This is a rush transcript from "The Story," January 2, 2018. This copy may not be in its final form and may be updated.

SANDRA SMITH, GUEST HOST: Thanks, Bret, happy New Year to you. We pick up the story from here. Breaking tonight, a renewed cry to quote.

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SMITH: Those chance once a staple of President Trump's 2016 campaign are taking on new life tonight in the wake of yet another revelation that Hillary Clinton's inner circle mishandled classified information while in power at the White House. And surprise, surprise, Hillary and her closest friend got a pass.

Good evening, everybody. I'm Sandra Smith in for Martha MacCallum tonight. Earlier today, the president slammed longtime Clinton Aide, Huma Abedin, suggesting she be jailed following the release of a trove of emails from Abedin's personal devices, and revelations that several were marked classified. Trump tweeting, "she put classified passwords into the hands of foreign agents. Remember sailors' pictures on a submarine? Jail! Deep State Justice Department must finally act."

The president referring to former Navy Sailor, Kristian Saucier; jailed in 2015 for taking classified photos of a ship. Critics called it a double standard. Both Clinton and Saucier were accused of mishandling classified information. Both were but our investigation by the FBI, but Hillary Clinton was cleared, and Saucier was sent to prison for what many consider to be a far lesser offense. In moments, that sailor, Kristian Saucier, joins us for an exclusive reaction to these new developments, and he has a lot to say. But first, Chief Intelligence Correspondent Catherine Herridge is live in Washington tonight with the latest fallout. Catherine, good evening.

CATHERINE HERRIDGE, FOX NEWS CHANNEL CHIEF INTELLIGENCE CORRESPONDENT: Thanks, Sandra. Newly released emails show Clinton aid, Huma Abedin, sent security passwords for sensitive government networks to her unsecured yahoo account. In a tweet today, President Trump unloaded on Abedin alleging she just regarded basic security, but classified passwords at risk and he suggested she should be jailed, and once again criticized what he called the Deep State Justice Department, imploring officials to finally act against Abedin, former FBI Director Comey, and others. At the State Department briefing, spokeswoman Sarah Sanders was pressed on the president's deep state allegations.

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SARAH SANDERS, WHITE HOUSE PRESS SECRETARY: Obviously, he doesn't believe the entire Justice Department is part of that. You know, one of the things that the president has done is appoint Christopher Wray at the FBI because he wants to change the culture of that agency, and he thinks he's the right person to do that.

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HERRIDGE: In her April 2016 FBI interview overseen by demoted agent Peter Strzok who sent anti-Trump text messages, Abedin admitted she routinely forwarded government emails to her Yahoo account for printing. Abedin said she was not sure her Yahoo account had ever been compromised despite receiving a warning. Those government email found on to her estranged husband, Anthony Weiner's computer are significant because they let the FBI to reopen the criminal case ten days before the election. Abedin was never charged with any crime, Sandra.

SMITH: All right. Catherine Herridge, thank you.

HERRIDGE: You're welcome.

SMITH: Well, the president's tweet triggering fresh calls for lawmakers to re-examine why Hillary Clinton and those around her seemed to be getting a free pass for their reckless handling of classified materials, while others are paying dearly for what they say are similar, even lesser offenses. Listen.

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REP. RON DESANTIS, R-FLA.: There was a sailor who took a picture on a submarine, that is on the Navy guy, that stuff is classified, you're not supposed to do that. He shouldn't have done it. But if he ends up going to the federal prison for that, where you look at what Huma Abedin did, you look at what Hillary did with how they had all this classified information on these unclassified servers and computers, and yet none of them were held accountable.

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SMITH: Here now in an exclusive interview is that Former Navy Machinist you just heard Congressman DeSantis talking about, Kristian Saucier. Kristian, thank you for joining us this evening.

KRISTIAN SAUCIER, FORMER NAVY MACHINIST: Thank you for having me on, Sandra.

SMITH: What was that like this morning to see your story brought up in that tweet by the president again?

SAUCIER: Well, I mean, it's good because I think he's pointing out some serious issues that the FBI and the DOJ under Comey and Andrew McCabe. You know, I mean, these are the same guys who are investigating me, at the same time they were supposedly investigating Hillary Clinton and her cronies. You know, they couldn't wait to exonerate them before they'd even conducted interviews, whereas they've jumped me, were chomping at the bit to destroy my life, which is exactly what they did.

SMITH: To be clear, Kristian, and I think this is important to get this out here, you took responsibility for your actions. You owned it. You pled guilty. And then you served time.

SAUCIER: That's absolutely correct.

SMITH: So, it's a double standard that you say you believe exists.

SAUCIER: Oh, yes. I mean, these politicians -- Hillary Clinton a prime example. She denied and denied and denied it until finally she got caught red-handed and said, OK, I did it, what's the big deal, basically? Well, the big deal is she did exactly what they accused me of doing, and what I pled guilty and took responsibility too. I didn't go to trial. Basically, I took secured information, pictures of my submarine, and put it on an unsecured device, my cell phone. That's what I got charged with, unlawful retention of national defense -- which, by the way, is exactly what she did.

SMITH: And also to point out, you're still under house arrest, right? I mean, you still got an ankle bracelet on.

