Karl Rove says Democrats are 'weaponizing' the IRS to bring down President Trump

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Karl Rove says Democrats are 'weaponizing' the IRS to bring down President Trump

Former White House deputy chief of staff Karl Rove weighs in on calls from Democrats to release six years of President Trump's tax returns.

This is a rush transcript from "Your World," April 4, 2019. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT: Better, but less drastic then closing the borders to tariff the cars coming in.

And I will do it, just like -- you know, I will do it. I don't play games.

(END VIDEO CLIP)

CHARLES PAYNE, ANCHOR: President Trump today issuing a new warning to Mexico: Stop the caravans or we will impose stiff tariffs on your cars. And if that doesn't work, we will shut down the border.

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

All of this ahead of the president's visit to the southern border tomorrow. DHS Secretary Kirstjen Nielsen is already there meeting with law enforcement.

And we are all -- we're all over this, first with John Roberts at the White House on how the president is responding, and Casey Stegall in El Paso, Texas, where the situation is worsening.

We begin with John.

JOHN ROBERTS, CHIEF WHITE HOUSE CORRESPONDENT: And, Charles, good afternoon to you.

And, this hour, we have got to do your favorite emoji, which is -- because we're not exactly sure what the president is talking about. When he was in that pool spray earlier for that Opportunity Zone event, he appeared to say that he was giving Mexico a year to address the immigration problem, and then, over and above that, the drug problem, or he would impose tariffs on cars.

And if Mexico still didn't get its act together, then he would close the border. Listen here.

(BEGIN VIDEO CLIP)

TRUMP: So we're doing it to stop people. We're going to give them a one- year warning. And if the drugs don't stop or largely stop, we're going to put tariffs on Mexico and products, in particular cars.

(END VIDEO CLIP)

ROBERTS: Now, we're being told that what the president might have met -- and we're trying to get some clarity on this -- is that the threat of closing the border because of immigration and apparently the application of tariffs on cars, which is brand-new, on that front, may still be imminent.

But then there's a second track here, where, if Mexico doesn't do something about drugs, then the president would impose tariffs on cars and then potentially close down the border again.

The senator from Texas John Cornyn thought that the president was talking about the idea of giving Mexico a year in total to fix immigration and drugs. This was his response.

(BEGIN VIDEO CLIP)

SEN. JOHN CORNYN, R-TX: Short of that, I'm glad to president is not closing the water down. I think it would have unintended consequences, be damaging to the economy, and it wouldn't really stop -- wouldn't really solve the problem.

(END VIDEO CLIP)

ROBERTS: So, at the moment, we all think that the president is giving Mexico a year to deal with immigration and cars, and we're checking to see if, no, he meant immigration now, drugs maybe later -- sorry -- stop immigration and drugs, or maybe it's immigration now and drugs later.

But then there's this other issue, too, because the president has a side letter with the USMCA that says that you cannot impose tariffs on cars coming in from Mexico or Canada on the first 2.6 million cars, which would seem to indicate that he can't impose tariffs on cars.

But the president seemed to say this afternoon, damn the torpedoes, I'm going to do it anyways. Listen here.

(BEGIN VIDEO CLIP)

TRUMP: now, we have a deal, USMCA. It's all done. They're going to have to live with it. OK? They're going to have to live with it. I'm not trying to be unfair. They're going to have to live with it.

The USMCA is a great deal for everybody. But this is more important to me than the USMCA, so they're going to have to live with it.

(END VIDEO CLIP)

ROBERTS: So the president is saying, we have got the USMCA, but I might want to impose tariffs on cars, despite the side letter that doesn't allow me to do that.

So, Charles, at this hour, we are trying to sort this all out. My apologies.

PAYNE: Soon, we may need your whole repertoire of emoji imitations.

(LAUGHTER)

PAYNE: So, thank you very much.

Now to Casey Stegall in El Paso, Texas, ground zero in this border battle - - Casey.

CASEY STEGALL, CORRESPONDENT: Hey, Charles.

A little confusion down here as well. You can imagine, if John Robert, standing on the lawn of the White House, is trying to get this sorted out, folks all the way down here certainly watching it from afar closely as well, because, quite frankly, talks of tariffs, talks of closing the border, all of it has folks in border communities like El Paso here on edge and uneasy, especially because some ripple effects they tell us have already been seen.

CBP says that there are longer-than-usual wait times at some of the international crossing bridges and ports of entry. Commercial traffic congestion is a real issue. Look at all of these 18-wheelers backed up. Those are all loaded with goods to be imported, and they have been stuck for hours.

Mexico, by the way, the third largest trading partner of the U.S. It is America's largest supplier of agriculture products, like fruits and vegetables. And if there is a closure, listen what could happen.

(BEGIN VIDEO CLIP)

DAVID FRENCH, NATIONAL RETAIL FEDERATION: Some of the obvious effects would be perhaps avocados or other fresh produce coming from Mexico wouldn't be available within a very short period of time.

(END VIDEO CLIP)

STEGALL: In fact, the president of Mission Produce, the largest distributor and grower of avocados in the whole world, says that the American supply would dwindle in about three weeks' time if imports from Mexico were halted -- Charles.

