This is a rush transcript from "Fox News Sunday," December 16, 2018. This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: I'm Chris Wallace.

A federal judge strikes down Obamacare, and President Trump's former fixer is sentenced to prison. Who in the president's inner circle is next to fall?


PRESIDENT DONALD TRUMP: Let me tell you, I never directed him to do anything wrong. Whatever he did, he did on his own.

WALLACE: What do we know about President Trump's involvement in hush money payments of two women during the 2016 campaign? And what does Michael Cohen's cooperation mean for the special counsel investigation? We'll ask the president's lead lawyer, Rudy Giuliani.

Then --

TRUMP: I am proud to shut down the government for border security, Chuck. I will take the mantle. I will be the one to shut it down. I'm not going to blame you for it.

WALLACE: The president deals with a divided Washington and a possible government shutdown over his border wall.

REP. NANCY PELOSI, D-CALIF.: Perhaps he doesn't understand people leave their paychecks.

WALLACE: We'll ask our Sunday panel if we're headed for compromise or confrontation.

Plus --

BILL GATES, GATES FOUNDATION: The U.S.'s engagement in Africa and around the world, there are many reasons we should maintain that.

WALLACE: We'll talk with Bill Gates, co-chair of the Gates Foundation about what he feels is a shrinking U.S. role in dealing with global poverty and public health.

All right now on "FOX News Sunday".


WALLACE: And hello again from FOX News in Washington.

We begin with breaking news. A federal judge has ruled the entire Affordable Care Act invalid. Obamacare will remain in place pending appeal and both President Trump and Democrats are calling for Congress to pass new legislation. We'll get to all that a little later.

But first, the president is already dealing with a possible government shutdown that's now just five days away. Meanwhile, prosecutors are producing more of the evidence that led former members of Mr. Trump's inner circle to plead guilty, evidence that implicates the president.

Let's get the latest from Kevin Corke live at the White House -- Kevin.

KEVIN CORKE, CORRESPONDENT: Chris, even for an administration accustomed to seismic shifts in the news cycle, it was without a doubt a tumultuous week. But few headlines could prove as potentially damaging to the Trump White House than those involving former members of the president's inner circle.


CORKE: Three of whom are facing time in prison for a variety of misdeeds, but none involving so-called Russian collusion. Former national security adviser, General Michael Flynn, faces sentencing Tuesday for lying to federal investigators. The special counsel's office recommending he get no jail time even as it has faced charges that the general was entrapped and inappropriately questioned.

Meanwhile, in his first televised interview since being sentenced to three years behind bar, the president's former fixer, attorney Michael Cohen, claimed he repeatedly lied for Mr. Trump over the years and he would set up payments to women to help aid his 2016 campaign, a claim strongly denied by the White House.

TRUMP: I will take the mantle of shutting down and I'm going to shut it down for border security.


SEN. CHUCK SCHUMER, D-N.Y.: But we believe you shouldn't shut it down.

CORKE: An Oval Office meeting with leading Democrats this week did little to quell fears of a potential partial government shutdown over the president's insistence that there would be funding for a border wall, something Democrats say they won't pay for. A work stoppage that could come in a week in which backers of the Affordable Care Act, Obamacare, consider their next move in the wake of a federal judge's ruling that the law is unconstitutional.

TRUMP: -- that the Supreme Court upholds, we'll be sitting down with the Democrats and we will get great health care for our people. Let's say repeal and replace.


CORKE: That ruling by District Court Judge Reed O'Connor, Chris, does not impact Obamacare recipients in the short term, but it does set up a potential high court battle and that is a debate White House officials would love to have -- Chris.

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

WALLACE: And joining me now from New York, the president's lead lawyer, Rudy Giuliani.

Mayor, welcome back to "FOX News Sunday".

RUDY GUILIANI, LEAD LAWYER, DONALD TRUMP: Thank you very much. Thank you -- thank you, Chris.

WALLACE: Let's start with Michael Cohen's allegation that President Trump directed him to commit a criminal campaign finance violation. Here first was the president and then Mr. Cohen.


TRUMP: I never directed him to do anything wrong. Whatever he did, he did on his own. He's a lawyer. A lawyer who represents a client is supposed to do the right thing.

MICHAEL COHEN, FORMER LAWYER, DONALD TRUMP: He directed me to make the payments, he directed me to become involved in these matters.


WALLACE: Question. Did Mr. Trump direct Michael Cohen to pay off these two women or not?

GIULIANI: No, the truth is actually what Cohen testified to under oath before Congress and what he repeated numerous times on surreptitious tape recordings that he made, which is that the president didn't know about this until some time into it, he did find out about it and eventually reimburse him. But, you know, this is a hard thing to do, but lawyers do this all the time.

But, Chris, even if it were true, it's not a crime. The payment -- the payment of money in a situation like this has been covered in the Edwards case. Not only the acquittal and hung jury in the Edwards case, but the fact that the FEC looked at those Edwards violations and determined they weren't violations --


WALLACE: I promise we're going to get to that in a minute, but let's get to the simple fact, question of whether the president directed Cohen --


WALLACE: -- to make these --


WALLACE: -- payments or not.

Cohen says that the president is not to be believed. Here he is.


COHEN: The man doesn't tell the truth. And it's sad that I should take responsibility for his dirty deeds.



WALLACE: Mayor -- Mayor --

GIULIANI: That's some lawyer. That is some lawyer. He was the lawyer in that situation.