SAUCIER: That's correct. I did a year in federal prison, I got six months of house arrest, and three years of federal probation. Plus, I'm a felon, and I have another dishonorable discharge. So, I lost all my V.A. disability benefits, you know, my veteran status, everything -- after 11 years in the service and, you know, two deployments to the Middle East. I have nothing. You know, it's very difficult for me watching as, you know, this very same FBI that was supposed, you know, protecting us from people that mishandled classified information, while that's what they said was my case, they need to set an example. But why aren't they setting an example of this egregious violation that Hillary Clinton, and Huma Abedin, and Sheryl Mills did?

They have top-secret FBI, which is the highest level. I had confidential pictures. You know, which -- you know, I'm not trying to minimize what I did, I made a mistake, and that's why I took responsibility. But I've been contacted by numerous people in the military after this happened and they said from Vietnam up to current day, and said, oh gosh I took pictures of where I worked, you know, and it was probably top-secret or something but I wanted to have mementos of my time in service. And I said, well, you know, that's -- honestly, that's what a lot of people do and that's what I did. You know, but it just so happened that my case was gratuitous for them to prosecute so that they could take the heat off Hillary Clinton.

SMITH: Now, what happens, what happens next with the president bringing you and your situation up in this tweet this morning? I know you had had hopes that President Trump what possibly pardon you or relook at your case; he hasn't done that. Do you still have hopes that he may?

SAUCIER: Well, I'm hopeful. I'm hopeful that he'll look at this case and say, look, this sailor, you know, me, I feed my family and I've been put through the ringer. We've been punished enough. You know, we've lost everything. Our house is in for closure. You know, we got bill collectors from all the legal debts calling all the time. You know, what more can they do to us? I think he needs to send a clear message to the DOJ under the Obama administration that what they did to us was far to the extreme. And he needs to send the same message to Hillary Clinton and them, and say, look, you need to get prosecuted, and this guy here, he shouldn't be a felon anymore. You know, it's difficult. It's such an uphill battle being a felon in trying to get a job and trying to assimilate back into society.

SMITH: Based on what we just learned with Huma Abedin and this latest e- mail release, what do you think should happen to her? Should she see jail time?

SAUCIER: I think she should be prosecuted. You know, it's neither here nor there whether she should see jail time. That's what a, you know, grand jury and what jury of her peers say, but she should be prosecuted, she should be put through the same legal system that went after me. And unfortunately, I didn't have near the legal resources that she does or Hillary Clinton does, so they'll be able to mount a much better defense than I could. But even still, they should still be charged the same as me.

SMITH: I know it and as you just detail to us here that this has been extremely painful to your family. I know you have a young daughter at home as well. We'll continue to follow your story, Kristian.

SAUCIER: Thank you so much and thank you for following it.

SMITH: Thanks for coming on. Also, tonight, yet another case of Hillary Clinton, potentially receiving a special treatment of sorts. This time from the media. WikiLeaks releasing e-mails between the Clinton State Department and the New York Times, showing the paper feeding the Clinton team information about stories they'd be publishing days before the story has hit newsstands. My next guest says this type of "collusion" by the Clintons doesn't shock him. Gary Byrne is a Former Secret Service Agent who protected President Bill Clinton and his new book "Secrets of the Secret Service". He claims Bill and Hillary Clinton "systematically broke the rules," and he says America deserves to know the real Hillary Clinton. And we thank you for coming on the program this evening.

GARY BYRNE, FORMER SECRET SERVICE AGENT: Thank you.

SMITH: So, who is the real Hillary Clinton, as you saw and got to know her?

BYRNE: The real Hillary Clinton as I detail in my book, "Secrets of the Secret Service," is the Hillary Clinton that doesn't follow the rules. The story that you just heard the gentleman before me talk about, he's exactly right. There's two sets of rules: there's a rule for everybody else, and then there's rules for the Clintons. We saw this many of times during the campaign. Mrs. Clinton was fed information from CNN. You just stated a fact that they were fed information from a news media. I wrote my book, "Secrets of The Secret Service," to get the truth out, that the secret service has been compromised and one of the ways it's been compromised is by the Clinton and former Clinton administration, and Mrs. Clinton.

SMITH: And that you say is posing a serious threat; a serious danger to the current president?

BYRNE: It absolutely -- to the serious president and to other who protect these. Who in their right mind thinks that during the campaign, that riding around in that van that we saw her riding around in is a secure mode of transportation? That van is set up for a certain reason she has for it. That's not what the secret service moves people around in. It's not armored correctly and it cannot ram vehicles out of the way. She's risking those agent's life and her own life. She has turned the secret service basically an armed rover, that's what they are now.

SMITH: Give us some more specific examples as to how they have completed, as you put it in your book, changed the quality and significantly lower the quality of the secret service as we know it today?

BYRNE: So, going back to President Bill Clinton's administration. The first thing they did when they got in there has they reduced the way we screen people. The Secret Service and the FBI had a system set up where they would screen employees that the current administration wanted to bring it in. And the first thing they did was take that apart because a lot of their employees had criminal records; and they ended up being hired anyway. One of the worst things to happen there is during the time the Clintons were there, Vince Foster, a lawyer for Mrs. Clinton took his own life; committed suicide.

