Priebus on future of Trump's agenda; Rep. Jordan details conservative opposition to GOP leadership; Iraqi PM Haider al-Abadi talks terror

This is a rush transcript from "Fox News Sunday," March 26, 2017. This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: I’m Chris Wallace.

President Trump suffers a major setback on his first big legislative initiative. What does that mean for the rest of his agenda?


REP. PAUL RYAN, R-WIS., SPEAKER OF THE HOUSE: I don't know what else to say other than ObamaCare is the law of the land.

PRESIDENT DONALD TRUMP: Bad things are going to happen to ObamaCare. There's not much you can do to help it. It's imploding and soon will explode and it's not going to be pretty.

WALLACE: We’ll discuss prospects for tax reform, trade, and immigration, as well as Mr. Trump's image as a dealmaker, with White House Chief of Staff Reince Priebus. It's a "Fox News Sunday" exclusive.

Then, Congressman Jim Jordan, founding member of the conservative House Freedom Caucus on why they oppose the president this time and whether they will again.

Plus, ISIS claims responsibility for the deadly attack in London. We will discuss the war on terror here and abroad with one of our key allies, Iraqi Prime Minister Haider al-Abadi, only on "Fox News Sunday."

And the House intelligence chair faces backlash for taking reports on surveillance of the Trump transition directly to the White House.

REP. DEVIN NUNES, R-CALIF., INTELLIGENCE COMMITTEE CHAIRMAN: I felt like I had a duty and obligation to tell them, because as you know, he's been taking a lot of heat in the news media.

WALLACE: We’ll ask our Sunday panel whether Nunes’ move undermines the committee’s credibility, investigating alleged links between the Trump team and Russia.

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


WALLACE: And hello again from Fox News in Washington.

ObamaCare is here to stay. House GOP leaders facing a revolt by Republican members pulled their plan to repeal and replace it. The result: a damaging defeat for Donald Trump, a consummate dealmaker, in the first big negotiation of his presidency.

In a moment, we’ll drill down into what went wrong and what it means to the rest of the president's agenda with White House Chief of Staff Reince Priebus, and Congressman Jim Jordan, and leader of the House Freedom Caucus.

But, first, let's bring in Fox News correspondent Kevin Corke at the White House -- Kevin.

KEVIN CORKE, FOX NEWS CORRESPONDENT: Chris, it certainly makes sense for the White House to move on to what could best be described as political low-hanging fruit -- jobs, regulatory reform. And we certainly expect to her great deal more about those issues this week as the White House tries to reassure the president’s rattled base following Friday’s setback on health care. In fact, the president seemed to look forward in a tweet he had just yesterday talking about ObamaCare as you said, saying that it would ultimately explode and that he would eventually get together with just his party and perhaps even others who might want to be involved in all that and try to come up with a plan to repeal and replace for the people.

He said, "Do not worry," and that was the message taken to West Virginia by his Vice President Mike Pence. He met, of course, with business leaders on Saturday and he said the fight to repeal and replace is not over yet.


VICE PRESIDENT MIKE PENCE: Even though Congress isn't ready to do it yet, President Trump will not rest, will not relent until we repeal and replace ObamaCare.


CORKE: Meantime, Treasury Secretary Steve Mnuchin will be in the headlines this week as he tries to tackle the next page of the Trump White House playbook. That’s tax reform. The U.S. corporate tax rate among the highest in the world, the president has said he’d like to cut the corporate rate down to 15 percent from 35 percent and he's repeatedly promised to reduce the tax burden on the American families.

But, Chris, it’s also important to point out that there is some concern among GOP lawmakers that given Friday’s fiasco on ObamaCare, the road ahead on tax reform could ultimately be even more complicated, especially when you consider the incredible number of competing stakeholders that can make what happened last week look like child's play moving forward -- Chris.

WALLACE: Kevin Corke reporting from the White House -- Kevin, thanks for that.

Joining us now, President Trump's chief of staff, Reince Priebus.

Reince, welcome back to "Fox News Sunday."


WALLACE: President Trump reacted to the defeat of repeal and replace on Friday by blaming Democrats. Here he is.


TRUMP: We had no Democrat support. We had no votes from the Democrats. They weren't going to give us a single vote.


WALLACE: But, Reince, the president never reached out to Democrats, he never offered Democrats a compromise. So, how can you blame Democrats for this?

PRIEBUS: Well, I mean, look, ObamaCare as we know is imploding and it is exploding, and every other adjective you can provide. It's going south. And it would be nice to get the Democrats on board.

But you’re right, at the end of the day, I believe that it's time for the party to start governing. And I think that's important. I think that Democrats can come to the table as well and if you look at what the president said in the Oval just after that comment, he said, you know, "Perhaps it's time for us to start talking to some moderate Democrats as well and come up with, you know, a bipartisan solution."

I do think that there are Republicans this weekend, Chris, that are scrambling. I think there are people in the Freedom Caucus, in the Tuesday Group, and for those listeners, that's the moderate group that are starting to talk about what the next steps are in order to prevent an implosion of ObamaCare. But the president has also said that when ObamaCare does ultimately explode, which it will, we are going to be prepared to lead again and if Democrats come on board with a plan down the road, we will welcome that.

WALLACE: OK. I want to talk about that in a second. But the president, I don't know if you even know this, has been tweeting this morning. And I want to put up the tweet -- as I see the look in your eye.

PRIEBUS: No, I’ve seen --


WALLACE: He said this morning, "Democrats are smiling in D.C., that the Freedom Caucus, with the help of Club for Growth and Heritage, two conservative think tanks, have saved Planned Parenthood and ObamaCare." So, he seems to be putting it right on the right wing -- the hard-line conservatives in your own party.

