Is the economy making a comeback?

This is a rush transcript from "Special Report with Bret Baier," June 2, 2017. This copy may not be in its final form and may be updated.


PRESIDENT DONALD TRUMP: Our tax bill is moving along in Congress, and I believe it's doing very well.

HOUSE MINORITY LEADER NANCY PELOSI, D-CALIF.: It doesn't exist. There is no tax bill moving through Congress.

UNIDENTIFIED FEMALE: We were expecting 185,000 jobs. We actually got 138,000 jobs.

MICK MULVANEY, WHITE HOUSE BUDGET DIRECTOR: The job numbers may reflect industry, capital sitting on the sidelines waiting for us to repeal Obamacare, waiting for us to get to tax reform.

UNIDENTIFIED FEMALE: What grade would you give the president thus far?

VICE PRESIDENT MIKE PENCE: You know what? I give him an A-plus for effort. I give him an A-plus for results.


JAMES ROSEN, FOX NEWS: And those are high grades. Are they justified by the numbers? Let's take a quick look at the numbers for the May jobs report. As you heard, 138,000 jobs were added in the month of May, although the previous two months saw their job figures revised downwards. And the unemployment rate is now at 4.3 percent. That is the lowest since May, 2001, the pre- 9/11 era.

Let's bring in our panel: Michael Needham is the chief executive officer at Heritage Action for America, David Catanese, senior politics writer for U.S. News and World Report, and syndicated columnist Charles Krauthammer. It was interesting to hear the president say, David, that our tax bill is moving along in Congress and for him to be so directly challenged on that by the minority leader of Nancy Pelosi. What is the deal there?

DAVID CATANESE, U.S. NEWS AND WORLD REPORT: There isn't an administration tax plan as of yet. They are trying to work this out. And I think due to what happened with health care, they don't want to get too far out in front of it without the coalitions on board. You don't want to present a plan that you don't have buy-in from outside groups, from conservatives, and from House and Senate members.

So they are also trying to do a two-step here moving along with the health care bill in the Senate. But, look, these deadlines they have set for August are not going to be attainable. They are not going to have -- I talked to Mark Meadows the other day. He still think this is a health care bill that --

ROSEN: The congressman from --

CATANESE: Congressman from North Carolina, crucial Freedom Caucus member. He still thinks that there will be a health care bill by July, he told me. I think that is ambitious. You see them quickly -- well, I shouldn't say quickly -- progressively move the timetable on tax reform past August into the fall, and I think even that could be ambitious.

ROSEN: Mike Needham, is this an A-plus economy right now?

MICHAEL NEEDHAM, HERITAGE ACTION FOR AMERICA: I think what you are seeing in this economy is that for eight years coming out of 2008 you had an L- shaped economy. We had bad policy that wasn't the type of policy that was going to get the kind of robust growth that the country has normally seen coming out of a recession. And we've kind of exhausted that L-shaped recovery. Now is the time where we need real stimulus from good policy if we are going to take it from what we've gotten in the last couple of months, the last year, to the next level.

That's where health care reform will be critical. Obamacare is a huge drag on small businesses. That's where tax reform will be critical. And also stuff like welfare reform right now where so many able-bodied Americans are encouraged to stay out of the workforce. Those policies are going to have to take root if we want to see the type of growth coming out in the next year that the president has promised.

ROSEN: To the extent that there is some softening of the labor market evidenced in these numbers today, we heard just now in that segment we played for you in the bump in from Mick Mulvaney, the White House director of the Office of Management and Budget, suggesting that perhaps capital is sitting on the sidelines, as he put in, waiting for us to repeal Obamacare, waiting for us to get tax reform.

But the Reuters article on the economy numbers that were presented today, offered a different suggestion about why the labor market might be softening. They quoted an economics professor named Sung Won Sohn from California State University in the channel island who said, quote, "Political uncertainty in Washington is another factor holding back the job market. The probably that any of the Trump stimulus would become reality has decreased significantly in recent weeks." Charles Krauthammer, are the political troubles of the president involving scandals, investigations, allegations and all of that potentially dragging of the economy?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, I think yes, but we haven't seen the actual effect. If that were the case, if that were already the case, the stock market would not be shooting through the roof. The increase in the value of shares is based on the assumption that it will be a spike in growth as results of policies.