As soon as the FBI found out about it, they contacted the Secret Service and ask them to put the uniform division officer on Vince Foster's office. As soon as he was posted, Maggie Williams, Mrs. Clinton's chief of staff, this is significant, Mrs. Clinton's chief of staff shows up, bullies her way inside there, take files out against -- you know, she broke a crime scene etiquette, basically, and then took the files back and then lied in a grand jury and said that she didn't know anything about it. Two to three years later, they're saying files showed up on Mrs. Clinton's private email.

SMITH: Based on your account of what you saw inside closed doors happening with the Clintons, why do you think that they have been able to get away with this for so long living by this other set of rules?

BYRNE: Because they slowly compromise and corrupt everybody. They started with the Secret Service and the FBI when Bill Clinton first got into office. There were 900 FBI files found in the Clinton White House that came from the FBI, and they were background files; for instance, like when you apply to the government or the FBI has done an investigation on you they have these files on you, that is raw data files. 900 of those files were found in a Clinton complex, and nobody knew how I they got there. And I can tell you exactly how they got there. The Clintons' security guy that they hired, the name is slipping my mind, but it'll come back to me in a minute, he asked the FBI person at the time to get these files going, and they refused to do it. So, he picked up the phone, he called somebody senior and 900 FBI files ended up in the Clinton White House. It was another scandal, one of many scandals.

SMITH: We see the Secret Service come in all the time.

BYRNE: Yes.

SMITH: Here at Fox, because we have so much respect for the work they do in protecting our president, quite frankly, as well as senators and congressmen. All of these people, and we know it is a hard job.

BYRNE: It is.

SMITH: You get the idea that President Trump understands what has happened with the Secret Service, and does he see the need for change?

BYRNE: I think he understands that they're under a lot of pressure. But I think there's a lot of things he doesn't know. For instance, there are 1300 uniform division officers, like I was, that work at the White House in the Foreign Ministry's (INAUDIBLE) right now. Out of those 1,300 officers, in the next three to five years, 1100 of them can retire. They can leave in three to five years. They are so overworked; their average salary is $70,000 - $100,000 a year. Some of these guys, men, and women, are making more than the secretary of Homeland Security because they're working 12 hours a day, seven days a week. I think he knows that. I think he knows it needs to be fixed. But the problem is that the director that he appointed, I'm sure he's a good man, he's a former Marine Corps General, but all the information he's getting is from people in the Secret Service, the made men, and women, that want to keep the Secret Service in the way it is now, and he's not getting the truth.

SMITH: Well, is it fair to say the double standard that we just spoke about with Kristian, that he says he's feeling right now is something you believe you saw firsthand?

BYRNE: No, absolutely, absolutely. It's just incredible the amount of corruption that took place during the Clinton administration, and the Secret Service had problems to start with before that.

SMITH: All right. Great to get your take on things. Gary Byrne, thank you for being here.

BYRNE: Thank you so much. It's a pleasure.

SMITH: All right. And the book, we will read it. The name: "Secrets of the Secret Service." I already made it through the first chapter.

BYRNE: Thank you.

SMITH: And it is an interesting one. All right. Thank you for being here. Tonight, as protest rage in Iran, President Trump does something his predecessors would not dare: he takes a side. And this veteran wounded by an Iranian bomb says it's about time. He joins us live exclusively next.

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UNIDENTIFIED MALE: An Iranian bomb killed me in 2005, and by the grace of God and great medics, I came back to life three times.

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TRUMP: Even the New York Times, which is totally dishonest, by the way. Here's the good news about the New York Times, they won't be in business much longer, do you see what they are losing?

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SMITH: President Trump issuing a rare congratulation to the New York Times along with a challenge for 2018. In an early morning tweet, the president wrote: "The failing New York Times has a new publisher, A.G. Sulzberger. Congratulations! Here is a last chance for the Times to fill the vision of its founder to give the news impartially without fear or favor regardless of party, sect, or interest involved." But it looks like the Times is off to a rough start with critics attacking a weekend expose on the Trump Russia investigation, calling it nothing more than a desperate attempt to bring the collusion narrative back from the dead. Fox's Doug McKelway is live in Washington with the story. Doug, good evening.

DOUG MCKELWAY, FOX NEWS CHANNEL REPORTER: Good evening to you, Sandra. It is no secret that one of President Trump's most notorious enemies has been what he calls the failing New York Times and after that tweet, which you just put up on the screen, he pointed out to this other New York Times story, a blockbuster story, which it was first publishing over Saturday, which hits at this. The Times story said, and I quote directly from it, "during a night of heavy drinking in an upscale London bar in May 2016, George Papadopoulos, a young foreign policy advisor to the Trump Campaign, made a startling revelation to Australia's top diplomat in Britain: Russia had political dirt on Hillary Clinton.

Well, the Times' story then goes on into more detail, "How much Mr. Papadopoulos said that night at the Kensington wine rooms with the Australian, Alexander Downer, is unclear. But two months later, when leaked Democratic e-mails began appearing online, Australian officials passed the information about Mr. Papadopoulos to their American counterparts according to four current and four former American and foreign officials with direct knowledge of the Australian's role."