WALLACE: But does the president tell the truth or not?

GIULIANI: The president is telling the truth, yes. This man is lying.

Now, is that a big surprise to you that Michael Cohen is lying? The man got up in front of the judge and said I was a fiercely loyal to Donald Trump. Nonsense he was fiercely loyal to him, he taped him, lied to him, revealed the tape and did something a lawyer I've never heard ever did -- tape record his own client.

WALLACE: But -- but, sir --

GIULIANI: He sat there with Chris Cuomo, told him he wasn't being taped, showed him a drawer (ph), and he lied to him and taped him for two hours. The man is a complete pathological liar that cannot be believed.

WALLACE: But, sir, let's -- let's turn to --


GIULIANI: And they'll never put him on a witness stand. They will never - - Chris --

WALLACE: Yes, but let me ask you --

GIULIANI: -- they will never put him on a witness stand.

WALLACE: I understand. But does the question -- the real question is the credibility of the president, not the credibility of Michael Cohen --

GIULIANI: No, no --

WALLACE: Let me just finish. The president has changed his story repeatedly about whether or not he knew about hush money. Here is what he said on Air Force One -- the president said on Air Force One this April, eight months ago.


REPORTER: Mr. President, did you know about the $130,000 payment to Stormy Daniels?

TRUMP: No. No. What else?

REPORTER: Then why did Michael Cohen make those if there was no truth to her allegations?

TRUMP: Well, you'll have to ask Michael Cohen. Michael is my attorney and you'll have to ask Michael Cohen.

REPORTER: Do you know where he got the money to make that payment?

TRUMP: No, I don't know.


WALLACE: The president said he doesn't know anything about any payments, but in one of those tapes that you're talking about where Cohen surreptitiously taped the president -- this is back in September of 2016 -- here are the president and Cohen discussing a potential --


WALLACE: Let's listen to the tape first.

GIULIANI: Sure, sure. I remember it well.


COHEN: I'm all over that. And I spoke to Allen about it. When it comes time for the financing, which will be --

TRUMP: Wait a sec, what financing?

COHEN: Well, I'll have to pay --

TRUMP: Pay with cash --

COHEN: No. No, no, no, no, no.


WALLACE: So which is it? Did the president know about the hush money payments or not?

GIULIANI: Chris, there's an intervening event that you're not talking about. I know this really well because I got criticized for revealing this when I first came into the case. Nobody really understood why I was doing it.

When I first came into the case, we went through the whole case. The president saw some notes and documents, thought about it, and I went out and said, no, there was an intervening conversation after the payments took place and before the revelations you're talking about on Air Force One.

The president did talk to Cohen or to people in between and they arranged to reimburse Cohen. This was after the payment was made, after it was over, after the campaign was over.

WALLACE: But -- but there's --


WALLACE: They're talking about a conversation, sir, in September of 2016 during the campaign. The president is clearly aware that David Pecker, the head of "National Enquirer" had paid off Karen McDougal and they're talking about reimbursing McDougal --

GIULIANI: Well, you know, that's --

WALLACE: -- or reimbursing Pecker for that payment.

GIULIANI: But there's a -- there's a big difference here. That was a - that was a conversation he was asked, middle of the campaign, I was with him back then in the middle of the campaign, he's working 18 hours a day. I wasn't able to remember a lot of things that happened in September of 2016. He was asked it one time.

When he sat down with his lawyer and went through it in great detail and saw things that could refresh his recollection, we immediately corrected it.

Nobody pushed us, nobody found it, we found it. And we corrected it and I got criticized like crazy for doing it.

WALLACE: So you're saying --


GIULIANI: By the time this came out, we all knew --

WALLACE: -- the fact -- I mean, the -- according both to Cohen and to Pecker, the -- again, he's the head of -- or was the head of National Enquirer, they say they were in a meeting with Donald Trump --

GIULIANI: Chris, Chris, Chris --

WALLACE: -- in the summer of 2016 in which --

GIULIANI: It doesn't matter.

WALLACE: -- they discussed the payment to Karen McDougal.

GIULIANI: We're talking about something that doesn't matter. I mean, whether - whether it happened or didn't happen, it's not illegal.


WALLACE: You're moving shells around on me. Either it happened or it didn't happen.

GIULIANI: But that's what lawyers do all the time. You argue in the alternative. I'm telling it --

WALLACE: But I'm asking you for the truth, sir.

GIULIANI: I'm telling you definitively -- well, I -- I want the truth too. And the truth is, yes, the tape-recorded conversation did take place. It exonerates the president. The president tells Cohen, do it by check.

I'm sorry, I prosecuted thousands of crimes, never prosecuted one where they wanted to hide something, they did it by check.

Make sure we pay him back. They paid him back. That's what that conversation's all about. It exonerates him.

I'd play that conversation in front of any jury in America and I'd cross- examine Cohen in front of any jury in America.

WALLACE: OK, here's what you're telling --

GIULIANI: But I -- but very important; Cohen did not plead guilty to conspiracy to violate the campaign finance laws. If they were going to use him as a witness against anybody, you always make them plea guilty to a conspiracy so you can fill the conspiracy in.

He pled guilty to a singular crime of violating the campaign finance laws. Not a conspiracy.

WALLACE: Yes, but the statement is full of references to individual one who is Donald Trump. Here's what you told the --

GIULIANI: It doesn't matter.

