Marc Short previews President Trump's 2018 agenda

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Marc Short previews President Trump's 2018 agenda

White House director of legislative affairs breaks down the president's priorities in 2018 on 'Fox News Sunday.'

This is a rush transcript from "Fox News Sunday," December 24, 2017. This copy may not be in its final form and may be updated.

CHRIS WALLACE, ANCHOR: I'm Chris Wallace.

Congress avoids a government shutdown pushing key fights into 2018. And President Trump signed historic tax cuts into law.

(BEGIN VIDEOTAPE)

PRESIDENT DONALD TRUMP: This is the bill right here and we're very proud of it. It's going to be a tremendous thing for the American people.

WALLACE: But showdowns loom on immigration, health care and national security.

SEN. JOHN THUNE, R-S.D.: You don't get very long around here to enjoy something when you get an accomplishment like this. We've got to shift our focus now to the other challenges that we have in front of us.

WALLACE: We'll discuss the agenda for 2018 with Marc Short, the White House director of legislative affairs.

Then, the U.N. defies the president's decision recognizing Jerusalem as the capital of Israel.

U.S. AMBASSADOR TO THE UNITED NATIONS NIKKI HALEY: We'll put our embassy in Jerusalem. No vote in the United Nations will make any difference on that.

WALLACE: We'll talk about the potential fallout with Ben Cardin, the top Democrat on the Senate Foreign Relations Committee.

Plus --

SENATE MAJORITY LEADER MITCH MCCONNELL, R-KY.: This has been a year of substantial, substantial accomplishment.

WALLACE: We'll ask our Sunday panel how the president did in his first year in office and what to look for in 2018.

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

(END VIDEOTAPE)

WALLACE: Hello again, and merry Christmas Eve from Fox News in Washington.

President Trump is spending the holidays with the Winter White House, resting up after a frenetic first year in office, and preparing for what promises to be an even tougher 2018. Republicans will return to Washington with just a 51-49 majority in the Senate after that big upset in Alabama. And Democrats are expecting big gains in next year's midterm elections.

We begin our look today at what's next with Marc Short, the White House director of legislative affairs.

And, Marc, welcome back in this Christmas Eve to "Fox News Sunday."

MARC SHORT, WHITE HOUSE LEGISLATIVE AFFAIRS DIRECTOR: Chris, thanks for having me. Merry Christmas.

WALLACE: Before we get to all that, we've got some breaking news we have to deal with. First of all, President Trump is on a tear this weekend sending out repeated tweets attacking the deputy director of the FBI.

There was one tweet this morning. FBI's Andrew McCabe, in addition to his wife getting all of this money from M, Clinton puppet. For scoring at home, that's Virginia Governor Terry McAuliffe, who gave campaign contributions to Mrs. McCabe who is running for office. He, McCabe, was using allegedly his FBI email account to promote her campaign.

You obviously cannot do this. These are the people who were investigating Hillary Clinton.

Question, is that helpful for the president to repeatedly attack top officials of the FBI?

SHORT: Chris, I think the president believes that the American people have a right to know what happened with that investigation. As you mentioned, in that tweet, I think people need to remember this, Terry McAuliffe, the governor of Virginia, is perhaps the Clinton's closest political friend. He gives $700,000 contribution to McCabe's wife when she was running for office. At the same time, they were launching investigation in Hillary Clinton.

The American people have the right to know that. McCabe is announcing it looks to move forward and move on, and we wish him well.

WALLACE: He says he will retire when he gets a full pension in March.

SHORT: Yes. But I think it's also important to segregate that and separate it from the special counsel, because the White House is cooperating every single way with that investigation. And after millions and millions of dollars, no collusion has been proven. So, the president is saying we need to have -- we need to know that our civil servants are doing the honorable thing and it's important the American people know what happened in that investigation.

WALLACE: I want to be clear, though, because he has attacked, in various tweets, not just McCabe, but also James Baker, the general counsel of the FBI, Peter Strzok, the lead investigator, Lisa Page.

Is he saying that there are some bad apples at the FBI, or is he saying that there's a fundamental structural problem with political bias?

SHORT: I think he's very pleased to have Christopher Wray now running the FBI. He is very pleased with the changes that are taking place. But at the same time, we put all of our faith and confidence in the Department of Justice and the FBI, knowing that there should be no bias there. He's making a point that we need to make sure there's no bias.

I think there are serious concerns about whether or not there was or not during the Hillary Clinton --

WALLACE: So, is he telling the FBI director, Chris Wray, is his appointee, is he telling them to clean house there?

SHORT: I think that he has full confidence in Christopher Wray, Chris.

WALLACE: OK. That's just one breaking news story. There's also a story on today's front page of "The New York Times" that reports that in an Oval Office meeting last summer about immigrants flooding into the U.S., President Trump said about people from Haiti, quote: They all have AIDS, and immigrants from Nigeria would never go back to their huts.

What's your response to that and also to a federal judge in Seattle this weekend partially lifting, again, the president's travel ban?

SHORT: So, a couple of issues there. I was not in that meeting but the people in the meeting say that those comments never happened. And so, I have no belief that that actually transpired.

But let's talk about the temporary protected status for a second, because it's an important case. The people from Haiti with the earthquake that happened roughly two years ago under temporary protected status. We have tens of thousands of people from Honduras and from Nicaragua from a hurricane that happened in 1999. Tens of thousands of people under temporary protected status.

