This is a rush transcript from "The Story," February 9, 2018. This copy may not be in its final form and may be updated.

MARTHA MACCALLUM, "THE STORY" HOST: Thanks. Chris, we will, of course, see you on Sunday as always. So, good evening, everybody. We are expecting that the White House could approve the release of the Democrats' memo any minute now. And, when that happens, we're going to start to go through it live with the group that we have gathered for you.

So, good evening, everybody. Good to see you on this Friday night. I'm Martha MacCallum and the top story tonight is the Democrats' answer to the GOP memo charging that there was politically charged abuse of our FISA system during the election, could come out at any minute now. It has been a battle between Republicans and Democrats on the House Intel Committee. Each seeing the FISA surveillance of the Trump campaign very differently. Democrats expected to argue that the court had viable reason to allow spying on Carter Page, a one-time foreign policy advisor to the Trump campaign.

This as Intel Committee Chairman Devin Nunes, has a new request today. He wants to see more of the background on how the court arrived at their decision as this thing gets more heated by the day. Now, last night, Fox news chief correspondent Ed Henry brought this breaking news that Democratic Senator Mark Warner texted with a lobbyist for a Russian oligarch in an effort to contact Trump dossier author, Christopher Steele, and he attempted to do that without initially letting the rest of the members on his committee know about it. Joining me now once again tonight, Ed Henry. Good evening, Ed.

ED HENRY, FOX NEWS CHANNEL NATIONAL CHIEF CORRESPONDENT: Martha, good to see you. Here we go again. The five-day window is closing tonight for President Trump to decide whether he's blocking this memo all together or making some final changes. And we're told late this afternoon, he met here at the White House with the FBI director, lawyers for the Justice Department and from inside the White House counsel's office to go over some of those final redactions. So, we expect the release either any moment late tonight or tomorrow from this Democratic memo.

What's interesting is the president himself indicated to reporters earlier today that he is not going to block it. Instead, he said he will soon release a letter with what needs to be blacked out, presumably on national security grounds. But a good chunk of this 10-page memo from Democrats is going public. It was put together by Democrat Adam Schiff largely aimed at pushing back on Republican claims that FBI and Justice Department officials mislead that FISA court to start spying on a former Trump adviser, Carter Page, without revealing the FISA application was largely based on unverified information, presented in former British spy Christopher Steele's anti-Trump dossier.

But Republican Devin Nunes, as you suggested, is far from backing down in from his assertions in the original memo. In fact, today, he asked the presiding judge of secretive court to take the extraordinary step of turning over transcripts from the court. Nunes wrote to the honorable Rosemary Collier, "The committee found that the FBI and DOJ failed to disclose specific political actors paying for uncorroborated information that formed a substantial part of the FISA application, misled the court regarding dissemination of this information and failed to correct these errors in the subsequent renewal."

Now, Nunes is setting a deadline, in fact, of next Friday for the court to turn over those transcripts because he believes those documents will show the Obama administration abused its power. In fact, some Republicans who have seen the Democratic memo say part of it actually is an attack on Nunes, focusing on that instead of actually rebutting the facts in the Republican memo, Martha.

MACCALLUM: That's interesting. Ed, thank you very much. Ed Henry watching all of this unfold with us tonight. Joining me now, Florida Congressman Matt Gaetz, member of the House Judiciary Committee. Congressman, welcome back to "The Story." Good to see you tonight.

REP. MATT GAETZ, R-FLORIDA: Good to see you.

MACCALLUM: Your thoughts on when we might see this, any idea?

GAETZ: My expectation is that we will see the Democratic memo this evening. And the American people should take note of the different writing styles for these memos. The Republican memo lays out a series of factual conclusions. The Democratic memo is heavily footnoted but the actual text of the memo, largely deals with analysis and editorial opinions. Those very footnotes are likely what the White House is having to redact because some of them cite to specific sources and methods that we use to collect intelligence. So, very different memos, very different styles, but in both circumstances, Republicans have been fighting for transparency. Democrats voted against even starting an investigation. And now, we'll see what their argument is this evening.

MACCALLUM: I mean, it seems their strongest point would be if they can undercut the argument that came from the Republican side which was that the reason that the FISA court signed off on it was based primarily on the dossier, and without that they wouldn't have been able to do it. Do the Democrats have evidence that is contrary to what your folks put together?

GAETZ: Well, the Republican memo lays out verifiable facts. And you see that Chairman Devin Nunes is still fighting for transparency. The reason Devin Nunes wants to release the FISA application is because the substance of that application will support and buttress all of the claims in the Republican memo, and it will prove many of the claims that Adam Schiff has made are false. And in fact, this dossier was the fundamental basis for the warrant to spy on American citizens, and it was not accurate. The information in it was actually planted by Democratic operatives and funded by the Democratic Party.

MACCALLUM: All right. When it comes out, we will see what's in it. In terms of some of the other things that are percolating around this story, because Devin Nunes said himself that there was more to come in terms of revelations about the FISA court and how they work, and one of the people who's getting some increased focus now is Judge Contreras, who was recused from -- generally you recuse yourself. But in this case, he was recused from the Michael Flynn side of this equation in this case. Do you know anything about that?