PAYNE: Casey, thank you very much.

Meanwhile, the House voting today to file a lawsuit against the president's executive order declaring a national emergency at the southern border.

House Speaker Nancy Pelosi saying -- quote -- "The president's sham emergency declaration and unlawful transfer of funds have undermined our democracy."

With me now, Louisiana Republican Senator Bill Cassidy.

Senator, thanks for joining us.

SEN. BILL CASSIDY, R-LA: Charles.

PAYNE: This was the tactic that the Democrats used, of course, for most of last year, early this year.

Subsequently, though, what the American public has seen, what the world is saying is a crisis of the magnitude that everyone acknowledges needs -- is an emergency.

CASSIDY: I agree with that totally.

The president speaks both of the drugs. He's previously spoken of the human trafficking, and obviously the folks coming in caravans from Central America. It is an emergency. It is a crisis.

I think we need to all be on board in terms of staunching this flow, if you will.

PAYNE: Sir, other than lawsuits and finger-pointing, isn't this the ultimate opportunity for both sides of the aisle to say, hey, let's come together, maybe come up with the ultimate solution, put everything on the table once and for all, and get it resolved?

Now is the moment where all -- everyone's watching what's happening down there and everyone, to a degree, is ashamed that we haven't fixed this yet.

CASSIDY: I agree with that premise.

I'm not sure everyone, though, would. Keep in mind, some on the left which to abolish ICE. They wish to have open borders. Now, I would like to think, Charles, that everybody is on the same page on this, but everyone is not. That said, your point is well-taken.

There's been money appropriated. There's been programmatic issue -- programs put into motion. We need to obviously allow those to go as expeditedly as possible. But I do think there's more. And this would be a great time for Democrats to decide to cooperate with Republicans.

PAYNE: With respect to President Trump potentially closing the border, where do you stand right now on there?

CASSIDY: I know, I think that could be counterproductive, in the sense that, right now, our caravans are coming from Central America.

But what we have learned is that, in terms of Mexico, it's not from Mexico. And when you ask the Mexicans why not, they say the economic development that has occurred in the northern part of Mexico gives us stickiness. Despite the violence, Mexican stay in Mexico because there's economic opportunity.

I don't want to thwart that economic opportunity that has addressed the issue of Mexican immigration as we attempt to staunch the flow from Central America.

PAYNE: Sir, I want to change course here, because a big news story this week, of course, is President Trump saying that the -- your party will address replacing Obamacare after the election.

Where are we right now with respect to improving our health care system, a topic that right now resonates as the number one in this country?

CASSIDY: Yes, I have got about, I don't know, maybe as many as 10 different bipartisan bills that would benefit everybody, no matter what your health care.

For example, price transparency helps the person on Medicare, as well as the person with commercial insurance. Lowering drug prices helps the person who's on Medicaid, because taxpayers pay less. I could go on.

Republicans clearly have a vision. It is to give power to the patient. I would argue that Democrats have a vision, and that is to have power over the patient, requiring them to give up their commercial insurance to go to Medicare for all.

So there will be that debate going forward. In the meantime, we have laid the foundation for success after 2020.

PAYNE: Senator Cassidy, thank you very much. Appreciate it.

CASSIDY: Thank you.

PAYNE: To Biden in a bind.

Seven women now accusing former Vice President Joe Biden of misconduct, proof that the video from Biden isn't going far enough.

(COMMERCIAL BREAK)

PAYNE: Three more women accusing former Vice President Joe Biden of improper conduct, this as he released the video on Twitter yesterday pledging to change.

(BEGIN VIDEO CLIP)

JOSEPH BIDEN, FORMER VICE PRESIDENT: Social norms have begun to change. They have shifted. And the boundaries of protecting personal space have been reset. And I get it. I get it. I hear what they're saying. I understand it.

And I will be much more mindful. That's my responsibility.

(END VIDEO CLIP)

PAYNE: Critics saying the former V.P.'s response fall short because he never apologized. So would that be enough?

Let's ask Fox News contributor Kat Timpf, Wall Street Journal's Bill McGurn, and Independent Women's Forum Inez Stepman.

Kat, is that what he needs to do? Does he need to completely fall on his sword?

KATHERINE TIMPF, CONTRIBUTOR: It's so interesting, because this is probably the best example that we could possibly have of the fact that he's right that times have changed, because this is not something that he did behind closed doors.

This is something that he did out in the open. People made jokes about it, sure, but it was never going beyond jokes, like oh, creepy uncle Joe, hah, hah, hah. There was never any sort of genuine concern for these women.

I think an apology could take him a long way certainly. But I -- he is right to say that the norms have changed. I mean, the reaction now vs. the reaction when this was happening, and we all saw it, there is a huge difference there.

PAYNE: Although, Inez, what I read that I thought was compelling was that maybe the general public's reactions have changed, but the women at that very moment felt like they were being violated. They felt that this was a creepy situation at the time that it happened.

Maybe they didn't feel they had the power to voice that, but they did feel that way.