The president has again and again made the case that our immigration laws, Congress needs to change these laws, as opposed to continue six-month extension of people that are here from 10 or 20 years ago, Chris.

WALLACE: All right. Let's get to your day job, even though you had a big success this last week, there's no rest for the weary. What's your legislative agenda for 2018 and what comes first?

SHORT: Well, in 2017, Chris, let's look all, first, that the president accomplish. The first president to get a Supreme Court justice confirmed in the first 100 days. The first president to get 12 circuit court judges confirmed in his first year.

The first one to deliver on significant tax form since 1986. The first one to rollback regulations with 15 times, signing legislation in the Congressional Review Act. Only once before in our history that a president used Congressional Review Act to roll back.

So, it's been an exciting 2017. But we have a lot to do in 2018. I think you'll see the president roll out infrastructure plan in January and the president has already invited Leader McConnell and Speaker Ryan to Camp David in the first weekend of January to make sure we are all on the same page for what our priorities are for 2018.

WALLACE: Let's talk about infrastructure, because he signed the tax bill Friday. The president indicated he might begin with infrastructure. Here he is.

(BEGIN VIDEO CLIP)

TRUMP: I really do believe we are going to have a lot of bipartisan work done and maybe we start with infrastructure, because I really believe if the structure can be bipartisan.

(END VIDEO CLIP)

WALLACE: But, while both parties want a trillion dollar program over the next decade, there's a big difference. The White House talks about $200 million in federal money with the rest coming from state and local governments and private investment. Democrats want the whole $100 trillion (ph) in federal funds but you say that you've already given that money away to corporations for your tax bill.

So, given those huge differences, where is the basis for compromise?

SHORT: There is no doubt, Chris, there's a pathway for them (ph). Both Democrats and Republicans say that infrastructure is crumbling and we need to fix it. But the big question remains, will Democrats but politics aside and actually work with us? They need to meet us halfway.

So far, when you talk about confirmations and our appointees to serve in the administration, in all since George H.W. Bush, there were 32 filibusters on nominees. We had 64 in our first year, twice as many of 20 years combined. We've got twice as many in one year.

Democrats have looked to obstruct this administration every chance they can get. The question for them is, will they actually partner with us to try to do things for the American people?

WALLACE: All right. On infrastructure, they want all federal money, you want only $200 billion with the rest coming from state, local and private. They say the private would be a corporate giveaway. So, where's the deal?

SHORT: I think that -- I'm not going to get in front of the president. His plan (INAUDIBLE) in January, Chris. But I'm very confident, we've had conversations with Democrats. I think there's a willingness on the policy to get there. The question remains, will politics prevent it?

WALLACE: OK, let's talk about another area with politics because I think it's fair to say there's a deal to be made on immigration. The Democrats want the DREAMers, the young people who came into this country as children as illegal immigrants to get some permanent legal status. In return, what are you asking for in terms of border enforcement? And does there have to be at least some funding for the president's border wall?

SHORT: Chris, the president put forward to Congress when he said that the Deferred Action for Childhood Arrivals was not constitutional. He put forward to Congress the principles he wanted which included border security. It included interior enforcement and included a couple additions to ending chain migration. Those were things we asked for.

We put that forward to Congress months ago. We are waiting for Congress to provide to us a proposal and get it done.

But you're right, the president very much wants a deal here. He wants to solve this problem.

WALLACE: One other thing you did not just mention just now is the border wall.

SHORT: Well, I did. In border security, we very much consider a physical barrier part of the border security.

WALLACE: Is that nonnegotiable, a border -- funding for the border wall?

SHORT: It's absolutely something the president has promised and it's not that it's nonnegotiable, it's what America needs. It's in our national security interest to prevent drug cartels, to prevent MS-13 to secure our border.

WALLACE: You got a lot of busy stuff in 2017. There's health care reform.

Here's what the president said about the repeal of the individual mandate that was part of the tax bill this week.

(BEGIN VIDEO CLIP)

TRUMP: Obamacare has been repealed in this bill. We didn't want to bring it up. I told people specifically required with the fake news media because I don't want them talking too much about it.

(END VIDEO CLIP)

WALLACE: But in fact, much of Obamacare remains, subsidies to help buy coverage. Medicaid expansion and gives coverage to more than 10 million Americans. Protection for pre-existing conditions.

The fact is, this a week, we learned that almost 9 million people enrolled in the federal Obamacare exchange.

So, isn't the president just flat wrong when he says that Obamacare has been repealed?

SHORT: No, I think the president is right in saying the heart has been repealed and that was individual mandate. That's what most Americans found most offensive for the government to dictate to you, to say, we are going to require you to buy something whether you wanted or not. There's a certain element of freedom that we still believe and cherish in this country. And that was the root of Obamacare.

WALLACE: But we're still going to have millions, more than 10 million people who are going to get their health care coverage through Obamacare, through the expanded Medicaid, still going to get paid by the subsidies, still going to get the protections of pre-existing conditions. Obamacare is still here, sir.

SHORT: Obamacare continues to collapse. The estimates where there would be 20 million more today than there. So, yes, there are 9 million have signed up, but it's way short of the estimate. It continues to fall apart. It continues to collapse.