GAETZ: I don't, Martha. I have litigated in my private life and I will say there are many reasons why a judge could be recused from a case that have nothing to do with their prior decisions or rulings on facts which may be relevant. But here, because the judge did sit on the FISA court, it does raise questions. I've never been critical of the judges who've issued these warrants though because, to me, they were the victims of fundamental misrepresentations of fact and fundamental omissions of fact that would have and should have resulted in a rejection of this desire to spy on members of Trump transition team. Instead, because the FBI and the Department of Justice, I think, were so overzealous in their pursuit, we ended up with this terrible deprivation of civil rights and I think the need for reform.

MACCALLUM: Excuse me for interrupting. And I asked Congressman Gowdy about this earlier in the week. I do think a lot of Americans watch this whole story and they do have questionings, though. I know you are both are reluctant to questions to judges, but, you know, or perhaps the system by which it is set up.

GAETZ: Sure.

MACCALLUM: A judge, only hears one side of the argument, right? He doesn't hear this is why you should allow to us surveil and this isn't why you shouldn't allow us and then he makes his decision, correct?

GAETZ: Correct, Martha. And actually, let me give some credit to Adam Schiff. Back in 2013, Adam Schiff introduced legislation that would have made the FISA process more adversarial, so there'd be a defense lawyer there to make that very argument. And hopefully, we'll be able to move past the partisanship of this moment to some bipartisan reforms that would create more protection for Americans in these FISA courts. The reason I don't blame the judge is that they can only rule on the information provided to them. And here, that information was either wrong or there were material omissions that were not included by the FBI and Department of Justice. That's where the focus for reform should be.

MACCALLUM: All right. We will see where it goes. Congressman Gaetz, thank you. Good to see you tonight.

GAETZ: Thank you.

MACCALLUM: So, this week's headlines have seriously muddied the waters when it comes to just who has come under influence by the Russians. And it appears that they were looking to influence, really, anywhere that could find any vulnerability. Howard Kurtz is host of "MediaBuzz", also author
of "Media Madness: Donald Trump, the Press, and the War Over the Truth". Howie, good evening. Good to see you tonight.


MACCALLUM: You know, it's interesting. Ed Henry did his report last night on Mark Warner, and there was a bit of circling of the wagons. Marco Rubio came out -- I think we have a tweet that Marco Rubio said about this report. It says, Senator Warner fully disclosed -- there we go. "Fully disclosed this to our committee four months ago, has had zero impact on our work." So, Marco Rubio, Senator Rubio saying that the fact that it was revealed that he was having one-on-one discussions with the lobbyist who was working for this Russian oligarch turned out to be irrelevant to what they're doing. But when you look at that, you look at the other story this week, Howie -- and I realize this is a long question but I want to lay it out. When you look at the other story this week about Adam Schiff and the pranksters that he was clearly looking for some dirt on President Trump, then-candidate Trump, and you look at the way the Trump side of the equation has been handled. Is the press handling all of these things in a fair and open, honest way?

KURTZ: Well, here is the short answer: nobody looks good in this entire mess. Now, Mark Warner, yes, he disclosed to the committee, but it just looks questionable for him to be dealing with a lobbyist for Russian oligarch trying to reach the dossier author Christopher Steele. I mean, Adam Schiff was on MSNBC so often, they ought to give him a contract, looked foolish trying falling for this prankster who was peddling nude photos of Donald Trump. And it doesn't take away -- they're not under investigation, so it doesn't take away from the importance of that memo that the president's son had during the campaign with a Russian lawyer promising dirt on Hillary Clinton. But as we know, that meeting didn't lead anywhere. So, I think the press takes these one at a time. But it does sort of muddied the waters, to use your phrase.

MACCALLUM: So, in terms of the FBI, Kim Strassel wrote a piece today in the Wall Street Journal. And she's saying, you know, it shows that the FBI fell for the whole Steele package that was cooked up, she says, in London over the course of weeks that got dirt that somehow alluded the FBI, the CIA, and MI-6. This Christopher Steele years out of service, then brought it all to Jim Comey. And James Comey declared that this person was, "reliable" and that's why they sort of bought what he had to say. You know, do you feel -- Kim Strassel has been writing about this quite a bit. How would you characterize the coverage of how much scrutiny James Comey and FBI gave Christopher Steele over the course of all of this?

KURTZ: I don't think there's been enough. I mean, I've always had the feeling that the Steele memo, the dossier, you know, was unverified, was unsubstantiated that's why no major news organization went with it at the time, though he tried to leak it. We now know Buzzfeed was the one that published it without knowing whether it's true. And I have to say on this whole memo battle, just to circle back to what you are talking about, I don't think the president had much choice but to approve the Democratic memo after green lighting the Devin Nunes memo or he would have been accused fairly or unfairly of trying to suppress one side of the debate. But the truth is some interest in the whole memo battle has been overshadowed now by the Rob Porter mess at the White House, by gyrations in the stock market. And although I think the GOP memo had some important information about the arch of this investigation, for a lot of people who don't follow this the way we do, Carter Page's FISA warrant process is a little bit down in the weeds.

