Lt. Gen. H.R. McMaster on foreign policy; Sen. Schumer on President Trump's first 100 days

This is a rush transcript from "Fox News Sunday," April 30, 2017. This copy may not be in its final form and may be updated.


With the Trump presidency now past the first hundred day milestone, what’s ahead for the next 100?


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: For the last 100 days, my administration has been delivering every single day for the great citizens of our country.

WALLACE: This hour, we’ll break down what the president has accomplished so far and what's to come. We’ll start with foreign policy towards North Korea, Iran and Russia, in an exclusive interview with the president’s national security advisor, General H.R. McMaster.

Then, the Democrats pushed back.

REP. NANCY PELOSI, D-CALIFORNIA: Creating jobs? F. Draining the swamp? F. Health care? F-minus.

SEN. CHARLES SCHUMER, D-NEW YORK: Unless his approach changes, the next 100 days will be just like the first.

WALLACE: We’ll discuss taxes, health care and the economy with Senate Democratic leader Chuck Schumer. It's a "Fox News Sunday" exclusive.

Plus, North Korea defies the world with another missile test as President Trump issues this stark warning.

TRUMP: There’s a chance that we could end up having a major, major conflict with North Korea. Absolutely.

WALLACE: We’ll ask our Sunday panel if there's a way for President Trump to halt North Korea's nuclear program.

And our power player of the week, using high tech to solve crimes.

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


WALLACE: And hello again from Fox News in Washington.

President Trump capped his 100th day in office with a rally last night in Harrisburg, Pennsylvania, touting his accomplishments and goals. While the press corps was back in Washington for the White House correspondents dinner, Mr. Trump was with thousands of supporters and he wasn't subtle about it.


TRUMP: I could not possibly be more thrilled then to be more than 100 miles away from Washington, spending my evening with all of you and with a much, much larger crowd and much better people, right?


WALLACE: The president reaches the 100-day milestone and as he takes another shot at replacing Obamacare, pitches for a major tax overhaul, and addresses rising tensions with North Korea, and that's where we will begin with President Trump's national security advisor, General H.R. McMaster.

General, welcome back to "Fox News Sunday."

LT. GEN. H.R. MCMASTER, NATIONAL SECURITY ADVISOR: Thanks, Chris. It's a pleasure to be here with you.

WALLACE: President Trump said this week that we could end up, his words, "in a major conflict with North Korea" and hours later, Saturday morning, North Korea conducts another ballistic launch. Isn't that a deliberate provocation to this president, isn't that open defiance?

MCMASTER: It is open defiance. It’s open defiance of the international community. You know, North Korea poses a great threat to the United States, our great allies in the region, South Korea in particular, but also to China and others. And so, it's important I think is for all of us to confront this regime, this regime that is pursuing the weaponization of a missile with a nuclear -- with a nuclear weapon.

And so, this is something that we know we cannot tolerate in terms of a risk to the American people. The president has made clear that he is going to resolve this issue one way or the other. And what we prefer to do his work with others, China included, to resolve this situation short of military action.

WALLACE: Both the vice president and the secretary of state have been going around the region in Asia and announcing that the era of strategic patience is over. Now, North Korea has responded with not one but two ballistic missile tests. They both failed, but still, they went ahead with a missile test.

Doesn't that mean since you say that the era of strategic patients is over, that you have to do something?

MCMASTER: Well, yes, we do have to do something, and so, we have to do something, again, with partners in the region and globally. And that involves enforcement of the U.N. sanctions that are in place. It may mean ratcheting up those sanctions even further. And it also means being prepared for military operations if necessary.

WALLACE: I want to go back to something else the president said, because in an interview this weekend with John Dickerson on "Face the Nation", he said he won't be happy if North Korea conducts a nuclear test. Do you and the White House distinguish between a nuclear test and a long-range missile test? Do you see one is more threatening?

MCMASTER: They are both threatening, because developing a nuclear capability has to be matched to a delivery system. So, it is their -- the sixth nuclear test is what it would be, combined with the ballistic missile program that poses a grave threat to the United States and our citizens, as well as our friends and partners in the region.

WALLACE: You talk about China and the -- our allies or other regional powers getting involved in this. President Trump keeps saying he's developed a special relationship with President Xi, that he very much hopes and believes that President Xi is going to apply greater pressure, ratchet up the pressure on North Korea, which is a client state.

Having said that, here’s what the Chinese foreign minister said this week at the United Nations. Take a look.


WANG YI, CHINESE FOREIGN MINISTER (through translator): China is not a focal point of the problem on the peninsula. And the key to solving the nuclear issue on the peninsula does not lie in the hands of the Chinese side.


WALLACE: He says North Korea is not China's responsibility.

MCMASTER: Well, he might want to talk to his president, who during the summit with President Trump acknowledged that this is a great threat, not just to the United States but a may be even more so to China. And I think what was most striking about the results of that summit is China’s willingness to take ownership of this problem and to recognize that they have to act to help resolve this problem, short of a military conflict.

And so, the president, I think, has been masterful in terms of his development of a relationship with President Xi and the discussions that led them to understand that this is a place where U.S. and Chinese interests overlap. And at the same time, the president has reinvigorated and strengthened our alliances with key nations in the region, including South Korea and Japan.

WALLACE: Do you see China actually doing something?