WALLACE: Here's what you told "The Daily Beast" this week. I want to put it up on the screen.

Nobody got killed. Nobody got robbed. This was not a big crime.

Mayor, what's the threshold between a crime and a big crime?

GIULIANI: My statement there was about the prosecutor's view of it, not mine. Mr. Swinger (ph) who wrote that, actually corrected that, to say that that was taken out of context. My point was, there was no crime.

But even if you take the prosecutor's viewpoint, this prosecutor was appointed -- both of them, right, looking at collusion, no collusion. Looking at obstruction --


WALLACE: No, no, no. No, no, no, no, no. Sir, this was the Southern District of New York. This is not -- has nothing to do with collusion --

GIULIANI: But now you're --

WALLACE: -- or obstruction of justice, there --

GIULIANI: Now, you're - they're part of the Department of Justice -- he's not being investigated --


WALLACE: I understand it's a separate prosecutor. I'm sure -- I'm sure when you were the --

GIULIANI: Yes, this guy -- this guy is going back --

WALLACE: I'm sure - I'm sure when you were the U.S. attorney for the Southern District --

GIULIANI: And this guy is going back --

WALLACE: You didn't take orders from somebody in Washington who had nothing to do with the attorney general. You were your own -- they used to call it a sovereign district of New York, sir.


GIULIANI: The person -- the person in charge of this investigation, Chris, is Rod Rosenstein the Deputy Attorney General of the United States. He is the boss of Mueller and he is the boss of the Southern District of New York. He's the one that determined, let's move it over here. He put it there in the Southern District of New York and keeps supervision of it.

WALLACE: I know --

GIULIANI: So don't give me that.

WALLACE: But they're not --


WALLACE: But they're not -- they're not working for --

GIULIANI: There is one Justice Department --- yes they are. They're working for the same Rod -- Rod Rosenstein's going to make the decision, not Mueller, about what to do with this case.

WALLACE: Right, and not Mueller.

GIULIANI: And this is a witch-hunt. They are going back now -- they're going back to 1982, 1983. They're going through business records. My goodness, they went from collusion to obstruction, no evidence -- now campaign finance, no violation of the law.

No matter who's right about what they said, it's no violation of the law. And now --

WALLACE: The president -- I -- I want to -- I want to move on. You're -- you're very a effective lawyer, but I've got -- I've got to move on, sir.

President Trump --

GIULIANI: You wanted the truth. That's the truth. The truth is it's not a violation of the law.


WALLACE: I want -- I want the truth in a limited amount of time.

President Trump talked this week about whether or not General Flynn lied to the FBI. Here he is.


TRUMP: They took a general that they said didn't lie, and they convinced him he did lie and he made some kind of a deal. And now, they're recommending no time. You know why? Because they're embarrassed that they've got caught.


WALLACE: Does the president believe Michael Flynn lied or not?

GIULIANI: I don't know if Michael Flynn lied or not. You got two contradictory things. You've got the FBI saying at the time that he wasn't lying. And then we have no explanation and the guy pleads guilty to lying.

So, I -- I mean, I don't know what happened in between. I do know they treated Flynn in a way that came very close to --


WALLACE: I'm asking a simple -- I'm asking a simple question. And the reason I ask is I want to put up a tweet from the president a year ago, in December of 2017, when he says this: I had to fire General Flynn because he lied to the vice president and the FBI. He has pled guilty to those lies.

The president a year ago seemed to know that Flynn has lied. Now, he's not so sure.

GIULIANI: The president doesn't know that he lied. The president -- the president --


GIULIANI: But he -- he knows what you knew at the time. The man pled guilty to lying. He did --

WALLACE: No, he knows -- he knows what -- he knows what Flynn said to his vice president.

GIULIANI: Yes, but that was a lie, but that's not a crime.

WALLACE: Well, I understand but I didn't ask if it was a crime, I asked whether it was a lie.


GIULIANI: Chris -- Chris, you're going all over the place and you're really confusing people. Look, first of all --


GIULIANI: You are -- you are -- you are -- you are -- you are, really --

WALLACE: Wait a minute. I didn't ask if it was a crime. I asked whether it was a lie and he told the same lie to the FBI and to the vice president. And you're quite right, lying to the vice president isn't a lie, it's not very good -- but lying to the FBI --


WALLACE: -- is a crime.

GIULIANI: Right. And the more important thing about what the president knew or didn't know -- because this doesn't involve the president in terms of him being involved in any kind of conspiracy or anything else -- it's like if it's reported that one of my assistants when I was a U.S. attorney lied to the court, how do I know if he did or he didn't? He knows what he reads. The man pled guilty to lying --

WALLACE: OK. I got -- I got one minute --

GIULIANI: -- so, yes. He didn't know at the time -- I didn't know at the time -- I didn't know at the time that the FBI had previously concluded he was telling the truth.

WALLACE: I got a --

GIULIANI: I didn't know he had been deprived of a lawyer.


WALLACE: Mayor, you're confusing people.


GIULIANI: I'm not confusing people.

WALLACE: All right. Let me ask you --

GIULIANI: The man was railroaded.

WALLACE: -- three last quick questions.

GIULIANI: He was railroaded.

WALLACE: There are -- there are reports now that the special counsel is interested again in interviewing the president. Has his office reached out to you about sitting down for an in-person interview with the president?