MACCALLUM: I'm glad you brought it up. We're going to dig into the Rob Porter situation and the way that it was handled at the White House in another segment that's coming up. But since you mentioned it, what do you think about the way this looks for General John Kelly and for others in the White House tonight?

KURTZ: Well, it doesn't take a great political analyst to know it doesn't look good for one thing. You know, there are questions about how Rob Porter was able to continue to work there, despite not getting FBI clearance, despite these accounts that we have now seen -- one of them on television from two ex-wives alleging physical abuse. But also, the White House has had shifting explanations and John Kelly put out the two different statements. So, the press kind of senses blood in the waters. I think there were more focused now on General Kelly, there are reports about whether President Trump is not happy with him. I don't know whether that's true or not. But he's very much in the spotlight. And the fact that, you know, whenever you have a series of explanations and when have the contrast with the awful accounts by these two ex-wives, it's going to be a pretty big story.

MACCALLUM: Howie, thank you. It's good to see you tonight.

KURTZ: You as well.

MACCALLUM: So, coming up next, for decades, we have defended South Korea against their belligerent neighbor to the north. So, why would they allow this to happen at the opening night of the Olympics? Our vice president with Kim Jong-un's sister literally over his shoulder? Plus, Congress passing its budget but have Republicans forgotten who they are? Rand Paul says, absolutely.


SEN. RAND PAUL, R-KENTUCKY: I can't, in all good honesty and all good faith, just look the other way because my party is now complicit in the deficit.




MIKE PENCE, VICE PRESIDENT OF THE UNITED STATES: Crystal clear, that our military, the Japanese self-defense forces, our allies here in South Korea, all of our allies across the region are fully prepared.

UNIDENTIFEID MALE: Military offense?

PENCE: Well, to defend our nation and to take what action is necessary to defend our homeland.


MACCALLUM: Tough talk tonight from Vice President Mike Pence arriving in South Korea for the kickoff of the 2018 Olympic Winter Games, which are now underway. But things got a little bit awkward at the opening ceremony when Vice President Pence was unexpectedly seated just literally feet away from this woman who you see behind him who turns out to be the sister of North Korean dictator Kim Jong-un. So, who thought that was a good idea? Lieutenant Colonel Michael Waltz, is Former Green Beret Commander and was Counter Terrorism Advisor to Vice President Cheney. Good to see you tonight, colonel. You know, as a former advisor to a vice president, how does this happen? I mean, how do the people not get together and communicate? None of this generally happens by accident and say oh no, that's not actually going to happen; they're not going to be seated near each other at this ceremony.

LT. COL. MICHAEL WALTZ, FORMER GREEN BERET COMMANDER AND FORMER COUNTER TERRORISM ADVISOR TO VICE PRESIDENT CHENEY: Well, you know, in terms the mechanics, Martha, yes, there's a lot of coordination. But, believe it or not, there's also a lot of chaos with world leaders coming from all over the world to an event like this. You know, but this is right out of the North Korean playbook to do something like this. And, you know, so far, instead of the Olympic Games, I'm calling it the North Korea propaganda games.

MACCALLUM: But hold on, let me just say, so, you're saying that you think that it's possible that there was no discussion between South Korea and the White House about who was going to be seated where and no one gave a heads up to the vice president's team that actually Kim Jong-un's sister was going to be basically, you know, breathing down your neck from behind?

WALTZ: You know, I think, obviously, I'm not privy to the discussions but having done this in the past, yes, it is heavily discussed, it is heavily mapped out. I think, you know, let's see how this unfolded. But at the end of the day, this is a propaganda win for the North Koreans. And the concern here is that Kim Jong-un, who is a liberal -- I mean, I'm sorry, President Moon of South Korea who is a liberal in his, you know, in South Korea needs an Olympic game that goes off without a hitch. He is desperate to see some type of talks move forward. And what I'm worried about is that the wedge that's going to happen from a policy standpoint from the United States and from the South Koreans moving forward, I'm worried about the day after the Olympics if President Moon of South Korea tries to move towards continuing talks and moving towards aid shipments in what they call a Sunshine Policy, we're going to have a real problem on our hands. Because we need to see sanctions dialed right back up, and the pressure on China and North Korea dialed right back up because this is what the North Koreans have done. As soon as it gets too hot, then they extend a hand for talks and they buy time. And as the director of the CIA has said repeatedly, we're only about a year from an operational ICBM that can strike anywhere in the United States. And I'm not willing to bet an American city that Kim Jong-un will abide by deterrence theory.

MACCALLUM: I mean, when you think about the American military on that border, and the time, and money, and history, and commitment to protecting South Korea from North Korea, I mean, it seems to me that it raises a lot of questions when you have these handshakes; and we all understand the principle of the Olympics is supposed to be that everybody puts down their arms for these moments and competes and focuses on sports and competition. I completely get that. But, you know, it looks weird to have -- and I don't want to overstate the seating arrangement but the whole thing, including the handshakes and the teams playing together, it makes it very uncomfortable, doesn't it?