MCMASTER: Yes, we do see China starting to do something.


MCMASTER: And you see that in their -- we’ve seen in public statements. You've seen it in the Chinese press. You see it with the more strident and stringent enforcement of existing U.N. sanctions.

But it is clear, more needs to be done. We are going to ask China to do more as we do more, as our South Korean and Japanese allies. But really, all nations have to take a look at this regime. It's already isolated itself, but to further isolate it financially and then also, diplomatically, to make clear that none of us can accept a North Korea with a nuclear weapon.

And, by the way, North Korea said they’re just -- they’re not developing this nuclear weapon just for defensive reasons, they said they want to use it to blackmail other nations and they’ve be declared that they intent to sell nuclear weapons openly and proliferating nuclear weapons.

WALLACE: I want to talk about the military option because you are saying that's on the table. I have been to the region. I’m sure you've been to the region, too. You go to the demilitarized zone.

It's 30 miles from Seoul. They have thousands of short range missiles that are aimed at Seoul, a metropolis of 25 million people, also 25,000 U.S. troops. If we were to launch a preemptive strike against their nuclear program, their missile program, we’re talking about human catastrophe, aren't we?

MCMASTER: Well, yes, and this is why the president said, this is something we don't want to have to do. But what this president has done is he's now connected what our military options are with what we’re trying to politically. For too long, those two things were disconnected from each other. So, you need the viable option, the military option, to help make what you were doing diplomatically, economically, with sanctions, viable, to be able to resolve this problem short of what would be, as the president said, a major, major war and a humanitarian catastrophe.

WALLACE: But, precisely to that point, can you envision a situation where North Korea becomes such a threat that we’re willing to take that risk of a fuselage of short range missiles hitting Seoul, a metropolis of millions of people?

MCMASTER: What the president has first and foremost on his mind is to protect the American people. And I don't think anyone thinks that it would be acceptable to have this kind of regime with nuclear weapons that can target, that can range the United States.

WALLACE: President Trump, changing just a little bit, but same region, said this week that South Korea should pay for the missile defense system that we have installed there, the THAAD system, $1 billion. There is a report today that you called your South Korean counterpart and said, no, the old agreement was that we the United States pay that billion dollars and we’re going to stick by that.

Is that true?

MCMASTER: Well, the last thing I would ever do is contradict the president of the United States, you know? But -- and that's not what it was. In fact, what I told our South Korean counterpart is until any renegotiation that the deal is in place. We’ll adhere to our word.

But what the president has asked us to do is to look across all of our alliances and to have appropriate burden-sharing, responsibility-sharing. We are looking at that with a great ally, South Korea. We’re looking at that with NATO.

And what you’ve seen because of the president's leadership, more and more nations are contributing more to our collective defense.

WALLACE: So, the question of who pays the billion dollars is still up in the air?

MCMASTER: The question of what is the relationship on THAAD, on our defense relationship going forward, will be renegotiated as it’s going to be with all of our allies. Because what the president has said is, he will prioritize American citizens' security and interests. And to do that, we need strong alliances. But also to do that effectively, and a way that is sustainable economically, we need everybody to pay their fair share.

WALLACE: I want to talk about a couple of other trouble spots around the world.

The State Department has just certified that Iran is complying with the nuclear deal, the terms of the specific field, but it was also made clear that the United States is going to be much tougher when it comes to other Iranian actions, for instance, the support of terrorism. But with the West, our allies dropping most of their sanctions and now in business -- doing business eagerly with Iran. Aren't we the ones who are marginalized, I mean, even if we wanted to get tough with Iran, do we really have leverage to enforce our will, to back up our threats?

MCMASTER: I think we certainly do. I think all we have to do is pull the curtain back on Iranian behavior. This is a regime that is supporting the murderous regime in Syria, that’s committing mass murder of its own people. This is a regime that is really applying what you might call a Hezbollah model to the greater Middle East, in which they have weak governments, that they want to depended on Iran for support, while they grow militias and other illegal armed groups outside.

WALLACE: I don't doubt that they’re bad actors. My question is, can we enforce sanctions when our allies are not interested in doing that?

MCMASTER: Well, our allies will be interested in doing that, and I think what you've seen is, if what has happened in the last eight years, is U.S. policy has unwittingly maybe empowered Iran across the greater Middle East and beyond. Now, we are seeing the effect of that with this humanitarian political catastrophe in the greater Middle East that Iran has helped to foment.

And so, what's critical now is a shift in that policy to confront Iran and what you're seeing is because of the president's leadership, really strong relationships across the Arab world, for example, and I think that there's going to be a tremendous opportunity to confront Iran’s destructive behavior in the region and beyond the region.

WALLACE: I’ve got two more quick questions for you. President Trump came into office talk about hoping to improve relations with Russia, but over these first 100 days, and I want to put this up on the screen, we've learned that Russia has violated the INF missile treaty, they defended Syrian President Assad against our claim he used chemical weapons, and they are now arming the Taliban in Afghanistan, oftentimes against us.

In these 100 days, General, have relations with the Kremlin gotten better or worse?

MCMASTER: Well, I don't think they’ve gotten really either better or worse. The Russian behavior as we've seen, you know, the annexation of Crimea, the invasion of Ukraine, the support for this murderous regime in Syria and now arming the Taliban -- these are all things that’s clearly cut against Russian interest, especially in connection with the relationship with Assad in Syria and to arm the Taliban.