PRIEBUS: Well, I think the president is 100 percent correct and he hits the bull's eye in that tweet, like he often does. We can’t be chasing the perfect all the time. I mean, sometimes you have to take the good and put it in your pocket and take the win.

And we only have -- we have a two-party system in this country. You know, we’re not Italy. We don't have 12 different parties where you have the super conservatives, the kind of conservatives, the moderates, and everyone else in between and everyone fits nicely into one package. We have one party, Republican Party, and one Democrat Party. And Republican Party came up with a package the president met with over 120 members of the House. There was more love shown to outside groups by this White House, whether it's Vice President Pence, Mick Mulvaney, Tom Price, Steve Bannon, myself, Mark Short.

I mean, the point is, the diverse group of people working the halls of Congress, including the leadership in Congress, I think it's time for our folks to come together, and I also think it's time to potentially get a few moderate Democrats on board as well.

WALLACE: I’m going to get to the Democrats in a second, but I want to talk about this issue --


WALLACE: -- ObamaCare, because the president and you this morning have said that ObamaCare is on its last legs.

Here's the president on Friday.



TRUMP: I’ve been saying for the last year and a half that the best thing we can do politically speaking is let ObamaCare explode, it is exploding right now.


WALLACE: But Mr. Trump has also said he doesn't want to hurt the millions of people who depend on ObamaCare right now. So, the question is, will he do something, as you have problems with ObamaCare, will he do things to prop it up, to stabilize it, in the meantime, or is he just going to let it explode?

PRIEBUS: Well, it’s going to be a decision on the line mainly driven by acts of Congress, as you know. I mean, there's funding issues coming up soon, I believe in the next couple months, in regard to ObamaCare.

WALLACE: But you can do things to try to protect those people.


PRIEBUS: And it's a possibility, Chris. I don't think the president is closing the door on anything in regard to the issue of health care. But if you look at this bill, and you look at what it provided, I mean, the tax relief, the largest entitlement reform in modern history.

You look at the fact that we were almost to the point where we would be defunding Planned Parenthood, or we were to the point where we were defunding Planned Parenthood. The fact that some of these members took that and decided not to move forward with it I think is a real shame and I think the president is disappointed in the number of people that he thought were loyal to him that weren’t.

That all being said, I want people out there to understand that this president is not going to be a partisan president. This is a president that wants to provide, and you are right, he wants to make sure that people don't get left behind. He wants to make sure that there’s competition in the marketplace so that rates are lower and people can choose their doctor.

So, if those three things are incompatible with some members of the Republican House, then it's going to be incompatible, and then we need to work with moderate Democrats to make sure that that happens. We will leave no one behind, we want to make sure that people are covered, they pick their doctor and they pay less and we enforce competition in the market.


PRIEBUS: By the way, that's what this bill provided.

WALLACE: I want to get to that, because this is like the third time in our brief conversation that you’ve talked about reaching out to Democrats. Is the lesson president is taking away from this defeat that he's got to change his legislative strategy, that you don't have a governing majority in the House that the Freedom Caucus never seems to get to yes, and that he's got to be more of a bipartisan president and reach out to Democrats and try to pick up some votes because he can't count on Republicans to give you the majority?

PRIEBUS: Well, I don't know if he agrees with everything you just said, but what I do think is that everything is on the table. We’ll give these guys another chance. And it’s not -- that's not really the point. If we can come up with a bill that accomplishes the goals of the president with Republicans alone, then we’ll take it and we’ll move forward with it. But we're moving on the tax reform. We’ve got the budget coming up. I think it's more or less a warning shot that we are willing to talk to anyone, we always have been, and I think more so now than ever, it's time for both parties to come together and get to real reforms in this country whether it be taxes, whether it’d be health care, whether it’d be immigration, whether it’d be infrastructure, this president is ready to lead and sort of -- you know, over with the games in the legislature.

WALLACE: OK. Yesterday morning the president tweeted this, and I want to put it up. "Watch Judge Jeanine on Fox News at 9:00 p.m."

Now, we all love Judge Jeanine on Fox News.

PRIEBUS: I do love Judge Jeanine.

WALLACE: But we were curious as to why she would call her out. Here was the start of her show last night.


JUDGE JEANINE PIRRO, HOST: My opening statement: Paul Ryan needs to step down as speaker of the House.


WALLACE: Does the president want Paul Ryan to resign as speaker?

PRIEBUS: Well, first of all, I will go on record, we do love Judge Jeanine, and so does the president. I think it was more coincidental, Chris. I --

WALLACE: Oh, come on.

PRIEBUS: I did not talk to the president about the tweet. I’m just telling the truth. There is no preplanning here. The president --


WALLACE: Why would he say watch her and then that's the first thing out of her mouth?

PRIEBUS: Because he loves Judge Jeanine and he wanted to Judge Jeanine a favor.

WALLACE: So, does he want Paul Ryan to step down?

PRIEBUS: No, he doesn't. And he’s talked to Paul Ryan yesterday for about an hour. He believes what he said in the Oval Office on Friday. He doesn't blame Paul Ryan. In fact, he thought Paul Ryan worked really hard. He enjoys his relationship with Paul Ryan, thinks that Paul Ryan is a great speaker of the House.


PRIEBUS: So, none of that has changed. I think this is more of a personal relationship, the president helping out a friend.

WALLACE: I assume the friend was Judge Jeanine, not Paul Ryan.