GIULIANI: Yes. There are several unpaid parking tickets that night -- back in 1986, '87 that haven't been explained. You know, we've got to --

WALLACE: Seriously?

GIULIANI: Seriously, unpaid parking tickets --

WALLACE: No, no, no.

GIULIANI: It was a movie theater. He didn't pay the proper fee.

WALLACE: Is the special counsel -- does he want to interview the president?

GIULIANI: Yes, good luck. Good luck. After what they did to Flynn, the way they trapped him into perjury and no sentence for him, 14 days for Papadopoulos. I did better on traffic violations than they did with Papadopoulos.

WALLACE: So, when you say good luck, you're saying no way, no interview?


GIULIANI: They're a joke. Over my dead body, but you know, I could be dead.

WALLACE: Do they want to speak to the president?

GIULIANI: I do have -- I do have other lawyer -- I am disgusted with the tactics they have used in this case. What they did to General Flynn should result in discipline. They're the ones who are violating the law.

They're looking at a non-crime collusion, the other guys are looking at a non-crime campaign violations, which are not violations. And they are the ones who are violating the law, the rules, the ethics and nobody wants to look at them. They destroyed Strzok and Page's texts, 19,000 texts.

WALLACE: Mayor --

GIULIANI: If he had destroyed 19,000 texts, they'd put him in jail.

WALLACE: Mayor --

GIULIANI: Even though they can't because he's the president.

WALLACE: Mayor Giuliani.


WALLACE: Thank you.

GIULIANI: I got a little --

WALLACE: No, listen, I love it and please come back. To be continued.

Thank you for your time. Always good to talk to you, sir.

GIULIANI: Thank you. Thank you.

WALLACE: Up next, we'll bring in our Sunday group to discuss what a judge's Obamacare ruling could mean for millions of Americans.

Plus, what would you like to ask the panel about President Trump saying he'd be proud to shut down the government over a border wall. Just go to Facebook or Twitter @FoxNewsSunday and we may use your question on the air.



TRUMP: A big, big victory by a highly respected judge. Highly, highly respected in Texas and on the assumption that the Supreme Court upholds, we will get great, great health care for our people. We'll have to sit down with the Democrats to do it but I'm sure they want to do it also.


WALLACE: President Trump praising the ruling from the federal judge striking down the entire Obamacare law.

And it's time now for our Sunday group. Fox News senior political analyst Brit Hume, columnist for "The Hill", Juan Williams, Julie Pace, Washington bureau chief for "The Associated Press" and Marc Short, former director of legislative affairs for President Trump.

Well, Brit, the federal judge said Obamacare is invalid because Congress has taken out the tax penalty as part of the individual mandate, which is the way that it passed through the Supreme Court in the first place. But we should point out the law stays in effect pending appeal.

What do you think of the ruling and how do you think this plays politically?

BRIT HUME, POLITICAL ANALYST: Well, remember, this is a trial court judge.


HUME: So, this is subject to appeal to appellate court and perhaps on the Supreme Court. I think it's an interesting legal argument whether because of the invalidation of the zeroing out of the penalty was the whole law therefore is invalid. I think you can hear good, legal arguments on both sides of that issue but I think we're nowhere near the last of this and because the judge did not issue an injunction that shuts it down. As you point out, Obamacare will remain in place -- what's left of Obamacare remains in place for the foreseeable future.

WALLACE: But how does it play politically, given the fact there are certain parts of Obamacare that people didn't like, like the individual mandate. On the other hand, there are lot of parts of it that people did like pre-existing conditions --

HUME: Right.

WALLACE: And that's according to the judge's ruling would be out, too.

HUME: It would be out but it won't be out now and it won't be out soon, in my judgment. So, I think the political effect will depend on the actual practical effect and there is no practical effect for the time being.

WALLACE: All right. Juan, the president and Republicans ran in 2016 on the idea of repeal and replace Obamacare, which they thought was a good issue for them. Democrats won in 2018 on the argument the Republicans want to take away your pre-existing conditions.

So, how do you think this is going to cut, particularly given the fact as Brit Hume says, it's not going to have a practical effect, it's not going to take effect for some months, maybe a year as it goes to the courts.

JUAN WILLIAMS, HOST: Well, I think you can see already this morning, Republicans are on their heels, not really saying much about this while you have Nancy Pelosi and potentially incoming speaker of the house saying Democrats will defend it. Chris Murphy, the senator from Connecticut, saying it's a five-alarm fire. I think clearly Democrats see themselves in a position where they are on the offensive with the voters about this. If you take away Obamacare, you know, after how many -- 70 votes by Republicans to repeal it, didn't work even with the Republican majority, Chris.

It's not only that you would do away with things like pre-existing conditions, you would drive up premiums for everybody. Our health care system would be in chaos. So, I think that what you get here is Republicans right now including President Trump, who initially tweeted great, great, are saying we need a bipartisan collaboration here to make health care work.

That's a different tone from Republicans and I think it's very telling about who is politically at risk here.

WALLACE: Marc, you're wrinkling your brow.

MARC SHORT, FORMER DIRECTOR OF LEGISLATIVE AFFAIRS UNDER PRESIDENT TRUMP: Well, I think, look, Republicans won in 2010 and 2014 and 2016 in large part on a promise to repeal Obamacare and now somehow the media are saying it's an albatross on Republicans. It's been a political win for Republicans.