None of these groups -- the Taliban groups are not monolithic or homogenous. They overlap with others. In the Taliban’s case, they overlap with groups like the Islamic movement of Uzbekistan, and then other terrorist groups that posed a great threat to Russia.

So, here you have a Russian president acting against the Russian people's interest and doing it I think kind of just reflexively. And so, can we shift the relationship such that there is room for cooperation in key areas where our interests overlap?

WALLACE: But you don't see that now.

MCMASTER: You don’t see that now. I think that’s what we are looking for is changes in behavior. We need changes in words and the nature of the relationship, but what we really need to see is change in behavior.

WALLACE: Final question -- 100 days end, is there a Trump doctrine in foreign policy that’s taking shape? We’ve clearly seen that this president is more willing to use force than Barack Obama was both in the missile strike in Syria -- we got it up on the screen. Also, that huge MOAB bomb that was dropped in Afghanistan.

But so far, General, he doesn't seem to back that up with a clear strategy in fighting ISIS, in winning the war in Afghanistan.

MCMASTER: His strategy is to advocate for the security and interests of the American people every day and to ensure that we are doing all we can to advance our security and the interest of the American people. You see that with the acceleration of the campaign against ISIS, in Syria, in Iraq. Also, you see that with a very effective operations against ISIS Khorasan in Afghanistan, as well.

You see that with combining of military force when necessary, with diplomatic and economic actions. Not -- I mean, not regarding military force as separate from what we want to achieve politically.

And so, I would say, it's competing, recognizing that we’re in competitions, where American vital interests are at stake, and advocating for the security of the American people and our interests.

He also has devolved responsibility down to where it belongs. The White House is no longer deploying three helicopters somewhere or having a very strict cap on forces so that you deploy helicopters but don't send the mechanics with them, for example. Or you contract guards to guard U.S. infantrymen.

So, he's doing things that have made our policy execution much more sensible.

WALLACE: Let the commanders in the field determine what they need?

MCMASTER: Yes, with civilian oversight, with policy direction and with the president ensuring that we’re combining what we’re doing militarily to what we want to achieve politically, and our diplomatic and our economic efforts all interconnected.

WALLACE: General McMaster, thank you. Thank you for your time today. I would love -- you're a straight talker. I’d love to have you back to talk some more about all of this. Thank you, sir.

MCMASTER: Thanks, Chris. Pleasure to be with you.

WALLACE: And we’ll be tracking what happens in the North Korean peninsula this week. Thank you, sir.

MCMASTER: Thank you.

WALLACE: Coming up, Senate's top Democrat, Chuck Schumer, gives his assessment of the president's first 100 days and responds to charges of Democratic obstruction.


WALLACE: Tens of thousands of demonstrators in the Washington heat Saturday protesting President Trump's climate policies on his 100th day in office. The president says he is willing to work with Democrats on health care and other issues, but the top Democrat in the Senate says Mr. Trump must change his approach if he wants help from the other side of the aisle.

Joining us now from New York, the Senate Democratic leader, Chuck Schumer.

Senator, welcome back to "Fox News Sunday."


WALLACE: You and the president had been in quite the war of words these last few days. Here's what the president had to say what about you last night in Harrisburg.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Schumer is weak on crime and wants to raise your taxes through the roof. He is a poor leader -- known him a long time -- and he's leading the Democrats to doom.


WALLACE: Weak on crime, raising taxes, leading the Democrats to doom. Your response?

SCHUMER: Well, look, the president, name-calling doesn't work. Let's look at values, let's look at issues.

I’d say the president's first hundred days have hardly been a success. He's broken promises to the working people of America, unfulfilled others.

You know, Chris, when he campaigned, he campaigned as a populist against the Democratic and Republican establishments. But he's governing like someone from the hard right, wealthy special interest.

Let me go over a few areas. On trade, he promised to be tough, backed off on China, backed off on Mexico. On buy America, again, we have a good, strong bill. They've backed off that, a lot of this deal now and infrastructure and water is going to be made overseas. On health care, he said he covered more people at less cost. His bill does just the opposite.

And maybe the worst is draining the swamp. His last days, he said, Wall Street won't be in Washington. Well, there are more in this cabinet than others, billionaires. And there’s such closeness. I think one of the worst things he did on the swamp is allowing lobbyists to work in the administration on issues they lobbied on and they get waivers that are secret.

So, there's been promise after promise that’s been either unfulfilled or broken. On infrastructure, we sent him a trillion dollar plan, we haven't heard a peep out of him. We’re willing to work with him on issues like this.

So, the bottom line is very simple: the president, if he works with us, particularly on issues like trade and infrastructure, we can work. But on the issue so far, taxes and health care, he doesn't consult us at all, he puts together a plan that's very hard right, special interest, wealth-oriented and then says, your -- the way to be bipartisan is just support his plan. That's not how America works.

CHRIS WALLACE, FOX NEWS ANCHOR: But, Senator, the Trump White House says a lot of what you say. And this is not new, you've been saying this for a while now.


WALLACE: In fact, you gave him an "F" for his first 100 days. They’d say a lot of your criticism is just not true.