PRIEBUS: Both of them are.

WALLACE: OK, but in terms of helping out.


PRIEBUS: But as to the tweet, yes.



WALLACE: Now, I want to pick up on somebody else.


WALLACE: Here's what The New York Times reports today about the president's reaction to his defeat. I’m sure you've seen this this morning.

"In a search for scapegoats, he, the president, asked his advisors repeatedly, whose fault was this? Increasingly, the blame has fallen on Reince Priebus, the White House chief of staff, who coordinated initial legislative strategy on the health care bill with Mr. Ryan."

And this is a comment similar to that in "The Washington Post" today. So, obviously, people are saying it. Are you in trouble?

PRIEBUS: I’m not in any trouble. I’ve got a great relationship with the president, we talk all the time. In fact, just before coming on the set he gave me a call.

This is gossip columns, and, you know, it's always going to happen. And I don't really care about it. I’m looking forward to accomplishing the president's agenda moving forward and working with anybody in the legislature to make sure that that happens.

WALLACE: OK, let's talk about some items moving forward, and that is tax reform, that which the president says that's the next big thing that he’s going to tackle. That's even more complicated that health care reform because it involves every industry and not just one industry, and you’ve also got a big split within the Republican Party because Speaker Ryan wants this border adjustment tax which would tax imports, not exports, and there are a lot of Republicans who say no way.

So, the question is, does the president have second thoughts after health care on following the lead of Paul Ryan, particularly when it comes to the border adjustment tax and tax reform in general?

PRIEBUS: No, I don’t -- not at all, Chris. I think that moving forward, the president's vision on lowering taxes for every American is what’s going to unite not just the Republican Party, but I think some of those Democrats are going to come on board as well. If we can provide one of the biggest middle class tax cuts in the history of this country, I think that's important.

I think another point that's important to the president as a potential border tax, that we start evening up the playing field between our country, countries around the world --

WALLACE: But he’s not backing off of that?

PRIEBUS: He's not backing off of that. It’s something that’s very important to him.

And if you go back and watch President Trump's interview from the 1980s, the 1990s, the early 2000s, and recent years, he has been talking about this agenda his entire life. I think now more than ever, I actually think the president is even more embolden to stick to his guns and his heart and the things and the convictions that he's laid out to the American people for decades.


PRIEBUS: And he's not going to turn his back on his core principles. I think his core principles have broad admiration in both parties.

WALLACE: Finally, and I want to do this quickly if we can, because we are running out of time. Let's turn to the House investigation of alleged links between Russia and the Trump campaign, and also the allegations that the Obama administration swept up surveillance and leaked it to try to undercut the Trump presidency.

Let's do a lighting round.



WALLACE: Quick question. Quick answer. I promise, these are going to be very easy.


WALLACE: Does the president accept the conclusion from all sides that President Obama did not wiretapped Trump Tower during the campaign, and is he ready to apologize?

PRIEBUS: OK. Well, first of all -- well, the answer is no. But --

WALLACE: No, he doesn't accept it?

PRIEBUS: No, and I don’t accept it. I mean, the reality is, is that, number, when people say Obama, I think it's really clear Obama administration.

WALLACE: No, no, no. I just -- no --

PRIEBUS: Number two --


PRIEBUS: Look at this headline. This is in The New York Times. It says wiretapped data. This is The New York Times.

I think it's safe to say --

WALLACE: But that's nothing about Trump Tower.

PRIEBUS: Wait a second. You asked me a question. I think it’s -- well, people working at Trump Tower. I think it’s safe to say --


WALLACE: -- about Trump Tower, there were also surveillance of foreign parties (ph).

PRIEBUS: I think it's safe to say that when people use the word "wiretapped", they are talking about the president, you know, hooking up wires in the telephones.

WALLACE: Nobody is saying that. Nobody is saying that.

PRIEBUS: The fact is, reports have come out for many, many months now that people on the Trump campaign transition team were surveillance (ph) by potentially some intelligence group, whether they were inadvertently swept up, whether the names were unmask. Chris, you don't know the full answer to that question, and I don't either.

WALLACE: That’s a --


PRIEBUS: But the people in the Trump transition were unknowingly surveillance and illegally unmasked on documents, which is what is being alleged out there. I think it's a big problem and I think ultimately, President Trump is going to be proven correct that this wasn’t --

WALLACE: OK, let me --

PRIEBUS: -- this wasn't right.


WALLACE: Now, my second question, does the president believe that this was a concerted effort by the Obama administration to sweep up this intelligence and to leak it to undercut the current presidency?

PRIEBUS: Well, there's two things there. One, the links are apparent. I mean, it's obviously all over the place.

I’ve been on your show before and I’ve had people in my office, at the highest levels of the intelligence community that volunteered, I didn't do anything wrong, they came into my office, shut my door and told me that these stories about Russian contacts and collusion were ridiculous.

So, there are leaks out there that are injuring the president, it's wrong, and people should be prosecuted. Now, as to whether or not to the first party of your question that there some sort of broad conspiracy, there's potentially something very wrong here. But I’m not going to go any further than that other than to say that I think the documents that the intelligence committees have apparently asked for from all over these different agencies that there collecting and reviewing --

WALLACE: All right. I’ve got one last --

PRIEBUS: -- to tell the story.

WALLACE: I’ve got one last question for you, again, quick answer. Does Chairman Nunes coming to the White House and briefing the president before he briefed his own committee, did that undercut his credibility and does that open the door to an independent investigation?

