This is a rush transcript from "The Story," January 24, 2018. This copy may not be in its final form and may be updated.

MARTHA MACCALLUM, HOST: And we begin tonight with a Fox News Alert. President Trump just telling reporters on the record that he is looking forward to his time talking with Robert Mueller and that it will be under oath. Here is the recording of what was said, so now you can hear it for yourself.


PRESIDENT DONALD TRUMP: I'm looking forward to it, actually. There's been no collusion whatsoever. There's no obstruction whatsoever. And I'm looking forward to it.


MACCALLUM: Interesting, right? So, we're going to have more on that in a moment. Brit Hume is going to join us with his unique take on what transpired in there. But first tonight, a chilly meeting at the White House as Democrats mayors refused to show up for their meeting with the president. Good evening, everybody. I'm Martha MacCallum, and this is THE STORY. The Justice Department announced that sanctuary cities must now prove that they're not unlawfully restricting information sharing with federal authorities, and there was a fierce backlash to that as mayors from New York City to New Orleans snubbed the president's invite today and they were proud of it. Here's President Trump.


TRUMP: As you know, the Department of Justice today has announced a critical legal step to hold accountable sanctuary cities that violate federal law and free criminal aliens back into our communities. We can't have that. We can't have that. It will be very easy to go the other way, but we can't have that. We want a safe country.


MACCALLUM: So, joining us with a moment with his take on "The Story" tonight is the mayor of a sanctuary city, Santa Fe, Javier Gonzalez, who says that he is proud to disobey that order. But we begin tonight with Trace Gallagher, live in our West Coast Newsroom with the backstory here. Hi, Trace.

TRACE GALLAGHER, FOX NEWS CHANNEL: Hi, Martha. The bottom line here is that Attorney General Jeff Sessions and the Department of Justice are very bluntly informing these 23 jurisdictions that protecting criminal aliens from federal immigration authorities is against the law. And the DOJ is demanding these cities, counties, and states either willingly turn over information about their sanctuary policies or they will be legally compelled to turn it over. What the feds are specifically looking for is any guidance local leaders have given their police force when it comes to dealing with Immigration and Customs Enforcement or ICE. But the DOJ demands have infuriated several Democratic mayors in cities like Los Angeles, Chicago, and New York. Those mayors were supposed to meet with President Trump at the White House today to talk about infrastructure, but instead, they boycotted the meeting. Here's New York Mayor Bill de Blasio. Watch.


BILL DE BLASIO, MAYOR OF NEW YORK CITY: The very day where we were told there would be a good-faith dialogue, a bipartisan dialogue on a crucial issue -- infrastructure. That's the day they decided to single out a group of American cities and once again threatened them.


GALLAGHER: The White House considers it more of a promise than a threat, saying it fully intends to hold these jurisdictions accountable by taking away part of their federal funding or even trying to claw back grant money that's already been given out. And despite some mayors pulling out of today's White House gathering, the meeting itself went on with the president making his case. Listen.


TRUMP: My administration is committed to protecting innocent Americans, and the mayors who choose to boycott this event have put the needs of criminal illegal immigrants over law-abiding Americans.


GALLAGHER: Communities have argued that Immigration Enforcement is a federal responsibility and that the U.S. Constitution prohibits Washington from forcing them to assist. Martha?

MACCALLUM: Trace, thank you very much. So, joining me now, Javier Gonzales, the Mayor of Santa Fe, a Sanctuary City, who says that he will defy the Justice Department order. Mayor, thank you for joining us tonight. Good to have you here. Did you decide not to attend today? Where was your stand?

JAVIER GONZALES, MAYOR OF SANTA FE: Well, first look, it was disingenuous for the president to call this meeting to talk about investing in our infrastructure, helping us to rebuild our economies of the local level. And then, of course, come out with this threat from the Department of Justice that really has no merit to it. And so, of course, I didn't want to participate, nor do I think we should until the administration is ready, to be honest about working with local governments.

MACCALLUM: You're calling it a threat. You know, I think they're calling it the federal law, and whether or not your city is upholding federal law. And as you heard the president put it there, he talked about putting the needs or wants, or desires of illegal immigrants ahead of American citizens. So, you know, what do you say to that? How do you respond to that? Why is that OK?