INEZ STEPMAN, INDEPENDENT WOMEN'S FORUM: Well, you used the word creepy, and I think that might be the right word.

It might be inappropriate. It might be creepy. And certainly these women fairly felt that way. But there were other women who have come out and said that they found these kinds of embraces comforting, that they found it to make them more comfortable, not less.

So what we have here is a completely subjective standard. And I think that that is actually dangerous and poisonous in general.

PAYNE: What would be the -- subjective, though? If you have never met him before vs. maybe someone who knew him, what -- does that -- does that -- that has to play into it, then, right?

STEPMAN: Sure.

And we're asking people to guess how people would feel about it. I think the safe way to deal with this, of course, would be not to get too touchy- feely with people, especially the opposite sex that you don't know in a professional environment.

That being said, putting this on the same continuum, even, with sexual assault, I think, does a real disservice to real sexual assault, to real victims. I don't think we should be talking about this kind of behavior in the same breath as sexual assault.

PAYNE: Yes.

And, Bill, a lot of people agree with that, certainly. But, by the same token, people were saying it was a violation of sorts. It's a misdemeanor compared to the -- to the drastic things that we have lived with in the last few years.

BILL MCGURN, THE WALL STREET JOURNAL: Well, here's Joe Biden's problem. He's living in today's Democratic Party, which is like living on a college campus, with the standards shifting.

I think Kat and Inez make two important points on this, on the continuum. I'm a dad of three young women. So, my continuum is, do I speak to someone and say, knock it off, or do I punch them in the nose right?

(LAUGHTER)

MCGURN: This is probably more, you speak to them, knock it off, if my daughter said this was uncomfortable.

I think, as Kat says, look, Harvey Weinstein, there's no -- it's no coincidence that, when he made his moves, he lured people to his townhouse, right, in private. Joe Biden did it all out in the open, right, probably out of ego that he thought these people would be pleased by.

His -- the problem is now, within his camp, there's got to be two -- two types of people. Some people are saying, look, we will go through three bad weeks of publicity, like Ralph Northam or Justin Fairfax, and it will pass. And the other people say, you're a dead man.

(CROSSTALK)

PAYNE: But, Kat, to Bill's point, did the Democrats set themselves up for this?

TIMPF: Right. Yes, they absolutely did.

I understand why these women would have been uncomfortable with this. I certainly don't want anyone nuzzling my head, other than, like, my cat. I like it when my cat nozzles my head. But that's a little different than Joe Biden.

I think that there's going to be a war within the campaign in terms of what to do about this. I think that you need to be really careful what we cancel people over, though, especially when this is something that was -- clearly, everybody thought was OK back in the day, because nobody said anything really seriously about it...

PAYNE: Right.

TIMPF: ... until now, really, I mean, other than jokes. And making jokes is different than now people saying, hey, I was uncomfortable.

And I think we need just to make sure, when we talk about these sorts of things, that we take politics out of it, even though that's what people want to go to, oh, he's -- this guy's on the other side. Let's make him -- he's toast.

PAYNE: That is always is either a mitigating or a magnifying factor.

TIMPF: Right, absolutely.

PAYNE: Which I think hurts the entire cause itself.

But I do want to ask you all about President Trump's tweet that said, welcome, Joe. Welcome back, Joe. I'm presuming anyone has seen it.

Your thoughts on President Trump weighing in on this?

STEPMAN: Look, I think he's pointing out that Joe Biden is now under the same sort of media scrutiny that everybody on the right always is.

And Kat is right when she says that this is a political standard. And that does a disservice. No matter what the standard should be in terms of appropriate or inappropriate behavior, we should be applying it equally to everyone. And what we see now is that, as long as you're firing right and saying somebody to the right of you, which the Democratic Party now sees Joe Biden sort of on the right edge of its party, as long as you're firing right, this is an acceptable standard.

But if you're going left, as we have saw -- you just mentioned the governor of Virginia, the vice governor of Virginia -- if you're firing left, you can survive these kinds of allegations and much, much, much worse.

PAYNE: Right. Right.

Political hit job, though, Bill?

MCGURN: Yes, look, it probably is. Why are they all coming forward now, when we have -- this has been out there for a while?

I think the bigger problem that he has is -- if he wants to win the nomination, is, he's trying to look -- as he tries to look increasingly woke, he's looking increasingly week. And I don't think the Democrats can run a weak candidate against Donald Trump.

And that's his problem. And this isn't the first thing he's qualified.

PAYNE: Is that what the Trump tweet was all about, Kat?

I mean, was it -- I mean, we know it maybe had several meetings, but it's out there. It's having a lot of fun at Biden's expense, but it might also be saying, hey, you're probably dead in the water now.

What do you think?

TIMPF: I think that it's just because Trump is Trump, and he cannot resist the urge to make fun of someone else on Twitter.

In this case, I think he might do been better off not doing so. If we can remember, back when he was running for election, there were quite a few allegations made against him. And I don't think he would think it was funny if people were tweeting about those.

I don't -- I think that he should leave this alone. And I think it is going to go away. But, again, Trump doesn't really care what I have to say. That's what makes him Trump. He's going to just do what he wants to do.

