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

MIKE EMANUEL, FOX NEWS: Let's talk more about the election and the economy with the top Republican in the House, Minority Leader Kevin McCarthy. He joins us live from Bakersfield, California.

Leader McCarthy -- it's great to have you.

HOUSE MINORITY LEADER KEVIN MCCARTHY, R-CALIF.: Thanks for having me on -- Mike. I appreciate it.

EMANUEL: Your observations of how Vice President Biden has handled his attacks and the surge of your California senator Kamala Harris?

MCCARTHY: Well, I don't think Joe Biden is going to become the nominee. Not for this position, but for many positions going forward. He's got a long history. I think his timing is wrong. And I just do not believe he will be the nominee.

I believe there will be others who come up and there's going to be a lot of opportunity. I actually think Bernie Sanders has the best chance of becoming the nominee because where this Democrat Party has moved.

It's no longer the Democrat Party. it's become the socialist Democrat Party and Bernie Sanders has the best philosophy, because he was registered a socialist who represents the current party.

EMANUEL: As you travel the country in your leadership position and in your district back home in California, what's your assessment of the state of the U.S. economy?

MCCARTHY: Well, you get a look at it, we are the strongest we've ever been. Just think, this month alone, June -- the best we've ever had in the market in 80 years. Unemployment that cuts across all ages, all demographics -- the strongest we've ever seen.

Even the Democrats, if you look at that Bloomberg poll just a couple of days ago, the sentiment for the economy is the strongest with Democrats since 2001. That's stronger than any time when President Obama was in office. And a lot of that credit, a majority of all that credit goes to this President.

Remember what President Obama said, the idea of getting 3 percent growth, you need a magic wand. All we really needed was somebody in office who understood how to make jobs, how to make America stronger and really put America first.

Through regulation, through tax reform, and all the other things this President has been able to accomplish, not even taking into account what he accomplished last week at G-20 and over in North Korea. Those are historical times, and I think that is what's going to help propel this president to reelection.

EMANUEL: Let's do a little more on foreign policy. First, President Trump's historic moment crossing into North Korea. Former vice president Joe Biden and some 2020 Dems have called it a photo op. Are they wrong about that?

MCCARTHY: They are really wrong about this because think for one moment, and if you study history, we had a real challenge with the Soviet Union. You had Ronald Reagan present at the time to travel to the Soviet Union. You had President Reagan step away from the negotiations in Iceland with Gorbachev because it wasn't getting everything that we needed.

And you know what happened at the end of the day? The Berlin Wall collapsed and so did the Soviet Union. Now compare that to today's challenge where you had North Korea testing long-range nuclear missiles. That's no longer the case that they're testing those.

You had President Trump step away from the table in Vietnam because it wasn't at the right setting. But what happened with President Trump, he reset the terms to have a negotiation. Now in two to three weeks we will be talking about denuclearizing North Korea.

We are safer today based on what President Trump has been able to do and build. And when you look at Kim Jong-un's face, you saw a smile there. You've got to build trust before you could ever get to an agreement.

That's exactly what President Reagan did with the Soviet Union and Gorbachev and you saw the results. And President Trump is correct in this and history will prove that.

EMANUEL: On China, Senator Marco Rubio is expressing serious concern tweeting over the weekend quote, "If President Trump has agreed to reverse recent sanctions against Huawei, he has made a catastrophic mistake. It will destroy the credibility of his administration's warnings about the threat posed by the company. No one will ever again take them seriously."

I want to get your thoughts on that.

MCCARTHY: I have real concerns about Huawei. But remember what the President said he said he will deal with that at the end of the negotiation. This president has been very strong against Huawei. We know the challenge of what they have, the number of backdoors. We know what this president has done talking to our allies. If they bring in Huawei products, we can no longer share with them information because it will go directly back to China.

Remember what China does. China has to have the Communist Party in every company. Their government part-owned Huawei. This is a real concern from a security issue long term. And I think we got to let this president -- he understands this, I've talked to him. I even talked to the President today he called, talking about the border.

I know where this president stands when it comes to the security of this nation and he will stand firm against Huawei.

EMANUEL: Before you and your colleagues left town, you passed a $4.6 billion humanitarian aid package negotiated by Democrat Senator Patrick Leahy and Republican Senator Richard Shelby. But it's appears it severely divided the House Democratic caucus. Take a listen.

(BEGIN VIDEO CLIP)

REP. RASHIDA TLAIB, D-MICH.: They will remember that we caged them up like animals. We ripped them away from their parents and prompt them with drugs to make them stop crying for their mothers. No amount of apologies, no amount of debating in this chamber will make it better -- Madam Speaker.

SPEAKER OF THE HOUSE NANCY PELOSI, D-CALIF.: It will not be the end of this debate, it will be the battle cry. It will be the battle cry.

(END VIDEO CLIP)

EMANUEL: how big of a problem does Speaker Nancy Pelosi have on her hands right now?

MCCARTHY: She has a severe problem because if you watch this debate, it lasted more than 58 days since President Trump has requested supplemental funding for the aid along this border. Even the "New York Times" wrote two editorials about it.

Mexico sent 15,000 troops to the southern end of their border. Everyone understands there's a crisis. Even the Democrat Senators on the senate side understand it, but not the House.

You know, a bill came out of the Senate 84-8. Every Democrat in the leadership on the Senate side voted for it, but Nancy Pelosi did not want to bring that up. You know why? Because she believes in open borders. She wanted to deny anybody working along the border that they could not have overtime.

In a time where you just had 144,000 apprehensions of people illegally crossing just last month, something we have not seen in a decade, this is when I talk about this is not the same Democratic Party of the past.

This is a new socialist Democratic Party and many of the members there call themselves that, and they are the new leaders of this socialist Democratic Party. And that's a real concern.

Not only do they want to have open borders, they want to allow illegals to even vote. We had a vote on the floor about illegals from other countries casting ballots. They voted that down.

EMANUEL: Leader McCarthy -- sorry to interrupt but New York Democrat Congresswoman Alexandria Ocasio-Cortez made pretty explosive allegation about facilities at the border. Let's play her comment and I will ask you to respond.

(BEGIN VIDEO CLIP)

REP. ALEXANDRIA OCASIO-CORTEZ, D-N.Y.: They put them in rooms with no running water. And these women were being told by CBP officers to drink out of the toilet. They were drinking water out of the toilet. And that was them knowing a congressional visit was coming. That was -- this is CBP on their best behavior telling people to drink out of the toilet.

(END VIDEO CLIP)

EMANUEL: What do you make of that -- sir?

MCCARTHY: I wasn't in there. I've been to the border many times, I never saw anything like that. That would be unacceptable. But what's very concerning to me is now they are just coming to the border. We've been trying to get funding, humanitarian aid here and unfortunately that Congresswoman was holding it up. She voted against this aid. She even voted against the Democrat vote in the house just a little bit before.

So I don't even know where she stands when it comes to this issue. That's what's concerning to me.

EMANUEL: All right. Leader Kevin McCarthy -- thanks so much for your time, have a safe Independence Day break and I will see you back on the Hill.

MCCARTHY: Thank you. I wish you all the best.

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