GONZALES: Well, first, the president is wrong about the priorities of cities across this country. Our first mandate is to keep our community safe and to follow the laws. The president doesn't know the people that I know in our community that are hardworking people there are immigrants that have come to this country seeking a better life. They participate in our communities. They participate in our economies, in our schools. And there's a broken immigration system that is not allowing them to be able to have recognition --

MACCALLUM: Let me ask you about that because you and I have talked before and you brought that up the last time that we spoke, that you say your desire is to fix the system. So, now, there's been a discussion in Washington about fixing the system. Having a trade-off for border security and funding for a wall to protect the DREAMERS. Are you in favor of that kind of deal?

GONZALES: Look, I'm in favor of everything we can do to make sure that the DREAMERS that are here that are participating in our country are allowed to continue to do so. I'm in favor of any type of federal immigration fix that allows for there to be ways to provide for some level of documentation for people that are currently living in the shadow. I'm in favor of working --

MACCALLUM: All right. So -- he even said that he would approve of a morphing for the DREAMERS to citizenships. So, can you answer my question? Are you in favor of building a wall if the trade-off is protection for the DREAMERS, are you in favor of that?

GONZALES: No, look, building a wall is not going to do anything to help secure our country. What we need to do is work alongside with federal officials to make sure we target people who want to commit violent crimes in our country. That's where we need to partner with the federal government. That's where federal government needs to partner with local law enforcement.

MACCALLUM: Let me ask you about that. What is the policy? Because the thrust of it was decided today, is that they're going to ask cities like yours, what do you tell the police officers?

GONZALES: Here's what the president wants you us to do --

MACCALLUM: No, I asked your question. What do they tell the police officers in Santa Fe in terms of whether or not they need to turn in people who have been requested to be turned over by ICE, or people who are brought into, you know -- brought into police stations across the city? And are -- what do you tell them about how they should deal with people who are potentially here illegally?

GONZALES: We tell our law enforcement officers that if there is a federal warrant out for the arrest for a violent crime that we fully participate with federal immigration officials to make sure that those individuals are removed from our streets, and that they are brought to justice. But anyone who is living in our country peacefully -- we don't ask for papers when we stop someone on the street. We don't ask someone to show their citizenship. That's not our requirement that we see to right there we make sure that we keep our communities safe.

MACCALLUM: What would you do to -- you know, is that flow just continuous? We should just continue to lead people in? You know, at what point do you draw the line and say, you know what, we have to take care of the people who that are here illegally in our country? We have to deal with them first. We can't allow more and more people to come through migration and other means?

GONZALES: Well, look, first of all -- having comments and terminology like chain migration goes against all the values of our country when it comes to how we address the issues of --

MACCALLUM: No, it doesn't. How does it?

GONZALES: Let me answer your question. What we do, is we make sure that we protect our communities by working along with federal law enforcement officials to make sure that any individual who wants to commit a violent crime -- I don't care if they grew up in Santa Fe or they came to our city -- we will do everything we can to stop them before they commit any type of violent crime. If we pick somebody up and through our database, we know they have committed a violent crime, we work quickly --

MACCALLUM: What if they have never committed a violent crime, but they commit their first violent, which has happened many times, against an innocent individual in this country and take their life? How do you prevent that from happening if you don't stop them with the first episode of lawbreaking, which is being here illegally?

GONZALES: Well, the first thing that you need to do is fix an immigration system that allows people to come out of the shadows and be able to get some form of documentation.

MACCALLUM: So, you're in favor of building a wall in exchange for DACA?

GONZALES: I'm in favor of making sure that we have an investment in border security that work along with local government officials to stop people that want to commit violent crimes from coming into our country. A wall? I can tell you, New Mexico is not going to keep violent criminals from coming out of our estate and inflicting harm on our citizens. What it will -- what we do need to do is actually work with the federal government to target people who want to commit violent crimes.

MACCALLUM: It would have been a good start to show up at the meeting today.

GONZALES: Well, if we -- if we actually would've shown up, if the president would've been honest about what he wanted to do with it, and how we can move forward, we can actually move our country forward by investing in infrastructure, fixing our immigration system, and doing what we know best, and that's working collectively as a country, valuing diversity, and making sure that we're able to move forward. Building an economy is our priority.

MACCALLUM: Sounds like there's a lot of reasons to get together and negotiate that could begin with discussions. Thank you very much. Good to have you here tonight.

GONZALES: Thank you. Thanks for allowing.

MACCALLUM: We'll hope to see you again. The hot debate, David Wohl, joins me now, California attorney and conservative commentator; and Richard Fowler, Senior Fellow at the New Leaders Council and a Fox News contributor. So, you hear the sort of circular argument that goes around, you know, where we're going to continue to protect these people and defy federal law in order to do it regardless of the fact that they're here illegally, and that some of them may even commit a violent crime for the first time against an innocent American citizen, Richard. So, you know, and he says, oh yes, you know, I'm in favor of border security. So, you know, why is this such a circular argument?