PAYNE: Yes.

And who knows? It's -- maybe it's better for Biden that this is out now, rather than later. We will see.

Thank you all very much. Really appreciate the conversation.

And while many are looking for an apology from Joe Biden, why Karl Rove says, if he has any shot at winning, Biden needs to stop apologizing. What? We're going to ask Karl what he means later in the show.

But, first, Chicago police union just holding a press conference about the prosecutor who dropped charges against Jussie Smollett -- what they're telling her to do now.

That's next.

(COMMERCIAL BREAK)

PAYNE: Just moments ago, the Chicago police union demanding Cook County state's attorney Kim Foxx step down immediately.

She's the prosecutor behind dropping charges against Jussie Smollett, and now she's firing back.

Our Trace Gallagher has more -- Trace.

TRACE GALLAGHER, CORRESPONDENT: And, Charles, this is significant because we're talking about every single police chief from every single police department in the greater Chicago area now voting no confidence in Kim Foxx.

And minutes ago, as you said, the chiefs just upped the ante. Watch.

(BEGIN VIDEO CLIP)

KEVIN GRAHAM, PRESIDENT, CHICAGO FRATERNAL ORDER OF POLICE: We are here today. We're very grateful for the top police officials who are here with one united voice to demand the resignation of Cook County state's attorney Kimberly Foxx.

(END VIDEO CLIP)

GALLAGHER: Now, clearly, Jussie Smollett was the final straw, but police are also irate over Kim Foxx refusing to prosecute low-level felonies, in other words, burglary and shoplifting under $1,000.

Police say in Chicago they believe theft is now permissible. And Chicago's newly elected mayor, Lori Lightfoot, says Foxx -- quote -- "owes the public a better explanation" of what happened in the Jussie Smollett case. Lightfoot calls the evidence against him very compelling.

And that is saying something, because Lightfoot herself was a very successful former federal prosecutor. But Kim Foxx claims that she promised to crack down on violent crime, telling the police chiefs -- quote -- "Unfortunately, this is an excuse to justify their resistance to our prioritizing resources to increase public safety and reduce harm."

Kim Foxx, you may recall, was elected in 2016 mainly because the prosecutor she defeated waited more than a year to charge a Chicago police officer with the shooting of black teenager Laquan McDonald -- Charles.

PAYNE: Trace, thank you very much.

GALLAGHER: Sure.

PAYNE: Is the Chicago police union right or wrong to call for Foxx's resignation?

To former D.C. Police Detective Ted Williams.

Ted, your thoughts on this?

TED WILLIAMS, CONTRIBUTOR: Yes, well, I don't think that they are wrong, Charles, for calling for a vote of no confidence in her resignation.

But it's really meaningless. She's an elected official. She's probably not going anywhere. But there's no doubt about it that she's her worst enemy. She brings a 16-count indictment against Jussie Smollett. She does not tell the police department that she's going to dismiss the charges.

She politicized this by talking to political figures and being influenced to some degree by them. And she tells the public that she's going to recuse himself, when, in fact, she did not recuse himself.

And it is my understanding now that there's a possibility of a federal investigation.

PAYNE: Yes, I was just going to ask you about that.

I mean, OK, she's an elected official, but there's got to be some recourse. There's got to be a way for the public to understand what drove her to this decision, where the pressure came from. And, of course, the police wondering if their work was just turned -- turned down like this, just completely dismissed to this degree, out of celebrity or connections.

That's disheartening.

WILLIAMS: Well, it's very disheartening.

But what's going to happen here is, I think they need to appoint a special prosecutor to look into the dismissal of the charges against Smollett. I would also like to say, Charles, I don't think that Smollett is really off the hook.

I have said it before on this television network, and I will say it again. If the FBI, who is looking at the evidence in this case, can find their saliva on the making of the envelope, on that stamp of Smollett, or the two brothers, I have a feeling that both -- all three of them could very well be charged.

And, by the way, all three of them should have been charged initially in this matter.

PAYNE: Detective Ted, thank you very much. I know we will probably continue to hear about this. Thank you.

WILLIAMS: My pleasure.

PAYNE: Hey, you are now looking live at the White House, where President Donald Trump is about to meet with China's vice premier. It's not their first meeting, but this one is the most crucial. Find out why, as we take you there live.

And, first, it's the Mueller -- first, it's the Mueller report. Now Democrats are going after President Trump's tax returns. But do they risk going overboard? Karl Rove on that and more coming up.

(COMMERCIAL BREAK)

PAYNE: Jeff and MacKenzie Bezos finalize their divorce, the settlement making MacKenzie Bezos the world's third richest woman, according to Forbes. More on that.

We're talking about $35 billion -- after this.

(COMMERCIAL BREAK)

PAYNE: President Trump meeting with China's vice premier right now amid optimism the two countries are getting closer to a trade deal.

Edward Lawrence is -- with the latest -- Edward.

EDWARD LAWRENCE, BUSINESS CORRESPONDENT: Yes, the Chinese vice premier, Liu He, is inside the Oval Office right now meeting with President Donald Trump.

