This is a rush transcript from "Fox News Sunday," October 15, 2017. This copy may not be in its final form and may be updated.

JAMES ROSEN, FOX NEWS HOST: I'm James Rosen, sitting in for Chris Wallace.

President Trump takes aim at Barack Obama's two biggest accomplishments.


ROSEN: First, the Iran nuclear deal.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: In the event we are not able to reach a solution working with Congress and our allies, then the agreement will be terminated.

ROSEN: We’ll examine the president's new strategy with national security advisor, General H.R. McMaster. It's a "Fox News Sunday" exclusive.

Then, a stunning blow to ObamaCare as the president orders the federal government to stop paying subsidies for ObamaCare exchanges.

TRUMP: If that money was a subsidy and almost you could say a payoff to insurance companies.

ROSEN: On all this and more from both sides of the aisle, we get the sense of the U.S. Senate from Democrat Chris Murphy and Republican Dr. Bill Cassidy.

Plus --

JOHN KELLY, WHITE HOUSE CHIEF OF STAFF: I'm not quitting today and I don't think I'm being fired today.

ROSEN: White House chief of staff, General John Kelly, tamping down uncertainty over his own standing and defending President Trump’s feud with Senator Bob Corker.

KELLY: When members of Congress say things that are unfair or critical, the president has a right to defend himself.

ROSEN: Our Sunday panel weighs in on Trump versus Corker, and which of them will pay the higher price.

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


ROSEN: And hello again from Fox News in Washington.

President Trump's back-to-back moves against his predecessor's health care law and the nuclear agreement with Iran not only seek to undo the Obama legacy but assign Congress responsibility for choosing the next steps. This hour, the president's national security advisor, General H.R. McMaster, joins me to discuss Mr. Trump's refusal to certify Iran's compliance in the nuclear deal.

And, two key members of the Senate Health Committee, Dr. Bill Cassidy and Chris Murphy, discuss the renewed war on ObamaCare.

But, first, the devastating wildfires in Northern California's wine country.


UNIDENTIFIED MALE: Go, go, go, go, go! Go! Go!


ROSEN: Body camera video released by the Sonoma County Sheriff’s Office showing just how dangerous it is for first responders.

More than 300 square miles now burning, that's the size of New York City. At least 40 people are dead, making these the deadliest fires in California in 80 years, with hundreds more people missing.

Will Carr is live in Santa Rosa with the very latest -- Will.

WILL CARR, FOX NEWS CORRESPONDENT: James, the search for victims continues through communities that have been destroyed. Garage doors crushed, cars that have been charred, and we’re not talking about a handful of homes. Instead, we are talking about entire neighborhoods that have been burned to the ground, more than 5,700 homes and businesses. And as the cadaver dogs continue to navigate through this wasteland of debris today, we are hearing stories of heroism, including the deputy that went door-to-door as he was trying to save lives.



UNIDENTIFIED MALE: She is disabled!

UNIDENTIFIED MALE: All right, all right. Let me get her feet! Let me get her feet!

UNIDENTIFIED MALE: Four nine, 10-4, don’t pass. Sonoma County Sheriff's Office mandatory evacuation order. Leave your homes.


CARR: Governor Jerry Brown and Senators Dianne Feinstein and Kamala Harris toured the hardest hit areas this weekend, all pledging financial help while praising first responders.


GOV. JERRY BROWN, D-CALIFORNIA GOVERNOR: All the resources, the people, the police, the fire, elected officials, neighbors, volunteers. It's a real example of how America pulls together.


ROSEN: To help, most of the home owners do have insurance and they will be covered. But as one mother put it to me, James, you can't replace the memories or the lives lost.

ROSEN: That's for sure. Will Carr reporting for Santa Rosa -- Will, thank you.

Joining us live here in Washington, White House national security advisor, General H.R. McMaster.

General, welcome back to FOX NEWS SUNDAY.

GEN. H.R. MCMASTER, WHITE HOUSE NATIONAL SECURITY ADVISOR: Thanks, James. It's a pleasure to be here.

ROSEN: It's an honor to have you.

The president called this new strategy towards Iran a two-step process. Step one is withholding the certification as you've done with an eye toward potentially securing some changes to the Iran nuclear deal and some changes in Iran’s behavior outside of the deal. Step two, as the president made clear in the remarks we are about to hear, is that if the first step doesn't work, we cancel the deal.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: In the event we are not able to reach a solution working with Congress and their allies, then the agreement will be terminated.


ROSEN: So, while we’re in this first phase seeking changes to the nuclear deal, is that the policy of United States government that we continue to implement fully all existing U.S. obligations under the deal?

MCMASTER: Yes, it is. And what the president, though, has done is he has set out a marker, a marker to Iranians and to our allies and partners that we have to fix fundamental flaws in this deal. It's a weak deal that is being weakly monitored. And so, the president has made clear that he will not permit this deal to provide cover for what we know is a horrible regime to develop a nuclear weapon.

ROSEN: So, two of the men in government today whom I think you most admire and respect advise the president against making this decision.


GEN. JOSEPH DUNFORD, CHAIRMAN, JOINT CHIEFS OF STATE: Iran is not a material breach of the agreement and I do believe the agreement to date has delayed development of a nuclear capability by Iran.

JAMES MATTIS, DEFENSE SECRETARY: I believe at this point in time, absent indications to the contrary, it is something the president should consider staying with.


ROSEN: And our allies have weighed in, right about where you would have expected them to be, with Britain, France and Germany issuing a joint statement and I quote: We stand committed to the JCPOA -- that's the technical name of the Iran deal -- and its full implementation by all sides. Preserving the JCPOA is in our shared national security interest, unquote.