RICHARD FOWLER, FOX NEWS CONTRIBUTOR AND SENIOR FELLOW AT THE NEW LEADERS COUNCIL: I don't think the argument is circular at all. I think what the mayor of Santa Fe was saying there was if you have committed a violent crime, he will do everything in his power to get you out of his city and make sure you are out of the country. With that being said --

MACCALLUM: Well, that's called comfort to them, you know, a family of Kate Steinle, just for example. Can you imagine?

FOWLER: I think Kate Steinle is -- that's one example from the 11 million other people.

MACCALLUM: There are so many more examples, Richard, but do you need even more than one to know that you have a problem?

FOWLER: And literally work hard each and every day to achieve the American dream. But let's be very clear here, what he's also saying is, if I stop you for a traffic ticket or if I stop you because of a noise ordinance, I'm not going to ask to see your papers. What Jeff Sessions and Donald Trump are saying is that everybody that gets stopped, everybody who commits any type of crime, whether violent or nonviolent, we should ask to see their papers, and that is the problem. And he's saying that his police officers won't do that and they shouldn't be allowed to do that because the Supreme Court clearly says ---

MACCALLUM: Wouldn't want to live in a city at -- let me get David in here. Because, David, I know has something to say too. Go ahead, David.

DAVID WOHL, CALIFORNIA ATTORNEY AND CONSERVATIVE COMMENTATOR: You know, that mayor was simply playing lip service to -- let's face it, the last straw was the acquittal of Jose Zarate in the Kate Steinle case. If he had been acquitted in the feds, hadn't immediately filed charges, he would've been released from jail, and either San Francisco, Chicago, or L.A., would've rolled out the red carpet, and he would've been right back living comfortably in one of those cities. So, Jeff Sessions, as he has said he would all along, is getting tough by threatening, revoking, and removing federal funding to these cities. And more importantly for these mayors, under Code 8 of the -- U.S. Code 8, Section 1324, these mayors can be prosecuted for harboring illegal immigrants, keeping them away from law enforcement, and they face, if convicted, up to ten years in federal prison. These guys have got to understand that it's crunch time now --

FOWLER: David, listen, I won't --

MACCALLUM: But what they're saying is that that is a risk that they're willing to take, and they see that as a badge of honor. And I would imagine that some of them would be happy to be arrested, Richard.

FOWLER: I don't care how you feel about sanctuary cities. That code does not apply here because the Supreme Court has already ruled on this particular thing. There's no time where the federal government can force local police officers and local municipalities to do something that is against the Constitution because that is tyrannical. Listen, you're a lawyer, you should know the case law.

WOHL: Federal law is supreme.

FOWLER: Hold the case law, David.

WOHL: When a federal warrant is issued, Richard. I'm a lawyer, you're not.

FOWLER: Exactly.

MACCALLUM: Let him answer you, Richard. OK, you had your piece, now let him answer you.

WOHL: Listen, Richard. It's 8 USC Section 1324.

FOWLER: I'm talking about the Supreme Court ruling that the federal government can never federalize local law enforcement.

MACCALLUM: Hold on, Richard. Go ahead, David.

WOHL: That statute controls the situation. The feds also have the right to remove federal funding from the cities. They're grandstanding now, Martha. Rest assured, if these two things actually take place, and Jeff Sessions has launched the first in doing them both, these mayors will buckle like no one's business. And they will stop the sanctuary cities nonsense, and American citizens will be protected, not illegal lawbreakers.

MACCALLUM: Richard, there are going to be confrontations on this, and it forces the issue out into the open. And if these folks want to defend what they are doing, then they're going to have to defend what they're doing. But at some point, you can't allow people to just -- you know, the question never gets answered: at what point do you say enough? At what point is it OK? You know, if even if you are here, you can say, but you can't let anyone else come in? Or you take a break, or you take a pause. I mean, it's not even discussed.

FOWLER: Absolutely. And I think Democrats are going to talk about border security, we're willing to figure out how we fix the borders. I think you saw that you've had Jose -- you had Luis Gutierrez in Chicago talk about that. With that being said, it's ridiculous to believe that the Trump administration can go around and start arresting mayors because they are using the power that is granted to them by the Constitution to control their police force.