And let's take a look. On creating jobs for the middle class, they note that he has signed executive orders to cut regulations and red tape, pull out of trade deals that he says heard America and to build the Keystone and Dakota Access pipelines. On draining the swamp, he has imposed a five-year lobbying ban on administration officials and a lifetime ban on lobbying for foreign countries.

You say he's broken his promises, Senator, but there was a fallout this week and 96 percent of Trump voters in the poll said they would vote for him all over, only 2 percent said they would not.

SCHUMER: Yes. Well, look, I think it's going to take a while for people to see this, but his popularity ratings, if you want to measure him overall, not just his supporters, but with independents and Democrats, they are way down -- the lowest of any president. And the point being here is that on so many of the major issues, they’ve gone at it alone.

Have they passed a few executive orders? Yeah, they have. Most of those are studies on into the future. The few that were serious got knocked out by the courts.

Have they repealed a few regulations? Yes, but mainly for coal companies, for companies that want to take advantage of workers rights.

They have broken their promises to the working people of America and Americans are seeing that. That's why his popularity ratings are as lower than any president in history.

WALLACE: But, Senator, President Trump says one of the problems is the constant obstruction by you and your party. You know, back when Republicans were in the minority, you liked to call them the "party of no". Today, aren't you?

SCHUMER: Well, let's take his biggest attempt so far, health care. That wasn't the Democrats. He tries to blame the Democrats, but he didn't need a single Democratic vote to pass it in the House. He couldn't do it, he couldn't do it twice.

He ought to realize that they ought to back off repealing Obamacare. We’ve said over and over again, if he backs off repeal, we’ll sit down and work with him to improve Obamacare.

Let's look at his next major issue, the tax bill. It seems to be a tax bill that’s totally aimed at the wealthy interests, estate tax, get rid of it. You know how many people pay the estate tax? Only -- each year, 5,200 of the various wealthiest Americans who have estates over $10 million.

WALLACE: Senator, I’m going to get through --

SCHUMER: The pass-throughs -- just one more, the pass-throughs on this -- on this tax bill, would allow hedge fund leaders, top Wall Street lawyers, CEOs of major corporations to pay 15 percent while their workers pay 20, 25, 30 percent.

So, he's not governing from the middle. He's governing from a hard right. That's why his regime has hardly had any major successes with the exception of Gorsuch. If he changes, we could work together.


SCHUMER: But he can't just dictate what he wants, not talk to us and say we must support him. The country doesn’t work my way or the highway.


WALLACE: Wait, wait, you say one more, we got there. So, now, let's talk about Neil Gorsuch because that is probably the biggest legislative issue that has come up in these first 100 days. The nomination of Neil Gorsuch to the Supreme Court, the American Bar Association and some top Democratic legal scholars said that he was clearly -- yes, conservative -- but clearly in the judicial mainstream and a distinguished judge.

President Obama’s two nominees, Sonia Sotomayor and Elena Kagan, were both confirmed easily with Republican support.

But with Gorsuch, Senator, you led the first partisan filibuster in the history of Supreme Court nominees. That doesn't sound like cooperation.

SCHUMER: Well, let me just say this. First, so did Judge Roberts and Alito under Bush get Democratic support. Gorsuch was nurtured and put forward by the Heritage Foundation and the Federalist Society. Ideologically, they are so far -- he is so far to the right, and I think the American people will see that as we see his --


SCHUMER: Let me just say, Chris, you’ve got to let me answer this.

WALLACE: You said farther to the right than Ruth Bader Ginsburg and Sonia Sotomayor are to the left.


WALLACE: Conservative presidents are going to nominate conservative judges and liberal presidents are going to nominate liberal judges, as long as they are in the judicial mainstream. Isn't that what an election is for?

SCHUMER: Well, both The New York Times and Washington Post hired independent experts to rate where Gorsuch would be. The Times said he would be to the right of every judge but Thomas, the most conservative judge we’ve had in history, and The Post analysis said he’d be to the right of that. So, this is not a mainstream judge.


SCHUMER: He comes off as mainstream, Chris. Let me finish my comment, Chris. He comes off --


WALLACE: You talk about The New York Times and Washington Post, Neal Katyal, who is a former general for the Democrats, the American Bar Association said he was in the traditional mainstream, sir.

SCHUMER: Yes, they said Ruth Bader Ginsburg -- they judged by their legal acumen, no one doubts Gorsuch's legal acumen. But his judicial rulings and all his comments in his earlier life show that he is far, far to the right, siding with special interest, corporate interests.

The average middle-class person, the only recourse they have is the courts. Gorsuch repeatedly on issue after issue has been far to the right. In one case, he even went against what Thomas and Alito said on education of special kids.

So, this is not a mainstream judge. Appearance is not what matters. It's how he will rule that matters.

WALLACE: All right. You talk about taxes, President Trump unveiled his tax -- it's not a whole plan, it’s an outline of a tax reform plan, principles, this week.

Here is how Treasury Secretary Mnuchin explained it.


STEVE MNUCHIN, TREASURY SECRETARY: What this is about is creating jobs and creating economic growth. And that's what massive tax cuts and massive tax reform and simplifying the system is what we’re going to do.


WALLACE: Senator, the government just announced that in the first quarter of this year, the economy GDP grew by seven tenths of 1 percent. That's the slowest rate in over three years. Doesn't this economy need some more growth?