What the administration is looking to do is to shore up the markets through administrative actions that we can take, such as you saw, the president signed executive order allowing associated health plans that more people can pool their resources together to help lower premiums. We will continue to see us take administrative action on Obamacare.

WALLACE: Finally, I want to ask about a couple of foreign affairs issues. President Trump issued a threat this week to countries of the U.N. not to oppose his decision to recognize Jerusalem as the capital of Israel. Here he is.

(BEGIN VIDEO CLIP)

TRUMP: They take hundreds of millions of dollars and even billions of dollars and then they vote against us. Well, we are watching those votes. Let them vote against us, we'll save a lot. We don't care.

(END VIDEO CLIP)

WALLACE: In the end, 128 countries ignore the president's threat and voted against his new policy. But the fact is the only country besides Israel that gets as much as a billion dollars in foreign aid that he's talking about perhaps doing away with, our two allies, Egypt and Jordan. So, was he really mean what he says about cutting aid either to countries like Egypt and Jordan, or to the U.N. itself?

SHORT: There are a couple very important things that happened in the United Nations this week and you are covering one of them, and that is recognizing Jerusalem as the capital of Israel. Keep in mind, in 1995, Congress voted overwhelmingly that's what the American position would be, and vote again 90-0 with 10 abstentions last year. It is a policy that is represented by many Americans. The president followed through on a campaign promise.

Also last week, there was about 15-0 will put additional sanctions on North Korea. That is something that's been underreported. The president's leadership with Ambassador Haley in bringing the United Nations together and isolating North Korea, that is far more important to what our national security objectives are.

WALLACE: But, respectfully, to answer my question, will the president go ahead and ask Congress to cut funding either to countries that voted against the new U.S. policy in Jerusalem or to cut funding to the U.N. itself?

SHORT: I'm not going to get ahead of the president, but I think the countries that continue to thwart the will of us (ph) and refuse to partner with us, they should be cognizant of the president's delivering on his promise that he's made before.

WALLACE: Finally, special counsel Robert Mueller is continuing his investigation into possible collusion with the Russians and to possible obstruction of justice. White House lawyers have been saying for weeks that they expect the special counsel to exonerate the president by early in 2018.

Did the White House lawyers meet, as had been reported, they were scheduled to with a special counsel's office this week? And on what basis do they believe that this investigation, at least as it involves the president, is going to be wrapped up early next year?

SHORT: Well, Chris, thankfully, that is handled separately. And I'm not in the middle of those conversations. But I think the reality is that we said before, the American taxpayers spent millions and millions of dollars on investigation so far, but has proven no evidence whatsoever of collusion with Russia. We are anxious to see this resolved, moved and allow the country to move forward.

WALLACE: Do believe as they say that this investigation in terms of the special counsel exonerating the president is going to be cleared up early in 2018?

SHORT: There's no way for me to know what the timing of that is, Chris. We continue to cooperate fully and everything they've asked for, we are anxious for it to be resolved then.

WALLACE: I got to say, Marc, I had a lot of things to ask you and we got them all in. Thank you, thank you especially for coming in on Christmas Eve. Merry Christmas to you and your family.

SHORT: Merry Christmas, sir.

WALLACE: Up next, what are the chances for bipartisan compromise in Congress and the New Year? Democratic Senator Ben Cardin weighs in on that and what grade he gives Donald Trump's year one when "Fox News Sunday" comes right back.

(COMMERCIAL BREAK)

WALLACE: For all the focus on domestic policy, President Trump also had an ambitious foreign policy agenda this year.

Joining me now, the top Democrat on the Senate Foreign Relations Committee, Ben Cardin.

Happy holidays and welcome back to "Fox News Sunday," Senator.

SEN. BEN CARDIN, D-MD.: Thanks, Chris. Happy holidays to you.

WALLACE: You just heard Marc Short, the White House legislative director. Do you see any areas of compromise between Republicans and Democrats in the new Congress, or is it going to be all politics all the time?

CARDIN: I think we'll -- very early, January 19th is the deadline for getting the budget done. We are already three months into this fiscal year and we don't have a budget.

The way the budget is handled I think will be an indicator of whether we can have bipartisan cooperation. It's not just the budget for the year. We have disaster relief for the people of Texas and Florida, California and Puerto Rico. We have the immigration issues that need to be dealt with now.

And I think the manner in which that is handled can set the stage for Congress, Democrats and Republicans, working together. Or if they can't -- if the president won't work with us on that, it's going to be a tough year.

WALLACE: Well, let me ask you about a couple specifics, a few specifics that I just raised with Marc Short. There's infrastructure. There's immigration. There's welfare reform. And those specific areas, do you see the outlines of a compromise with the president?

CARDIN: Well, there's been negotiations between Democrats and Republicans on immigration. We're hoping that we can get the DREAMer bill done. We also have people -- as pointed out -- on temporary protected status. We have to deal with that issue.

Marc is right. We should pass legislation in these areas. The president has made it more difficult but we need to get together and we have Democrats and Republicans working together.

On infrastructure, absolutely we want to get an infrastructure bill done. It's more challenging because of the tax bill and the revenues that have been taken off the table, but we can work together and get something done on that.

WALLACE: In terms of immigration, as I was talking about. There's an obvious deal to be made there. On the one hand you and some Republicans want to give protection to the DREAMers. On the other hand, Republicans and especially this president want to offer border enforcement including funding for the wall. Would you be willing to compromise there?