MACCALLUM: Well, you say they can't do it and then say they can, and we're about to see what's going to happen, which ought to be very interesting.

FOWLER: No matter -- excuse me, wait for a second, David, no matter what you think about sanctuary cities. No matter what you think about sanctuary cities, David, the truth is that there is never a time where the federal government can take over local police departments, period, or force them to do something.

MACCALLUM: Federal law supersedes local law. You guys, I got to go. I'm sorry. I got a jump in. OK. Richard, thank you very much. David, thank you, you too. All right. We've got to go because we got a Fox News Alert. President Trump telling reporters that from the oval office, he said, I'm looking forward to talking to Robert Mueller, and he said, yes, he would do it under oath. Brit Hume is here to react to a pretty stunning interview before the president took off for Davos tonight, or is about to, that's next.

Plus, new questions about those five months of missing text messages. Can you imagine having the time to text as much as these folks were texting, these two FBI agents? As there are new reports that the mood inside the bureau is getting tense. Many in the rank and file, upset about what they have seen at the top of their beloved agency. Former FBI Assistant Director, Ron Hosko, is here with his take on this after the break.


SEN. RON JOHNSON, R-WIS.: I mean, these indications -- there was number of high-level FBI officials, they were holding secret meetings off- site.




TRUMP: I'm looking forward to it, actually. There's been no collusion whatsoever. There's no obstruction whatsoever. And I'm looking forward to it.


MACCALLUM: So, that was brand new audio, President Trump speaking to reporters at the White House just moments ago. The president also talks about the missing five months of text messages between Special Counsel Investigators, Peter Strzok and Lisa Page.


TRUMP: If you take a look at, you know, the five months' worth of missing texts -- that's a lot of missing texts. And as I said yesterday that's primetime. So, you just got to look at that and say, "what's going on". You do sort of look at certain texts where they talk about insurance policies or insurance, where they say the kinds of things they're saying.


MACCALLUM: Chief national correspondent Ed Henry is live at the White House tonight where there is always breaking news in the 7:00 p.m. hour. Good evening, Ed.

ED HENRY, FOX NEWS CHANNEL CHIEF NATIONAL CORRESPONDENT: Good to see you, Martha. We got a little busy here tonight. A huge surprise from the president himself. Surprising reporters and start talking -- starting to talk about Special Counsel Robert Mueller's investigation. And in addition to what you just reported there, the president said he's looking forward to doing an interview with Robert Mueller, said he's willing to do it under oath, and even put a timetable on it, saying he thinks it's probably going to happen in the next two to three weeks, in what would be a historic session that also carries a lot of political and legal risk for this president to sit down with the special counsel.

But on the other hand, it could fit right into the strategy that's been pushed for a long time behind the scenes by White House Lawyer, Ty Cobb. He has been saying for a long time, you see him on the right there, that Mueller is close to wrapping up this investigation, and that they have nothing to fear from sitting down and cooperating, contrary to all of these leaks we've seen recently suggesting the opposite. That Mueller's probe will drag on for months or even years, and his investigation is intensifying, because he's been conducting all of these high-level interviews with Attorney General Jeff Sessions and others. Instead, the president's comments could mean the probe is winding down, just as scrutiny of some of his critics is heating up.

You see right there, the FBI Officials, Peter Strzok and Lisa Page. Republicans today, demanding answers about how five months of their text messages were not uploaded into the FBI system. And new tonight, a federal law enforcement official tells Fox, cell phones belonging to a few thousand FBI employees were affected by that technical glitch which led to the five months of texts not being stored. Officials stressed they're taking steps now to possibly recover those messages as two Republican senators stepped up their pressure on the FBI and the Justice Department. Chuck Grassley accusing the FBI of playing hide the ball on key information about Fusion GPS and the dossier, while Ron Johnson claims he has an informant who says there was a secret society of FBI officials trying to undermine the president.


SEN. CHUCK GRASSLEY, R-IOWA: It sure looks like a bureaucratic game of hide the ball. Showing genuine concern about national security.

JOHNSON: I have heard, you know, from somebody who has talked to our committee that there's a group of individuals in the FBI who was told that they were holding secret off-site meetings.


HENRY: Now, Adam Schiff, the top Democrat on the House Intelligence Committee charged that Republican are only preparing to release that four- page memo about alleged Obama surveillance or Trump officials because it will help the president politically. Meanwhile, sources familiar with the letter tell me that the Justice Department, late today, sent a letter to Devin Nunes, the Republican chair of the House panel until the panel saying it will be dangerous to release that memo that has classified information. But I'm told that people close to Nunes believe it's not going to deter that committee from moving forward with the process to eventually tell the public and release that memo to the public. Martha.