WALTZ: Yes, and past South Korean presidents have done this in previous Olympics. And they have tended to be from the same party that President Moon is from. We can't under estimate, you know, how badly some portions of South Korean society or how all South Koreans want unification and want to have a peaceful resolution. However, you know, we need to stand firm and this president is going to stand firm that the way to get to a peaceful resolution is by maintaining pressure and his policy of maximum pressure is the correct policy going forward. And the South Koreans have to stay on board with that.

MACCALLUM: And it's significant that Vice President Pence was seated with the South Korean President Moon and also Prime Minister Abe from Japan.

WALTZ: That's right.

MACCALLUM: They present a very strong alliance.

WALTZ: Kim Jong-un is going to do whatever can he can to drive wedges. And he's using the Olympics to do that, and we have to stand firm which Vice President Pence is doing.

MACCALLUM: Lieutenant Colonel Michael Waltz, always good to see you, thank you very much.

WALTZ: Thanks, Martha.

MACCALLUM: So, coming up tonight, President Trump says the two-year budget deal is a win for our military, and Democrats also got a lot of what they wanted but some are asking what happened to the GOP's pledge to cut spending and to drain the swamp? Plus, as the White House deals with the Rob Porter mess; Hope Hicks, one of the president's closest advisors is in the spotlight that she usually seeks to avoid.


UNIDENTIFIED FEMALE: The fact that she was allowed to help craft this statement that the White House put on, that, again, that is a lack of judgment, that is a lack of leadership. The fact that she was allowed to do that.




SEN. MIKE LEE, R-UTAH: You get in excess of a trillion dollars in new debt.

PAUL: Don't you remember when Republicans howled to high heaven that President Obama was spending us into the gutter, spending us into oblivion. And now, Republicans are doing the same thing.


MACCALLUM: As you can see there, the federal budget deal signed today is facing a ton of conservative backlash as critics, like Senator Rand Paul, accused Republicans of only being fiscal conservatives when they're not actually in charge of the government as they are now. But President Trump is touting this as a victory in delivering the military spending boost that he promised as a candidate. The president admits that the spending bill contains much waste, which he blames on Democrats. Joining me now, Congressman Andy Biggs, an Arizona Republican. Congressman, welcome. Good to have you here tonight. What's your take on this thing?

REP. ANDY BIGGS, R-ARIZONA: Thank you. Well, I'm more on the Rand Paul-Mike Lee camp. I agree with that. I mean, we actually send a C.R. over to the -- a short-term spending bill over at the beginning of the week to the Senate that had full funding to the military, but it kept the other spending at a lower level within the caps. What we did last night and early this morning is blew off those caps and now we're looking at having 1.2 trillion-dollar structural deficit for this year alone. And that's not good, that's not counting the military funding. So, it's -- I am just absolutely shocked that my party is now the grand old profligates, instead of the grand old party.

MACCALLUM: You know, some are saying that sort of signal the end of the Tea Party movement, would you agree?

BIGGS: Well, no, because I think what we may actually see is the re-energizing of the Tea Party movement. When President Trump got elected, the Tea Party began taking it easy. We're good -- you know, we're good to go. I think this will reenergize it. I hope it reenergizes it, because we have got to get our spending under control. We are $20.5 trillion in national debt. It's going to balloon up to 21.5 to 22 by the end of this next fiscal year, this current fiscal year. It's unsustainable, and we have to get those people involved.

MACCALLUM: Well, let me ask you this: how do you think this happened? I mean, there were some reports I read that indicated that President Trump sort of sent the signal that it was OK to allow this to happen because he really wanted the military spending, which is a campaign promise that he made, and was that the priority, and you have to go back and start to deal with whatever cuts you might be able to do down the road. Is that your understanding of how this worked?

BIGGS: Well, I think he sent the signal, but I think he sent the signal after the Senate said we're not going to change our rules, we're going to still rely on the 60-vote rule. We still have to rely on Democrats. And, this could be avoided quite simply if Senate just said, you know, like we did for Justice Gorsuch, like the Democrats did under Harry Reid. We're going to suspend that 60-vote closure rule, and we're going to make it 51 votes for short-term spending or budget bill. If they did that, then you don't need to do all this other rigamarole and jack up the spending to buy the votes, which is really what happens. And then they could've done it at a very low rate for discretionary spending, and fully funded the defense. That's a logical thing to do. Didn't happen. I think the president is saying, look, we have to have the military spending but we're sure eating a lot of other spending.

MACCALLUM: What do you say to the leadership on the House side? Paul Ryan, I saw speaking about this, the Speaker, he said, you know what are we not going to do? Not fund disaster relief for Houston? We're not going to rebuild cities? Of course, we are. What do you say to that?

BIGGS: Well, I say, well, at least put some "pay for" in there. Let's -- if you're going to do that, make sure you can afford to pay for it. This is the fifth C.R. we've done this year and the Senate has never even taken up the budget we sent over to them in September. Good grief, the reason that the CR's are so bad is that they have given us -- we do on average five a year for the last 20 years, we have quadrupled our national debt in that same period because we won't simply do an annual budget.

MACCALLUM: Do you think -- last question for you, sir. Do you think this hurts Republicans in the midterm?