PRIEBUS: Well, first of all, that's not for me to answer. It’s for Chairman Nunes to answer. But it was his decision he made. We don't calculate the decisions that they make and whether they've briefed someone or not. We had no knowledge --


WALLACE: And what do you think with the idea of an independent investigation?

PRIEBUS: I think we let the House Committee do its job and see what they come up with. I mean -- by the way, they’re not going to come up with anything. We've already been told. I mean, I have been on the show -- I’m not making this stuff up.

Every single person has been briefed by the intelligence community has come back to the sticks (ph) and told the press, we have been told that there's no truth --

WALLACE: We should say, sticks is a reference to Michael --


PRIEBUS: -- there is no truth to the allegation that there is some sort of collusion between the Trump campaign and Russia.

WALLACE: Reince, thank you.

PRIEBUS: Thank you, sir.

WALLACE: Better than last time, right?



WALLACE: You didn’t call us an enemy of the American people. It went well. It’s always good to talk with you.

PRIEBUS: All right. Thank you, Chris.

WALLACE: Please come back.

PRIEBUS: You bet.

WALLACE: Up next, one of the leaders of the House Freedom Caucus who played a big role in blocking the GOP health care plan. We’ll ask Congressman Jim Jordan whether conservative hardliners want to govern or keep opposing their own leaders.


WALLACE: House Republicans had more than enough members to pass the ObamaCare repeal and replace bill, but once again, the House Freedom Caucus of hard-line conservatives bucked its leaders, in this case, President Trump and Speaker Ryan, to block a major GOP initiative.

Joining me now, Congressman Jim Jordan of Ohio, a founding member of the group.

Congressman, welcome back to "Fox News Sunday."

REP. JIM JORDAN, R-OHIO: Good to be with you.

WALLACE: So, Paul Ryan and Nancy Pelosi agreed on the one thing Friday, both for here is line on the defeat of ObamaCare repeal and replace. Here it is.


RYAN: ObamaCare is the law of the land. It’s going to remain the law of the land until it’s replaced. We did not have quite the votes to replace this law. And so, yes, we’re going to be living with ObamaCare for the foreseeable future.

REP. NANCY PELOSI, D-CALIF., MINORITY LEADER: It’s pretty -- it’s pretty exciting for us. Yesterday, our anniversary. Today, a victory for the Affordable Care Act, more importantly, for the American people.


WALLACE: We’ll be living with ObamaCare for the foreseeable future.

Isn’t that on you and your fellow members of the Freedom Caucus?

JORDAN: Chris, in the last segment, I think you blamed the Freedom Caucus, or people blamed the Freedom Caucus, the Heritage Foundation, the Club for Growth.

WALLACE: I didn’t --


JORDAN: You blame the speaker of the House, and even people are blaming the very guest you had on before, Reince Priebus. Instead of doing the blame game, let's get to work. Let's do the responsible thing. Let’ get back to work and do what we told the voters we were going to do.

Remember this bill, 17 percent of the country approved this bill. Maybe the fact that we opposed it, we did the country a favor because this bill didn't repeal ObamaCare. This bill didn't do what we told the American people we were going to do.

So, let's be responsible, let’s get back to work and do what we told the American people we were going to accomplish, which is repeal ObamaCare and replace it with a patient-centered health care program.

WALLACE: But -- and here's the concern of the president and Ryan and a number of other people. There were a number of conservative provisions in this bill.

I want to put some of them up on the screen. Here's just a few. First, major reform of Medicaid ever. Repeal individual and employer mandates. Defund Planned Parenthood.

Now in large part due to the opposition of you and other members of the Freedom Caucus, all of that goes away.

JORDAN: But you’re forgetting the overall legislation. Even -- did the bill repeal ObamaCare? No. Even Krauthammer said it didn’t. It was Obama -- he called it ObamaCare-light. Not me. So, it didn’t Obama -- did it bring down premiums? No. Even the CBO said premiums are going to continue to rise for the foreseeable future, for at least three years.

WALLACE: And then it goes.

JORDAN: Yes. And did it unite the Republican Party? Of course it didn't. We saw every major conservative organization in the country oppose this. You saw conservatives and frankly moderates in the House and Senate oppose this legislation. So, it didn't unite our party.

So, why didn't we just do -- there’s been talk about moving the goalpost moves? You know when the goalposts were moved, when they didn't start with the legislation we all voted for 15 months ago, the same bill I introduced two weeks ago, which said, let’s do clean repeal in one piece of legislation, and then let’s do a separate piece of legislation to replace ObamaCare with patient-centered healthcare.

WALLACE: OK. But wait, wait, let’s talk about this question of clean repeal. If you would have done and you could have done it, under reconciliation, there would be no --

JORDAN: And we did 15 months ago, Chris.

WALLACE: There would be subsidies to help people buy insurance or pay for their premiums or deductibles. There would be no expanded Medicaid. Let me finish. There would be no expanded Medicaid to help those people.

The result of a clean repeal is that millions of people who currently have health insurance coverage wouldn't.

JORDAN: No, the result of the claim repeal is we get rid of ObamaCare.

WALLACE: Right. But that has the subsidies and has the expanded Medicaid.

JORDAN: And there would be two-year wind down, and then you replace it with things that are going to bring back affordable insurance. Again, this is just --


WALLACE: The flaw with that is that to get that through, you’re going to need Democratic votes.

JORDAN: We were going to need Democratic votes for this plan.

WALLACE: No, you weren't.

JORDAN: Look at phase two and phase three.

WALLACE: I understand. But not for the repeal and replace.


JORDAN: We had two to ours, and ours was actually consistent with what we told the American people we were going to do.