Well, Mr. Trump is not the only one to question yet another New York Times anonymously source, entirely anonymous source story. Also, Former Federal Prosecutor, Andrew McCarthy, writing in the National Review, calls the Times story: Russian Collusion 2.0. He says that back in April, the Times had a similar blockbuster story of collusion but blamed it on another Trump campaign staffer Carter Page. He wrote McCarthy did, "Back then no fewer than six of the Times' top reporters along with the researcher, worked their anonymous current and former law enforcement and intelligence officials in order to generate the Page blockbuster."

Now, Trump in his argument with the New York Times may be scoring some points, at least among people who approve of Mr. Trump's behavior in this regard. If only in the sense that the most common sense dictates that people will say something anonymously that they will not say on the record. And his battle with the New York Times and other members of the mainstream media is not likely to end until Mr. Mueller and the special prosecutor's office comes down with an indictment on the president of the United States or if it clears the president of the United States. Sandra, back to you.

SMITH: All right. Doug McKelway, thank you, at the White House for us tonight. So, why is the New York Times so interested in George Papadopoulos now? Well, in a new op-ed on Foxnews.com, Former CIA Agent, and Democrat, Brian Dean writes, "If this journalistic whiplash seems incredibly suspicious, it should. The Times' sleight-of-hand from dossier to Papadopoulos is a thinly veiled effort to keep the allegations of collusion alive in the face of Trump's demand for the witch hunt to come to an end." Here now is Ari Fleischer, former White House Press Secretary under George W. Bush and Fox News Contributor. And Ari, happy new year to you; always good to see you.

ARI FLEISCHER, FOX NEWS CONTRIBUTOR AND FORMER WHITE HOUSE PRESS SECRETARY UNDER GEORGE W. BUSH: Happy New Year!

SMITH: So, what do you make of then of the New York Times offering up this new explanation behind all of this?

FLEISCHER: Yes. I mean, the amount of ink that has spilled on collusion with no evidence of collusion is staggering. You know, I understand -- and if anybody in the Trump campaign did engage in collusion with Russia to hack the DNC or John Podesta's emails, they deserve whatever is coming to them. But we've seen no evidence that anybody did that. So, instead, you just are getting this giant wave of the story after story about why is the FBI investigating Trump, and the reasons keep changing. And I think it's because they're such a desperation to attach the word collusion to Trump, that anonymous sources just get passed on to the front page even if they contradict previous New York Times front pages.

SMITH: You know, to dig a little bit further in the National Review piece, Andrew McCarthy, writes on the New York Times report on Papadopoulos: "Now, with the Page foundation of the collusion narrative collapsing, and that the heat on over the Obama administration use of the dossier, it is apparently Papadopoulos to the rescue." So, to your point, Ari, it really just seems like they're grabbing at anything they can hear.

FLEISCHER: Well, kind of reminds me of Tarzan swinging through a jungle just grabbing vines. But this time, he keeps yelling "collusion", when there is none. You know, it started out with the dossier and the Democrats demanded an investigation -- dossier. And then you had, as it was pointed out, Carter Page was the reason the FBI began its investigation because he took a trip to Moscow. And now, you say it's George Papadopoulos because he was drunk in a bar. You know, those are the three vines, but none of them prove anything.

SMITH: Quite frankly, I find it difficult to keep track of it all. And I'm sure our viewers do, too. There's a lot to this. Yes, go ahead.

FLEISCHER: That's why the heart of the matter, the only thing that counts is that Donald Trump or his campaign colluded with Russia. And if so to say, if anybody did cooperate with an enemy to influence an American election, they deserve to be prosecuted. You don't do that in this country if that is a crime. But if it's not a crime, it certainly is immoral. We see no evidence. It would've leaked by now if we end -- people had done that because keep in mind, we're talking about almost two years old, and none of that has come out; it hasn't come from Capitol Hill, it hasn't from the FBI, it's come out from nowhere. Probably, because it doesn't exist.

SMITH: And clearly, by the look of the president's recent tweets on this, he's choosing to pick another fight with not just the media, but specifically the New York Times here. And, Ari, you and I have talked a lot about this, you know. Is the president's strategy to go after them, is it working?

FLEISCHER: Well, I've made a point of saying the president sometimes goes too far and he says things on Twitter that hurt him. I don't think this was one of those cases. I think the president -- put yourself in his shoes. If you know you did not collude, but you are under an FBI investigation, of course, you're going to want to speak out; you're going to lash out even if you are the president of the United States. And there is a policy objective here, and the president should be free, whether you like it or not, to pursue foreign policies. But the FBI has effectively tied Donald Trump's hands when it comes to how to deal with Russian until this probe is complete, and that's a foreign policy problem that the United States has. The FBI needs to finish its work, the Mueller report needs to get completed. I still have faith in Bob Mueller or the individual, although I've lost a lot of faith in his staff. But I do believe Bob Mueller is a man of integrity. This probe should come to a conclusion. We all deserve to know what the FBI has found and go public.

SMITH: And you've said that all along.

FLEISCHER: And I still believe it because I believe in Bob Mueller, the man. I know him, and I do think he will hold this group that he unwisely put together and makes sure their standards are high they investigate.

SMITH: You know, for the American people, they see it -- they see it's taking a lot of time, and it's requiring a lot of patients from all of us. Ari Fleischer, it is good to see you and great to start out the new year with you. Thank you.