SCHUMER: Yes, it needs growth, but it does not need to give the wealthiest people in America huge tax break. Mnuchin said himself a few months ago, the Mnuchin rule, that the very wealthy would be tax neutral. In other words, the loopholes, they close on them, and the things they’d take away would be the same they gave.

This tax plan is not like that at all. In addition, it adds anywhere from $3 trillion to $7 trillion to the deficit. Many of our Republican friends who railed against the deficit when President Obama wanted to help middle-class people and the poor people are saying that this is OK, I think it's going to cause huge problems for America.

If you aim tax breaks at the middle class, we are fine with it. If you aim them at the very wealthiest who are doing very well so far -- God bless them -- that's not going to work. It's not going to -- it’s not what America needs.

WALLACE: But, Senator, here is what you failed to mention in your critique of the tax plan. The president's plan would also double the standard deduction, as you can see, we got it up on the screen, from $12,000 to $25,000 for married couples, 70 percent of Americans, mostly low to moderate income earners, take the standard deduction and they would benefit from that doubling of the standard deduction. This would be a tax break for them.

SCHUMER: Well, but he also takes away things like the mortgage interest deduction, the local -- the state and local property.


WALLACE: No, does not true. He does not take away -- no, he does not take away the mortgage interest deduction.

SCHUMER: You cannot do it if you use it -- without the standard deduction. He takes away state and local as well, and middle-class people get far less of a benefit, many of them were hurt, one estimate said that millions would pay more and the rich do extremely well. They seem to get 90, 95 percent of this tax plan.

That is not how Donald Trump campaign. It's another broken promise. That is not what the American people want. That is not what the American people need.

When you rush through a plan like he did, and put it on one page, it’s not going to be very good. And this shows it.

WALLACE: Senator Schumer, thank you. Thanks for joining us today.

SCHUMER: Thank you.

WALLACE: And I – and I just want to say, I do not believe that you are leading the Democratic Party to doom, sir.

SCHUMER: Thank you very much, Chris.

WALLACE: That’s all I’ll say, but I will give you that.

Up next, we’ll bring in our Sunday group to grade the president's first 100 days and look at his agenda going forward.

Plus, what would you like to ask the panel about Mr. Trump's big, new tax plan. Just go to Facebook or Twitter @foxnewssunday and we may use your question on the air.


WALLACE: Coming up, the Trump administration says all options are on the table when it comes to North Korea.


REX TILLERSON, SECRETARY OF STATE: We put in place a very deliberate strategy which we are just in the early stages of executing.


WALLACE: We’ll ask our Sunday group about the White House strategy for handling the growing conflict, coming up on "Fox News Sunday."



TRUMP: We are keeping one promise after another. And, frankly, the people are really happy about it. They see what’s happening.


WALLACE: President Trump last night in Harrisburg, Pennsylvania, trumpeting his record in his first 100 days in office. And I'm choked up about it.

Time now for our Sunday group.

The head of Heritage Action for America, Michael Needham, Fox News political analyst and author of "We the People," now in paperback, Juan Williams, former Democratic Congresswoman Donna Edwards, and Rich Lowry, editor of The National Review.

Well, Rich, as a traditional conservative, I think it's fair to say, you were pretty concerned ahead of time about Donald Trump. For all the theatrics, and tell me if you think I'm wrong on this, isn’t the real story of these 100 days that on taxes and spending and the cabinet and foreign policy, he's been a pretty conventional Republican conservative?

RICH LOWRY, EDITOR, NATIONAL REVIEW: Yes. I think that's exactly right. If you' wee living on another planet, and I know Juan probably thinks he's been living on another planet for a lot of these 100 days, and you weren’t getting any of the news about the tweets or the other controversies, you were just hearing about substantive things that have happened, you would think this is a fairly conventional Republican administration doing fairly conventional Republican things.

WALLACE: And does that make you happy?

LOWRY: Yes. Happier than I expected. And, look, it’s not the greatest 100 days ever, as Trump likes to portray it, but Gorsuch was a home run. He’s gotten significant early progress on the border where illegal crossings are down. And he’s begun the deregulatory rollback. The big incomplete, though, Chris, is on Capitol Hill where he still could get health care reform and tax reform, but he also could get shutout on both, although I think it’s likely that he gets taxes rather than health care.

WALLACE: Congresswoman Edwards, how do you assess these first 100 days?

DONNA EDWARDS, FORMER DEMOCRATIC CONGRESSWOMAN: Well, it feels like 100,000, but I think he's been beaten back on immigration in the courts. He hasn't had a significant legislative achievement. Health care has gone down twice and it's still a disaster. And, you know, this tax plan is not really a tax plan. It’s a set of taxable (ph). It's – so I – I – I think, you know, there’s a D minus going on, on this – in this administration so far.

WALLACE: Well, that’s better than – than Chuck Schumer, who gave him a straight F, so.

EDWARDS: Well, you – you get – you get a plus for signing your name.

WALLACE: OK. There you go.

The big news this week, as the congresswoman mentioned, was that the White House came out, not with really a plan, but an outline, bullet points, of the president’s tax plan – tax reform plan. Here's what candidate Trump and Treasury Secretary Mnuchin had to say about the plan before they took office.