So, General, isn't it farcical to imagine that the Iranians or the P5-plus-1 allies are going to be willing to revisit the terms of this deal?

MCMASTER: No, they already are revisiting the terms of the deal and implementation of the deal. And our European allies, the E3 they’re called -- France, Germany and the U.K. -- are supporting much more rigorous enforcement of the JCPOA and monitoring.

One of the real problems with this deal is we can't really say with confidence that they are complying and we know from their behavior, their behavior broadly in the region, and their behavior within the agreement where they have walked up to the line, they have crossed the line several times in terms of the restrictions, that this is not a trustworthy regime. So, much more comprehensive monitoring is in order.

ROSEN: What parts do you see the Iranians being willing to revisit?

MCMASTER: Well, it's not even revisit. It's just implement the agreement by going to sites, to fully implement the inspections of sites, the monitoring of suspicious sites within Iran.

ROSEN: The things you find most objectionable about the deal, which is the restrictions on military sites for access for inspectors, the sunset causes, the Iranians are not going to revisit any of that, are they? Willingly.

MCMASTER: Well, they have to revisit it because otherwise what you do is you just give the Iranians the opportunity to develop the nuclear capability. Their programs can advance and then they can go to industrial scale enrichment of uranium within a very short period of time and then bridge into a weapon, and that is just an unacceptable risk in the world.

ROSEN: Isn't that precisely what they can do if you walk away from the deal?

MCMASTER: Well, the president is not walking away from the deal yet. So, if he sees some real change, if he sees the ability of the Congress within U.S. law to address some of these problems associated with the deal. So, this -- in our legislation, the domestic law about the deal was really flawed because it was really just about cost reporting to each other.

So, what the president has done is met with Congress to ask Congress help fix this domestic legislation and let's work on as Secretary Tillerson has said, a deal that can lay alongside the JCPOA and address its fundamental flaws. One of which you already mentioned, which is the sunset clause where Iran can just wait for a little while and reap all the benefits of sanctions relief to enrich the Islamic Revolutionary Guards Corps, which is on a murderous brutal campaign across the Middle East.


MCMASTER: And then they’re going to breach in to a nuclear weapon. Yes.

ROSEN: Which is designated as part of this initiative, correct?

MCMASTER: Because I think what’s really important about the president’s speech is to pay attention to the whole speech because what the president has done is he has laid out a strategy for dealing with Iran's destabilizing and dangerous hate filled behavior, its behavior toward its own people and its behavior towards the region. And I would ask, as we always pay attention to our European allies and others, pay attention to our allies and partners in the region. What they said, the people who were under the gun of this regime, Israel and Saudi Arabia in particular.

ROSEN: All right. Let's turn to a country that many believe Iran has actually been helping advance towards a nuclear weapons capability and that's North Korea. The Stalinist regime in Pyongyang this past week reissued its threat to move militarily against Guam, a U.S. territory. We have heard you and the president and others in the administration reaffirm many times that the so-called military option remains on the table.

What would you like our adversary, in this instance Kim Jong-un, to know about that military option? Is it the same option military that was on the table when I used to hear Condoleezza Rice talk about it in 2005, or has in fact the North Koreans nuclear progress in that time served to constrain the military options that we have today?

MCMASTER: Our president has been really clear about this. He is not going to permit this rogue regime, Kim Jong-un, to threaten the United States with a nuclear weapon. And so, he is willing (ph) to do anything necessary to prevent that from happening and what Kim Jong-un should recognize is that if he thinks the development of this nuclear capability is keeping him safer, it's actually the opposite. It’s having the opposite effect.

ROSEN: What about the military options, are they the same ones we had in 2005?

MCMASTER: Well, they were under constant refinement. So, we have a broad range of new capabilities coming into our armed forces, thanks to the president's focus on modernizing the armed forces, addressing what had been a bow wave of deferred military modernization.

So, our military is getting stronger and stronger under military leaders are refining, improving plans every day. Plans we hope we don't have to use but we must be ready, we have to be ready. And so, all of our armed forces are getting to really a high, high degree of readiness for this mission, if it's necessary.

ROSEN: This tweet by President Trump instantly became one of his most memorable. It was posted just after 11:00 p.m. on the night of September 23rd and it read and I quote: Just heard foreign minister of North Korea speak at U.N. If the echoes thoughts of Little Rocket Man, they won't be around much longer.

General, did you receive advance warning that that tweet was going to go out?

MCMASTER: Well, the president doesn't have to clear anything with me. But what the president’s tweet is it’s very consistent with this policy. I think what's important to understand with both the Iran policy and with the North Korea policy, the president gave us very clear guidance at the outset.

We delivered as the national security team multiple options to the president, had broad ranging discussions, the president has made decisions on very coherent, well laid out strategies and that's what we’re executing now.

ROSEN: I want to ask about the tweet, though. Do you and the president perceive (ph) from a shared view that public integrations of another head of state, an attempt at publicly humiliating an adversary on the world stage with a derisive term like "little rocket man", that that can have some positive strategic impact?

MCMASTER: I think with a real danger is in terms of communicating with Kim Jong-un is that he doesn't understand how serious we are about his behavior and behavior of the regime. And the president has been very clear on that and I think that is -- it’s beneficial to the safety and security of not only the United States but our great allies in South Korea and Japan and the world.