This is the second such meeting he's had this year. You never know what the president's going to say during one of these meetings. I could tell you, though, all smiles when he went in here at the White House, all smiles this morning for the arrival, when he first came to the U.S. trade representative's office.

An interesting addition to that meet-and-greet this morning, Treasury Secretary Steve Mnuchin was out with U.S. Trade Representative Robert Lighthizer to meet the vice premier when he came into the U.S. trade representative's office.

This is significant. It's the first time the treasury secretary has also been involved in that meet-and-greet. And it was all smiles, all good signs. But, at the moment, we still don't have the final word that we actually have a deal.

(BEGIN VIDEO CLIP)

TRUMP: We're going to either make a very good deal or we're not going to make a deal at all. But I think it looks like the deal is moving along very nicely.

(END VIDEO CLIP)

LAWRENCE: And the indications are, we're getting closer or inching closer to a deal here.

The main sticking point is the mechanism of enforcement. The Chinese want all of the tariffs removed, never to return. The U.S. wants to leave some of the tariffs in place to make sure that China follows through with this agreement, and then wants to be able to reimpose tariffs without retaliation if China breaks this agreement, but, again, inching closer.

The U.S. trade representative's office is scheduled or working on more talks, another day of meetings tomorrow. These are unscheduled meetings. But it looks like they will happen, as these talks are progressing nicely - - Charles.

PAYNE: Edward, thank you very much.

Meanwhile, Wall Street seems to be shrugging off any trade concerns. Are they banking on a deal with China?

FOX Business Network's Susan Li.

Susan, it feels like Wall Street believes this is a done deal.

SUSAN LI, CORRESPONDENT: Absolutely.

That's why we saw the best quarter in close to 10 years in the first three months of this year. And it's pretty much baked in. But the question is, what does this deal look like? A lot of people say it's a deal if the president says is a deal.

But we pretty much know the mechanics of it, right? So we're looking at a trillion dollars of purchases by China for U.S. goods over the next six years, also allowing U.S. firms to wholly own their companies, 100 percent, in China, again, a 2025 deadline for that.

However, we have heard this before through many administrations. Enforcement is key. And I think that's the main sticking point right now.

PAYNE: Although no administration has challenged China like President Trump has, let's face it. I mean, these tariffs, no one would dare go there. He went there.

LI: Right.

PAYNE: A year ago, China was talking about made in China 2025. Everyone said they can hold out. More -- everyone -- those same folks are now saying, China's got to cut a deal. America's got to cut a deal.

The enforcement mechanism.

LI: Yes.

PAYNE: Keeping the tariffs on, that seems to be the last sticking point.

LI: Absolutely.

So I have covered China for many, many years. And I have seen many administrations try to negotiate this trade deal, even with kid glove strategic economic dialogues. It just always felt like it was diplomacy at work.

And I think what this hard-line tactic, you finally have China really negotiating, coming to the table. And some of the impressive changes that I have seen is this new law that basically punishes Chinese companies for forcing U.S. ones to transfer technology, also an opening of the cloud computing sector.

PAYNE: Right.

LI: That's something that China was very hesitant to do.

Yes, it's going to be opened marginally at this point, but still that -- I think that's a breakthrough, given that it's been 20 years, and you have at least this crack through the door. But it is about enforcement. And I think, right now, with China, they're thinking about this nonretaliatory mechanism, which means you keep these tariffs in place until China proves that they are sticking to their promises.

However, China will have to remove all the tariffs that they have on U.S. goods. And, for them, in China, there's a cultural thing called face and respect. And, arguably, right now, this U.S. president is best when it comes to optics. In China, optics is part of the culture.

And if China and Chinese President Xi Jinping is trying to sell this to the people of China, saying, we have to lift all these barriers, all these tariffs off, but we accept U.S. terms, that might be a tough sell.

PAYNE: Right.

All right, we will see. It seems like it's coming down to the wire. Thank you very much, Susan.

House Democrats officially going after President Trump's tax returns, but the White House is standing firm.

Karl Rove on the new political showdown and, oh, yes, why he says it's time for former Vice President Joe Biden to stop apologizing. Rove is next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI, D-CALIF., SPEAKER OF THE HOUSE: The U.S. tax code Section 6103 -- remember those numbers, 6103 -- provides Congress the legal authority to get the tax returns.

Show us the Mueller report. Show us the tax returns. And we're not walking away just because you say no the first time around.

SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: While his taxes continue to be under audit, he doesn't anticipate that changing at any point anytime soon, and, therefore, doesn't have any intention to release those returns.

(END VIDEO CLIP)

PAYNE: Speaker Nancy Pelosi claiming House Democrats have the -- quote -- "legal authority" to demand six years of President Trump's tax returns, but so far the White House is not budging.

So how will all of this play out?

Former White House Deputy Chief of Staff and Fox News contributor Karl Rove joins us now to discuss.

Karl, after two years, they found 6103. Is that going to be the magic bullet for them?