FLEISCHER: Well, thanks, Sandra. Happy new year, again.

SMITH: All right. What does President Trump actually think about Elizabeth Warren running for president?

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TRUMP: Well, I actually think she's a hopeless case. I call her Pocahontas and that's an insult to Pocahontas.

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SMITH: But wait until you hear what we just found out about Pocahontas' plan for 2020. Karl Rove and Marc Thiessen on whether or not her strategy just might work.

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SANDERS: The Iranian regime spends its people's wealth on spreading militancy and terror abroad rather than ensuring prosperity at home. We stand in total solidarity with the Iranian regime's longest suffering victims -- its own people.

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SMITH: Developing tonight, Iran gearing up for what could be a seventh day of protests. Today, Iran's supreme leader accusing the country's enemies like the United States for the violent clashes that have so far claimed more than 20 lives. The demonstrations began as a protest over Iran's beleaguered economy but has since widened to a more general expression of anger over alleged government corruption and leadership.

President Trump tweeting in support of the protesters today saying, "many reports of peaceful protests by Iranian citizens fed up with regime corruption and its squandering of the nation's wealth to fund terrorism abroad. Iran and the government should respect their people's rights including the right to express themselves. The world is watching!" Here now: Retired Sergeant, Roger Bartlett, an Iraq Combat Veteran who was badly injured when his convoy hit an Iranian bomb and can speak to how horrific that regime has become. Sergeant, thank you for being here this evening.

ROGER BARTLETT, RETIRED SERGEANT: Thank you, Sandra.

SMITH: You can obviously, obviously, talk to us specifically about how that regime so badly impacted your own life.

BARTLETT: Oh, yes, absolutely. You know, I joined you on in that's against the deal to try and stop them from getting a nuclear bomb a long time ago, and we're still on that mission today. You know, when they got the blood of 500 Americans just in the last few years on their hands. You know, they've been killing Americans since the 1970s and we just really haven't done a whole lot, really, about it.

SMITH: And you've been against that, that deal with Iran from ago?

BARTLETT: Absolutely. Absolutely. It paved the way for a lot of things. The billions of dollars and money to go over that obviously is not going to the people, and you're seeing the protests now. And then all of a sudden you see -- which is kind of funny, you see another rogue regime like North Korea all of a sudden getting supercharged nuclear program. So you're wondering where that untraceable money is really going.

SMITH: You know, when we talk to you and see how deeply affected you are by the Iranian regime, it makes you wonder -- we could talk about the politics all day long, and talk about the strategy, of course, that is important. But one might wonder how it makes you feel to hear President Trump say the world is watching and actually back the Iranian people in these protests.

BARTLETT: It's wonderful. I went to school with Iranians, American- Iranians, great guys, you know. There's plenty of good people in the world and in every country. The problem is bad regimes. Bad regime in Iraq, bad regimes in Afghanistan, and we had a bad regime for a long time in Iran that we've been dealing with. They've been killing Americans. They have blood on their hands for years since the '70s.

SMITH: So when you have the president talk about this and there are calls -- you know, you heard the politics today saying we need to do more. It's one thing to say something, it's another thing to show how we're going to act. Lindsey Graham saying we need to lay out our strategy and how we're going to move forward here. You know, just curious how all this -- this is your mission in life now.

BARTLETT: Yeah. You never know where you're going to end up. You start with a 30-year-old guy bartending. You go to war because the war starts. You go to sniper school you end up getting blown up. You spent four and a half years at Walter Reed, and then you're getting involved in trying to stop bad policies from happening, and continue to save Americans on a policy level. You never know where you're going to end up. You just roll with the punches, as they say.

SMITH: Sergeant Bartlett, it's an honor to speak with you tonight. Thank you for being here and thank you for your service.

BARTLETT: Thank you, Sandra. I appreciate it.

SMITH: Well, here now General Jack Keane, he's the chairman of the Institute for the Study of War and a Fox News senior strategic analyst. General Keane, it is good to see you and it is tough.

JACK KEANE, FOX NEWS SENIOR STRATEGIC ANALYST: Good to see you, Sandra.

SMITH: . to hear his story. And we've heard his story before, and every time he tells it I learn something more about his mission now. And now as we see these protests there grow even more deadly, your thoughts?

KEANE: Well, first of all, an honor to be here with Sergeant Bartlett, and the fact that he still in the fight and God bless him. God bless him for that. He's made a hell of a sacrifice, that's for sure. I think this when we compare this at 2009, and we cannot help it, suddenly the way President Obama acted then, I was embarrassed for the United States. I think the first time ever in my life that we did not stand up and have moral clarity over the fact that there was a serious protest going on for the first time of any consequence against the Iranian regime. This one, I think -- it cuts a little deeper because that one was about an election the people believe was stolen. This demonstration, while not as massive in Tehran, it's in 80 cities, Sandra. And it cuts across the entire social economic fabric of the country because unemployment is 12 percent, inflation is high. That touches everybody's pocketbook.

