that too often domestic abuse cases get too light a sentence, and they shouldn't be handled within the military. They should be turnover to the federal agencies and the court systems.

SHAFFER: No, I disagree. Look, the military has to be held to account here. You can't have a separate disciplinary process outside the military chain of command. Those men under those commanders have to be held accountable based on the fact that they, as you point out, Martha, they do things that are extraordinary. And if they cannot perform adequately in their home life, that needs to be part of the equation looking at them for their suitability and service. I think Michael would agree with me on that.

WALTZ: Look, I think the military court system is fantastic, it just needs to be enforced.

MACCALLUM: All right. Thank you so much you guys. Great to see you as always. We'll be right back with more.


MACCALLUM: Finally tonight, politics put aside for a moving moment on the hill today, U.S. Capitol Police awarding five officers of the department highest award, the medal of honor for their bravery and response to the June shooting at congressional baseball practice. Congressman Steve Scalise was severely injured that day. He delivered a personal message of gratitude.


REP. STEVE SCALISE, R-LA.: You look at the shooting in Las Vegas where so many lives were lost and so many are still fighting for their lives. That day on June 14th could have turned out the exact same way. We all know. What the outcome would have been if not for the heroism and the bravery of the men and women on this stage.


MACCALLUM: We commend them. Amazing moment today. That's The Story. We will see you back here tomorrow night at 7:00. Tucker is up next.

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