CARDIN: We need to get the DREAMer issue done. It should not be connected to anything else. In regards to border security --

WALLACE: Wait a minute, Senator, that's not -- I mean, that's not a compromise because you have something you want in immigration, they have something they want. Why not put them together?

CARDIN: Well, of course, the president but the deadline when he gave six months last year -- earlier this year. So, we have a deadline on the DREAMers. We should do better border security. We are for border security, but let's make it sensible border security.

Let's deal with technologies on the border. Let's deal with the real problems there. The wall is not going to make us safer.

WALLACE: All right. Let's turn to your area of expertise, which is foreign policy. You heard my discussion just now with Marc Short about the Trump administration issuing a threat to the U.N. and to its member nations about not voting against his decision to move the U.S. embassy from Tel Aviv to Jerusalem.

Here at the U.N. was our Ambassador Nikki Haley.

(BEGIN VIDEO CLIP)

HALEY: No vote in the United Nations will make any difference on that. But this vote will make a difference on how the Americans look at the U.N. and on how we look at countries who disrespect us in the U.N. and this vote will be remembered.

(END VIDEO CLIP)

WALLACE: Senator, what do you make of the president issuing that threat and what happens in Congress if the president tries to make good on the threat and to cut funding either to some of the countries that opposed us or to the U.N. itself?

CARDIN: Well, first, as it's been pointed out, the United States recognizing Jerusalem as the capital of Israel, the Congress did that in 1995. The country has a right to determine its own capital.

I don't think it was a controversial move, but the manner in which he handled it without using diplomacy, without trying to advance the peace process, using this to put other issues on the table so he could get the Palestinians and Israelis talking together, that I think was the mistake. So, the reaction the United Nations I think was expected. I don't know whether it's useful to make threats.

We do watch how the countries in the United Nations vote on our resolutions. We always do that. But I think the manner in which the president handled this is not in our best national security interests.

WALLACE: All right. Let's turn to another subject. The U.S. pushed a resolution through the U.N. Security Council on Friday imposing new sanctions against North Korea, including sharp new limits on petroleum, shipments to North Korea. And the vote got the support of both China and Russia. It was 15-0 on the Security Council.

Doesn't that indicate that the Trump administration diplomacy to try and build up international support against North Korea is working?

CARDIN: That was a good move. That was a major accomplishment. I give our team a lot of credit for getting that done. They're pretty strong additional sanctions to be imposed against North Korea because of their continued testing of ballistic missiles. So, that absolutely was a strong move forward and it was great to see China and Russia join us in that.

It now needs to be followed up with diplomacy, where we get China and the United States working with the same strategy with North Korea, to find a way that we can ease the tension and get North Korea to change directions. It's a good first step.

WALLACE: Another trouble spot, Ukraine. The president has agreed to settle lethal weapons to Ukraine including antitank missiles to fight the pro-Russian separatist forces there. This is a move that President Obama consistently for years refused to make.

Will you support that or will you try to block the sale in Congress?

CARDIN: I talked to Secretary Tillerson earlier this week. I support the administration's decision to provide these types of defensive weapons for the Ukrainians. It's a clear message to Russia that we will not allow them to continue to compromise the sovereignty of Ukraine.

Russia will continue to push as far as they can. It was important for the United States to tell Russia that we will support Ukraine's ability to defend itself. So, I support the decision.

WALLACE: Overall, how do you think the administration has done this first year in foreign policy, and are you troubled that we have a secretary of state, Rex Tillerson, who almost everybody in Washington thinks is going to be gone within a year.

Has he lost his credibility as he traveled the world representing this country?

CARDIN: In many respects, our foreign policy is inconsistent. We'll have a policy coming out of the State Department or coming out from people that are representing the White House and then have the president come out with a tweet that totally undermines that. We saw that in North Korea when Secretary Tillerson was pursuing diplomacy and then the president undercut his ability with a tweet.

I think we found from the president, he doesn't always support his team and therefore we have an inconsistent message. We have distant America -- we say America first. It looks like America in isolation. America has lost its leadership on many key issues. That's certainly true in climate change, where we were not as present as we should have been on talks. China came in and took a lot of the leadership that should have been with the United States. We see the United States being excluded from a lot of the discussions globally and that's not helpful to our national security.

WALLACE: Senator, I want to put up some numbers for you that I think are fairly striking. We now have growth of 3 percent, unemployment just over 4 percent. The Dow Jones average is up almost 25 percent since the Trump inauguration. ISIS has lost 97 percent of the land it once controlled in Iraq and Syria.

For all the controversies, for all the questions about this administration, when you look back on all of that, hasn't President Trump had a pretty good year?

CARDIN: I think it reflects the fact that America is the strongest nation in the world, that what we can do as this country really is indispensable to the global community. And that there were seeds planted by both Democratic and Republican administrations that have caused us to continue to grow.

But as we do that, there's a lot of Americans who have been left behind. I think that's the key challenge. We have a shrinking middle class. We got to focus on a growing middle class.

And I think there was a missed opportunity on this tax bill where it helped basically large corporations and high income people. If we could have focused on middle income, we could have I think grown or helped grow the middle class, which would have been good for our future.

Things are good, they could be better. Let's concentrate on middle income families.