KARL ROVE, FORMER SENIOR ADVISER TO PRESIDENT GEORGE W. BUSH: Well, Congress does have the right, the Ways and Means Committee chairman has the right to request the tax return of any American citizen, but is subject to strict privacy rules and cannot be revealed publicly.

But let's not kid ourselves. The excuse that they're offering for this, that they're conducting oversight to make certain that the IRS is doing its job, Senator Chuck Grassley earlier today called them out on the Senate floor and said, if you wanted to actually make sure the IRS was doing its job, you ought to ask the inspector general of the Department of the Treasury to find out if it's doing its job.

That's not what this is all about. This is an attempt to get the president's tax return and try and find anything, anything they can find in order to bring him down.

And, Charles, this is every American, Republican or Democrat, ought to be concerned about weaponizing the IRS in this manner, so that you can use the IRS to get the tax return of a political opponent in order to do something to embarrass them or to attack them.

PAYNE: Right.

And, Karl, I mean, it's not the first time the Democrats have been accused of weaponizing the IRS or wanting to.

ROVE: Oh, no, we had the -- we had the whole issue with the IRS being run -- the nonprofit division denying nonprofit status to conservative groups, while granting it to liberals.

But I'm not finished, Charles. We need to look at what they're saying. I just -- I saw today Congressman Hakeem Jeffries, one of the top five Democrats in the House, part of the House leadership, and he said, look, we have an out-of-control executive branch.

That's how he explained why they were doing this. We need to -- we have a responsibility to find waste and fraud. And we got to do something about the culture of corruption that's coming out of the White House. And that's why he said we needed to have the returns.

Well, what kind of evidence do they have? Is this a criminal investigation? Then there ought to be a scintilla of evidence that this is true. He said, we will see where this leads us.

They have no idea what's in those tax returns. And yet they're -- they're using, abusing this power in order to go after the president. And, frankly, it is reprehensible. It's like a thug, in all candor.

And who doesn't think that, being a New York real estate guy, that Donald J. Trump has not had his tax returns audited by the IRS with a fine-tooth comb for decades?

PAYNE: Yes, I saw.

ROVE: And yet they're...

PAYNE: I saw the stack of them. So -- but it feels like many have found him guilty. And now they're just looking for proof, to your point.

ROVE: Well...

PAYNE: And you would have to believe that they would find -- because it seems subjective. If they were to get these returns, in the strictest privacy, that it would be subjective for them to think of it if it's elevated to a level where the public must see them.

ROVE: Yes.

Well, how much do you -- A, how do you think -- how likely do you think it is, if they get the returns, that they're going to be leaked? And, B, how likely do you think it is that, on a straight party-line vote, the House Ways and Means Committee might vote to release Donald Trump's tax records, as opposed to anybody else's?

Once you weaponize it, once you make it possible for one side to do that, it's possible for the other side to do it. And nobody in America should think that it does our country any good to have the House Ways and Means Committee do a fishing expedition in the tax returns of anybody they want that.

PAYNE: Right.

ROVE: We had that happening when -- under Lyndon Johnson and Herbert Hoover -- with J. Edgar Hoover.

We're not a Third World country. We should not be operating this way.

PAYNE: Karl, while I have you here, I wanted to ask you about your op-ed saying former Vice President Joe Biden needs to stop apologizing if he wants to become president?

ROVE: Yes, look, I think it's a mistake for him to go around saying well, you know what, I'm -- I'm sorry about my vote for the crime bill, and I'm sorry about this and I'm sorry about that.

I think he hit the right tone, which is to say, look, I understand that I'm sort of a handsy kind of guy, touchy-feely, and I understand I have offended some people by that, and I have encroached on your space. And so I'm going to learn from that, and it's my responsibility not to do that.

But most of this stuff is just like, we're -- here's a guy who served in public life for a long time, cost -- cast a lot of votes. And now he's been attacked for something that he's been doing for 20 or 30 years.

If people thought this was a problem, they should have been talking about it when he was elected in the 1970s or when he was chairman of the Judiciary Committee in the 1990s, or vice president under Barack Obama.

PAYNE: Right.

ROVE: But now, weaponized by the left -- not to use that -- overuse that word -- opposition research dumped on him on the eve of his entering the presidential contest.

PAYNE: Right.

ROVE: It's like a new welcome wagon gift we give presidential candidates.

You get an oppo research package dumped on you as you get ready to get in the race.

PAYNE: We got 30 seconds, Karl, but I do want to ask, though, is it ironic to you, though, that this is probably, after years of the Democrats and these sort of political tactics, that it's imploding on the -- on their own party?

ROVE: Well, yes.

And, look, the point of my article, though, was to say, look, right now, conventional wisdom is that he is in deep trouble. I said, maybe he's a stock, to use your terms, that is undervalued.

(LAUGHTER)

ROVE: Let's see how he performs, because he's got a lot of advantages.

He leads the Democratic pack. He's got a record that he can defend. He could be a traditional Democrat in a field of people who are racing to the far left.

PAYNE: Right.

ROVE: So I -- my point was, let's see how he performs here in the next couple of months. He might surprise us all.

PAYNE: He might.

Hey, Karl, you never surprise us. You always bring it. We know that, and we appreciate it.