MACCALLUM: Ed, thank you very much. So, joining us now: Brit Hume, Fox News Senior Political Analyst. Brit, this is a president who is always full of surprises. You know, he could have just slipped off to Davos this evening, but he took that moment, and you could tell that he wanted to say this to those reporters that, you know, "bring it on" was the message. What do you think?

BRIT HUME, FOX NEWS CHANNEL SENIOR POLITICAL ANALYST: Well, it's not the first time that he has said there's no collusion or anything else wrong, including, of course, obstruction of justice. And the fact that he has said this over and over again, can lead you and two directions: one is that this is the guy who's protesting too much because the Mueller team is going to find something, and he's denying it ahead of time. And the other we're looking at is, he's awfully confident about this and awfully certain and awfully strong and has been from the start. And the fact that he is now apparently on the verge of going to talk to Mr. Mueller or have Mr. Mueller come and talk to him, and he seems eager to do it, suggests that he feels, at least, that he has nothing to hide.

The idea that he's going to be under oath is something that I'm sure his lawyers are very worried about, not because the president would go in with any intention of lying or covering up, but because any number of this special counsel or independent counsel investigations have resulted in charges that have nothing to do with the matter for which the council was appointed to investigate, that these are crimes or problems or charges that occurred and growing out of things that happened during the course of the investigation. So, here you have the president with a lot at stake going into a situation under oath, where, you know, he slips up, misstates, and, of course, this president is not phenomenally articulate. He could get himself in trouble. So, it'll be interesting to see if, indeed, he does do this conversation with Director Mueller -- I mean, with Special Counsel Mueller, under oath.

MACCALLUM: You know, it's interesting, I remember him saying once, not long ago, well, if I could get the same deal that Hillary Clinton got -- you know, a holiday discussion not under oath, not with the lead investigator, because James Comey was not in the room when Hillary Clinton was spoken to, and, you know, others who were in the room get immunity, even though they're part of the investigation. You know, he thought that would be a pretty good situation that would give him equal treatment. If he does go in there under oath, as you say, he opens himself up to an inconsistency that perhaps has been laid down by some of the prior people who were interviewed.

But it does look like the focus, just based on who they've been talking to, Brit appears to be obstruction of justice, and go back to the firing of James Comey and Michael Flynn. So, you know, if that is the case, and a lot of lawyers that we have spoken to in this program, I know you have too, say that, you know, obstruction -- that he has every right to fire James Comey, that obstruction of justice is a pretty tough bar to meet here. So, perhaps, the president feels, you know, that legally, he's on the decent ground here.

HUME: Well, he certainly has a right to fire the FBI director at any time for any reason. However, if he acted, if it can be shown that he acted with corrupt motives, that would be the kind of thing that he would refer to the House of Representatives for potential impeachment. I doubt that Bob Mueller is interested in trying to put some kind of indictment against the president that would be without precedent and extraordinary. So, the question arises is whether the president, you know, in firing Mueller, did so for a good reason. And everything we've learned about -- I said Mueller, I mean Comey. Everything we've learned about Comey conduct during the Clinton investigation and going forward suggests that there was ample reason to act against this guy. So, you know, I -- we don't know, Martha. What Mueller has. But there's plenty of reason to think that this may not end up in charges.

MACCALLUM: Yes, and we should also mention that there is another -- there's another part of this audio where the president says something to the effect of, you know, subject to agreement by my attorneys. I mean, that's a pretty big hole that you could drive a truck through. I mean, he could walk this entire thing back and say, you know, it was my desire to speak to Robert Mueller, and I have nothing to hide. My attorneys feel like it isn't something that I should do. Do you think that -- go ahead.

HUME: Look, I'm a lawyer, I've covered a lot of these cases, I wouldn't let him testify under oath if it were up to me. Not with the history of what happens with these independent counsels and special counsels. I just think it's ill-advised and probably not necessary. I think the president likes to talk about it because, I think, he thinks he's innocent and he's not afraid of, you know, telling his story under oath. But I still think it's, you know, from a lawyer's point of view, representing him trying to protect his interests, I'm not sure a good lawyer will want him to do that. That doesn't mean the president won't override that.

MACCALLUM: Yes, exactly. It might not necessarily matter if he decides that he really wants to tell his story, and that (INAUDIBLE), and he goes from there and talks to Bob Mueller, but it's going to be a fascinating few weeks when he gets back from his trip. Brit, thank you so much. Good to see you, as always.