WALLACE: OK, I got less than a minute left. I want to ask you about one last area. Congress has been investigating this, the whole Russia issue for about a year. The Justice Department has been investigating possible ties between the Trump campaign and Russia for a year and a half.

Really two questions. First of all, do you feel any urgency to wrap this up, to remove the cloud over our president if it can be removed? And secondly, what do you think of the tweets and it's continued this week on the attacks against the FBI?

CARDIN: I think it's critically important that we respect the independence of the Department of Justice and the FBI. No one is above the law. Let Mr. Mueller to his investigation without interference from the president.

In regards to this investigation, I hope it is completed early. I think the American people need to understand exactly what Russia was doing here in the United States and the involvement with the Trump campaign. It would be helpful for this country to have as much of that information made available as quickly as possible.

WALLACE: Senator Cardin, thank you. Thanks for your time and happy holidays to you and your family, sir.

CARDIN: Thanks, Chris. Same to you.

WALLACE: Up next, we'll bring in our Sunday group to look back at 2017.

Plus, what would you like to ask the panel about the president's first year in office? Go to Facebook or Twitter, @FoxNewsSunday, and we may use your question on the air.

(COMMERCIAL BREAK)

WALLACE: Coming up, President Trump signs the GOP's new tax bill into law, the first big legislative one of his presidency.

(BEGIN VIDEO CLIP)

TRUMP: You'll see something February 1st when you open up the paycheck. That's when you're going to start to see it.

(END VIDEO CLIP)

WALLACE: We'll ask our Sunday panel what that means for you in 2018, next on "Fox News Sunday".

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIPS)

SENATE MINORITY LEADER CHUCK SCHUMER, D-N.Y.: Help the rich, hurt the middle class. The whole year can be summed up in that one sentence.

TRUMP: But, unfortunately, the Democrats don't like to see tax cutting. They like to see tax increases. And they like to complain. But they don't get it done, unfortunately. But they complain a lot.

(END VIDEO CLIPS)

WALLACE: President Trump and Senate Democratic Leader Chuck Schumer wrapping up 2017 with two very different takes on Congress passing the Republican tax bill.

And it's time now for our Sunday group.

Former National Security Council staffer and now a Fox News correspondent, Gillian Turner; columnist for The Hill, Juan Williams; Bob Woodward from The Washington Post and Fox News politics editor Chris Stirewalt.

Merry Christmas Eve to all of you and thank you for coming in.

UNIDENTIFIED MALE: Merry Christmas.

GILLIAN TURNER, FOX NEWS: Merry Christmas.

WALLACE: Gillian, there were certainly times this year when it appeared that the Trump presidency was headed off the tracks. But when you look back at the numbers that I just -- the economic numbers I just showed Senator Cardin, the success with ISIS, now the passage of this signature tax cut bill, has 2017 turned out to be a pretty good year for President Trump?

TURNER: It's definitely ending on a high note is the way that I would describe it. Specifically, with the stock market booming. On the foreign policy side of things, ISIS has been really the sweet spot for the administration this year. They've -- the United States military has decimated their strongholds in Iraq and Syria, essentially denying them any claims to legitimate caliphate.

The challenge on this and many other issues is that the world, at the risk of sounding trite, the world is a complex place today and the nature of all the threats we face as a nation are changing. They're evolving very quickly. So if we take ISIS an example -- as an example, we have had great success militarily. The new front in the war on terror, next year and beyond is really going to be in cyberspace. So the question is, how quickly can the administration adapt? How can they take these policy successes and translate them in the future?

WALLACE: We asked you for questions for the panel and we got this on FaceBook from Christopher Fauver who writes, is Trump going to be another Reagan? Thought to be a lightweight but gets conservative agenda put in action.

Juan, how do you answer Christopher?

JUAN WILLIAMS, FOX NEWS: Well, I think if you look at the past year, picking up on what Gillian was saying, you'd have to say that in terms of putting conservative judges on the court's, in terms of things like the dismantling of regulations and regulatory state, Trump has had some success, or I would say actually Paul Ryan and Mitch McConnell have had success while using Trump almost as a distraction. To me, when you think about Ronald Reagan, it was the ability to negotiate in times across the aisle. I don't think Trump has that. I'm not sure I can point to one Republican who would say he voted for the tax bill because of Trump.

I think the deals were struck by, for example, in the Senate, McConnell, Anwar drilling for Lisa Murkowski, you know, something of a promise on health care going to Susan Collins of Maine, something promised about immigration reform to Jeff Flake. That's the so-called swamp that Trump once promised to drain. Actually McConnell, I think, has poured some water and muck into that swamp.

WALLACE: One of the president's complaints is that he doesn't get a shake for -- a fair shake from the mainstream media. Mr. Williams, a perfect example of that.

Here was the president on Friday as he signed the tax bill.

(BEGIN VIDEO CLIP)

TRUMP: Legislative approval, for which I'm given no credit in the mainstream media. If we have I believe it's 88, which is number one in the history of our country.

(END VIDEO CLIP)

WALLACE: Chris, is this presidency the hot mess it's often portrayed as being, or does President Trump have a point?

CHRIS STIREWALT, FOX NEWS: Well, I thank he very much has a point. I think he has a point that much of the coverage about him has been withering and unfairly so. But then again, much of the coverage has also been fairly harsh because, as we've already alluded to, the opening stanzas of this presidency, the first eight months, ten months were very, very off-kilter. And he had a hard run getting started. So much of the coverage that was harsh was unfair.