WALLACE: If you look at the polls, Obamacare has become more popular.

SHORT: And you know why, Chris? Because the last two years, from 2013 to 2017, premiums went up 105 percent across the country. In the last year, they've gone up 5 percent. They used to be 50 percent of the counties in the United States had one insurer, and that was it. That's been fixed. All counties now have more than one insurer.

Because this administration has provided more choice for people, they have actually helped to stabilize the markets. That doesn't mean forcing people to buy a product they don't want is a good policy.

JULIE PACE, THE ASSOCIATED PRESS: But in terms of the fallout from this ruling potentially, one thing you're definitely not hearing from the Republicans after this judge's ruling is any interest in going back to the drawing board and starting from scratch. If -- ultimately, this move through the court that Obamacare fully is repealed, you do not have a lot of Republicans who want to spend 2019 deep in the weeds on health care.


WALLACE: Let me switch, I'll tell you what they're going to spend at the end of 2018 on. There is the real threat now of a partial government shutdown that would start at midnight this Friday. Here's how that played out this week.


TRUMP: I am proud to shut down the government for border security, Chuck, because the people of this country don't want criminals and people that have lots of problems and drugs pouring into our country. So I will take the mantle.

REP. NANCY PELOSI, D-CALIF.: He is taking full responsibility for the Trump shutdown. Perhaps he doesn't understand people need their paychecks. Maybe that's not the life he leads.


WALLACE: We asked you for questions for the panel and on this issue of the president saying that he would be proud to shutdown the government, we got this on Facebook from Linda Rector.

Why is shutting down the government not something to be proud of if it means protecting the country? That's exactly what we elected the president to do.

Marc, Juan, how do you answer Linda? And two, as a person who until last July used to deal with Congress for the White House, for President Trump, what do you think is going to happen? Will there be a shutdown? Will they kick it down the can into January?

SHORT: If there were a shutdown, it would be different the very previous ones. This government has already funded all the men and women serving in uniform. It has funded all the entitlement checks. It will keep the parts of (INAUDIBLE)

So, the average American wouldn't even recognize the shutdown other than the fact that it would be a media story, Chris.

WALLACE: Wait, there's about 30 percent of the government that gets shut down and I think 30 to 40 percent of the employees.

SHORT: And every time there's been a shutdown, every employee has been paid back in full. So I think the average person is not going to feel it in the immediate future.

Having said that, I still think you're going to find a compromise that comes together before the end of the week. I think the president has got to look to find ways to fund this out of military construction dollars. They'll create a separate problem later, because Democrats object to that.

But last year, we secured the first new funding, $1.6 billion for the wall in ten years. Democrats come on your show and say we oppose any funding for the wall. They've already agreed to it. It's already 1.6 in this year.

All we're not arguing about is not what they are, it's how much it costs, and it's a matter of whether they can notified (ph) being at 1.6.

WALLACE: That's an old joke.


WALLACE: All right. Let's gather here, everybody.

So, Julie, shutdown or not?

PACE: I think all signs point to, as Marc says, some kind of compromise. I think we'll have a tense couple of days. This is normally how the pattern of these shutdowns play out, but both Republicans and Democrats that I talked on Capitol Hill last week have very little interest in a shutdown. They have very little interest in staying in Washington for Christmas which is ultimately what this comes down to a lot of times.

I do think that the president might be itching for a shutdown. But I ultimately think he will sign on if there is some kind of compromise that gets some amount of wall funding and he can punt towards the military to see if that's another option for building the wall.

WALLACE: All right. Let me ask about another issue, which is the president on Friday afternoon named a acting chief of staff, Mick Mulvaney, and it's already come out that during the 2016 campaign, during a debate right after the "Access Hollywood" came out, a debate with his Democratic candidate, this is before he joined the Trump administration as OMB director, he said this.


MICK MULVANEY, ACTING CHIEF OF STAFF: Yes, I'm supporting Donald Trump, doing so as enthusiastically as I can, given the fact I think he's a terrible human being. But the choice on the other side is just as bad.


WALLACE: Well --

PACE: Here we are.

WALLACE: Do you think that creates problems for Mulvaney?

PACE: I think Mulvaney has been really strategic over the last couple of years. He has found a way to work with the president. He's been very loyal to the president since he's taken his job as OMB director. So much so that Trump keeps trying to give him other jobs in addition to chief of staff.

I do think that it's interesting that Mulvaney is leaving himself an out by taking on the acting chief of staff role and keeping his job as OMB director, if this doesn't work out for either side, he's got a fallback option within the administration. But Mulvaney kind of falls into a category like a Lindsey Graham, who was also critical of the president during the campaign, even after he became the nominee but has found a way to work with him in office.

WALLACE: Brit, after Nick Ayers turned the president down, the vice president's chief of staff, and then Chris Christie turned the president down, he almost had to name somebody, didn't he? This was getting a little embarrassing.

HUME: He was like the guy who couldn't get a date for the prom and he finally got Mulvaney, who was already on board to join in. But Mulvaney is a good choice. He's a very able guy, seasoned and experience, knows the issues, knows the policies, knows the government. So --

WALLACE: I'll say something else, he is a happy warrior. He's a guy who - - he's a positive guy. He is also a guy who might come on Sunday talk shows, which John Kelly treated us like the plague.

HUME: He wasn't interested.