HUME: You bet, Martha. Thank you.

MACCALLUM: So, the FBI, as we've been discussing on the periphery, has definitely seen better days. They're under intense scrutiny. Here now Former FBI Assistant Director of the Criminal Investigation Division, Ron Hosko, who served in the FBI for 30 years. Ron, thanks for being here, welcome back to the program tonight. It's always good to have you with us.

RON HOSKO, FORMER ASSISTANT DIRECTOR OF THE CRIMINAL INVESTIGATION DIVISION, FBI: When you listen to what Senator Ron Johnson says about an informant telling them that there have been these meetings of what was referred to in these texts as a secret society off-site, what do you make of it?

HOSKO: Well, Martha, the FBI is full of informal networks, many of whom need off-site to have a drink, to have lunch or dinner together, to talk about the days of the answer, the challenges for tomorrow. So, I don't make much at all of the off-site meetings with small groups, different networks, those exist in every organization, they exist in the FBI. The secret society part is a little bit different. I've not been part of an FBI secret society, even though, perhaps, some homework for me or knew of me thought I was part of a secret society because senior leadership gets to promote junior leadership, or decide that somebody's not going to be promoted, and I think they can be perceived as a secret society. Sometimes their deliberations are in secret and they make hard decisions about the organization -- who moves up and who doesn't. I can see perception issues, but I would like to see the facts.

MACCALLUM: You know, some agents are very unhappy with what they have seen in leadership. They believe that the FBI has become very politicized, that it used to be an agency that went right down the middle, and, you know, call the balls and strikes as they saw them when they do these investigations. How do you respond to them? I mean, as someone who committed such a big part of your own life to the agency, how do you feel about that? Do you agree with them?

RON HOSKO, FORMER FBI ASSISTANT DIRECTOR CRIMINAL DIVISION: Well, look, I've heard any number of different views from both on-board agents, managers, executives, and from retired folks who have very decided views on the Hillary Clinton investigation. I have my own. And I will tell you, I share their pain and the struggle, the notion of the corruption of what Hillary Clinton did with that server and the idea of her walking away essentially unscathed. The FBI was not in a position to pull her revoke her clearance, they made a decision not prosecutor her based in my estimation on a good-faith analysis of the facts and the president of what the statute said. I differ in material ways with the outcome. To me, it was completely offensive, what she did, and a complete failure of the department of state, top to bottom. However, I have to depend on people who I know who are in the decision loop making good faith decisions with prosecutors to come to a certain outcome may be based largely on precedent. I don't like it, I don't agree with it, but it is what it is, and I believe that good people acted in good faith.

MACCALLUM: Ron Hosko, thank you so much, sir. Good to see you tonight.

HOSKO: You too.

MACCALLUM: So still to come, the chilling new threat from North Korea, the head of the CIA, is a preemptive strike on the table? Plus, any moment, President Trump leaves the White House to take his America First agenda to the world stage, so how is that going to be received at Davos. Niall Ferguson just wrote a unique piece on this in a brand new book. He joins me next.


TRUMP: From this day forward, it is going to be only America first, America first.




TRUMP: The west will never, ever be broken. Our values will prevail. Our people will thrive. And our civilization will triumph.


MACCALLUM: So that was President Trump when he was in Poland in July, and within the next hour, he will leave the White House for Davos, Switzerland, to take that America First agenda back to Europe and to the elite world economic forum. It comes as a new Fox News poll shows that -- in terms of the economy, enthusiasm is extraordinarily strong, it's as strong as it has been in almost two decades, 49 percent say it is excellent or good. Here now, Niall Ferguson, who is the author of the new book, The Square and The Tower, networks and power from the freemasons to Facebook. It's a fascinating book. Niall, good to see you tonight, thanks for being here.

NIALL FERGUSON, AUTHOR: Thank you, Martha.

MACCALLUM: So, I want to start with a quote from the piece that you wrote today. Let's put that up in the screen. It says Trump exemplifies the ugly American. Davos will accept him anyway. And it goes on to say, one of my favorite lines about Davos comes from JP Morgan boss, Jamie Dimon, who says Davos is where billionaires tell millionaires how the middle class feels. The events of 2016 revealed that Trump knew a lot more than most members of his class about how the American middle and working class felt. For that reason, if no other, he can expect more than a cold shoulder from the globalist this week. So, which Donald Trump do you think we're going to see at Davos?