ROSEN: All right. We just have about a minute left, I want to ask about your 1997 book, "Dereliction of Duty: Johnson, McManara, the Joint Chiefs of Staff and the Lies that Led to Vietnam".

I was a big admirer of the book. It’s a deep archival study of how the joint chiefs were systematically excluded from policy-making in the process that gave us the quagmire in Vietnam. You wrote at the time: Those who question the direction of LBJ's policy were excluded from future deliberations on Vietnam. The president got the military advice he wanted.

So, having made wartime dysfunction on the National Security Council your area of academic study, how do you apply the lessons you learned about the process in the Vietnam era to the running of the National Security Council today?

MCMASTER: Well, it was a real gift to be able to study the National Security Council and decision-making within that National Security Council and with its interaction with the president from historical perspective. And I think history can't give you the answer to today's problems, but it can help you maybe avoid some mistakes of the past.

So, it really highlighted for me what we owe the president within the National Security Council, is to coordinate and integrate efforts across all departments and agencies and provide the president with multiple options -- options that are based on clearly articulated goals and objectives that we derive from an understanding of vital interests, with U.S. vital interest.

ROSEN: Would there be any policy stakeholders with equities in the process who would complain they've been excluded in any way under H.R. McMaster?

MCMASTER: No, what we have done is we are running a fully transparent process that empowers president’s very talented cabinet, to bring forward to him their best assessments and their best recommendations. What the president does is he asks very tough questions and I think you've seen this in the development of a broad number of strategies from Cuba, to North Korea to South Asia.

And so, what I think the president has done is helped us restore our strategic competence. He got the National Security Council out of the tactical day-to-day business and supervising cabinet officials who don't need supervision. They need -- they need support and they need effort to -- help in integrating their efforts with others.

ROSEN: We will pursue all of this more with you the next time you come back here.

MCMASTER: Thanks. It was a privilege to be with you.

ROSEN: Thank you, General.

Up next, the fate of the Iran deal now in the hands of Congress, and what the president's actions on health care might mean for you. Two key senators join us to discuss the looming battles on Capitol Hill, just ahead.


ROSEN: President Trump's frustration with the Republican-led Congress for failing to help them deliver on some of his key campaign promises could mean an uphill battle ahead on Capitol Hill on everything -- from the Iran deal, to health care, to immigration.

Two key senators, Republicans Bill Cassidy of Louisiana, excuse me, and Democrat Chris Murphy of Connecticut, are here to discuss.

We begin here in Washington with you, Senator Murphy. Thanks for being here.

You are a member of both the Foreign Relations and the Health Committees. So, firstly, what did you make of the remarks that you heard from General McMaster?

SEN. CHRIS MURPHY, D-CONN., FOREIGN RELATIONS COMMITTEE: Well, you were right to point out that there's not a single advisor around the president that advised him to decertify the Iran deal. The fact of the matter is, Iran is complying with the agreement. The White House is required to tell Congress if they are not and they have submitted absolutely no submissions.

There is no chance that the deal is going to be renegotiated. The Iranians will not renegotiate it and neither will the Europeans. And so, if we were to pull all of this agreement as the president is threatening, Iran would get everything they want. They would be able to restart their nuclear program because we would be in violation of the deal, the Europeans would continue to grant them sanctions relief. Their economy would continue to grow, and they would look like the victim in this situation.

So, there is absolutely nothing that accrues to our national security benefit if we ultimately fall out of this deal and it is an absolute fantasy to suggest that we are going to be able to restart negotiations.

ROSEN: Still, even the Obama administration conceded a year ago that the nuclear deal, far from having a salutary effect on the Iran’s regional behavior, might actually have been emboldening it.


ROSEN: You can’t rule out that, in fact, this deal has served as a cause for this more aggressive posture.

UNIDENTIFIED MALE: I mean, I can't rule that out.


ROSEN: So, was in it high time, Senator, that the nuclear deal, specifically the threat of abrogating it, be used to try to curb Iran's more aggressive regional behavior?

MURPHY: So, importantly, those of us that supported the Iran deal, did so with the knowledge that we could continue to pass additional sanctions to stop their other nefarious activity in the region and we did that. Earlier this year, Republicans and Democrats joined together to pass new sanctions against Iran's ballistic missile program. But you know what? The president hasn't implemented those sanctions.

So, the White House can't complain that Iran is still acting in the deleterious manner in the region and then not implement the powers that we have given him to try to stop that behavior. We should be working together to take on their support for terrorism, their ballistic missile program, their miserable human rights record.

But if you allow them to get back on the path to a nuclear weapon, their activity in the region supporting our enemies is even worse. It's even more threatening to us if they become a nuclear power in that region. That should be unacceptable and that's what the deal was about.

ROSEN: You heard the president say the list of things that Iran has been doing that had been not in compliance with this deal, exceeding some of the enriched uranium stockpiles and so forth, you're not bothered by any of that?

MURPHY: The president and his advisors have made it absolutely clear -- notwithstanding the president’s bizarre speech -- the Iranians are in compliance with the agreement. To the extent that there have been instances of noncompliance, they’ve gotten right back in compliance.

Now, the president’s national security advisor is right, military sites are not automatically subject to inspection. But we have the right at any time, if we believe that there was nuclear activity happening on those sites, to request access. We have never had a problem with a request. We have never had an incident of noncompliance because of a request we made to get into those sites.

ROSEN: All right. Let's move to health care. You serve on the Senate, Health, Education, Labor and Pensions Committee. The Trump administration, as you know, this past week, directed the federal government to stop payments of cost-sharing subsidies under ObamaCare. The president called it a payoff to the insurance industry.