ROVE: There we go.

PAYNE: Thank you.

ROVE: Thank you, Charles.

PAYNE: Tesla CEO Elon Musk in court, as he tries to settle a dispute with the SEC over a tweet -- new details over what just went down.

(COMMERCIAL BREAK)

PAYNE: Getting a divorce can be a long, dragged-out process.

But that doesn't seem to be the case for Amazon CEO Jeff Bezos and his wife -- ex-wife, MacKenzie, the two saying they finalized their split today.

And, under the agreement, MacKenzie is giving Jeff 75 percent of Amazon stock that they own together -- they own together, although -- along with voting control over the shares that she's keeping. The settlement also gives Jeff all of MacKenzie's interest in The Washington Post and Blue Origin.

Forbes saying MacKenzie is now the third richest woman on the planet.

A judge ordering Tesla CEO Elon Musk and the SEC to talk it out over the next two weeks, as they try to settle a dispute over a Tesla-related tweet.

Charlie Gasparino outside the New York City court where it all is going down -- Charlie.

CHARLIE GASPARINO, SENIOR CORRESPONDENT: Yes, Charles.

A Tesla-related tweet that essentially violated an earlier settlement with the SEC, allegedly, that he wasn't supposed to tweet out stuff that was wrong. That came after the 420 -- taking -- taking Tesla, a private tweet that the SEC found to be inaccurate and wrong and violating securities laws.

He was supposed to get all his tweets checked by a general counsel. Apparently, he didn't. He went to court today. The judge said, A, work it out, and, if you don't work it out, I'm going to rule.

And I will say this, Charles. I have covered a lot of these cases. What's interesting about this is that Elon Musk keeps thumbing his nose at the SEC, at the government. And he's still coming out ahead.

Let's just back up a minute. He may be -- he may be held in contempt of court when the judge, Nathan, eventually rules. But the SEC has asked for these types of penalties, not to get rid of them as CEO, as I believe the Obama SEC would do. But they have basically asked for some sort of escalating fines and maybe more regulation and procedures.

It's pretty weak tea. So if you want to know why -- I noticed -- I just looked before -- maybe it changed -- but the Tesla stock, after a lousy day, where they missed performance numbers, Tesla stock in after-hours is up today, it's because he came out of here.

And I will tell you, his smile was ear to ear. He felt really good, because the worst that could happen to a billionaire is that he's going to have to pay a few more bucks by basically thumbing his nose at regulation.

PAYNE: Right.

GASPARINO: I mean, let's be clear here. Most CEOs don't go out there and tweet errant production numbers and that we're going private at 420, when the stock is trading at 320, or whatever it was.

PAYNE: Right.

GASPARINO: I mean, these -- this guy is a loaded gun for shareholders.

And, you know, when he came out of this hearing -- and I will tell you, I was in there. I listened to the judge. I listened to the SEC. When he came out of here, if you're an investor in this, you got to be kind of worried, because the government is -- doesn't really have your back here. I mean, it's pretty clear.

And it doesn't look like the judge is going to do much. And the SEC, under Trump, I know where they're going. They don't -- they want less regulation. I get it. They think it's good for the markets. I agree.

But when CEOs step over the line, you need a -- you need to draw the line, I think.

PAYNE: Yes.

GASPARINO: They didn't do it here. I mean, it's -- and this will play out in a couple of weeks.

PAYNE: Yes.

GASPARINO: We will see exactly where they go. The judge may rule he's not in contempt. And then we're -- it's nothing.

But if you look at what the SEC said, they're looking at a fine.

PAYNE: Well, Charlie...

GASPARINO: And they're looking for a -- some sort of remedy, regulatory remedy.

And when Musk showed up here, Charles, I will tell you, I thought -- I thought they were worried that he was going to get bounced as CEO. And there's no sign that's going to happen -- back to you.

PAYNE: I'll tell you what, though. He strutted in like a rock star, and the Elon Musk charm must have worked on the judge too, Charlie. So we will see what happens.

GASPARINO: Yes, he did.

PAYNE: By the way, you were the only guy who said he may show up. All day long, I watched all the networks.

GASPARINO: I know. I know.

PAYNE: And you were the only one who called it. Congratulations, my friend.

We will see you real -- see you back in the studio.

GASPARINO: Thank you.

And you know why -- you know how I did that? I will tell you how I did that. It was pretty simple. Unlike these other guys at these other networks, I do reporting. I called up.

(LAUGHTER)

GASPARINO: And when -- the tell was when they wouldn't -- when they wouldn't say yes or no, I said, he's got to be showing up, if they're not confirming.

PAYNE: Right. Great stuff, my friend. Thank you.

GASPARINO: Anyway, back to you.

PAYNE: Hey, he's the guy 2020 Democrats are fearing, but is former Starbucks CEO Howard Schultz right when he says he's not the spoiler, Democrat socialist policies are?

All as we get into ready for Bret and Martha's big town hall with the potential 2020 candidate tonight.