There've been so many false promises about what they were going to do when they got sanction relief. They got the money. They've got a ton of money, over $100 billion. And most of that as documented by our intelligence agencies has gone to fund the war in Syria, in other words the Hezbollah, the war in Iraq, in other words the Shia militia, and the war in Yemen, Houthi's. All of which the Iranians are backing. That is where their money is primarily going. The well-being of the people are paying a heck of a price for it and they're in the streets absolutely getting the attention. And the other thing I've noticed that's different is they're really attacking the president of the country for failing them in Riwani, and also attacking the supreme leader. And I think the degree that that's going on is a bit unusual.

SMITH: You know it's such an important distinction, and when I heard Ambassador John Bolton make earlier today as well. You look back at the protests in 2009 that was post-election, they were protesting the election. This is much different. It's a protest of the actual regime. Susan Rice says the best thing that President Trump can do is stay quiet. President Trump is making it very clear he's not staying quiet here. How important is it that he lay out a specific strategy, which he has often reluctant to do?

KEANE: Well, first of all, providing moral clarity much as Ronald Reagan did to stand up against communism, particularly when the polls were rebelling and protesting against the communist regime in Poland, it can be very inspirational to the people on the ground. And I've talked to (INAUDIBLE) about this and he's quite emotional in describing the impact it had on him. But yes, I really think that we have to get the other countries of the world to work with us on this. I understand the communication is being put together with the U.K., France, Italy and, possibly, Germany as well. That's a step in the right direction. Nikki Haley today spoke about a Security Council meeting, condemnation by the world for what they're doing is very important and it's one of the useful things that the U.N. can actually do in a positive way. But then I think you've got to get considerably more specific, and that is what the leaders themselves and the radicals who are -- their secret service who impose their will. This is the Iranian Republican guard corps and Kurds force. The leaders of those organizations should be sanctioned. We should call them out for what they're doing. And then, revisit their comprehensive strategy against Iran, and how we're going to stand up against this regime with our allies. We're not in this by ourselves. We got to push back hard on it.

SMITH: And we're not in this by ourselves when it comes to North Korea either, General Keane. And as we begin a New Year, that threat is growing. Kim Jong-un making it very clear he is ready to act. And that threat continues to grow. You have to wonder what 2018 holds?

KEANE: Well, it's likely to show down here given the director of the CIA has said they're months away from achieving this capability in his judgement. He said that publicly. So, this thing is coming to a head and we're relying on China to accomplish the major diplomatic and economic sanction effort here. I doubt seriously if they're stepping up to the fullest that our government wants them to do, and I'm sure we're putting more pressure on them. But we're getting closer and closer to a potential of a horrible situation, certainly, with some kind of military option being exercised because the Trump administration, rightfully so, is not going to permit North Korea to have intercontinental ballistic missile pointed at American cities. And then once he miniaturizes those -- that capability, sell that to terrorists around the world into his proxies. That's the second stage of this thing and why it's so unacceptable.

SMITH: A lot on the presidents plate as we start the New Year. Thanks for covering all of that for us, General Keane, good to see you.

KEANE: Good talking to you, Sandra.

SMITH: Well, Utah Senator Orrin Hatch, announced his retirement, but was it just to make waves for Senator Mitt Romney? Karl Rove and Marc Thiessen join me next, and one of them says this is a great idea. Then, from the network that's begging its critics, please stop calling us fake news.

(BEGIN VIDEO CLIP)

UNINDENTIFIED MALE: I came prepared this year. I thought maybe I would bring a gas mask with me, so I wouldn't get that contact eye. But look on what's on the other end of the gas mask, yes, a bomb.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

SMITH: Al Franken makes it official, formally resigning from the United States senate today. It comes nearly a month after he announced plans to leave following a series of sexual misconduct allegations. His replacement is Minnesota's lieutenant governor Tina Smith. She will be sworn in tomorrow. A special election to fill the remainder of Franken term is slated for later this year. Former Republican congresswoman Michele Bachmann, a conservative favorite, has hinted she is considering running for the seat.

(BEGIN VIDEO CLIP)

PRESIDENT DONALD TRUMP: I have a feeling that in the next election you're going to be swamped with candidates, but you're not going to be wasting your time. You will have plenty of those Democrats coming over and you're going to say no, sir, no, thank you. No, ma'am. Perhaps, ma'am. It may be Pocahontas.

(END VIDEO CLIP)

SMITH: Well, that was President Trump more than eight months ago predicting Massachusetts Senator Elizabeth Warren, may run for president in 2020. And now, it appears that just might be the case. With reports suggesting she has made a series of important moves that could position her for a run against her nemesis, President Trump. Karl Rove is founder and advisor to the American crossword, Marc Thiessen is an American enterprise institute scholar, both men served under President George W. Bush, and are Fox News contributors. And every time we showed you guys during those teases, you were laughing and having fun. So let's get this going. So, Senator Warren, Marc Thiessen, is this going to happen?

MARC THIESSEN, FOX NEWS CONTRIBUTOR: It's entirely possible. I mean, look, I think the nomination is Bernie Sanders if he wants it. The Clinton machine is dead. It's his party now. And so, if he wants this nomination they're going to have to wrestle it from him. And look, he's a year younger than Joe Biden, who everybody is talking about is a serious candidate, so he's not too old if he wants to do it. But she won't get into the race if he does, but if he doesn't get into the race that I think she is quite frankly the heir apparent to the Sanders movement. And I think she would take -- she would be a real contender for the nomination. She's a little bit different from Bernie Sanders in the sense that she's not a Democratic socialist. Until the 1990's she was a registered Republican in the state of Massachusetts. She says she believes in markets and she believes that the Republican -- she he left the Republican Party she says, because the Republican Party abandon market and got into bed with big government and big business to rig the system against the little guy. That sounds a lot like Donald Trump. So it would be a very fascinating clash of populism.