Why do you and your fellow Democrats oppose doing away with that?

MURPHY: So, this is the equivalent of health care arson. He's really literally setting the entire health care system on fire just because the president is upset that the United States Congress won't pass a repeal bill that is supported by 17 percent of the American public.

These subsidies going to the insurance companies help very low income people afford insurance. And without the subsidies, there will be many people who won't be able to provide insurance and afford it. And the other set of subsidies that go to individuals to access coverage will actually increase. Meaning that the deficit goes up, the amount of money that we spend overall on the Affordable Care Act goes up, because all that happens is the payments that used to be going to insurance companies now get substituted with increased tax credits for individuals to afford the coverage.

The fact of the matter is the president is trying to sabotage the American health care system, trying to put a gun to the head of our constituents by taking away their health care or raising their costs in order to force us to repeal a bill that the American public doesn't want us to repeal.

ROSEN: Arsons, guns to the head, this is pretty strong medicine in terms of the rhetoric in -- you know, I remember after Gabby Giffords was shot, we all wanted to tamp down the rhetoric and the use of these kinds of imagery and metaphor.

But let's move to, in fact, the atrocity out in Las Vegas where authorities are still investigating and trying to find a motive, for this deadliest mass shooting in American history. We’re just two weeks away from that sickening event. Do you sense that the momentum on Capitol Hill to enact legislation to restrict gun ownership rights in some form or fashion, perhaps the bump stocks, has already subsided?

MURPHY: I think there is willingness to take on this very narrow issue, bump stocks, which allow you to take a semiautomatic weapon and turn it into an automatic weapon. But I do think that you’re seeing the same pattern play out here -- thoughts and prayers from Congress, a little nibble of interest at legislative action and then we go back to the status quo.

I just think that we can’t -- we can't continue to pretend that are loose and lax gun laws don't contribute to the rate of gun crime in this country. Nobody should have that kind of powerful weapon to be able to kill 50 people in a period of 10 to 15 minutes. Nobody should be able to turn that kind of weapon into an automatic weapon. The vast of gun owners in my state support commonsense gun restrictions because they don't need those kind of weapons to hunt and they don't think that criminals should be able to buy weapons.

ROSEN: Would you be willing to accept new regulation of this bump stocks issue through ATF instead of congressional action?

MURPHY: My worry is that the ATF didn't do it in 2010 because the law is actually ambiguous. And so, I think if we all agree that people shouldn't be able to turn these weapons into automatic weapons, then let's just pass a law through Congress. I think that it's a punt for Congress to tell the ATF to do it, when we know that the underlying problem is that the statue itself is very unclear on this matter.

ROSEN: Punting as a metaphor on a football-infested Sunday, now, that’s appropriate. Senator Murphy, thank you very much for joining us here on FOX NEWS SUNDAY.

MURPHY: Thanks a lot.

ROSEN: Coming up, from Baton Rouge, Republican senator, Dr. Bill Cassidy.

All right. Senator Cassidy, we appreciate you’re there. You’re live in studio.

Given that the Republican-led Congress could not coalesce behind a legislative measure to repeal and replace ObamaCare, something that congressional Republicans and the president spent 2016 vowing that they would get done. Do you support the president’s use of executive authority effectively to gut the Affordable Care Act through administrative action?

SEN. BILL CASSIDY, R-LA., HEALTH COMMITTEE: The president -- first, James, let me just push back. The president is not gutting the Affordable Care Act. Let's just take the cost-sharing reduction payments as one example. They’re unconstitutional. A court has said so.

And with the president focusing on middle-class families who are paying $30,000 to $40,000 a year for premiums plus deductibles on top of this. Think about that, $30,000 to 40,000 a year. If there's something, which is damaging the credibility of the Affordable Care Act, is these premiums which are unaffordable, not that which the president is doing.

ROSEN: Senator, not so long ago, you counseled the president against the very health care decision that he made this week. Let's listen.


CASSIDY: We’ve got to continue to think about that family around the kitchen table who cannot afford their premiums under the Affordable Care Act as it now is. So, we do not wish to do anything -- we don't want to make it worse for them. Now, the short-term continuation of the CSR payments, we call (ph) cost-sharing reduction, would be a part of that.


ROSEN: So, Senator, do you still believe today as you did just two months ago that termination of these payments is going to make things worse for that family around the kitchen table?

CASSIDY: But, first, as I said, they’re unconstitutional. If you played a little bit more of that clip, you would have heard me say that I think Congress should pass that short-term extension. And that’s actually what the president is asking.

The payments are unconstitutional, according to a court, and his first responsibility is to uphold that. But we absolutely have to think about that family around the kitchen table, which is why I think Congress should pass them. Republicans have been trying to do so, but coupled with flexibility so that premiums can come down. Keep in mind, with those payments, that family is paying $30,000 to 40,000 a year. We’ve got to do something to lower their premiums.

And so, if we continue on the short-term, have the regulatory flexibility to lower those costs and then do something like Graham-Cassidy to correct things long term, I think that's a good direction.

ROSEN: But again, in the absence of the congressional action that you advise, the president now ordering the federal government to stop payments for these reimbursements. Is that going to help or hurt that family around the table? Yes or no?

CASSIDY: If you -- if you take the totality of what the president did, I think it actually helps the family. So, those who are lowest income, the payments will still -- the subsidies will still go to insurance companies for them to buy their coverage. And someone told me that the CBO said they might pay a little bit less.

