This is a rush transcript from "Special Report," January 1, 2019. This copy may not be in its final form and may be updated.


UNIDENTIFIED FEMALE: It seems like changes on the way.

ILHAN OMAR, D-MINN. REPRESENTATIVE-ELECT: I think the last two years, we've heard people say that they didn't just want to be part of a resistance. They wanted to insist on a set of values.

RASHIDA TLAIB, MICHIGAN CONGRESSIONAL CANDIDATE: Even people here right here at home in Detroit, in the metro Detroit area, they don't feel like they're being heard. And I think that starts at the top with leadership.

She doesn't speak about the issues that are important to the families of 13 congressional districts, and they are a priority for me.

ALEXANDRA OCASIO-CORTEZ, D-N.Y., REPRESENTATIVE-ELECT: If we are not on the same page about changing the systems and the values and how we're going to adapt as a party for the future, then what is the point of just changing our party leadership just for the sake of it?


HENRY: Some new faces for a new Congress. Let's bring in the panel, Charles Hurt, opinion editor for "The Washington Times," David Catanese, senior politics writer for "U.S. News and World Report," and Matthew Continetti, editor in chief, of course, of the "Washington Free Beacon." Welcome, all. Charlie, is the president ready for this new dynamic, new faces? And do you believe the Democrats who are saying we are not just going to be resist. We are going to actually try to work with people and change things?

CHARLES HURT, OPINION EDITOR, WASHINGTON TIMES: That will be interesting to see. I'm highly doubtful given the rhetoric that we've heard from House from House Democrats. But in a lot of ways, Donald Trump couldn't be happier with what he's going in -- he is going into this with a fight on immigration, on border security, which is a strong suit of his. And even if you get into your basic Democratic voters, if you're going to have to choose between a border wall versus sanctuary cities, abolishing ICE, to oversimplify both sides a little bit, people are going to choose border security.

I think the other interesting thing to watch, obviously Nancy Pelosi will probably get picked speaker. But the big difference this time is, in years past, she's had opposition from blue dog Democrats. There are few of them left anymore. She is getting now opposition, some from conservatives, but mainly from the left. And so she's going to have to navigate that for the next two years. And that's going to be interesting.

HENRY: David, if we put it up on the screen, the House balance of power, net gain of 40 seats for the Democrats. You've got 235 Democrats, 199 Republicans, one still not yet determined in North Carolina. Then you look at the Senate balance of power, 53 Republicans, that's a net gain of two seats, 47 Democrats. It's 45 Dems and two independents who vote with the Democrats.

The bottom line, as the president says over and over, everyone focuses on the House, but he does have a bigger majority in the Senate that can help him.

DAVID CATANESE, SENIOR POLITICS WRITER, U.S. NEWS AND WORLD REPORT: A slightly bigger, majority, but the first test is going to come on Thursday, and the Democrats are going to hold two votes to reopen the government. And then it's going to go to the Senate. And then Mitch McConnell I think has a tough decision to make. Will he put a vote on the floor to reopen the government that does not include border wall funding? The president has said he's not going to sign that bill. This is sort of the first game of chicken of 2019. And I think Pelosi and Democrats, it's incumbent on them as a new Democratic majority to try to show they want to govern.

HENRY: On that point.

CATANESE: But the question is, does the Senate now -- I think the relationship between Mitch McConnell and the president is going to be very key on this.

HENRY: Matt, the Democrats in the House see themselves as putting brakes on this president, but as David lays it out, Mitch McConnell with a pretty strong majority in the Senate can put the brakes on Nancy Pelosi as well.

MATTHEW CONTINETTI, EDITOR IN CHIEF, WASHINGTON FREE BEACON: That's right. And all the new faces that you showed on the bump, they are going to be very frustrated very quickly, because despite the Democrats' victory on election night, which was real, they only control one chamber of Congress. And to get anything really done, you need at least two chambers. And of course, as Republicans learn while Obama was president, even when you don't have the presidency, you are in trouble. So those new faces will be frustrated.

McConnell has said he won't even put to the vote anything that the president won't sign. So we have this impasse where they Democrats say they won't fund the wall and Trump says he won't sign anything that doesn't include funding for the wall.

HENRY: The other big dynamic of course, is the president himself. He was up early, as we started out the show, tweeting and throwing punches, making clear it might be January 1st, he's not changing. And something else caught my ear, I guess, with Pete Hegseth in this interview last night, when asked about New Year's resolutions, here's what the president said.


PETE HEGSETH, HOST: Any resolutions from you, Mr. President, in this new year, or any predictions in the new year, or both?

PRESIDENT DONALD TRUMP: I think we are going to have a great form of wealth. We have created a lot of wealth for our country. And that's very important because that means jobs, it means prosperity.

HEGSETH: Do you have any resolutions for 2019, sir? Any resolutions?

TRUMP: Just success and prosperity and help for our country. That's all I want.


HENRY: Quick around the horn. Pete was trying, and there was no sense from the president that he's going to change one bit.

HURT: The most important thing out of that is the president is not going to change at all. He's going to keep doing what has gotten him this far. And I think he is going to focus on things like wealth and growth because if that's going well, then the rest of his agenda is --

HENRY: His supporters love that he's not going to change, but David, does he need to make adjustments with this new power dynamic?