FERGUSON: Well, we'll see Donald Trump as he always is, unfiltered and probably making no concessions at all to the globalists. I think a lot of people expect him to be given a very cold shoulder. After all, a lot of his views on immigration or free-trade run counter to the conventional wisdom of the kind of people you meet at Davos, especially the Europeans, who certainly don't like him. On the other hand, it is a world's economic forum, and it's predominately business people who are there. And whatever they may think of Trump's views on issues like immigration, they secretly love the economics here. And so, my sense is, whatever they may say in public, and I imagine there'll be a few frosty disavowals, in any private meetings, I think they're going to be high-fiving President Trump because he's given the world economy, certainly the U.S. economy, something of a tail wind at the moment.

MACCALLUM: Angela Merkel has said that unilateralism and protectionism is not the way forward. She said that in her initial comment, which is a pretty clear reference and criticism, I would think, of President Trump. However, she has encountered a lot of problems, to say the least, in Germany, based on her own open-door policy, and it hasn't worked out for her politically very well.

FERGUSON: That's right. I think the tendency of the kind of global elite to see Angela Merkel as a hero and Donald Trump as a villain starts to look a little bit more problematic when you just look at the way German politics is going at the moment. I mean, there was a tremendous backlash against Merkel's open-door policy in 2015 and 16 when more than a million migrants came into Germany. At the most recent German election she's only clinging onto power just barely. It's not even clear yet that she can form a coalition in Germany. So, my sense is that the narrative of last year, which was that Angela Merkel is a hero -- oh, and let's not forget, Xi Jinping, the Chinese leader who was the toast of Davos a year ago. I think that narrative looks a little less compelling now, suddenly from the vantage point of many ordinary European voters, it's Trump who's been right on immigration issues, not Merkel.

MACCALLUM: Quickly, and I know it's hard to do this quickly, but just a quick thought on your, sort of, theory about Facebook and Google and Amazon and how they feel about the 2016 election, and what you think they're going to try to rectify that with in 2020?

FERGUSON: Well, talking of liberal elites, they don't get more liberal than the elite of Silicon Valley, the people who designed the network platforms that we all have grown addicted to, Facebook, Google, YouTube and the rest. The one thing those people did not expect was that their tools, their software, their apps, would end up being used by a populist campaign, Donald Trump's campaign, to propel him to victory over Hillary Clinton. And the heads were exploding all over Silicon Valley on November 9, 2016, when it was clear what had happened.

But it took a long time for everybody to start admitting how crucial Facebook, as well as twitter, had been to the Trump campaign. And also, took a long time for Facebook to concede how far they had allowed their tools to be used by the Russians and Russian bots to spread what was unquestionably polarizing messages to American voters. At first, Mark Zuckerberg was dismissive, oh, it's absurd to think that fake news had any part played in the election. Now we know that almost as many people saw Russian ads on Facebook that's voted on the election.

MACCALLUM: And it looks like, you know, with Facebook move in terms of the way they're filtering their news. They're going to try to make sure that that never ever happens again. I've got to leave it there, but I hope you'll come back. And Niall, good to see you tonight.

FERGUSON: Thank you, Martha.

MACCALLUM: You bet. So coming up, decision day for the doctor who abused droves of young female gymnasts for decades. Plus, is the U.S. considering military action against North Korea as the clock ticks. Michael Waltz joins me next on that. Stick around.


MACCALLUM: Developing tonight, chilling new words from the Trump administration on the growing nuclear threat in North Korea. CIA director, Mike Pompeo, saying all potential military options are on the table.


UNINDENTIFIED MALE: The president is intent on delivering a solution through diplomatic means. We are equally at the same time ensuring that if we conclude that is not possible that we present the president with a range of options that can achieve what is his stated intention.


MACCALLUM: Michael Waltz, a former Green Beret commander and a counter- terrorism advisor to Vice President Dick Cheney joins us now. He's also a Fox News contributor, good to see you tonight. Welcome. What's your take on that? And I know that you feel that one of the biggest things that we need to focus on is the relationship between North Korea and Iran, that that's the issue that's not being discussed enough here.

MICHAEL WALTZ, FOX NEWS CONTRIBUTOR: Well, to answer your first question, Martha, it's absolutely appropriate and it's expected for Pompeo, as a CIA director, for H.R. McMaster, the national security apparatus, to brief the president with all the options, and it has to be options in between doing nothing and all-out war. In this case, a preemptive strike, of course they're going to brief him on the downside and the risks there of a massive North Korean retaliation. But on the other hand, I want Kim Jong-un to know that's on the table and know that's something that the president is considering. But there's also real risk to doing nothing here. The North Korean program is only going to progress in sophistication, mobile launchers, submarines, decoys. It's going to make it much harder to destroy down the road if we just let this progress.