WALLACE: Would you agree that clean repeal would have left -- just clean repeal would have left millions of people without health insurance?

JORDAN: There’s nothing that said you couldn’t start with our clean repeal bill and also put in some other things that would help. But the focus is, we want to bring back affordable insurance.

The left always defines success by signing people up for ObamaCare, signing people up for Medicaid. Conservatives say, no, no, a better approach is to get back to market-oriented health care. Let’s bring down the cost of premiums so that middle-class people will be able to afford a plan in the private sector that actually fits their families needs, not a one-size-fits-all mandate from Washington. That's the difference, and that's what our plan would have accomplished.

WALLACE: The wrap on the Freedom Caucus is that you refuse to take yes for an answer. The president, I don't know -- were you in the meeting on Thursday?


WALLACE: So, one of the things that you guys were demanding was you wanted the essential health benefits removed, and the president agreed to remove a number of the essential health benefits, mandates on what has to be on coverage, things like maternity care, and mental health coverage. And you pocketed that and then you said, no, no, we need more, we need you to remove the protection for people with pre-existing conditions.

JORDAN: We were consistent all along. And that narrative is just not accurate. We were consistent all along. We want those regulations and mandates placed on that industry that drove up the cost of insurance. We want those to go so that premiums actually come down.

WALLACE: Wait a minute.


WALLACE: Wait, wait -- so you want people who have pre-existing conditions to no longer have protection?

JORDAN: No, we were talking about community rating, guaranteed issue. We wanted those revisions in that -- in those age bands, in that -- in those groups, we wanted those things remove so that you would actually bring down premiums. That’s what --


WALLACE: -- bringing down premiums, if you only -- if you only insure healthy people, you’re going to have really low premiums. My point is, one of the things that you got wanted --

JORDAN: Chris, we --


WALLACE: Wait, wait, you wanted them to remove the provision that would protect people, that would require insurance companies to ensure people with preexisting conditions.

JORDAN: We want to remove the regulations that drive up the cost of insurance for middle-class and working-class. And we --


WALLACE: -- protection for pre-existing conditions or not.

JORDAN: Even the speaker said this on Friday at his press conference, there's money in the bill to set up the high risk pools, additional dollars --

WALLACE: But you were taking away that, and you were also taking away the --

JORDAN: No, we were for that.

WALLACE: No, you were taking away the pre-existing conditions and you were also taking away --

JORDAN: We were taking away those mandates that drove up the cost.

WALLACE: Some people would look at this and say, what's good about you are going to away maternity care? You are going to take away mental health?

JORDAN: What’s good about ObamaCare, which we’ve driven up the cost of insurance for every single family across the country? What’s good about that? That’s what we’re trying to change. That’s what the election about in 2010 was about, Chris, that’s what the election in 2014 and in large part, the election in November 8, 2016, was about getting rid of this law that has driven up the cost of insurance for every single working class and middle class family across this country.

That’s what we’re focused on doing. And until you go after those regulations that drive up those cost, you will not solve the problem. This bill didn’t do it. And that's why --

WALLACE: But the result is --

JORDAN: Chris, that’s why 17 -- only 17 percent of the country approved at the legislation.

WALLACE: But the result is, you've still got ObamaCare. And the president offered a huge concession on Thursday on the enhanced health benefits. You wouldn't take it, you refused to vote for the bill. And the result, you cut the legs out from under President Trump and Paul Ryan on the first legislative initiative.

JORDAN: This is about the American people and what we told them we were going to do. There is no way this legislation was consistent with what the American people sent us here to accomplish. No way it was consistent with what we told them we were going to do. And that's why you saw members oppose it, and that's why the Freedom Caucus opposed it in large part because of that simple fact.

WALLACE: Final question, so, what’s is your play going forward, when it comes to tax reform? When it comes to trade? When it comes to immigration? Are you still going to say, it's do it our way or we are not going to vote? And as a result, what happens if the president, as you heard Reince Priebus say, goes for moderate Democrats instead?

JORDAN: Chris, this is real simple, do it the way we told the American people. This bill didn’t do that, so let's do tax reform like we told the American people we were going to. Let’s make sure we actually secure the border, build a wall, like we told the American people we were going to.

Let’s focus -- we make this job way too complicated. Do what we told the people we were going to do. That's what -- that’s what our -- that’s what our -- the Freedom Caucus was created to do, to fight for those simple principles. We’re -- we’re happy to get to yes if it's accomplishing what the American people sent us here to accomplish.

WALLACE: Congressman, Jordan, thank you. It's always good to talk with you. I -- I enjoy the back and forth.

JORDAN: Thank you.

WALLACE: Up next, we’ll bring in our Sunday group to discuss the continuing controversy over the Trump campaign’s alleged links to Russia.

Plus, what would you like to ask the panel about the president’s defeat on his first big legislative initiative? Just go to FaceBook or Twitter @foxnewssunday and we may use your question on the air.


WALLACE: Coming up, congressional Democrats celebrate President Trump's health care defeat.


PELOSI: Today is a great day for our country. It’s a victory. What happened on the floor is a victory for the American people.


WALLACE: We’ll ask our Sunday panel whether the two parties can work together to prevent an ObamaCare breakdown, next on "Fox News Sunday."



RYAN: Moving from an opposition party to a governing party comes with growing pains. And, well, we’re feeling those growing pains today.

PELOSI: Rookies error, Donald Trump. He may be a great negotiator. Rookies error for bringing this up on a day when you clearly are not ready.


WALLACE: Speaker Paul Ryan taking his licks and House Democratic Leader Nancy Pelosi taking a bow over the defeat of the GOP’s plan to repeal and replace ObamaCare.