And he also benefits, by the way, from a lot of very favorable coverage and talking points from his boosters out there. So if I don't think we can just say that he is -- he is a victim.

WALLACE: Bob, your -- I want to continue on this theme. You're writing a book about Donald Trump that's going to come out next year.

BOB WOODWARD, THE WASHINGTON POST: An undetermined date.

WALLACE: You're having problems making the deadline with your editor?

WOODWARD: No, no, there's so much in getting your arms around it is difficult. It's hard.

WALLACE: Ah --

TURNER: Not trying to rush the process.

WALLACE: What are you finding? Is -- is part of the story how much he has changed as president or how little he has changed as president?

WOODWARD: Well, I can't really answer that. What's interesting, there's a discussion going on about whether there is within the Trump presidency a crisis of legitimacy. And I think as you look back on it, there is not actually. He was elected. Ben Cardin, Democrat was saying, gee, I agree with this, I agree with that. Much disagreement on the tax cut, but we're going to see, as we know in tax cuts, it depends on outcomes. The condition of the economy is good now, supposedly. We will see. So that can't be measured.

So, at the same time, there's been a lot of turmoil in the Trump presidency. One of the people I talked to called it a chaos furnace. And there's a lot of truth in that. And that's Trump style. And a lot of that is done intentionally with his tweets in the morning. If you talk to anyone on the staff, and there is no clearing house for his tweets. He's going to do it all on his own.

WALLACE: And -- and --

WOODWARD: And that's defined a lot.

WALLACE: Do you agree with -- I'm surprised is a consensus, it seems to be on this panel, that the president has ended the year much stronger than he started.

WOODWARD: Well, the tax cut's important. And look at foreign affairs. There's been lots of anxiety, rightfully so, that maybe there's going to be a war with North Korea. I think that's been turned down. ISIS is a plus, may, but, you know, we'll have to see. I mean you're exactly right, it is a dangerous world. But the fuse of instability is lit in so many countries and the crisis can come from a place we least expect it.

I'm looking at this and there are dozens of places that can go off and wind up defining the presidency. And so, you know, that's why I'm waiting to finish the book.

WALLACE: Gillian, how does this president compare both in substance and style points to the two presidents that you worked for on the National Security Council, Bush 43 and Obama?

TURNER: I think it's fair to say that President Trump is different in every way imaginable, both -- and they are very different from one another, President Obama and President Bush. President Trump is temperamentally different. I think his worldview is different from any president we've potentially seen before. And I think what he is -- you know, the end of the year always offers this opportunity to sort of talk about lessons learned and I think one of the -- one of the things the administration has done well is that they've learned to adapt some fairly outlandish policy ideas to suit the swamp and to suit the Congress and they've become -- like there's no better example than the travel ban, the president's believed travel ban. If you look at the first version, it was fairly outrageous. Everything from what it said on paper to how it was rolled out. We go from there to the second and then the third version has sort of passed without much controversy. And what they're doing their is trying to, I think -- you know, they're coming to terms with the fact that the president doesn't have all the prerogative in the world and if he wants to get these fairly controversial things through, he's going to have to learn to adapt.

WILLIAMS: Can I -- can I just --

TURNER: He's adapting to the swamp in essence rather than change (ph).

WILLIAMS: Can I just throw in there, when you were saying that there's a consensus on the panel, I think my part to contribute -- contribution to this consensus would be that the right-wing agenda in America has been advanced by a Republican Congress, McConnell and Ryan. But if you look at the tax bill -- remember, Trump promised to cut tax -- increase taxes on the rich, get rid of carried interest for the hedge fund people. The exact opposite has come through because of the agenda, McConnell, Ryan in terms of cutting taxes on the upper income and in terms of beginning a tax on the social safety net that I anticipate to come on Medicare, Social Security and the like because they'll say the revenue's not there.

STIREWALT: I think you can rest easy, Mr. Williams. I -- I do not think that that -- that that is in the offing at any time soon.

WILLIAMS: You don't think McConnell-Ryan (ph) has promised that?

STIREWALT: Outright, no. Well, I'm sure they promised part of it.

WALLACE: Folks, you have another panel, and I don't want you to steal time from yourselves on the other side of the break.

Do we're going to take a break here. When we come back, we'll look ahead to President Trump's prospects for a year or two, his policy agenda, the political challenges and, yes, the continuing Russia investigation.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TRUMP: It's always a lot of fun when you win. If you work hard and lose, that's not acceptable.

(END VIDEO CLIP)

WALLACE: President Trump celebrating with congressional Republicans the passage of his first major legislative win, that big tax cut, and promising more victories in 2018.

And we're back now with the panel.

Well, Chris, you heard the president's legislative director, Mark Shot, laying out a pretty ambitious agenda for 2018. How much of that will actually get done given the fact that they don't' have reconciliation, they've got to pass it with nine Democratic votes in the Senate, and that you've got the midterms coming up in November?