But the problem for the president, for the Republicans is that the policies are being held up by the fact that Republicans can't agree among themselves. Health care reform was stalled because of Republican internal disagreements, the same with tax reform and with health care in the Senate, and it's going to be the same tax reform.

So this is a problem. You've got one party with control of all the elements of power. When the Democrats had that, they actually did stuff with it. They passed an enormous stimulus and they reformed -- remade health care, one-sixth of the economy. You can agree with the result or with the legislation or not, but the effectiveness of what they did is unmistakable. That hasn't happened.

I think there is sort of an expectation that there is going to be at least tax cuts, if not tax reform, and that may propel the economy. But right now the economy, to personify it, is waiting to see if the agenda is going to get off the ground. Right now it's stalled on the runway.

ROSEN: Sean Spicer, the White House press secretary, said something at the press briefing today that suggested that the president's communications team is aware that perhaps just sitting around in the White House and tweeting and waiting for the next "Washington Post" bombshell to hit and responding might not be the best way to advance this agenda. Let's hear what he said.


SEAN SPICER, WHITE HOUSE PRESS SECRETARY: You can expect the president to be focusing even more on jobs this month and holding events in Washington and outside pushing his pro-growth, pro-jobs agenda.


ROSEN: President Trump had a good first foreign trip. David, do you think that doing what is Sean Spicer foretelling here, getting out into the country, using Air Force One, holding rallies to try and drum up support for his agenda will work?

CATANESE: I think it is better to the alternative, which is having Sean Spicer on camera every day not being able to answer questions. Look, President Trump is supposed to have a rally in Iowa this week that got canceled because of the Paris agreement announcement. But I think you are going to start to see him move about the country more. You are already starting to see this week some of the Spicer briefings were pulled back off camera. I think we will continue to see that.

This is a president who drives his own message. He doesn't tell everyone, all his advisors where he's going to be on a certain day and time, so his best vehicle is speaking directly to the American people. And he gets energized by it. This is a guy who loves the crowd, he feeds off the crowd. And that will put them in a better atmosphere. Look, he can go to some of these states and pressures some of these countrymen and senators to get on board with his agenda, states he carried by 20, 30 points. Goes into some of those states, and those Democrats also are going to have to face reelection in 2018, he could be more effective there than here. I think every president is.

ROSEN: David just raised a point, Mike, of Sean Spicer declining to answer certain questions. And I think what that was a reference to was his new decree that any questions from the White House press corps about the whole complex of scandals and allegations surrounding Russia and so forth, he will not answer any more and he will just direct reporters to the president's personal attorney Marc Kasowitz. Are you OK with that?

NEEDHAM: I think it's wise. I think they need to take those issues, let the investigations play out and push those to the side because Republicans, they need to start getting a sense of urgency about the agenda. I think that the expectations coming to this administration were set a little bit too high. The notion of repealing Obamacare by inauguration day or Presidents' Day weekend, getting a budget through the House and the Senate and getting tax reform done all by August recess would require perfection out of the legislative process, which would never happen. But now you are starting to butt up against all of those different things, plus the debt limit put on top. If you don't create a sense of urgency out of the president and the House and the Senate, that's not going to get done. And so that's where their focus needs to be.

ROSEN: Charles, I need a "yes" or "no" from you. Is it OK for Sean Spicer to say we are just not going to answer questions on that subject, go to the attorney?

KRAUTHAMMER: That's his business. I think for the administration to shift the focus to its own agenda, at least they do have a two-part program. Hide Sean Spicer for witness protection program, somewhere in Iowa I think would help. And take away the president's tweeting machine, because it isn't only the briefings and the stories in "The Post." The president reignites this issue every time he picks up his little machine, and all you've got to do is hide it. Put it in the fridge, put a lock and key, and I think that might work.

ROSEN: Hide the tweeting machine inside the food machine, as it were?

KRAUTHAMMER: Get it away from him.

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