CATANESE: I think he's going to have a very tough year just because Democrats are going to have 22 committees with subpoena power, and it's going to be investigation city on Capitol Hill with the president.

CONTINETTI: He needs to resolve to win back those voters that went for him and 2016 team but didn't show up in 2018.

HENRY: Get the base back. The wall, that may be why he's digging in big on the wall. Gentlemen, we'll be right back. Next up for our panel, the Mueller probe, what to expect in the new year. Is it really nearly over, or are they going to just keep dragging it on? We'll be right back.



HOWARD DEAN, D-VT., FORMER GOVERNOR: I expect there's a good likelihood Jared Kushner will be indicted for money laundering. And then we are going to have to see how far the Russian involvement goes.

REP. STEVE COHEN, D-TENN.: Some of that was Jared Kushner's responsibilities. Some of it was Donald Jr. I think you're going to probably see indictments of both of those people.

REP. DENNY HECK, D-WASH.: I prepared to say something I've never said. The writing is on the wall, the walls are closing in, and this is the beginning of the end for the Trump administration.


HENRY: This is the beginning of the end. We are back with our panel. How many times have we heard that before, Charlie?

HURT: Far too many for what's actually come of all of this. But when you look back, and the report from Catherine Herridge I thought was really interesting tonight, when you look back to that seven, eight days back then, and you look at all the people that were acting behind the scenes.

HENRY: Roughly, May, 2017.

HURT: Yes. Lisa Page, Peter Strzok, James Comey, Andrew McCabe, even Rod Rosenstein himself, all of those people, when you ask yourself now, where they acting in good faith? There's a lot of evidence to suggest that they were not acting in good faith. In the case of Rod Rosenstein obviously he says that he was joking when he joked about wanting to wear a wire to go see the president. But the fact of the matter is, who makes a joke like that? In which atmosphere do make a joke like that except a DOJ that is in a posture to get this guy, to get this president.

HENRY: Democrats as we played at the top have overshot many times. On the other hand, people inside the White House assumed that there was no there there and this was going to be over a long time, and they haven't exactly been right either.

CATANESE: Yes. And we have also been told the Mueller report is coming, the Mueller report is coming. And then it's more months and more months.

HENRY: Last summer, last fall.

CATANESE: Right. Now we are saying February. I think the next battle, though, is going to be about the actual release of the Mueller report. The White House seems to be their legal strategy is going to be that this is going to be protected by executive privilege. And remember, the attorney general makes the decision of whether to send the report to Congress. So we will have a Mueller report. But I think the big question that is kind of being overlooked is will the public see it? And will parts, major parts be redacted? And Rudy Giuliani has already signaled this, that they will fight it. And so it could be months and months --

HENRY: You raise a great point, but I say, well, because Matthew, in this environment, if Mueller steam turns over the report to the acting attorney general and they sit on it, what are the chances of it being leaked in whole to the front pace of "The Washington Post" and "New York Times."

CONTINETTI: For sure. And this is one area, Ed, where the Democratic control of the House does matter, because all of the work that Devin Nunes has done over the last two years to uncover the other side of the story that Charlie is talking about, what's happening in DOJ and the FBI in the run-up to the firing of Comey and that appointment of Mueller, that will stop, and now Adam Schiff is going to have the reins, and it will be a very different type of Russia investigation in the year to come.

HENRY: And good point there, Charlie, because the Democrats also can bring Bob Mueller and a whole bunch of other people in as witnesses because they have gavels, bring them in for hearings. And in regards to what the reports says, they can dig deeper. What else did you know? What else did you not put in the report? They are going to be pressing, they're going to be investigating like crazy.

HURT: Yes. And I think David is exactly right about what we're going to see out of the House. They are going to use this as an opportunity to run full bore investigations into every aspect of this. The silver lining of that I think is two years of that, people are going to be really exhausted of it.

HENRY: David, are they going to overshoot?

CATANESE: There is a risk that the Democrats make their agenda and all spring, winter is all about Mueller. I think there will be fatigue because people want them to address real issues.

HENRY: Maxine Waters said it late in the campaign. They tell me not to talk about it. But I'm not going to talk about impeachment, impeachment, she kept repeating.

CONTINETTI: I know, much to Nancy Pelosi's annoyance. And Pelosi has been here before. She's been a speaker for a majority that overshot. So I don't think she wants to overshoot this time. Unfortunately all those new faces we talked about, they want to get Trump soon.

HENRY: Pressure from the left.

Gentlemen, when we come back, police officers across the nation are poking a little fun at one news story that caught our eye. You don't want to miss it. That's coming up.


HENRY: Finally tonight, this story sure to melt some hearts. Police in Lexington, Kentucky, responded to a car fire only to find it was a Krispy Kreme doughnut truck. The drive was able to escape without injury, but all the doughnuts were destroyed. Officers on the scene say they have no words to describe this tragedy. British police sent their condolences, saying, we feel your loss. We donut what else to say.

Thanks for inviting us in your home. That's a great way to start the year, with a little bit of a joke. That's “Special Report.” Just a programming note, "The Story" is being preempted tonight so we can bring you our series "Scandalous." The show chronicles the events that ultimately led to the impeachment of President Bill Clinton during the 90s. So stay tuned for that.

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