STIREWALT: Well, look, even before they begin negotiating with Democrats -- and it is, of course, the kind of pivot that we had anticipated from the president really from the beginning, reach out to Democrats, infrastructure, find ways to build this new populist, almost centrist in some ways, domestic policies agenda. But they have a big rhubarb to settle among Republicans before they figure out what they're going to do there because they made a lot of promises to ideologically desperate Republicans in order to get the tax bill passed. That bill is coming due really in January through March as they have to deal with DACA, illegal immigrants who are brought to the United States as minors. They have to deal with questions of fixing Obamacare or patching Obamacare for the year. Different promises to different people.

And then, on top of that, you want to talk about changing entitlement reform. Rand Paul closes the year in the Senate saying, we're coming back, we're cutting spending. We're coming back, we're cutting welfare. And tell me how you make that all fit.

WALLACE: Juan, one thing that struck me about the president's event on the South Lawn this week after he signed the tax cut bill was how much -- and this picks up on what Gillian's said, he's adapted to Washington. He was calling out not just the leaders. Because It seemed when he came he knew about four names of people in Congress. He was calling out committee chairman. He was calling out subcommittee chairman. Has he gotten better and, in fact, is -- has he begun to master the art of the legislative deal?

WILLIAMS: Well, I think what you said is true. And, by the way, what a show of sycophancy. I mean it's unbelievable that that exhibit at the White House. I couldn't believe it. I mean I thought it was kind of like some authoritarian leader from some other country in front of his, you know, self-selected leaders. Oh, dear leader, we love you Mr. Trump. Good God.

Anyway, I think that what you have seen is that he has more familiarity with Congress and understands that he has to make deals through Congress. But --

WALLACE: Well, of course he's got to make deals through Congress.

WILLIAMS: Right, but --

WALLACE: I mean Ronald Reagan had to make deals though Congress. Bill Clinton did.

WILLIAMS: Yes.

WALLACE: My point is -- and --

WILLIAMS: But I'm not sure he recognized that when he started.

WALLACE: I understand. But would you agree that he now does understand that?

WILLIAMS: No, because -- no. Even in the tax bill, he -- it's not that he put forward with Marc Short's help some legislative agenda or structure that allowed them to act. It was that they came up with their own prescriptions to their conservative agenda.

WALLACE: You're not going to give him any credit?

WILLIAMS: No, no, I think he knows now some members of Congress and understands he's got to work with Congress. But, look, for example, Marc Short said to you, we want to do something on infrastructure. And what you hear from the Democrats in the Senate, as we heard this morning is, yes, we want to do something on infrastructure, but where's the revenue? You just passed a tax bill that took away the money.

WALLACE: No, that's true. That was a trillion dollars that they wanted to get --

WILLIAMS: Right.

WALLACE: That they were going to put into infrastructure. Now you've got to -- you've got to sell (ph) me another trillion dollar tax cut plan.

WILLIAMS: I understand (ph).

WALLACE: It's over ten years.

Anyway, casting a shadow over everything is the continuing investigation of Russia. Senate Democratic Leader Chuck Schumer put the president on notice this week.

(BEGIN VIDEO CLIP)

SCHUMER: If the president were to fire Special Counsel Mueller, our country would face a constitutional crisis.

(END VIDEO CLIP)

WALLACE: Bob, as a veteran of covering Watergate, of covering Iran Contra, of covering the Monica Lewinsky, where are we headed in 2018? You hear White House lawyer saying that this is going to be wrapped up quickly. That the president, at least as far as the president's concern, maybe not Paul Manafort, that he's going to be exonerated early in 2018. And you hear some Democrats saying they're just getting started.

WOODWARD: My analysis and information is that we reporters and the public only know a sliver of what's going on in that investigation. And we also only know a sliver of what really happened.

Mueller is the special counsel here. Has extraordinary power in law. Supreme Court decisions in the Nixon case saying, you, as the investigator, have the power to get the evidence. In the case of Nixon, it was the tapes. So Mueller presumably can get all evidence and testimony on this. So we don't know where it's going to go.

I think one of the big problems here is our business, the media. You see the declarations about, oh, we know this is going to lead to impeachment or the declarations that it's going to be over, it's going to go away.

I suspect, if we had Mueller here on sodium pentothal, the truth serum, he --

WALLACE: I would -- I would love that.

WOODWARD: Let me tell you --

WALLACE: Well, try!

I think when we (ph) come in with a hypodermic, it's going to be a problem.

WOODWARD: Sometimes you have to roll the dice. Donald Trump knows that. And I think he likely would say, I don't know. This is a process. He's very exhaustive. He -- and that's exactly the way it should be. But given that - -

WALLACE: But let me ask you -- but let me ask you, because Congress has been investigating this question for a year. The Justice Department has been investigating this question of possible collusion for a year and a half, since the summer of 2016. Wouldn't -- why don't we have any sense at all, if there is any, of any collusion between the Russians and the Trump campaign?

WOODWARD: A fair question. And, you know, maybe we won't. Maybe the trail will become cold. We don't know.

But these things take time. Mueller started in May. That's the really serious investigation. But I think in the discussion about and what is somebody who's done this for, God, 47 years, there is, in the media, this polarization of -- and people attacking Trump and the kind of self- satisfaction and smugness and ridicule, which I think does not work at all. And on the other side, oh, Trump is totally right, this is innocent. This is some sort of jihad against him. And I think we need to turn that down and listen to facts. There are facts out there and be a little (INAUDIBLE) in --

WALLACE: I couldn't agree more, but good luck to you in trying to get that done.