And it’s time now for our Sunday group. Bill Kristol from The Weekly Standard.

And, Bill, welcome back.

BILL KRISTOL, THE WEEKLY STANDARD: Thank you, Chris. Good to be here.

WALLACE: We've missed you.

Charles Lane of The Washington Post, Susan Page, Washington bureau chief of USA Today, and former speaker of the House, Newt Gingrich.

Speaker, let me start with you.

What went wrong? What should President Trump and his team do differently next time? And what about Speaker Paul Ryan?

NEWT GINGRICH, FOX NEWS CONTRIBUTOR: Well, look, Ryan’s a brilliant policy guy. This is his first really big effort to put together a legislative package. I hope that this will be a moment in the Trump presidency when they realize that they can’t win an inside game. Trump's great strength is in the country, as Reagan’s great strength was in the country. It took Reagan until August to pass a tax cut, which is a pretty easy thing. It took us until August of ’96 to pass welfare reform, which is a relatively easy thing.

First ground rule is simple, don’t set up an artificial deadline to fail. The second ground rule is equally simple, start with the country understanding what you’re doing and then try to do it in Washington. But they’re here with a -- with a fake score from CBO and the absurdity of the Senate reconciliation bills, trying to explain a process that is hopelessly complicated to the average American and then saying in the age of Donald Trump, trust us, we’re going to fix it all in the second and third phases. It was just profoundly miss-designed.

WALLACE: And is there one person you blame for it?

GINGRICH: No, I think -- I think it was -- I think the congressional leadership still wants to behave as though -- though they’re in a pre-Trump world, and I think Trump, frankly, trusted them and up until, what, five days out, they kept telling him they had the votes.

WALLACE: We asked you for questions for the panel and we got a number on this question of the first big defeat for the Trump presidency. Kevin Henderson tweeted, "the congressional GOP has six years to come up with a decent alternative. What were they doing this whole -- that whole time." And Michael Lodge sent this on Facebook, "why do you think the American people will accept failure of not repealing and replace ObamaCare after eight years of telling us they would?"

Bill, how do you answer those questions, and who do you think’s responsible for this failure?

KRISTOL: They’ll have to revisit reforming and repealing parts, at least, of ObamaCare over the next year and a half. There's plenty of time, as Newt said.

I do think just going for some huge comprehensive bill on the toughest thing to tackle, something that the Clinton administration didn’t succeed with in ’93-’94, they never got even a vote on their health care bill, and that Barack Obama took 15 months of arm twisting with bigger majorities to get through, to begin with that was a little crazy.

There’s a lot of low-hanging fruit he could do. Some of it bipartisan. I thought Reince Priebus was interesting in his talk with you. They could do some stuff some conservatives won't like and get Democrats on board of, bringing some prescription drug prices down. If I were Trump now, I would do some easy things. There’s a continue resolution in a month. Say, I want the wall funded now, in 2017, not 2018. I’m not a big fan of the wall, but if you’re a Trump voter, you like the wall, right? I want the defense supplement now. I’m building back the military. He has three or four things he could do over the next month. He could pivot away from this, which will be medium-sized victories for him, which is what you can get in the first hundred days.

WALLACE: Let's talk about the other big story this week, and that was the continuing investigation into alleged ties between Russia -- alleged ties between Russia and the Trump campaign. And it’s also the question of the surveillance of the Trump team and whether there was an effort to surveil and to leak this information to undercut the Trump presidency. One of the big developments this week was that the chair of the House Intelligence Committee, Devin Nunes, rushed to the White House to brief the president. Here he is.


NUNES: What I had read bothers me, and I think it should bother the president himself and his team.

REP. ADAM SCHIFF, R-CALIF., RANKING MEMBER, HOUSE INTELLIGENCE COMMITTEE: The chairman will need to decide whether he is the chairman of an independent investigation into conduct which includes allegations of potential coordination between the Trump campaign and the Russians, or he’s going to act as a surrogate of the White House.


WALLACE: Chuck, did Nunes make a mistake going to the White House, briefing the president before he briefed his own committee? And does this open the door, and this is a question I asked Reince Priebus, does this open the door and increase the demand for an independent investigation?

CHARLES LANE, THE WASHINGTON POST: Well, on the second part of your question, obviously it's increasing the demand for an independent investigation, both in the media and elsewhere on Capitol Hill, if I’m not mistaken I think John McCain piped up about that again this week. And for good reason that here you have a House body, obviously whose chairman feels it's his duty, you know, the minute some new development takes place in the middle of their investigation, to run over to the target in effect of the investigation and tell him what's going on.

On the point about whether or not it's a mistake, I guess it depends on what his goal was. If his goal was to remain in good graces with the Trump administration, it was probably a very successful venture on his part, but it doesn't seem to me, at least, consistent with sort of separation of powers 101. And, politically, I think it obviously has backfired on him.


SUSAN PAGE, USA TODAY: Well, you still -- you do have Democrats calling for an independent commission or a special counsel but you don't really see anybody in the Republican leadership going that way. And it seems to meet you need some explosive new disclosure to really propel an independent investigation beyond. I mean now I think Democrats will focus more on the Senate Intelligence Committee that has not had the kind of partisan breach that we saw this week on the -- on the House Intelligence Committee. And, of course, the FBI investigation is going to continue no matter what. So this is going to be an issue that we know from Monday's testimony -- just on Monday, it seems like so long ago -- just on Monday from the FBI director that this is going to be with the chairman called a big gray cloud over the Trump administration for at least months.