To your point on Iran, I don't think that's being discussed. Look, you have a rich country that wants nukes, that's Iran, and you have a very poor country that potentially has nukes. We can see how that's going to go. The proliferation of missile technology, of nuclear technology, heck, of submarine technology, has been ongoing between Iran and North Korea for years, and if we let this program developed, it is going to proliferate, and then we're going to even have a more massive problem on our hands.

MACCALLUM: I want to play this for you from the Today's Show and get your reaction. This is Lester Holt on North Korea.



UNINDENTIFIED MALE: We have been treated with respect here. We have been invited, and our guests at the ministry of foreign affairs. We stayed at a guest house outside Pyongyang last night, and then made our way to this ski resort to get a look at a part of North Korea that most Americans don't see and, certainly, a part they would like us to see.


MACCALLUM: So, the criticism of this came far and wide and said that this was so stage. And that they were -- folks were all wearing, basically, one of three different ski outfits behind him. Was he sort of taken there?

WALTZ: This is right out of the North Korean playbook. As soon as the pressure really gets dialed up and they're feeling the heat, economically, which President Trump has done a great job of doing, and Nikki Haley, then they reach out their hand, they engage in talks, and they buy time, and they turn on the charm. That's exactly what's happening. I would just remind everyone to not forget Otto Warmbier, what the North Korean regime did to that poor young man.

MACCALLUM: Great point.

WALTZ: . and that he's still holding other Americans hostage right now as we speak, as folks are touring around Pyongyang.

MACCALLUM: Lieutenant Colonel Michael Waltz, thank you very much. Good to see you, sir.

WALTZ: All right. Thanks, Martha.

MACCALLUM: So, still ahead tonight, the man who spent decades abusing innocent gymnasts, learned his fate in a hammer way today. That is next.


UNINDENTIFIED FEMALE: I ask you to please give this monster the maximum sentence so then he could never hurt another human being again. The animal needs to be in his cage.



MACCALLUM: Today, he learnt that he will spend his life behind bars, 54- year-old Larry Nassar sentenced to 175 years for decades of sexual abuse of young gymnasts. In recent days, more than 150 of his very brave victims spoke out about the so-called treatment that he was giving them that was clearly thinly veiled assault. No one believed what Nassar was doing, not even some of their parents. Watch Krista Wakeman standing alongside her mother in court.


UNINDENTIFIED FEMALE: I immediately told her that I was violated by Larry, but she didn't believe me because my sister had been going to him for years before I did. She never said anything to her, so I talked it through -- we talked it through together, and we figured that it was just his type of manipulation. Little did we know that the type of manipulation that he was doing was not just to my body and others but also to all of our minds as well.


MACCALLUM: His abuse knew no bounds, reaching the highest level of the sport, impacting many of our most decorated Olympians. Among the survivors, 6-time medalist, Aly Raisman, who delivered a jaw-dropping message to him in court. Watch.


UNINDENTIFIED FEMALE: I'm here to face you, Larry, so you can see I've regained my strength. I'm here to tell you that I will not rest until every last trace of your influence on this sport has been destroyed like the cancer it is. Let this sentence strike fear in anyone who thinks it is OK to hurt another person. Abusers, your time is up.


MACCALLUM: When it was all over, the judge in the case had this message for Nassar.


UNINDENTIFIED FEMALE: I wouldn't send my dogs to you, sir. I'm giving you 175 years, which is 2,100 months. I've just signed your death warrant.



MACCALLUM: This is an incredible story of courage. And on Friday, we will be speaking with Olympic gold medalist Dominique Moceanu, who has spent years advocating for young athletes. She was blacklisted for speaking out. While she was not abused by Dr. Nassar, she has supported many of the victims in her beloved sport. She will share her remarkable story with us this Friday. We'll be right back.


MACCALLUM: How about this, Jack White, formerly of the White Stripes, is doing what most parents only wish they could do, banning cell phones at his shows saying, quote, we think you'll enjoy looking up from your gadgets for a little while and experience the music and our shared love of it in person. Wow. What a concept, get your head out of your phone and listen to the music, folks. I love it.

Thanks for joining us with "The Story." Good to have you here tonight. Tucker Carlson in D.C., coming up next. Look up from your phone.

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