Gillian, I want to get you into this. On the foreign policy front, North Korea, Russia, China, Middle East, what are you looking for in 2018?

TURNER: So, I think, just quickly on North Korea, the big variable is whether or not we end up at war with the North Korean regime. I -- I'm not refuting Bob. I wouldn't dare do that. But I don't think the question of whether or not we're going to war with the North is it all settled at this time. I hope you're right and I'm wrong.

On Russia, the investigation aside, I think the U.S./Russia bilateral relationship has taken a nosedive. That is evidenced by the fact that the announcement this week that we're now providing them with this major defensive capability in the form of lethal weapons. President --

WALLACE: The Ukraine?

TURNER: Excuse me, to Ukraine.

WALLACE: Right.

TURNER: President Trump is learning what all his predecessors have learned, which is that Vladimir Putin cannot be trusted and cannot be worked with, even on the issues where they share common national security interests. And I think that has been a particularly difficult lesson for him because he started with high hopes of turning -- turning the tide in favor of working with Putin. So I think that's going to be -- that's going to die a very quick death and --

WALLACE: And in about 40 seconds, the Middle East?

TURNER: And the Middle East -- the Middle East at large, I think some major humanitarian concerns for the administration in 2018. We've got Yemen on the brink of one of the worst famines the world has ever seen, potentially, thanks to the Saudi blockade. The Trump administration is trying to really exert a special relationship to try and get them to back down. That will be a huge test for the region generally I think.

WALLACE: And ISIS?

TURNER: And ISIS' online caliphate is flourishing. So the big test for the Trump administration is, can we fight them online, as well as we have fought them on the battlefield?

WALLACE: Well, it's going to be a fascinating year and we will all be here to cover it fairly and in a smog-free zone.

STIREWALT: Hear, hear!

WOODWARD: Well said!

WALLACE: Thank you, panel. See you next Sunday. Have a Merry Christmas.

Up next, our "Power Player of the Week," honoring America's veterans this holiday season.

Plus, another visit from the Wallace grandkids.

(COMMERCIAL BREAK)

WALLACE: It's a Christmas tradition here to share the story about one family has found a way to express the meaning of the holiday season. It's a moving example of love for our country and personal generosity. Once again, here is our "Power Player of the Week."

(BEGIN VIDEOTAPE)

MORRILL WORCESTER, FOUNDER, WREATHS ACROSS AMERICA: We wouldn't have the opportunities if it wasn't for the people that fought for us and gave their lives for us.

WALLACE (voice-over): It's that plainspoken wisdom that has driven Morrill Worcester for years on a mission that has touched America's heart. Each December Worcester places wreathes at Arlington National Cemetery and thousands of volunteers are there to help him.

WORCESTER: I think a lot of people think like I do and they just want to -- you know, they appreciate the veterans and they want to show it.

WALLACE: This story begins back in 1962 when Worcester, then a 12-year-old paperboy from Maine, won a trip to Washington. What impressed him most was Arlington, it's beauty and dignity and those rows and rows of graves.

WORCESTER: Every one represents a life and a family and a story. They're not just tombstones. I mean those are all people.

WALLACE: Thirty years later, in 1992, Worcester was running his own wreath company in Harrington, Maine. But as Christmas approached, he had a bunch left over.

WORCESTER: These wreaths are real fresh, right -- just made. And I just didn't want to throw them away.

WALLACE: He thought of Arlington and all those graves. When the cemetery approved, he and a dozen volunteers drove the wreaths down and laid them on the headstones. And so it continued for years until a few Christmases back when an Air Force sergeant took this picture, which ended up on the Internet.

WORCESTER: It kind of struck a nerve and people emailed it to each other. And it really went around the world.

WALLACE: We were there the next year as he and his workers at the Worcester Wreath Company loaded up 5,265 wreaths. Then they embarked on what Worcester calls the world's longest veterans parade. A 750-mile journey that at some points attracted more than 100 vehicles. And when they got to Arlington, so many people wanted to participate.

UNIDENTIFIED MALE: The ceremony you are about to witness is an Army wreath laying ceremony, to be conducted for the Worcester Wreath Company.

WALLACE: For years Worcester paid for all of this out of his own pocket. And he started Wreaths Across America, sending hundreds to cemeteries and war memorials around the country. But he will need help to reach his new goal.

WORCESTER: I think around 2.7 million graves. And that's a tall order to decorate 2.7 million graves. So --

WALLACE (on camera): But you'd like to do it, wouldn't you?

WORCESTER: I really would, yes, sometime, I don't know how, but, hey, you know.

WALLACE: How long are you going to keep doing this?

WORCESTER: I'm going to keep doing it for as long as I work and then I know my family is going to continue. So, it will be here for a long time.

(END VIDEOTAPE)

WALLACE: This is the 26th year Morrill Worcester has taken on his Christmas wreath project. This month volunteers placed more than one and a half million wreaths on veterans graves in over 1,400 locations in all 50 states.

And now another Christmas tradition. Here's a look from the last three years at all five of the Wallace grandkids. And now here they are again. And they keep growing. Caroline, Libby, Sabine, James and William. From our family to yours, have a very Merry Christmas and we'll see you --

UNIDENTIFIED MALE: Next "Fox News Sunday."

WALLACE: You're getting quite professional at that.

All right, guys, three, two, one.

ALL: Merry Christmas.

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