TRUMP: Barack Obama has – has doubled during his fairly short period of years, he's doubled our national debt. Doubled it. It’s going to be close to $20 trillion when he leaves. $20 trillion. So we have to get rid of at least a good portion of that.

STEVE MNUCHIN, TREASURY SECRETARY: Now on the upper – the upper class, we’re going to simplify it. We’re not going to have a tax cut for the upper class.


WALLACE: But, Michael, even with just this bare-bones outline, isn't it pretty clear that this plan will add trillions of dollars to the national debt, contrary to what candidate Trump said, and that it would mean a substantial tax break for the upper income people?

MICHAEL NEEDHAM, CEO, HERITAGE ACTION FOR AMERICA: Well, we don't have a ballooning national debt because we don't tax enough. Our tax rates, the percentage of the economy taken by taxes is well above the historic norm. And the only way we’re going to get out of the debt problems that our nation has is, first, we need to do entitlement reform and it’s good to see the president –

WALLACE: Which the president’s not doing it.

NEEDHAM: Well, but seemingly moving towards the direction of – of maybe doing something and we need to grow the economy. And that’s why what’s so exciting about what he's done in the first 100 days is, one, he’s come out with this big, bold tax reform plan and, tow, he’s put out with a great plan and – and real action to roll back the regulatory state using the congressional repeal (ph) back (ph) 13 times.

WALLACE: But – but wouldn’t you agree that this plan would add trillions to the – to the national debt?

NEEDHAM: There’s trillions being added to the national debt because we are spending way too much. We do not have a revenue problem.

WALLACE: You’re not asking my question.

NEEDHAM: Sure. This plan –

WALLACE: I mean I’m not saying – you know, there – you could argue that he needs spending cuts as well, but would you agree that this cut, with all the cuts in revenue, is going to add trillions to the debt?

NEEDHAM: What this plan would do is it would move revenues from where they are today, approaching 20 percent of GDP, back to the historic, post-World War II norm, which is 18.5 percent. And I love the conversation you had with Chuck Schumer about taxes for the wealthy and what will this do here. I thought you made a great point about the standard deduction. But Chuck Schumer, from New York state, mentioned state and local tax deduction. Eighty-eight percent of the benefit from the state and local tax deduction goes to people who make over $100,000. It is a subsidy from all of us around the country to states like New York that had terrible fiscal policies and it's a subsidy that overwhelmingly 88 percent goes to people making over $100,000. So I think Chuck Schumer, if he wants to be, you know, a class warfare populist, should join a President Trump and say, let’s get rid of this ridiculous tax deduction for citizens in New York and New Jersey.

WALLACE: Fair enough.

We asked you for questions for the panel and we got a bunch on this issue of President Trump's tax cuts. And there was a lot of concern about adding to the national debt. Murat Turkson tweeted this, "what will it do to the deficit?" And here is Chuck's tweet, "where are the budget cuts," to Michael’s point, "to match the reduced revenue?"

Juan, how do you answer them and what do you make of the White House contention that between economic growth and the reduction of some of the loopholes, of closing the loopholes and deductions, at this tax cut will pay for itself?

JUAN WILLIAMS, FOX NEWS POLITICAL ANALYST: Well, it’s all speculative at this point. I mean this is all conjecture. You know, when you ask people, even on the conservative side, like the Tax Foundation people, they say this will add $4 trillion to $6 trillion over the course of its life – you know, ten years, let’s say, to the budget debt. So, I mean, to me, you know, I listen and I – I – because I – I want to be sensitive to the idea because I think most Americans would like to pay less tax and think that we should simplify a very complex tax code.

But what’s striking here in Washington is that the people who were these loud, deficit screeching hawks are now crickets. Silence, Chris. Nothing to say. I mean what has – what is going on here? You look at the idea of doing away with the estate tax, the alternative minimum tax, this is written by Goldman Sachs for Goldman Sachs in the White House by Mr. Trump who said, I'm going to drain the swamp. I'm going to really look out for blue-collar workers in states that elected me in Wisconsin, Michigan, Pennsylvania. Those folks are getting hosed by this deal and somehow Republicans, who previously would have – especially under Obama – oh, spending out of control, silent.

WALLACE: Well, we don't like silence.

Michael, I have to ask you about one other subject before we end this segment. I want to ask about the Heritage Foundation, that you’re associated with. There are a lot of stories out that Jim DeMint, the head of the Heritage Foundation, is going to be out and that Steve Bannon may become the new head, that this is going to be his safety net as he is forced out of the White House. What can you tell us?

NEEDHAM: That there’s a lot of speculation and rumor in the media that never misses a chance to divide and attack conservatives. Jim DeMint is a patriot. He has had a courageous career in Washington and the country and the conservative movement are far better because of that. And The Heritage Foundation is an institution that is committed to formulating and promoting conservative policies. And – and that is not going to change.

WALLACE: But is he – is – is DeMint out? I mean the story that the board wants him out.

NEEDHAM: I – I don't know. There’s a lot of speculation and rumor and I'm not going to add to the speculation and rumor.

WALLACE: And Steve Bannon?

NEEDHAM: There's a lot of speculation and rumor and I'm not going to add to the speculation and rumor.

WILLIAMS: Will you stop? Leave it there.


WALLACE: We live at speculation.