SMITH: Enter Karl Rove, your thoughts?

KARL ROVE, FOX NEWS CONTRIBUTOR: I agree. The minor disagreement I have with Marc is that I think she may say those things but I don't think she believes those things. If you look at her legislative career, she may not run as a Democratic socialist like Bernie Sanders does in Vermont, but she is a Democratic socialist and her behavior in congress and the things that she espouses. But I think he's got it absolutely right, Bernie Sanders represents that sort of populist wing of the Democratic Party. If he runs, he represents.

SMITH: All right. So you both agree she could run. There's a good possibility she could run.

ROVE: Absolutely.

SMITH: But can she win, Karl Rove?

ROVE: Well, look, the general election is several geological ages away. I think it all depends upon where is Donald Trump's favorable rating if he does run. If it's 35 to 38 where it is today then she's got a shot at it. If he is either not in the race or he approves his favorable rating so it's up in the 40s, maybe 45 or 50, then he can beat her. But it's a long way between.

SMITH: Come on, Karl. You and I both know it's right around the corner. So, if it's not her, say it's not her, although you're both telling me it's a likely situation that she could run, but if it's not her, who else, Marc Thiessen? Who's on the bench?

THIESSEN: Well, you got candidates like Cory Booker, Kamala Harris and Deval Patrick, who are all out there and they would have the advantage of being both articulate speakers, but also they would be able to -- they would be arguably because they're African-American, they would appeal to the African-American community and bring out that Obama coalition. I think the sort of the dark horse front runner would be Sherrod Brown of Ohio. If Sherrod Brown wins his reelection in 2018, he's a progressive populist from a key state in Ohio. Who knows how to champion the white working class that abandon -- who voted for Barack Obama twice and switched to Donald Trump in 2016. The key for the Democrats to win in 2016 is to find a candidate who can win back those Obama-Trump voters. There are millions of them. There's hundreds of counties that voted twice for Barack Obama and then switched to Donald Trump. If they have any chance of winning that election they got to find somebody who can appeal to them and it might be someone like Sherrod Brown.

SMITH: So you don't have to look far to see Mitt Romney in the headlines right now, Karl Rove. Orrin Hatch announces his retirement, and shortly after Mitt Romney issues a statement congratulating him. And the reason is OK. So is it going to be Mitt Romney?

ROVE: Well, Romney is very popular in Utah because the families long association to the state and his personal involvement in the Olympics, lives in Park City outside of Salt Lake. And so, yeah, if he decides to run he is a very popular figure. He will be challenged for the nomination if he does run. But my sense is that he would be enormously popular. The LDS church would be largely behind him. And the statue that he would bring to the senate will cause a lot of Utah's to come out and support him both on the primary and the general election.

SMITH: The big question, Marc, would he align with Donald Trump?

THIESSEN: I think he would be. But I think in order for Mitt Romney to lose we would have to get Steve Bannon to find another alleged sex predator to run against him, because that's the only way you're going to lose the state of Utah to the Democrats. So, I think Mitt Romney is very much the likely nominee. And I think it's good that Orrin Hatch decided to step down. He's been in Washington since 1977. He just passed the first tax reform in three decades. He repealed the Obama individual mandate. And so, yeah, I think it's time for him to step aside and call it a career and make way for somebody.

SMITH: Karl, it seems like you're trying to jump back in there?

ROVE: Look, I do think that Mitt Romney is an adult. So, I think if he would be elected to the senate he would find ways to cooperate with the president when they agreed, and if they had disagreements he would be respectful about it. And like, Marc -- look, I was involved in Orrin Hatch's 1988 campaign as a youngster, known him a long time. He's a wonderful human being. I'm glad he's going out on a high. He has passed this major tax form legislation. He's got lot of other accomplishments under his belt. He's done a magnificent job for the country and for the state of Utah, and I'm glad he's going out on a high note.

SMITH: I can already picture a lot of the words that Mitt Romney -- choice words that Mitt Romney had for Donald Trump back then that would then come up, right, Marc?

THIESSEN: Oh, absolutely. I mean, the reality is I think Donald Trump is probably going to have to go out and support him because he's going to be the nominee. And the presumption is to work together. I don't think Mitt Romney is going to be going to Washington to stop tax reform, to stop the growing economy and get an economy moving again and undermined the Trump presidency. He's going to be going there to get conservative things accomplished. And even the senators that Donald Trump hates the most like Jeff Flake and Dean Heller, vote with him 95, 96, 97 percent of the time. And I think Mitt Romney would vote with him 96, 97 percent of the time.

SMITH: Marc and Karl, happy New Year, good to see both of you.

ROVE: Same to you, happy New Year.