WALLACE: And, speaker, I want -- I want to give you a thought experiment. Assume that Adam Schiff, the ranking Democrat, was the chairman of the committee and he raced to the White House to tell President Obama about some information he had gotten on Benghazi, let's say, before he told his committee. Wouldn’t you have been among the first people to cry foul on that?

GINGRICH: We would have been deeply shocked, horrified and called for an independent commission.

WALLACE: Meaning what, that this is just -- we’re rounding up the usual suspects?

GINGRICH: Meaning -- meaning -- meaning he did his job as a partisan and we would have done our job as a partisan. I mean --

WALLACE: Yes, but --

KRISTOL: (INAUDIBLE) Newt, I mean, this is where Paul Ryan was talking about being a governing party. He is chairman of the committee.


KRISTOL: He has a pretty good staff in that committee. He could actually investigate these things. It seems ridiculous for the chairman of the -- it’s one thing for a back bencher and a minority to say, I have no recourse, I'm having a press conference, I'm going to go tell people and scream and yell. He's chairman. He can actually investigate this. Why is he running to the White House?

GINGRICH: Oh, I think he’s --

LANE: Yes, the standard is not what your average partisan would do. That's not our standard.

GINGRICH: The fact is, this whole thing is so overblown and I think what Nunes was saying to Trump, which the media doesn't want to accept is, that in fact he has some reason to believe they were under surveillance. Now, Trump got the -- he got pounded on by the media for weeks. And all of a sudden Nunes says, wait a second, what if it turns out he was right? Well, I think he probably was -- was stunned at the idea that after all of this lynch mob mentality in the media, it may well turn out Donald J. Trump is right and everybody in the establishment is wrong. And I think that's why he went up to see him.

LANE: And, again, this -- this is not all about -- at least from the point of view of what good governance and what the American people need, it's not sort of like, what proves the establishment wrong or right in the course of one 24-hour news cycle. He’s supposedly the chairman of a committee doing a serious investigation and --

GINGRICH: But the -- the news media is willing to prove Donald Trump wrong within a half hour. So don’t talk to him about 24-hour news cycles.

LANE: But -- but -- but we’re the news media. That guy has an oath. He’s chairman of a committee.

WALLACE: Hey, guys, I’m not going to talk to you about 24 hours or 20 minutes. I am talking about a commercial, though. Thank you. We’ll see you Sunday.

Coming up, the terror attack this week in London increases fears over the threat of ISIS. We’ll ask the leader of Iraq how soon his country will destroy the jihadists and how he compares President Trump's war on terror to President Obama's. That’s next.


WALLACE: As London dealt with a deadly terror attack outside parliament this week, leaders of 68 nations met here in Washington to assess their strategy to destroy ISIS, or Daesh. And we sat down for an exclusive interview with one of the leaders of the war on terror, the prime minister of Iraq, Haider al-Abadi.


WALLACE: Mr. Prime Minister, welcome to "Fox News Sunday."


WALLACE: Let's start with the terror attack in London, which at the very least appears to be ISIS-inspired. What are your thoughts about what Europe, the U.S. the west can do to prevent these kinds of attacks?

AL-ABADI: I think at the moment we are at very important juncture where Daesh is on the retreat. We in Iraq has -- has been killing Daesh, removing them from our land. And we are killing their aim so that recruits are at minimal at the moment. So what they’re trying to do now, they’re trying to attract more recruits by doing these acts, criminal acts. We should be focused. We should be concentrated to remove this ugly, dangerous terrorist organization.

WALLACE: But you’re saying that the success in the Middle East is spawning these attacks in the west?

AL-ABADI: Yes, for simple reason. It’s like -- like somebody who’s dying who’s trying just to flex his -- his muscles at the last moment. So knowing your way forward is to kill their hope just to finish them, then they will not be -- have any hope to commit such criminal acts.

WALLACE: In your meetings this week with President Trump, with the summit of nations that’s fighting ISIS, was there any agreement on a new strategy to fight and destroy ISIS in the Middle East?

AL-ABADI: I don't think there's a final version of us agreeing on -- on like a plan, but I’ve seen that there’s commitment from the U.S., especially from the administration, of course from Congress, to continue to support Iraq and to continue to stay focused on eliminating Daesh.

WALLACE: President Trump, at various points over the last year, has talked about having a secret plan to defeat ISIS. Did he share that with you?

AL-ABADI: Well, I don't think he would share his secret, but I think my belief, as I understood, that plan is not ready yet. It is still in its draft format and still is not -- is not there.

WALLACE: How close in Iraq, in Syria, how close is ISIS to defeat?

AL-ABADI: Well, In Iraq, it’s there. I think the defeat is sure, it’s definite. We finished the job in a very short time. It is within our reach.

WALLACE: By one?

AL-ABADI: Within the next few weeks.

WALLACE: Within the next few weeks Daesh, ISIS, will be gone from Iraq?

AL-ABADI: Yes, militarily. We are defeating them militarily. As a terrorist organization, as I said before, they will try. So that's where we need the efforts of others to flush them out and see there (ph) and other places.

WALLACE: There are now 5,000 U.S. troops in Iraq and the chairman of the Joint Chiefs, General Dunford, talks about wanting to keep troops in your country for a long time.

GENERAL JOSEPH DUNFORD, JOINT CHIEFS CHAIRMAN: We have, as has NATO, become a dialogue about a long-term commitment to groom capacity, maintain a capacity of Iraqi security forces, but no decisions have been made yet.

WALLACE: How many U.S. troops do you want in Iraq and for how long?