BIGGS: I think it really can hurt as people see it. It's going -- it offsets what we did and had so much success with the tax cut deal where people are feeling that tax cut and they are happy about it. They see the economy growing. This could actually counter balance that. I'm afraid of it.

MACCALLUM: We will see. Congressman Biggs, thank you very much. Good to see you tonight.

BIGGS: Thanks. Good to see you.

MACCALLUM: So this latest budget deal now setting the stage for more intense battles to come from immigration to deficits. All of this as we head -- as we just talked about to the 2018 midterm elections. Here now Ned Ryun, former White House staff under President George W. Bush and Michael Blake, Vice Chair of the Democratic National Committee. Good to see you both.



MACCALLUM: Ned, let me start with you. Just looking at some of the notes that you made about this earlier today, you believe that if the GOP had stuck to its guns, so to speak...

RYUN: Yes.

MACCALLUM: ... on the military side of this that they could have gotten the deal without all the Democratic spending. How so?

RYUN: Well, no. Congress just made this point that the House sent over a bill that did the military funding but essentially kept the rest of government spending flat. And if Republicans would have stuck to their guns, they would have dared the Democrats to vote against the military and I think Republicans could have won that fight.

I mean, the amazing thing, too, Martha, is I think this is exhibit, A, as to why Mitch McConnell should have done away with the legislative filibuster. I have fellow conservatives that say, well, the legislative filibuster prevents bad spending bills. I would argue that's what got us this bad spending bill.

And when you think about it, it's about of 1.2 trillion or 1.5 trillion that we are adding to the 20.6 trillion, and national crumbly, at what point did Republicans decide that they didn't want to address government spending, that they didn't want to shrink government.

And I do think it has implications for the midterms, Martha. And the amazing thing to me is, Paul Ryan and Mitch McConnell, I don't think they wanted to have a spending fight because they might -- they thought it might endanger their 2018 chances. I actually think by not having a spending fight, they might have called into question some of those key races in 2018.

And other the thing that's disappointing that I think this forecasts as well, Martha, Republicans have been talking a big game that if you put us back in the majorities in 2019, we will deal with entitlement reform. I think this is a very clear signal that they absolutely have no intention of dealing with entitlement reform, should they get the majorities in 2019.

MACCALLUM: Could be. Michael Blake, what do you think?

BLAKE: So, the response that you just heard is exact reason why there is such dysfunction in Washington. The repeated comment was fight, and fight, and fight. What Americans want is that we are going to fight for them, not focusing in on political fights.

Let's talk about what actually happened here. You had funding that happened for CHIP so that children could have health insurance. You were able to get funding for the military which obviously so critical for someone like me who is the youngest brother of a sergeant first class in the army, it's obviously critical what we do for our military all across the country.

MACCALLUM: Well, that's clearly the area that brought agreement. But the argument is -- so do you think Democrats would have been, you know, just looking at it from a distance if you can, do you think Democrats would have had to vote for that military funding even if the rest wasn't thrown into this bill?

BLAKE: We can't focus on hypothetical. When I was in the White House from 2009 to 2011, we would have to assess things as they came forward. And what came forward was an opportunity for us to continue to stand up for our respective communities.

Let's also be clear that last night in the last 48 hours, is another reminder of the dysfunction that's happening in Washington with the Republican leadership. The only reason why a shutdown happened on yesterday is because of Senator Rand Paul.

That said, funding that happened for Puerto Rico that make sure that we give opportunity for those communities, that still struggling, making sure we are able again to help our children, standing up for military veterans.

Now let's move forward and making sure we don't forget the responsibility happen for our DREAMers. We heard Senator McConnell say that come forward. We have not had that clear enough vision that's come from Speaker Ryan. So that's the responsibility that we now have to have now.

MACCALLUM: Can there ever be a discussion about cutting or maybe saying to the agencies in the United States government in everybody has got to cut three percent?

BLAKE: Absolutely.

RYUN: Martha.

BLAKE: Absolutely. You can focus on that. In New York in our assembly we have two percent spending cap that happens in our budget.


BLAKE: So there are ways you can focus on addressing.

MACCALLUM: We didn't hear a whiff of that idea, Ned.

BLAKE: Not at all.

RYUN: We increase government spending by 13 percent. And we're not even, Martha, having a conversation again about, do we really need 2 million federal government employees that we spend 136 billion on every year? Do we need the over 430 department, agencies, and sub-agencies? And again...

MACCALLUM: That it's not even on the table.

RYUN: It's not even on the table. And I think Republicans squandered an opportunity to have that debate and say, we need to be responsible moving forward and how we are actually spending. Oh, by the way the American taxpayer dollars. We are the ones that get to foot the bill as do our future children and grandchildren. It's absurd.


MACCALLUM: Everyone pretty much gets what they want and you shake on it and spend a whole lot more money. Thanks, you guys. Good to hear from both of you.

BLAKE: Thank you, Martha.

RYUN: Thank you, Martha.