If you speak about that family who’s just above federal poverty level, according to eHealth.com, a family of three making $82,000 a year, according to the Affordable Care Act definition, cannot afford their current policy on the exchange. They’re making $82,000 a year, and so, $30,000 to $40,000 is beyond their reach.

The president also allowed flexibility for their employer to perhaps ban together in association health plans are for short-term insurance to be sold that would be much lower in cost to allow them to purchase that which they can afford.

ROSEN: All right.

CASSIDY: Right now, they can't afford -- let's give them a chance to buy something they can afford.

ROSEN: Senator, some remarks made yesterday at the Values Voters Summit here in Washington by Steve Bannon, President Trump’s former chief strategist, is generating a lot of buzz online this morning, particularly the threat that Mr. Bannon issued to Senate Majority Leader Mitch McConnell.

Let's hear it.


STEVE BANNON, FORMER WHITE HOUSE CHIEF STRATEGIST: Up on Capitol Hill, because I've been getting calls, it's like before the Ides of March. They are just looking to find out who's going to be Brutus to your Julius Caesar.

Yes, Mitch, the donors -- the donors are not happy, they’ve all left you. We’ve cut your oxygen off, Mitch.


ROSEN: Senator Cassidy, I need a quick answer from you. Do you regard Steve Bannon as a real threat to Mitch McConnell and the Republican establishment?

CASSIDY: I think where there's a real threat to the Republican establishment is not addressing the needs of that family around the kitchen table. If we take care of that family, good policy is good politics.

ROSEN: All right. We’ll await your thoughts on Steve Bannon for another occasion. Senator Cassidy, thank you for your time today.

Up next, we’ll bring in our Sunday group to discuss how the president’s bold use of executive authority will impact ObamaCare and the Americans who rely on it.

Plus, three weeks after Maria, Puerto Rico remains a disaster zone, with most of the island still without power. We’ll assess the president's response to the crisis, next.


JAMES ROSEN, FOX ANCHOR: Coming up, President Trump seeks the support of Chuck and Nancy.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: What would be nice if the Democratic leaders could come over to the White House, we'll negotiate some deal that's good for everybody.


ROSEN: We'll ask our Sunday panel if a bipartisan deal can be reached on health care, next.



TRUMP: Democrats should come to me. I would even go to them because I'm only interested in one thing, getting great health care for this country.


ROSEN: President Trump calling for bipartisan support on health care reform, just hours after he used executive authority to terminate payments for ObamaCare.

And it is time now for our Sunday group.

GOP strategist Karl rove, Marie Harf, a State Department official in the Obama administration, Gerald Seib from The Wall Street Journal and the head of Heritage Action for America, Michael Needham.

Friends all, welcome.

Karl, it's estimated that three out of five customers who rely on healthcare.gov also rely on subsidies and the kind that the president ordered the federal government to stop paying this week. That amounts to about 6 million people. With our eyes on the 2018 midterms, does that make smart, political sense?

KARL ROVE, FOX NEWS CONTRIBUTOR: Well, the real question is, did it make constitutional sense. Article One, Section Nine of the Constitution says, no money shall be drawn from a Treasury but in consequence of appropriation made by law. Senator Murphy said this was health care arson. I wonder what he would think if President Trump said, you know what, I don't need an appropriation from Congress. I'm going to build a wall by just sending the money out of the Treasury. What if he said, you know what, I think the military needs more money, I don't care that the Congress won't appropriated it, I'm going to spend more money. That's exactly what happened on this.

ROSEN: All right.

ROVE: So -- so, yes, it -- it -- it is constitutionally wrong. Now we've got to fix it. And when we fix it, we ought to -- simply piling more money into the subsidies into the insurance companies is not going to fund and fix the fundamental flaw to the Affordable Care Act, which is, it is -- it is structured so that we don't get enough younger, healthier people in the process to subsidize the older, less healthy people.

ROSEN: Those 6 million people might not make the subtle distinctions about Article One that you just did. And, by the way, we want the viewers to know that Karl was reading from notes. He did not have Article One memorized.

Michael Needham, I dug up -- I spent the weekend digging up old quotes of yours, reliably criticizing President Obama over the years for his use of executive authority here and there as unlawful, a threat to our separation of powers government. I will spare you the reading of these old quotes of yours. I just want to know if President Trump's use of executive orders and administrative authority on everything from health care to environmental policy troubles you just as much.

MICHAEL NEEDHAM, CEO, HERITAGE ACTION FOR AMERICA: No, I mean it goes back to what Karl just said, nobody has a problem with executive action. We have a constitutional system that sets up a very robust executive branch of government. People had a problem with unconstitutional executive action. ObamaCare is very clear, there is no appropriation for bailouts to insurance companies.

Now, because ObamaCare is unstable, the assumption that those bailouts would be given is critical to it. And what President Trump has done -- has said is that he's not going to continue to make those unconstitutional bailouts. Similarly, President Obama regulated short-term limited duration health plans, which are a great life boat away from ObamaCare for people who are suffering under it. President Trump is putting forth a proposal to allow those lifeboats to be used.

The challenge of ObamaCare is that it's so fundamentally unstable that when people start getting into the short term limited durations like boats, It further destabilizes an incoherent plan. When you stop making unconstitutional payments to insurance companies, it starts destabilizing in a coherent plan. The challenges with ObamaCare is not what the president faithfully executing the duties of his office.

ROSEN: So the frequency of Mr. Trump's resort to executive orders doesn't bother you?

NEEDHAM: Well, I think the frequency of executive orders, which has gotten, you know, much worse under President Obama is obviously something that we need to go back to a constitutional system where the Congress steps out, does its job.