I would add this. There's some talk that Trump doesn't need to chief of staff, he should be his own, that is really nonsense because Trump needs help from people who really know this town, know its ways, know the details, know the issues, and he has been at important time, willing to accept advice from those people to his benefit.

WALLACE: All right, panel, we have to take a break here. But stay right here.

When we come back, as new evidence implicates the president, what are the chances Democrats will move pursuing impeachment?


CHRIS WALLACE, FOX ANCHOR: Coming up, the president sounds off on the Mueller investigation, as his former fixer is sentenced to prison.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Nobody, except for me, would be looked at like this. Nobody.


WALLACE: We'll get our Sunday panel's read on how serious the president's legal troubles really are, next on FOX NEWS SUNDAY.



TRUMP: What he did was all unrelated to me except for the two campaign finance charges that are not criminal and shouldn't have been on there. They put that on to embarrass me. They put those two charges on to embarrass me.

COHEN: I told the truth. I took responsibility for my actions. And instead of him taking responsibility for his actions, what does he do? He attacks my family.


WALLACE: President Trump and his former fixer, Michael Cohen, taking shots at each other after Cohen received a three-year prison sentence for a number of crimes, including making hush money payments during the 2016 campaign.

And we're back now with the panel.

Julie, there are reports, and we hear these from time to time, the president is more and more consumed by the special counsel investigation, especially as former allies like Michael Cohen and the publisher of "The National Enquirer" are providing evidence against him.

What do you hear your sources?

PACE: So I think it is indisputable that the president is consumed by these investigations. You really don't need any secret sources on this. You just need to look at his -- at his Twitter feed. He is following the twists and turns of this extremely closely. And as people who are close to him get caught up in this, he gets more agitated. And I think now we are seeing that almost every aspect of his life, over the last several years, is now under some level of investigation. His administration, his campaign, the inauguration, and his businesses.

And the business piece of this is, I think, the one that is getting to the president the most because, yes, being president is part of his identity, but actually being this successful businessman is almost more important to him in some ways. It's how he has defined himself for decades. And it's his children's legacy. They are at the top of this -- at this business. And any sign that his business could crumble, that past business dealings could be swept up in this investigation, is incredibly personal to him.


SHORT: I agree 100 percent with Julie. I think that what's unfortunate here is that you have what begins as a special prosecutor focus on collusion in Russia. And as Julie just said, it's about every part of his life. We end up saying, instead of investigating a crime, we're investigating a person. And Republicans and civil libertarians used to oppose that motion after Iran Contra. Then they fell in love with it during the Whitewater years because they said it was a land deal but it became something about an affair with an intern.

And it's a problem. It's a problem where we have prosecutors going all over. And I think --

WALLACE: But how about -- how about the argument that is made, gee, we didn't hear Republicans complain about it when it happened to Bill Clinton?

SHORT: I agree 100 percent. I'm saying -- I'm saying Republicans as well have been hypocritical on this. There used to be a group of strong, civil libertarians who would recognize the problem of special prosecutors. And -- probably this is now the -- what's been born of that fruit.

WALLACE: All right, so far the only alleged crime that the president is specifically linked to is not collusion, is not obstruction of justice, it involves campaign finance violations, alleged campaign finance violations.

Here is how Democratic Congressman Jerry Nadler, the incoming chair of the House Judiciary Committee, responded to that this week.


JERRY NADLER, D-N.Y.: Well, they would be impeachable offenses. Whether they are important enough to justify an impeachment is a different question.


WALLACE: Brit, how persuaded are you that if President Trump directed these payments, these hush money payments, as Michael Cohen says he did, that it was a campaign finance violation on his part, a criminal violation? And, two, what do you think of the likelihood that the House and the wisdom of the House proceeding to impeachment on campaign finance violation?

HUME: I think it's a little hard to imagine a president being impeached for a campaign finance violation. Most of these violations are handled as civil matters and result in fines. And they are, you know, widespread, rampant. Obama had a -- the Obama campaign had to pay a big fine.

I don't -- I just don't think the House of Representatives, even such ardent Democrats as Jerry Nadler, will go there. The greater worry is that some other charge comes out when Mueller finally gets his ore in with his report and says whatever he says. And that, I think, Chris, raises an intriguing question, which is this, how far will these House investigations go if Mueller doesn't find something very serious about the president? My thought is, it probably takes the wind out of their sails, but we'll have to wait and see. But, on balance, I don't think campaign finance is going to dislodge him.

WALLACE: When you look at all of this and, you know, as we say, there is still no hard evidence of collusion, no hard evidence of obstruction of justice, but the wall do seem to be moving in on the president on a lot of fronts.

HUME: Well, I don't think the Mueller report is likely to be -- to sing the president's praises. But that's not what he needs. What he needs is kind of an -- of a -- of a report that says, you know does not outline some major crime. And if that happens, I mean I think it changes the atmosphere dramatically, both legally and politically, because I think it's -- and if he is vindicated on no collusion, which is what he's been saying, I don't think the -- I've never thought that collusion was the central point of this investigation.

Remember, when it started, Chris, it was a counterintelligence investigation with the FBI acting as an intelligence agency to determine what Russia actually did. And if you go back and look at the letter authorizing Mueller's appointment, it says -- it mentions that it picks up that investigation and then says, he's also authorized to find out if there was collaboration between the two. That was always a subset of the overall investigation. And if it turns out to be a subset with no crime alleged in the final report, I think it's a huge boost for the president.