AL-ABADI: We are concentrating on training, logistical support and intelligence cooperation and gathering. These are three important elements which I think we need some U.S. troops to stay in Iraq to continue the task.

WALLACE: So if we now have 5,000 troops there, to complete the kind of mission you're talking about, to train and assist, how many U.S. troops would you --

AL-ABADI: I think much less than the existing one. Of course with the war done, and the (INAUDIBLE) will be much less than at the present. So we’ll be looking at much -- at -- at a lower number than (INAUDIBLE).

WALLACE: On thousand?

AL-ABADI: I think it’s a bit more. Fighting terrorism is a priority. It’s a priority for us. It should be a priority for everybody. I know it's a priority for the United States, but we should be on the same chapter on this.

WALLACE: I want to follow up on that. Do you see a difference between President Trump's determination to destroy ISIS and President Obama's?

AL-ABADI: I can see a very powerful determination to defeat Daesh.

WALLACE: But more determination with President Trump then President Obama?

AL-ABADI: Well, I -- yes, I can see that determination. President Obama didn’t want to get involved in the first place. He just want to just forget Iraq. But I think coming back to Iraq was sort of (INAUDIBLE) because of Daesh and what they have done by crossing the Syrian-Iraqi border and occupied about 40 percent of Iraqi land. I mean slaughtering people. So there was a lot of pressure on President Obama to set -- to -- to come to the help of Iraq. While I think, at the moment, there is understanding that Iraq is an ally and we should keep on working with Iraq to support Iraq to stand against terrorists.

WALLACE: During the campaign, and even as president, Mr. Trump has talked about taking Iraq's oil as a way to repay the U.S. for all the money we have spent in your country.

TRUMP: The old expression, to the victor belong to spoils. You remember, I always used to say, keep the oil.

So we should have kept the oil. But, OK, maybe we’ll have another chance.

WALLACE: One, what do you think of that? And, two, did you tell the president directly in your meeting?

AL-ABADI: Yes, I did. I told Mr. President, Iraqi oil is -- are -- is for Iraqis. There's no question about that.

WALLACE: Did it upset you that he was suggesting that the U.S. could take your oil?

AL-ABADI: Well, of course it upset every Iraqi. It upset every citizen. I don’t think one should say that. This is the wealth of the country, the wealth of the people. It’s not right for any foreign country to take over the wealth of another country.

WALLACE: One of the reasons that you came to Washington is because you would like continued U.S. support as you try to rebuild Iraq after the war, after the attack by ISIS. But President Trump announced in his new budget that he's cutting foreign aid by 30 percent.

AL-ABADI: We are not begging. We have been fighting on the ground, fighting ISIL, Daesh, with our own blood, with our own sacrifices and this is a danger to the whole world. But we need much more to win the piece rather than winning the war -- after winning the war. And this, I think, is what’s (INAUDIBLE) of all -- all our partners. It shouldn't be just fall on Iraq, because this terrorism is not from Iraq alone. It's from all over the world.

WALLACE: But President Trump talks about cutting foreign aid.

AL-ABADI: This is not aid. This is something else I think to preserve your own national security. It’s completely different. Terrorism is a threat of -- to all -- to the whole of the world.

WALLACE: Iraq was one of seven largely Muslim countries that was included in the president’s original travel ban. And after you raised strong objections, Iraq was taken off the list. But I wonder, what do you think of the travel ban in general? Is it a good policy, and have other Arab leaders been as upset about it as you were?

AL-ABADI: As to do with Iraq because we are allies. We are -- we are victims of terrorism. It was like it is not acceptable to us, especially when you have U.S. soldiers, U.S. officers working with Iraqis in Iraq. I was really tough for them to tell the Iraqis, I'm working with you (INAUDIBLE) a threat to the U.S. I think that's a major point which was raised and was rectified and I'm very thankful, which indicates that the U.S. administration (INAUDIBLE).

WALLACE: After 14 years in Iraq, America wonder what's going to happen to your country and one of their big concerns as this, can you guarantee that Iran will not have undue influence or even control over some parts of Iraq?

AL-ABADI: See, Iraq is for Iraqis. Iraqis are nationalist. They don't accept anybody controlling them. They will object it and they will fight for their --

WALLACE: But -- but Iran plays a big role in the Shia parts of the country.

AL-ABADI: Well, Iran playing a role being a neighbor and other neighbors play a role. We are looking at the good side and we want to prevent the bad side. No country accepts another country controlling it. And definitely in Iraq we don’t accept it.

WALLACE: Finally, ever since we toppled Saddam Hussein, it seems that the different parts of the country, the Sunni section, the Shia section, the Kurdish section, have each pursued different interests and a somewhat different future. How comfortable are you that Iraq will remain a stable and democratic nation?

AL-ABADI: It’s happening in Iraq. I mean there's freedom of expression. There’s a freedom of election. We -- we hold elections every four years. This is going on despite all our difficulties. Yes, this is new since democracy, very infant. It needs support and we are supporting it. And I think it was worth it to remove Saddam Hussein from power. He was a dictator. He killed the people. He oppressed the people. And people are seeing the new Iraq as a democratic Iraq.

WALLACE: Mr. Prime Minister, thank you.

AL-ABADI: Thank you.

WALLACE: And safe travel home.

AL-ABADI: Thank you.


WALLACE: And we’ll be right back with a final word.


WALLACE: A look outside the beltway at Charleston, South Carolina. A beautiful place.

For the latest on President Trump's next move after his defeat on health care, please stay tuned to the station and Fox News Channel.

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

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