MACCALLUM: so get this, on a trip to local story, she picked up a few things and a lottery ticket. Now she is a half billion-dollar winner who is fighting for her right to remain anonymous and private in this world. This is turning into a fascinating legal fight. Plus, a rough week for the White House, a trusted advisor now suddenly gone, accused of domestic violence.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: But it was very sad when we heard about it. And certainly, he is also very sad.



MACCALLUM: So Fox News alert for you tonight, this story breaking this evening by the New York Times, the news that American spies paid $100,000 to a shadowy Russian who promised to deliver stolen U.S. Cyber weapons and, quote, compromising material on President Trump.

So according to this report that just came out of the New York Times this evening, the spies arranged a meeting with the Russian last September, September of 2017. By posting quoted messages to the NSA's public Twitter account, they were able to arrange this meeting in a Berlin Hotel room where the Americans handed over $100,000 in cash in an unmarked suitcase.

But ultimately, according to this story, it appears that the American spies got duped, quote, the United States intelligence officials said that they cut off the deal because they were weary of being entangled in Russian operation to create discord inside the American government.

So we are just laying all this out and we are just kind of getting through it ourselves here tonight. Mollie Hemingway, Senior Editor at the Federalist and Guy Benson, Political Editor at Townhall.com, both are Fox News Contributors and Mary Anne Marsh is a Democratic strategist joining us this evening as well. So, first crack at this as you take a look at it, Mollie, what does it tell you?

MOLLIE HEMINGWAY, SENIOR EDITOR, THE FEDERALIST: Well, the story is very oddly written. So I think we have a lot more to learn about it but that point that you just made about how they got duped and they felt like they were just being used by Russians who wanted to sow chaos.

I think that's what this story has been all along as Clinton come up with this crazy Russian conspiracy theory to undermine the campaign and then presidency, as well in, it was all fed by Russians. You know this dossier was forced to inside the Kremlin operatives.

People knew that this guy was creating this dossier. It allowed Russians to kind of play around with the guy who was doing it and this entire operation has not been good for the country but we don't have -- don't have even at this late date confirmation of this dossier. And here we have someone who was willing to be paid to hand over proof of it and he still didn't have the goods.

MACCALLUM: It's weird though because, Guy -- you know, the underlying story as it's presented by the intelligence officials who were involved in it, according to this New York Times report, is that what they really were trying to get back were cyber weapons that had been stolen.

And that that was why they -- they claim in this story they didn't care so much about the Trump material, according to this. They wanted to get these cyber weapons back. But then they realized in the tradeoff that wasn't what's happening and they were sort of left with nothing.

GUY BENSON, POLITICAL EDITOR, TOWNHALL.COM: Well, are just starting to see some details. I agree with, Mollie, that this is the first in probably a series of several stories. It sounds like a terrible misadventure for U.S. Intelligence, right, that they got drawn in by whoever this was, brought $100,000 in cash to get some information that was actually not forthcoming.

And if in fact this all traces back to the Kremlin and Russia again, it does underscore the point Russia is up to no good. They want to screw with us. They want to sow mistrust among the American people on both sides of the aisle and it sounds like the NSA got tangled up in this, at least in this case and I look forward to more details.

MACCALLUM: All right. Mary Anne, do you want to weigh in on this story before I give you another bit of breaking news here tonight? Go ahead.

MARY ANNE MARSH, DEMOCRATIC STRATEGIST: It's Friday night. I mean, I think the real point here is the fact is that they there were cyber tools and codes taken. I mean, that's the real news and real concern.

MACCALLUM: That is a concern.

MARSH: What you have to look forward going forward is -- yes, I mean, it was Russia trying to sow discord in our national security intelligence operations the way they did in our political process and our elections. That's the real story here afternoon that should concern everyone.

MACCALLUM: I think the answer here is yes, based on everything that we see through all of these stories. OK. We're going to switch gears here because we originally invited you this evening to talk a little bit about what's going on in the White House and now tonight, we have this breaking news.

A second White House aide has now resigned amid past domestic abuse allegations, Speech Writer David Sorensen. So we're -- as I said, just getting this information. And obviously, it has been a very rough week on the Me Too front at the White House. And it has, you know really rocked a lot of the relationships and clearly, they saw very different person in Rob Porter and perhaps, than David Sorensen than they turned out to be, Mollie.

HEMINGWAY: People can behave very differently publicly than privately. By all accounts people say Rob Porter was a very good person to work with. It doesn't mean in his private life, it's all the same. And it's not about a he said, she said thing because it also affected her security clearance.

If it's credible enough that it's affecting whether he can get a security clearance, it shoes that even though public and private lives can be separate, they are not completely separate and people should take this seriously and know that private behavior does also reflect on public performance.

MACCALLUM: And, Guy, tonight the focus is on General John Kelly in a big way. There are two different stories coming out of the White House, one that he offered his resignation, the other that that absolutely did not happen. How secure do you think his position is?

BENSON: Your guess is as good as mine. I mean, I think that if the reporting is true about what he knew and when he knew it, then it's within the president's rights to fire him. I think the true -- the same is true of Hope Hicks. I think the White House counsel is probably under fire here as well.

And to, Mollie's, point it's not just he said -- he said, she said, it's she said, she said, she said -- three women, a police report, a restraining order, a black eye on a photograph of that. The fact that apparently the White House counsel knew about this, and was told about this four separate times over the course of a year.