WILLIAMS: Well, I think the Democratic base is so inflamed by Trump, by his behavior overall, I think they -- they would think that Democrats weren't, in fact, holding up to their constitutional responsivities if they did not consider impeachment. So you get the --

WALLACE: Even on campaign finance violations?

WILLIAMS: Well, I mean, what we -- what did we learn this week? He wants to say it's just Michael Cohen making these outrageous claims because Cohen wants a better deal from the prosecutors. But, in fat, we hear from David Packer at "National Enquirer," same thing happened. We hear from "The Wall Street Journal," the president was in the room. So if -- potentially he would be an unindicted coconspirator while his president because nobody thinks you can indict the president. But that doesn't mean that you can't go to the Congress and say, let's look at this and see --

WALLACE: Do you really think that would be wise for Democrats to do? And this -- this is speculative.

WILLIAMS: Well, that's a separate issue. That's a separate issue.

WALLACE: OK. Well, that's my question, though.

WILLIAMS: OK. Well, if the question was --

WALLACE: Would it be wise for them to do it if that's all that there is?

WILLIAMS: Well, I don't think that's -- no. And I think that what you're going to see, and you already see this from, by the way, Jerry Nadler, but also from Nancy Pelosi, Chuck Schumer, as the say, they're not interested right now. But the base of the party, is what I was trying to say to you, Chris, is going to be putting pressure there because they think that, in fact, Democrats had been too docile in dealing with Trump and they want -- they want them to come and have the --

WALLACE: They want blood?

WILLIAMS: Well, because, guess what, you've saw a blue wave, 40 seats switch hands, and the number -- you know, health care was clearly important. But also a check on Trump was very important to voters.

WALLACE: And every indication is -- everybody keeps saying this investigation is going to be over the end of the year.

WILLIAMS: I don't see it.

WALLACE: I always say, pick the over, right?

PACE: Right. We -- we don't know what else Mueller has. I think this could go well into next year and really line up with some of these congressional investigation.

WALLACE: Thank you, panel.

Up next we sit down with Microsoft co-founder Bill Gates, head of the Gates Foundation. In the era of America first, he worries about a shrinking U.S. role in dealing with global poverty and public health.


WALLACE: The Bill and Melinda Gates Foundation is the world's largest private charitable fund, giving $46 billion in grants since its founding in 2000 and literally saving millions of lives. The Microsoft co-founder came to Washington this week to make the case for American leadership and the need for foreign aid in the era of America first. When we sat down at the Chamber of Commerce, that's where we began.


GATES: There was a recommendation by the executive branch to make fairly substantial cuts U.S. aid budget. And, fortunately, the Congress took that proposal, which would have meant cutting people off from those HIV medicines, and they decided to maintain the foreign aid levels.

WALLACE: Your wife Melinda recently talked about -- and I want to quote her directly -- how incredibly disappointing it is to see U.S. leadership deteriorating and the view of the U.S. deteriorating because of some of the egregious things that have been said by this current administration. What's she talking about?

GATES: I hope I know. The -- I think the particular episode there was talking about Africa and the conditions in Africa in a -- not in a positive way. Sort of characterizing the entire continent. But, in any case --

WALLACE: Your talk about the blank countries?

GATES: Exactly. In the U.S. engagement in Africa and around the world, there are many reasons we should maintain that. Just a pure security point of view alone would justify this level of expenditure.

Now, for many people, the humanitarian part of it is also there and that part is dramatic. And so it is disappointing when it feels like the U.S. is being short-term and the U.S. is only thinking about its interest in a very narrow way and not being the leader that says, now, we -- you know, we are going to help these countries get so that they can -- can take care of themselves.

WALLACE: The president's mantra is America first. You seem to be suggesting that in terms of America's interests you've got to look a long way beyond America first.

GATES: Well, I think that the broad definition of our interests, including investing in allies and not viewing every transaction as one that we have to maximize our benefit, taking, you know, world institutions and have them just focus on the United States. What we did, in terms of the post-World War II institutions has been a fantastic thing. That included having a common view of the future with our western allies.

If you really follow that line of thinking, the idea of helping Africa, of working on an HIV vaccine to stop the AIDS crisis, you just wouldn't do it. And -- and yet I feel, even in that narrow framework of, OK, I only care about what -- how U.S. citizens do, even in that framework, these institutions, these alliances, these investments in innovation are overwhelmingly smart things to do.

WALLACE: Since the year 2000, a billion people have lifted themselves from what you define as extreme poverty. And you say that the first wave was in China and the second wave was in India. Before we get to places where the wave hasn't hit yet, what happened in those places?

GATES: One of the first things you want to do in these countries is raise agricultural productivity. All of the Asian miracles, even going back to Taiwan and Japan, South Korea, involved more than tripling agricultural output per person so you could free up that labor and move it into the cities. And if you had the right infrastructure, educational investment, then you've got a manufacturing sector of the economy and slowly but surely you'd get a very large middle class.

WALLACE: You talk about the successes, the waves in China and India, and then there's Africa. You say that by 2050, 86 percent -- 86 percent of the extremely poor people in the world will live in Africa and, in fact, 40 percent will live in just two countries, the Democratic Republic of Congo and Nigeria.

What's holding them back?

GATES: They're starting at very low levels of infrastructure, very low level of property. And one of the things that drives those numbers you mentioned is the very high population growth. And so they account for double the portions of births you'd expect. By the end of the century, the majority of births in the world will take place in Africa.