ROSEN: All right.

NEEDHAM: Both Trump and President Obama have been frustrated by a Congress that can't do its job. We all want to get back to that separation of powers. We should look at each of these individually and see whether the president is acting safely within the powers given to him. And I think that this past week the president has.

ROSEN: I'm going to turn to Iran. And, Marie, I'm very happy for this opportunity to add to the existing body to Rosen-Harf transcripts from all of those State Department briefings we were in together.


ROSEN: In withholding certification of Iran's compliance with the terms of the nuclear deal, the president -- and we'll listen to him do it - - cited multiple violations.


TRUMP: On two separate occasions, they have exceeded the limit of 130 metric tons of heavy water. Until recently, the Iranian regime has also failed to meet our expectations in its operation of advanced centrifuges. The Iranian regime has also intimidated international inspectors.


ROSEN: So does that sound like compliance to you?

HARF: Well, I think President Trump is taking a few liberties here with some of the facts. It is true on heavy water that when they were very briefly out of compliance, they immediately came back in compliance.

ROSEN: Twice.

HARF: As you know -- twice. That's right.

As you know, these are very complicated arms control agreements. And when there are implementation issues, how you can judge an agreement is whether they can be resolved, resolved quickly and today everyone, including General Mattis, a number of other people, General Dunford, have been very clear that Iran is in compliance.

The president just doesn't like the agreement. I think because President Obama was the one to do it. Also because he -- he wishes that it looked at things like ballistic missiles or support for terrorism.

And the fact is, there are better ways to deal with all those other issues and to make sure Iran is complying and crossing every T and dotting every I. There are better ways to do that than threatening to blow the whole thing up, or kicking it into Congress, which really throws it into this really uncertain place. And I don't have any faith that Congress is going to do the right thing here.

ROSEN: Jerry Seib, is the president backing himself into a corner in essence by making his -- his sole leverage on this whole deal, his willingness to walk away from it when, if he does that, the Iranians can just flip the switch and made the mad dash towards a -- towards a bomb?

GERALD F. SEIB, THE WALL STREET JOURNAL: Well, look, I mean we are entering a six-month period of great uncertainty in which that question is going to be answered. I mean especially what happens now is the guys behinds you (ph) in Congress have to decide if they're going to re-impose sanctions. Ironically, people who don't like the deal, starting with Senator Tom Cotton of Arkansas, do not want to move immediately to imposing the additional sanctions on Iranians because that will blow up the deal. The Europeans will stay in the agreement. The U.S. will walk away from it. Whether the Iranians continue to comply with -- at that point or not, who knows?

I think what's going to -- what the attempts now is going to be, to get the Iranians to renegotiate parts of this agreement. I agree with Senator Murphy, I don't think that's very likely to happen.

So I think we're headed toward a situation in which Congress is going to do what it usually does, which is not very much and it will be six months from now in a situation which, as you suggest, the president's going to have to decide, now do I pull the plug on the deal entirely or not. I don't know how that changes between now and then.

ROSEN: All right, panel, we're going to take a break right here.

But when we come back, President Trump and Republican Senators Bob Corker's ongoing war of words. The Senate Foreign Relations chair now claiming the president is undermining his own secretary of state's diplomatic efforts. That plus Puerto Rico when we come back.



JOHN KELLY, WHITE HOUSE CHIEF OF STAFF: I was not sent into, or brought into, control him, and you should not measure my effectiveness as a chief of staff by what you think I should be doing.


ROSEN: White House Chief of Staff General John Kelly making a surprise appearance at Thursday's daily press briefing, in part to dispel speculation about his future in the West Wing.

We are now back with our panel.

Karl, as a veteran of the Katrina experience, I do just want to ask you how you feel that President Trump is responding. He posted a tweet on Thursday after he had already received a fair amount of criticism for his response to that crisis saying, we cannot keep FEMA, the military, and the first responders, who have been amazing under the most difficult circumstances, in Puerto Rico forever. How is he doing and what do you make of the criticism?

KARL: Well, this followed on his comment when he was on the ground in Puerto Rico saying, well, you know, fortunately for you, this isn't a real disaster like Katrina was, which didn't sell very well in a -- in an island that has 80 percent of its power gone in 40 percent of its water on and 80 percent of its cell phone towers down. So my understanding is, my sense is, the administration's moving to rectify this by appointing a -- by appointing a recovery czar and they'd be smart to do so.

ROSEN: Interesting. All right, a little bit of news here on the program. That epic feud between President Trump and its fellow Republican Bob Corker of Tennessee, chairman of the Senate Foreign Relations Committee, only intensified this past week with Corker openly fretting that Mr. Trump might be setting us, quote, on the path to World War III. For his part, the president disparaged Corker on Twitter as "little Bob Corker."


UNIDENTIFIED FEMALE: Is that helpful to your agenda?

REP. PAUL RYAN, R-WIS., HOUSE SPEAKER: It's what he does. And we've kind of learned to live with it.

ROSEN: Jerry Seib, we're all chuckling, but I gather you have never seen anything like this in all your years in Washington. It is almost a mathematic certainty that one of these two men will pay a heavier price than the other for this. Who will that be?

SEIB: Well, it's hard to see what Bob Corker has to lose at this point. I mean he's not running for re-election. He's -- you know, he barely considers himself part of the same party as President Trump right now.