And this guy remained in the employee of the White House. To me there is absolutely no defending it whatsoever. And I -- it is beyond me why the president decided that he was going to send him off with sort of this nice little well, it's a tough time for him and we wish him the best in his career.

MACCALLUM: You don't think the explanation for that, Guy, at least partly right or wrong is that they really -- you know, he seemed to have a real Jekyll and Hyde personality.

BENSON: I'm sure.

MACCALLUM: He clearly convinced them these allegations were false. They believed him.

BENSON: I'm sure that's true. I'm sure that's true. But once you have the evidence that is now public and the third woman going to another network and saying, I'm an ex-girlfriend. Same thing happened to me. At that point, you realize that Mr. Hyde exists and you stop praising Dr. Jekyll.

MACCALLUM: Yes. The story now from General Kelly is that 40 minutes after he got that definitive news, Rob Porter was out the door. All right. We are asking you to deal with story after story of breaking news. And now we have another one for you.

So here comes this from Raj Shah in the Communications Department at the White House, he says that the president is inclined to declassify the Democrats' memo but is unable to do so at this time.

He said that the DOJ is working with the committee to see if they can come up with a releasable version of this. Mary Anne, it's Friday night, a little before 8:00 eastern time, and still no memo.

MARSH: And he had five days to do it and we are on day five. So, that's the issue here. The reality is, Trump should have released would both memos at the same time. That would have been the fair and right thing to do.

MACCALLUM: So the Democrats' memo to be fair was not released. It wasn't generated until a few days later. So the process went through its own process and now they are at the point where White House yes or no.

MARSH: I think the reality here, Martha, they could have produced it at the same time. It could have been released at the same time. And then what you see now is the first memo by the Republicans and Nunes did not work the way Donald Trump and Hope did. He thought it would end this entire investigation.

Instead now you have the Democratic memo and the question is, how much of it will they really redact? Will they render it useless because they have redacted so much but the point can't get made? And if that happens, then I think you will see some form of the information coming out in some other way.

But let's be clear here, Devin Nunes has made clear he is going to do more memos. And we will see where they go. And that leaves the Democrats to do more. And in the end, you look at these Congressional investigations that really at least on the House side, incredibly hobbled.

So you have to look at Mueller as the one person who is doing the one investigation that's really going to matter here in the end. And we are all waiting to find out the facts that he has. And no doubt we will in the next few months.

MACCALLUM: Mollie, what do you think?

HEMINGWAY: When the Nunes memo was about to be released, people said it had sources and methods. And we all know now that we read it, that it wasn't filled with, you know, things that had to be kept secret.

What people on both sides of the aisle do say is that the Democratic memo really does have sources and methods that are in there that might make it truly impossible to be totally revealed. But I think at this point just get it out. Just get it all out, even if it has sources and methods.

If Democrats felt comfortable putting it all out there, they can take responsibility for any of the downside that goes along with that. Just a reminder, too, that the Nunes memo was also confirmed this week by a criminal referral from Schumer -- I'm sorry, criminal referral from Senators Graham and Grassley that confirmed all of the lately allegations...

MACCALLUM: I am going to ask you to stick around because I have to see we're dealing. Three stories here, we are getting more information on the White House, second resignation there. So we will be back with our panel and more of the story on this breaking news Friday night after this.


MACCALLUM: All right. We are back. A lot of breaking news this evening out of the White House and with regard to the memo where we opened this story tonight because we thought this memo was going to be declassified any minute and that we were going to get a look at it.

But it looks like there is a bit of a holdup this evening and just moments ago we received a letter from White House Counsel Don McGahn that was released. And I'm going to jump down to the third paragraph of this letter, which gets into this issue.

It says consistent with the review of previous memorandum, meaning the GOP One, the president asked the office of director of national intelligence and the Department of Justice to assess the declassification process and -- request rather and provide him recommendations.

The department has identified portions of the February 5th memorandum. The disclosure of which it believes it would create especially significant concerns for the national security and law enforcement interests. The enclosed letter from the deputy attorney general and the Department of the Federal Bureau of investigation explain these determines in greater details.

Although the president is inclined to declassify this February 5 memo, because it contains numerous properly classified and especially insensitive passages, he is unable to do so at this time. So I mean, bringing back in our panel, to sort of as we get a little bit of a better sense of what's in here, this doesn't sound like this is a done deal at all, Guy.

BENSON: Well, it's not, obviously. I'm a little bit confused as to why this has taken five days. They got the memo five days ago and they have looked at it, right?

MACCALLUM: Good question.

BENSON: The DOJ could have said here are our problems, X, Y, and Z. Let's redact these parts and then release it. I don't know why they waited and then said well five days later, now we can't do it. I'm inclined to agree with the president and with, Mollie, let's get it out there.

Obviously, we don't want to put anything at risk in terms of national security. I would point out, Mollie, referenced that letter, that referral from Senators Graham and Grassley. There was an initial version of that that was published a while ago that was heavily redacted.