Africa has to demand our attention. That's where extreme poverty is still tough. That's where stability is difficult to achieve. And, you know, we've got to go after things like these neglected diseases, malaria. We've got to help them with infrastructure. It's really, in terms of our humanity of helping the poorest, Africa's where we'll be most tested.

WALLACE: How do you even begin to address these concentrations of misery?

GATES: Well, one of the great achievements in development history was what was called the green revolution where new varieties of the cereal (ph) crops, corn, which everyone else calls maize, rice and wheat. In a period where people thought India would experience mass starvation because the agricultural output went up, they were actually able to improve the nutrition even when their population was growing. We need to do that same thing for Africa.

WALLACE: It seems that climate change could be the accelerant to all of the bad things in terms of agricultural productivity, global health, instability, extreme poverty. Talk about that.

GATES: Yes. For a country like the U.S., that's northern, you know, climate change will change things. We'll have more hot days, more forest fires. But it's not a threat to our survival.

In Africa, where you are completely dependent on the rain coming, whereas there been in the past about one out of 12 years you'll have a failed harvest, the prediction is that we be closer to one out of four years because of the higher temperature and the -- the -- unfortunately, with climate change, you -- not only is it hotter, but the rain comes all at once, or it doesn't come for long periods of time. So if you want to say, where are you going to get millions of deaths because of climate change between now and the end of the century, you don't look to the United States. Yes, you'll have some forest fires and there will be some deaths. But the -- the significant numbers are in these very, very poor countries because of the subsistence farming.

WALLACE: What do you say to those who say it's not climate change, it's weather, and that the -- the man -- the human component is questionable?

GATES: That's impressive if somebody can say that out loud. The --the amount of --

WALLACE: Have you been -- have you been to Washington?

GATES: The amount of CO2 in the atmosphere is a super measurable thing. It's important not to over claim what we know because that undermines the whole discussion., But the general warming and the mechanism of that warming has to do with CO2 and methane emissions. That's -- that's really not a question.

WALLACE: I want to talk to you about toilets. Since 2011, the Gates Foundation has launched to reinvent the toilet challenge. Explain, one, why that's so important, and, two, again, dealing with the specifics, what have been some of your successes and failures along the way?

GATES: In many of these poor countries, the capital cost of building that sewer, it's just never going to happen. And so the solution would be to, instead of using that sewer, to have something in the toilet itself, which is essentially the processing facility. We have ten different universities whose designs we funded. So we put in several hundred million dollars. And now we've gotten it to the point where we have a lot of commercial companies who say, OK, that approach looks promising.

Now, the price of this toilet, that does the processing, is still ten times more expensive. It's about, you know, $10,000 per toilet right now. We need to get it into these tough parts, the slums of these African cities. We need it to be more like a thousand dollars.

WALLACE: I want to ask about your -- your old job. There's something of a backlash here in Washington against big tech. The growing feeling in Washington is that big tech does not do enough to protect users' privacy and that it shows political bias. Do you see merit in either of those arguments?

GATES: I went through an episode in the late '90s where Microsoft was subject to government investigation.

WALLACE: We remember.

GATES: And so in a way this is -- in a small way now it's less Microsoft now, but it's broad.

Yes, the government should be talking to these companies about what they do. There's nothing inappropriate.

I was naive. I didn't have an office in Washington, D.C. I thought that was a good thing and I even bragged about it. I later came to regret that.

So these -- I'm sure these guys are learning better than I did that they need to come back here and start a dialogue. And there will be new types of regulations for these companies.

WALLACE: And you don't have a problem with that? I mean you think that's appropriate?

GATES: Well, the notion that there will be privacy regulations, that makes a lot of sense. The notion that this ability to identify anyone that were going to think about how do businesses get to use that and how does the government use that, it makes a lot of sense.

WALLACE: Apple, Amazon and Microsoft are right now jockeying for which is going to be the most highly valued company in the world in terms of market capitalization. At the close of the market on Friday, Microsoft was number one at over $800 billion, Apple, $799.5 billion. Does that give you any pleasure?

GATES: You know, when I was starting Microsoft in my 20s, the idea that we could create a company that was -- you know, would beat IBM, you know, because they were the big monolith and, you know, we understood software and they didn't. And we believed in these cute, small machines to empower individuals and they believed in these big machines. It was kind of mythic that we were going to beat IBM.

By the time Microsoft valuation passed IBM, which is now, you know, 15 years ago, it didn't feel like that big of a victory. And so you really -- it's really better to define yourself by an aspiration. You know, can software improve education? Can software help, you know, medical care costs in the U.S. just keep going up dramatically? Can software play a role there?.

So, yes, I'm very proud of Microsoft and the vision that software and technology would make a big thing. You know, it's led to the most valuable, the five most valuable companies being these tech companies. So I do think it's an vindication (ph) of the importance of technology, which now is coming with a lot of responsibilities as well.

WALLACE: Bill, it's an honor to talk to you again.

GATES: Thank you.


WALLACE: And if you want to learn more about the remarkable work Bill and Melinda Gates are doing, you can find their link at

Up next, a final word.


WALLACE: Stay tuned to this station and Fox News Channel for the latest on a potential end of year government shutdown.

And that's it for today. Have a great week and we'll see you next FOX NEWS SUNDAY.

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