All right, panel, we have to take a break here. That was a definite maybe.

When we come back, another failed missile test by North Korea as the Trump administration seeks to strategy for dealing with that regime.



ADMIRAL HARRY HARRIS, COMMANDER, U.S. PACIFIC COMMAND: All options are on the table. We want to bring Kim Jong-un to his senses, not to his knees.


WALLACE: Admiral Harry Harris, the top U.S. commander in the Pacific, emphasizing the Trump administration is not looking for a military confrontation with North Korea.

And we're back now with the panel.

Rich, clearly the policy of these three presidents, Clinton, Bush 43 and Obama hasn't worked in stopping North Korea’s nuclear weapons program. Do you understand – what do you think – that the Trump strategy is in the ways that it’s different from theirs and do you have any confidence it’s going to work?

LOWRY: I think I do, which is to engage in saber rattling, to try to get the attention primarily of the Chinese and shake them loose and get them to pressure the North Korea regime more. I think critics who have approached it have a dose of modesty, as you alluded to. The Bush era negotiations didn't work. The Obama policy of more or less ignoring the North didn't work. So it makes sense to try to catalyze something different. I just think the options here are so limited, especially the military options. It wouldn't shock me if this policy ends up running in fairy familiar ruts. And we’ll just try to cut off as much cash as we can for the regime. Maybe some internal subversion through covert action if we can. And then as much missile defense in the region as possible.

WALLACE: Congresswoman Edwards, if Kim Jong-un is as determined as he seems to be, and some thought that this isn’t blackmail before he – that he thinks the best survival for this administration – the chance of survival is to develop a nuclear weapon, that that will prevent an invasion or an attack, are we headed for a military confrontation, because you heard at the top of the show, H.R. McMaster, the national security advisor, say we cannot allow that to happen, an ICBM with a nuclear warhead on the tip.

EDWARDS: No, I – I think that's right, although I think that we’ve never really used the leverage that we can with China. And, frankly, the leverage that each of these presidents has had is on trade. And there’s been a patent unwillingness to use our leverage with China on – on trade as a way to get the Chinese more engaged and in, you know, trying to hold down North – North Korea.

WALLACE: Look, isn’t this president, though, I mean he really has made an offensive. He had the meeting at Mar-a-Lago with President Xi. He keeps talking about that. I mean isn't he working the Chinese about as hard as he can?

EDWARDS: No, I don't think so. And – and – and, frankly, I think that him, you know, having – the conversations, which are very confused, around whether or not we’re going to foot the bill for the thermal defense system, has complicated –

WALLACE: The THAAD missile defense.

EDWARDS: The THAAD missile defense has actually complicated things because it makes it appear that we’re not, you know, standing with – with the South – with South Korea, as we should. And so I think it was good for General McMaster to kind of get that off the table, if you will, maybe until next time. But our leverage with China is on trade. Our leverage is not in just trying to ask the Chinese to do – to do what they need to do on that – on that border with Korea.

WALLACE: I want to switch subjects. It was more trouble this week – still more trouble for former retired General Michael Flynn, briefly the president's national security advisor. As a former military intelligence officer, he took over half a million dollars to do work for the government of Turkey. He took more than $33,000 to make a speech in Moscow for Russian Television. And here this week was a top Democratic on the House Oversight Committee.


REP. ELIJAH CUMMINGS, D-MD., OVERSIGHT COMMITTEE RANKING MEMBER: This letter explicitly warned General Flynn as he entered retirement that the Constitution prohibited him from accepting any foreign government payments without advance permission.


WALLACE: Michael, there is reportedly no evidence that General Flynn got that permission before he made that speech in Moscow or took this big consulting job for Turkey.

NEEDHAM: Yes, no evidence that he got the commission, no evidence that he’s disclose it. He actually did disclose it, it appears. And so I think every day that goes by is further justification of Donald Trump's decision to get him out of there and get him out of there early.

Michael Flynn’s going to be a distraction going forward. There's no doubt he’s going to keep popping up. I think the real story, though, is that there is now a national security team in place with General McMaster, who did such a credible job at the top of the show, Secretary Mattis, Secretary Tillerson, Nikki Haley up in New York. There's an incredible national security team that is navigating some of these crises. And Michael Flynn is going to be in the news, but fortunately not part of the national security apparatus.

WALLACE: Juan, let – let me pick up on that because in an interview on Friday, President Trump blamed Flynn and the lack of vetting and screening of him on his predecessor. Take a look.


TRUMP: He was approved by the Obama administration at the highest level. And when they say we didn't vet. Well, Obama, I guess, didn't vet, because he was approved at the highest level of security by the Obama administration.


WALLACE: So is Michael Flynn – are his problems Barack Obama’s fault?

WILLIAMS: Wow. Talk about spin. I – my head is spinning. I mean it’s unbelievable. Look, the fact is, Flynn had been in the intelligence agency going back to the Bush administration. He sought renewal in ’16, Chris. And when he did so, he did not disclose – that's what we're talking about this week – he did not disclose any contacts that – you know, or seek permission for taking payments from Russia or – or Turkey or anybody else.