SMITH: Well, up next, the most trusted name in news brings in the New Year with a bong. Plus, NBC announces Matt Lauer's replacement, but their choice is raising one pretty uncomfortable question. Mollie Hemingway and Richard Fowler on where the media is headed in 2018 when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNINDENTIFIED FEMALE: I came prepared this year. I thought maybe I would bring a gas mask with me so I wouldn't get that contact high. But look at what's on the other end of the gas mask. Yes, a bong.

(END VIDEO CLIP)

SMITH: That just doesn't get old, does it? They didn't teach that in journalism school, did they? CNN taking some heat for its live report on board of the Canna-bus this New Year's Eve. Joining me now Mollie Hemingway, senior editor at The Federalist, and Richard Fowler, nationally syndicated radio talk show host, both are Fox News contributors. Mollie, what did you think of that moment the other night?

MOLLIE HEMINGWAY, FOX NEWS CONTRIBUTOR: Well, I am from Colorado, where we do have legal weed. But I think it's totally OK to have fun on New Year's and be goofy and lighthearted, although there is a difference between.

SMITH: Would you be OK with children seeing that?

HEMINGWAY: Well, it's not -- that's actually just one of many things that was happening that night on CNN, where a lot of drunken behavior and revelry.

SMITH: Will that makes it OK then?

(LAUGHTER)

HEMINGWAY: No, I'm saying it was sort of problematic across the board. And also, it's so inconsistent for CNN. I mean, a couple months ago they banned someone from appearing on a network because he said that there were two things that would never let him down, boobs and the first amendment. And its host, Brooke Baldwin said she was gasped and she couldn't believe it was said. And then on New Year's Eve night she's making all these double entendre jokes about similar things. And it's like you have to be consistent. You can't act like you're so offended by this rhetoric and then have a New Year's Eve special like this.

SMITH: Richard, what do you have to say about this?

RICHARD FOWLER, FOX NEWS CONTRIBUTOR: Number one, your show is better because I was in it.

SMITH: Ah, you're in it.

(LAUGHTER)

FOWLER: Number two, I actually tend to agree with Mollie on this one, and the reason being is that I do believe that we should legalize marijuana for all the positive reasons. Number one, it's cost-saving in Colorado. They have a budget surplus thanks to the tax that are collected because of legalize.

SMITH: Hold on, hold on, hold on, you're getting away from the conversation.

FOWLER: No, no.

SMITH: I mean there was a visible uncomfortable Anderson Cooper looking on.

FOWLER: That's the point I'm making, I think when you do these types of segments where you novelize it and you sort of make it kooky and funny you get away from the actual benefits and talking about the benefits of legalizing it. You get into the sort of morality, people are aghast by the fact that CNN had the segment instead of actually talking about the benefits of legalizing it.

SMITH: All right. So moving on to another big new story, Hoda Kotb is now the new host -- the co-host of The Today Show with Savannah Guthrie. An all-female Today Show hosting panel there. All women, Mollie.

HEMINGWAY: Yeah. And I mean, I think, in this case, Hoda Kotb was chosen because she's a very beloved person on the network and they needed someone -- this is kind of a new trend just to go in-house to replace talent and whatnot. But also they had, you know, they had reason to have problem with Matt Lauer and they probably wanted a fresh female face there to not remind viewers of his many troubles.

SMITH: You know it's an interesting move. I think, five years ago, and looking back several years ago, Richard, you would have assumed that that position would have been filled with a man, but it was not, what does that tell us?

FOWLER: I mean, I think that's right. I think there's a lot of speculation that there was a couple of men in line to get that role and they ended up going in-house and having an all-female cast. I mean, she is accompanied by Al Roker and Carson -- I think Carson, I can't remember his last name.

SMITH: Carson Daly.

FOWLER: Carson Daly, almost got it right the first time there. So, I think there is a benefit to having all-female cast. I think this bring some diversity to the morning line up where there's usually one man and two women, and now you have two women sort of teeing off the table. But I think it speaks to the fact that I think, you know, this sort of break the barrier that you can have an all-female cast lead a show. I think, you know, Fox did it first with "Outnumbered."

SMITH: But we do bring on a man in the middle every day, our one lucky guy. That was your today, right?

FOWLER: It was me today. Been working hard. But I think it does speak to the fact that the network is trying to really sort of take away the stain of Matt Lauer.

SMITH: Interesting, Mollie, that Hoda Kotb, I believe, she weight in and said that she did receive a congratulatory text from Matt Lauer afterwards.

(CROSSTALK)

(LAUGHTER)

SMITH: All right. We'll see what the big new store is going to be a 2018, that's for sure. Happy New Year to you both, thanks for being here. Richard, get some sleep tonight.

FOWLER: I will.

SMITH: We will be right back.

(COMMERCIAL BREAK)

SMITH: Just wanted to bring this to your attention, a look at Twitter this evening as we look at Mitt Romney's Twitter page after our discussion about Orrin Hatch, the Utah senator, announcing his retirement, possible paving the way for Mitt Romney. It appears right after his announcement that Mitt Romney went on his Twitter account and changed his location to Holladay, Utah, from Massachusetts. Something we observed and that we would share with you.

All right. Well, thank you so much for being a part of "The Story" tonight. It was great to be with you. We will see you back tomorrow night at 7:00 PM. You can also catch me every day weekday at 9:00 on "America's Newsroom," and again at noon on "Outnumbered." Tucker is up next.

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