(COMMERCIAL BREAK)

PAYNE: You're looking live at Kansas City, Missouri, where, in about an hour-and-a-half from now, former Starbucks CEO and potential 2020 independent presidential candidate Howard Schultz will join our Bret Baier and Martha MacCallum for a town hall.

Some Democrats have accused Schultz of being a spoiler, but here's what he told FOX back in March:

(BEGIN VIDEO CLIP)

HOWARD SCHULTZ, FORMER CEO, STARBUCKS: If you want to talk about spoiler, if the Democrats decide, in their wisdom, to nominate a far left person who is professing policies that resemble that of a socialist, that will be the spoiler and, in my view, my view, Donald Trump will get reelected.

(END VIDEO CLIP)

PAYNE: So, is he right or is he wrong?

With me now, Democratic strategist Richard Goodstein, Trump 2020 Advisory Board member Jenna Ellis, and Vince Coglianese with The Daily Caller.

Vince, that's got to be enticing for Howard Schultz. I really thought he should have just joined the Democratic Party, but he's shaking things up, isn't he?

VINCE COGLIANESE, THE DAILY CALLER: He absolutely is. And his criticism is spot on.

This idea that if you get to the 2020 election, and this entire race becomes a referendum on socialism, Donald Trump wins. I mean, the president of the United States knows that. He said as much earlier this week to the NRCC. He said, look, we have to educate the public on the horrors of socialism.

And if you can do that successfully, you win reelection. And the president is in for another four years.

PAYNE: Jenna, of course, President Trump having some fun, but also being truthful, when he says, hey, we don't want to knock the Green New Deal too much. We want this to resonate within the party.

Do you think, of course, if the Democrats, particularly this class who are going for the nomination now, stay on this course, this far left course, that President Trump is automatically reelected?

JENNA ELLIS, TRUMP 2020 ADVISORY BOARD MEMBER: Absolutely.

The American people love the American dream, because we are fundamentally capitalists. Now, the Democrats can call this whatever they want, but really their policy agenda and legislation that they're advancing is a political and economic theory that is fundamentally antithetical to capitalism.

It is not what America stands for. And so if the progressive left is going to want to push and advance of these type of policy and legislative agendas, then, absolutely, Donald Trump gets reelected.

We love the economy. We love everything that he's doing for the average American person, for families and for the household. And that's absolutely something that is going to reelect Donald Trump in 2020.

PAYNE: So, Richard, with many folks saying that Biden is the last moderate hope, the great moderate hope for your party, under some pressure right now, if he were not to announce, would that leave a giant void that perhaps Howard Schultz could feel?

RICHARD GOODSTEIN, DEMOCRATIC STRATEGIST: Well, I agree with what you said earlier, Charles, that I think, if Howard Schultz was serious, he would have run as a Democrat.

And I think it's weak, to put it kindly, that he's -- he talked about running as an independent. He knows that he's going to take votes from Democrats, not from Republicans. So this criticism he has is frankly kind of spineless.

PAYNE: Would you be happy if he ran as a Democrat?

GOODSTEIN: Absolutely. He should. If he means what he says, absolutely.

And incidentally, it's a caricature. Look, Democrats in Congress are talking about shoring up health care, about doing something about gun violence, something about addressing climate change, and protecting voting rights, all of which are widely popular and hardly socialist ideas.

The biggest caucus among House Democrats are the New Democrats, the pro- business New Democrats. They have 101 members. The 40 members that went from red to blue districts, 33 of them were New Democrats.

PAYNE: Sure. Sure.

GOODSTEIN: So, it's a caricature to say that there's this socialist -- yes, AOC is real popular. Great. But she doesn't lead anything.

PAYNE: Yes.

COGLIANESE: But so is Bernie Sanders. I mean, think about that.

PAYNE: Thank you, Vince.

And, by the way, Vince, I want you to pick up on that.

COGLIANESE: Yes.

PAYNE: But let's acknowledge that many of the folks who are running for president, not the folks in Congress, Richard, but the ones who have announced that they're running, Beto says we got 12 years and the world's gone, gone, that's it.

They -- they all seem to have jumped on this same bandwagon, right -- right, Vince?

COGLIANESE: Look -- look, in 2016, Bernie Sanders runs for the -- for the presidency. He's the Democratic socialist. It's the novel idea, right?

And now this election cycle, he's already said out loud, man, how much has changed in four years? Everybody's coming in my direction policy-wise. So when Richard talks about sort of providing health care, and people like that, when they hear it, yes, on its face, people having access to health care is a positive thing.

But when you get into the details, $32 trillion expense over 10 years, the fact that taxes will have to go up in order to afford that, the fact that people will have wait times in order to achieve medicine, and the fact that they will lose their private insurance, as Kamala Harris said, that's totally fine.

PAYNE: Right.

COGLIANESE: When you hear things like that, people actually are reviled by socialism.

PAYNE: Well, guys, we got to leave it there.

But I think, Richard, listen, we know that the folks in Congress didn't want to vote on the Green New Deal. That underscores your point, but the Democrats running all seem to be in for it right now.

Town hall tonight, make sure you tune in. You got to catch it, Howard Schultz.

Now "The Five."

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