So what you have here is a situation where Michael Flynn, even subsequent to the renewal, then engaged in contacts. And we know Sally Yates, then the acting attorney general, went to the Obama administration and said – or went to the Trump administration and said, this guy’s lying about his contacts with the Russians. And we know that he also hid information from Vice President Pence and that Donald Trump, the president, sat on that information for three weeks before firing him.

WALLACE: But – but the president says he was vetted by Barack Obama.

WILLIAMS: He didn’t take – he – he was vetted, again, in '16, when he saw that renewal. But at that point, he had not committed these acts that we are discussing now.

EDWARDS: But let’s be clear. President Obama fired him and then he went into the – into the Trump camp. And so this can't be placed at the foot of President Obama at all. This is a Trump –

LOWRY: Trump – Trump fired him too. He’s been fired by everyone.


LOWRY: I think Trump clearly showed bad judgment being so close to him, making him national security adviser. But this scandal, at the end of the day, has much more to do with Flynn than with the Trump administration or the – or so-called Russian scandal.


EDWARDS: well, I don't think we know that yet. And this is the reason that we need a strong, independent investigation because I don't think we know that at all. We know what we know about Flynn, but we don't know all of the details. And I think it's time for an independent investigation to follow that money.

WALLACE: I want to give Michael 30 seconds to say why an independent investigation is not a good idea.

NEEDHAM: Well, I think an independent investigation is – I think there’s plenty of investigations going on right now. There’s generally been good cooperation between the Republicans and Democrats on those. There was a little bit of a brouhaha this past week about whether information –

WALLACE: Particularly in the Senate there seems to be an investigation.

NEEDHAM: And so I think that, you know, the best thing that we can do is – there's a lot of – of kind of things going back and forth. Let’s let these investigations play out and let's talk about it when it's all over.

WALLACE: Thank you, panel. See you next Sunday.

Up next, our "Power Player of the Week," a crime-fighting tool making guns and bullets to solve crimes. This is pretty cool.

But, first, President Trump, as you know, didn't attend last night's White House Correspondents Dinner, but that didn't stop the headliner, Hasan Minhaj, from roasting the president and his administration.


HASAN MINHAJ: I get why Donald Trump didn’t want to be roasted tonight. By the looks of him, he's been roasting non-stop for the past 70 years.



WALLACE: Donald Trump became the first president this week since Ronald Reagan to address the National Rifle Association. But while he reaffirmed his support for gun rights, one of his agencies is using remarkable technology to solve crimes committed with guns. Here's our "Power Player of the Week."


JIM FERGUSON, ATF, CHIEF OF FIREARMS OPERATIONS: We could take the exact same make, model of a firearm off of an assembly line and one will leave one impression and the next one will be a very unique, different impression.

WALLACE: In effect, fingerprints?

FERGUSON: Correct.

WALLACE: (voice-over): Jim Ferguson is head of the ATF’s Firearms Operations Division and he's talking about NIBIN, a national ballistics database that helps connect guns to crime scenes. Some of the best evidence after a shooting are the spent bullet cases which have been ejected from guns. Police take 2-D and 3-D images of the cartridges.

UNIDENTIFIED FEMALE: This would be what we would consider an IBIN (ph) leave (ph).

WALLACE: At the ATF’s national laboratory outside Washington, they checked the new casings against the 3 million they already have from other crime scenes, looking for matches left by the firing pin, stress marks and the gun's cartridge ejector.

FERGUSON: So what she’ll do is she’ll then match the two of them up and then turn them so that you can – it's almost like looking at it inside out –

WALLACE (on camera): Right.

FERGUSON: So that you can see the depth and – and the similarities in those depths.

WALLACE: How precisely can you tell this same gun fired this cartridge in Chicago and this cartridge in Denver?

FERGUSON: The system itself is more than 95 percent accurate. And for us to be able to link people, whether it be a suspect in one shooting and no information in the other shooting, we now have a potential suspect because those two incidents are related by the same gun.

UNIDENTIFIED MALE: I have the 40 S&W Glock. I’m going to load into the magazine well. OK, we’re ready to fire two rounds.

WALLACE (voice-over): When guns are found at crime scenes, they can be fired into a tank of water. You can see the bullet case that’s ejected from the gun. The markings from the cartridge can then be checked in the database to see if that gun has been used in other crimes. And if a criminal has filed off a gun’s serial number, well, that's no problem for ATF to recover.

All of this raises a sensitive question.

WALLACE (on camera): You enter the evidence from crime scenes. Do you take this kind of fingerprint of a gun at the point of manufacture?

FERGUSON: No. Absolutely not. We do not have any sort of a manufacturer point on the front end because we are prohibited from having any sort of a gun registry. And this allows us to keep it so that only crime guns are entered into the system.

WALLACE (voice-over): ATF has even set up this mobile forensic lab to take its ballistic database into the field.

How effective is NIBIN as a crime-fighting tool?

FERGUSON: We are trying to identify that very small population of shooters who are actually pulling the trigger and causing our communities, you know, considerable harm.


WALLACE: Not surprisingly, the city of Chicago is the number one user of the NIBIN system, adding 1,000 spent bullet casings to the system each month.

Now, this program note. Be sure to watch Fox News Channel tomorrow at 5:00 p.m. Eastern for the premier of "The Fox News Specialists." Co-host Eric Bolling sits down with President Trump for the first show.

And that's it for today. Have a great week. And we’ll see you next "Fox News Sunday."

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