BENSON: And then they unredacted a lot of it, kept some of it under wraps. And the new version of it, I think, is very telling, and actually quite significant. So, I think that there is an issue of over redaction here. I do think it looks a little bit odd for the White House to wait five days and then say they have got a problem.

MACCALLUM: Mary Anne, I bet you agree.

MARSH: On a Friday night. Yes, of course. I mean, I think, I would want to hear from the FBI and even Department of Justice here about these redactions not just from the White House. The other possibility here is. Remember, it was a 10-page memo with lots of footnotes.

Maybe this was just too effective at rebutting what Devin Nunes put out. So, I think it's a bad look for the White House. It's a bad look for Devin Nunes. I think the Democrats one way or the other will make sure that information gets out there. But I think we have to be really careful seriously about sources and methods.

BENSON: Well, you're talking about a...

MARSH: Well, I'm talking about sources and methods here. Everyone sort of blankly saying, we should do it no matter what. We can't because it becomes increasingly more difficult as we go forward whether people will trust us with information from around the world, our allies, in this country. You don't want to put sources and methods out there. And I think we still have to see whether that's the real reason this memo is not coming out tonight after five days.


MACCALLUM: I interviewed Congressman Gowdy and we talked about this earlier in the week he said, he suggested that the Democrats, he said -- I think he said, we're smart enough, I think that was part of his quote to put things in to this memo that would make it difficult to release. And that that would make the White House potentially look bad for not releasing it. Mollie, what do you think about that.

HEMINGWAY: Yes. I mean, the Democrats are very open about doing that and having that be part of their strategy. I think in an attempt to keep the other memo from being released initially. If you keep reading that letter that you read, Martha, the last paragraph says that the executive branch will help the Democrats on this committee come up with a version of their letter that includes all of the meat that they want to have in there, but none of the sensitive issues that can't be brought to light.

So I think this might be an area where we can all come to agreement that they will get a memo out that makes their case about Russia collusion. And I think that's a fair thing they get to make without compromising all of this national security. It's not over yet.

MACCALLUM: How the five-day thing worked last time around. Because I think if the president didn't rule on it, then Congress had the ability to decide to release it, so essentially, the president could say it can't be released so he could potentially punt it back to the Congress and, you know, say to the committee, release it or don't release it.

HEMINGWAY: Well, that's actually has he what happened. It's the same -- it's the same process. It was five days. It was on a Friday of last week in the same way. And that's why that last paragraph is really key.

They are encouraging them to keep working on a version of the memo that can be made public, so that level of transparency is good to hear. It's not just that they get shutdown. They get to try again. But without hurting the sources and methods that they filled that memo with as an attempt to kind of thwart the whole process.

MACCALLUM: Mary Anne, what do you think about the -- you know, about the charge that Democrats kind of stuffed this with a lot of classified information to make it look bad if it wasn't released, if the White House didn't release it then they could say, you let the GOP memo out but not the Democratic one?

MARSH: I think the bigger concern here, Martha, is -- look, I haven't seen the memo. No one here has. But I don't think that's the case. But let's say that's true. I think the bigger concern here is that both parties, the Republicans and the Democrats, are constantly giving information now to the White House.

So they now know the information that both parts of the committee are dealing with and in many ways is helping them make their case and build their defense. So I think the fact that I read, Mollie's, assertion that the White House offering to help the Democrats write this memo, it looks a little more nefarious than maybe she presented. And I think that's the real problem here.


MACCALLUM: You know what, the bottom line is I think the American people want to know whether or not this process worked the way it's supposed to work, you know. And whether or not they were provided with the right information that would give them the ability and the FISA court to assess whether or not this kind of surveillance was -- had a grounded reason.

And that, in the end, that's what the American people want to know. They want to know if the DOJ and the FBI are slanting the political picture, if they are putting their thumb on the scale during an election, in order to release information that's bad about one candidate. I mean, in the end that's what really matters here. Guy.

BENSON: Yes. And look, I actually want to see the Democrats rebuttal to this.

MACCALLUM: I think everybody does.


BENSON: I want to see the information that they are bringing to the table. But if they are going to do it in a way that compromises national security in a way that the Republican memo did not, that has to be dealt with ahead of time. Get the DOJ and Adam Schiff in a room and hammer it out, and make it work. I don't think we have to cast aspersions on the White House here. There are two parties that can get this done and they should.

MACCALLUM: Quick thought. I will go to, Mollie, on this. The second person who was leaving the White House, it seems like this Me Too moments when they happen. Everybody thinks they are happening somewhere else. When they happen in your own work place, it tends to be very different. People have a lot of different takes on it, now a second person, Mr. Sorensen is also out.

HEMINGWAY: I know absolutely nothing about that. But I do think the White House needs to balance its messaging to make sure that it shows empathy for women or others who are hurt by domestic violence while also not prejudging situations and that's it, that's key, too.

MACCALLUM: All right, we have to leave it there. Thanks, you guys, for handling all these breaking news stories tonight. Great to see all of you this evening.

BENSON: Thanks, Martha.

MACCALLUM: Have a great weekend. So that's "The Story" for tonight. It's a jam-packed one, as can you tell. Have a great weakened. Tucker Carlson is up next.


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