I think the odd situation is that the president has gotten himself alienated from Bob Corker, who's the chairman of the Senate Foreign Relations Committee, and John McCain, who's chairman of the Senate Armed Services Committee, at a time when two very big national security issues, the Iran deal and North Korea, are coming to full blow. I just don't think that's a good situation.

Now, having said all that, I think one of the things we've learned in the last eight or nine months is that you have to step back from the kind of junior high level rhetoric and look at what people do, not what they say. And my guess is Bob Corker will continue to work with the administration on the Iran deal and John McCain will continue to work with the administration on North Korea. And, in fact, he had some good things to say about the president on his Iran speech already this week. So the rhetoric is probably worse than the reality, but I don't think the reality is perfect by any means.

ROSEN: Michael, the president's supporters seem to like it, seem to view it as kind of Harry Truman giving them hell when he goes after establishment figures in this way, even when they are in his own party. So my question to you is, is there political capital to be derived from the president in his public criticism of a Bob Corker or a Jeff Sessions or a Rex Tillerson?

NEEDHAM: Well, I think the president is channeling a frustration that many Americans around the country have, both at a Congress that is not capable of legislating, of getting tax reform done, of getting ObamaCare done, and a Republican establishment that has often been out of touch with the real anxieties that people face, lest they be economic anxieties or a feeling that in Washington, D.C., that they don't have voice. And I think that's what the president is frustrated by. That's what he's articulating by. And we need to figure out, as a party, how do we come together, how do we accept that this is a president who made a more correct diagnosis of where the country is than any of the establishment Republicans who typically run for party or run for president. How do we come alongside that diagnosis? How do we tie it to principle and come forward with an agenda that unifies the party? That's the act that we need to be involved in right now and it's a frustrating process and it's not going as well as it needs to be.

ROSEN: But he was also more accurate than a lot of the posters and other wielders of big data who are supposed to have the answers of everything in advance.

All right, let's turn to the Democrats now. Senator Dianne Feinstein, the 84-year-old Democrat from California, who is the Senate's oldest member, announced this week she will seek re-election for a fifth full term, which, if served in full, would take Ms. Feinstein past her 92nd birthday. Not long after announcement, published reports indicated a likely primary challenge from this man, Kevin De Leon, leader of California's state senate. Mr. De Leon represents the Los Angeles area, is 50 years old, has close to a decade of experience in state politics and is Latino.

Marie Harf, as a Democrat, is it healthy for the party to have leaders like Nancy Pelosi and Steny Hoyer and Dianne Feinstein, all of whom are in their late 70s, even their mid-80s, for a party that places such a premium on progressivism and novelty and youth?

HARF: Well, I don't think age is the question, right? I think that any party that --

ROSEN: That is my question.

HARF: Well, I'm saying it shouldn't be the question.

ROSEN: All right.

HARF: Any part that loses like we lost in 2016 should do soul-searching. I think that's natural, right? It always happens. What's been interesting is that the Republican Party, who won, has this really serious level of infighting too. That actually I've been a little surprised about.

So, yes, I think the Democratic Party needs new leaders. We need a message that makes clear to middle-class voters around the country why I believe and we believe our policies are best for them.

But, look, if the Republican Party is going to spend its time and it's money primary challenge and a bunch of Republican senators instead of putting that money into ten Democratic Senate races where there are states where Donald Trump won in 2016, and we have venerable senators, I'm not sure this is going to be a win for the Republicans. Sure, we have problems on the Democratic side, but speaking to what we were just talking about, the Republican Party has its own problems. And 2018, at this point, could really go either way.

ROSEN: Karl --

NEEDHAM: I appreciate the attempt to concern (ph) the Republican Party in response to a question about the attempted --

HARF: That in turn (INAUDIBLE)?

ROSEN: It is now.

HARF: I like it.

NEEDHAM: I think it's interesting. But I don't think the debate is actually an unhealthy thing. It's only liberals on college campuses who are afraid of a debate about the --

HARF: Whoa, the college campus liberals.

NEEDHAM: It's interesting, actually, if we want to talk about the Democratic Party, that Dianne Feinstein, who is a fierce opponent of the second amendment, and has been fiercely against free speech on college campuses, is insufficiently liberal for the hash tag left (INAUDIBLE).

HARF: I don't think it's -- I don't think it's sufficiently liberal.

ROSEN: So let me -- let me jump in here, just to ask Karl, given your great, vast experience with -- with campaigns and elections, do you think that Mr. De Leon, would you place odds on him, since he does seem to embody the -- more the current demographics of California, would you place odds on him defeating Senator Feinstein?

KARL: I think she's formidable.

But, look, this isn't just -- I agree with Marie, this is not just a question of age. But I disagree with Marie perhaps that age is not important. Age is important.

If you take a look at the age break that was in the Democratic Party in Washington, it is between people like Seth Moulton and Tim Ryan who say, we need to have a message, like Marie said, that appeals to a middle class. That's not the big division of the Democratic Party.

An interesting piece in this week's "New Republican" says, can't a socialist and the liberals get together and work together? The Democratic Party, outside of Washington, is split between a very hard left, the resistance that has energy and enthusiasm, and then you have the traditional liberals, like Dianne Feinstein. So De Leon is going to -- going to appeal to the hard left of the Democratic Party that in opposition to this president is going even more hard left and spinning out of control.

ROSEN: All right. We have to leave it there just for the moment.

I, too, by the way, am a newcomer to this term "concerned troll (ph)."

It's time for a quick break. But when we return, President Trump starts a new front in his culture war, from the NFL to his pledge to return the country to its religious roots. That's just ahead



TRUMP: Before watching a football game, you want to see those players be proud of their country, respect our country, respect our flag and respect our national anthem. And we think they will. We certainly hope they will.


ROSEN: President Trump using his weekly address to go after NFL players kneeling during the playing of the national anthem. This a day after appealing to his evangelical base at the Values Voters Summit promoting a return to traditional American values.

And we're back now for some bonus time with our panel.

Jerry, this week saw President Trump become the first sitting president to visit the Values Voter Summit here in Washington. Let's listen to what he said.


TRUMP: The American founders invoked our creator four times in the Declaration of Independence. Four times. How times have changed. But, you know what, now they're changing back again. Just remember that.


ROSEN: So, Jerry, are the times changing back again, or do we see it, as we look around us in America, that it's more progressive than ever and perhaps accepting of things like same-sex marriage?

SEIB: Yes, it is both those things at the same time and that's why this was an interesting presentation by the president. I mean the Values Voter -- and, by the way, who would have guessed this a few years ago that Donald Trump was the champion of the value voters, but that's kind of what happened. And they form a large part of the Trump base right now. And he is speaking to them.

And, obviously, the NFL protest, which you referred to, is an attempt to say something I think which was very important in 2016 and under appreciated, which is, a large part of the divide between Hillary Clinton voters and Donald Trump voters was cultural. It was not economic, it was cultural. And this is now shot through every political issue. We've seen it in our polling. And, you know, conversations about issues like the NFL now play into that as well. And I think it dominates the entire political conversation in some ways.

ROSEN: Karl, it was at Values Voter where we saw Steve Bannon issue that direct threat to Mitch. We're turning off the spigots, Mitch, et cetera. We're cutting off your oxygen. Is Steve Bannon a genuine threat to Mitch McConnell and the Republican establishment?

ROVE: Not really. Think about the candidates he's recruited. The first candidate he went out and recruited to run for the House just got out of federal pen where he was for tax evasion, Michael Graham.

ROSEN: From my home town of Staten Island, by the way.

ROVE: Exactly. Danny Tarkadian (ph). He blessed him for a race for the United States Senate. He lost a race for state senate, secretary of state, a U.S. senator, and two races for Congress. May be the sixth time will be the winning time for him.

ROSEN: Right.

ROVE: How about the guy running in Wyoming, who lives in Abu Dhabi where he runs a security firm underwritten by a Chinese company with state ties that provides security to Chinese oil projects in Africa. I'm not certain that people will want -- will be ready to elect somebody who's from Abu Dhabi.

ROSEN: That's the first sentence in my life I've heard that name checks Wyoming, Abu Dhabi and China right all in the same sentence.

SEIB: And Karl does not have strong feelings about that at all.

ROSEN: He wasn't reading from notes.

Michael, the president in the remarks we just heard appear to be teeing up, perhaps as his next culture class issue, the so-called war on Christmas. The Real Clear Politics average of major reliable polling where the president's job approval rating is concerned places him right now at 38 percent. Briefly, are these kinds of appeals going to be the thing that brings them above 50 percent?

NEEDHAM: Well, I think the number one challenge that our country has right now is a civic coming apart where there is not trust between our nation's elites and the rest of the country. The rest of the country feels that our elites would rather be at Davos or worrying about the problems of the world than worrying about real economic and other anxieties that people fell in this country. There's not a lot of charities being funded by our nation's donor class that are dealing with Mountain Dew mouth in Kentucky.

And so I think dealing with that culture war, figuring out a way that instead of having a civic breaking, we can have a civic reawakening that brings us apart, is the most important challenge that we have as a nation. Clearly the president's doing it in a pretty very divisive way, which I don't think is going to be the way that we come together as a nation, but we need to figure out how we pull ourselves together, how we fight battles between a progressive left that does want to tear us away from our civic ties and do it in a way that's tied to policy and where the president can use that momentum to get things done.

ROSEN: Very quickly. Today's football games are the first Sunday matchup since the league, the commissioner, wrote to team presidents and league executives urging them to try to persuade their players to stand during the national anthem.

Marie Harf, two parts, very quickly, we have about 60 seconds, do you believe racism to be endemic in American society, yes or no?

HARF: In parts of it, yes.

ROSEN: And do you believe that these athletes are correct to use this pressure point of the playing of the national anthem in order to press their point?

HARF: Absolutely. And I think that they should be listened to. I think that the issues they're raising should be discussed in a serious, sustained way and not just be put aside because the president is trying to make this about patriotism and it's not. These players have said, we are patriotic. We love this country. But there are serious issues we have to talk about and we're not, as a nation, having that conversation. I want that to be the conversation, not these divisive, cultural wars that the president's trying to rely on because he's got nothing else done, like health care or tax reform or infrastructure. That's what I want to see.

ROSEN: He's got some things done. His name is Neil Gorsuch. And he sits on the Supreme Court.

HARF: And that's the -- that's the only thing that people can point to in terms of legislative accomplishment. They haven't done health care. They haven't done tax reform. They haven't done a number of things that he ran on and promised. And so I think he's going back to these cultural war to get his base fired up. It's not going to grow that number beyond that 35 percent you mentioned though. I think it's just going to solidify that number.

ROSEN: In five seconds, Karl, yes or no, will this issue with the NFL go away anytime soon?


ROSEN: All right. You heard it from the oracle.

Thank you, panel. We'll see you next Sunday.

And that is it for today. I'm James Rosen, sitting in for Chris Wallace. Have a great week. We will see you next "Fox News Sunday."

Content and Programming Copyright 2017 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2017 CQ-Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.