Gowdy: Don't think Nunes source matters if info is authentic; Sen. Paul wants 'more modest' health bill

This is a rush transcript from "The First 100 Days," March 27, 2017. This copy may not be in its final form and may be updated.

MARTHA MACCALLUM, CO-HOST: Breaking tonight, the most powerful Democrat in Congress is now calling for the Republican investigating alleged spying by the Obama administration to be removed from his post. As we learned some new information tonight, suggesting how the Obama White House may have been keeping tabs on then President-elect Donald Trump and his advisors. I'm Martha MacCallum, it's day 67, everybody of "The First 100."

So, the Republican chairman of the House Intelligence Community, Devin Nunes saying that he visited the White House grounds to see his source to look at these documents. He did that one day before he came back and made that now sort of famous appearance outside of the White House after he shared what he knew with President Trump. Showing members of Trump Transition Team had been inappropriately unmasked and Obama era surveillance operations.

And Tonight, Chairman Nunes goes even further, detailing how he viewed those reports on a secretive trip to the White House compound where he met with intelligence officials who had access to a secure computer network who showed these things to him. It was in the executive branch documents that were the focus of that viewing. So these new revelations are setting up Democrat House Minority Leader Chuck Schumer who has now demanded that Chairman Nunes be removed from this pending investigation.

(BEGIN VIDEO CLIP)

SEN. CHUCK SCHUMER, D-N.Y., HOUSE MINORITY LEADER: Chairman Nunes is falling down on the job. And seems to be more interested in protecting the president than in seeking the truth without further ado. Speaker Ryan should replace Chairman Nunes.

(END VIDEO CLIP)

MACCALLUM: So here now, one of Chairman Nunes' Republican committee colleagues, Congressman Trey Gowdy who is also a former chairman of the special select committee on Benghazi and a former federal prosecutor. Good to have you here tonight.

SEN. TREY GOWDY, R-S.C.: Yes, ma'am. Thank you.

MACCALLUM: What do you make of the charge or the call to step down to Chairman Nunes by Chuck Schumer?

GOWDY: I just love it when Senator Schumer gives Republicans advice on what we ought to do. Devin is doing exactly what the chairman obviously ought to do. When you have a source that has information, you handle that information safely, securely, which is exactly what he did. I wish Senator Schumer and some of the Democrats would be more interested in the authenticity and the reliability of the underlying data and not the means by which it was required.

Whether the White House or waffle house, what difference does it make if the information is reliable and authentic? It just so happens, Devin had to do it this way. So, we're not going to take advice from Senator Schumer on who our chair people ought to be.

MACCALLUM: All right. So, you know, everybody obviously has been wondering who the sources on this, who called him, there is a story about how he received a text and his car, with other staffers. You know, just got out of the car quickly, left, went over to the White House, we now know, view those documents and then the next day goes back to show them to the president. So that sort of lines up to appear that the person who revealed all of this to him is either in the White House or was associated with the White House. Now, the narrative on that has changed a bit in the past two press briefings. Let's watch.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Will you rule out that the White House or anyone in the Trump administration give Chairman Nunes that information?

SEAN SPICER, WHITE HOUSE PRESS SECETARY: I'm not aware of it but it doesn't really pass the smell test.

UNIDENTIFIED MALE: It appears there was some degree cooperation in this process. The White House granted Chairman Nunez --

SPICER: I will be glad to take a look at that and figure out whether or not that's an accurate statement or not.

(END VIDEO CLIP)

MACCALLUM: All right. So the door is open to the possibility that it came from the White House. Does that matter? Why?

GOWDY: Devin hasn't told us it came from the White House. I don't think the source matters, Martha, nearly as much as whether or not the underlying information is authentic and credible. Keep in mind, Devin has also says this has nothing to do with Russia. And for those who missed at the first time he said, he said it again. Nothing to do with Russia. So, if we have gotten to the point where the chairman of the House Intelligence Committee cannot go gather information related to our surveillance programs and cannot operate the commander-in-chief on the nature of that information, we are at a really strange place.

I realize that Democrats don't like the fact that President Trump won but he did and it Devin is the chairperson of the -- of the intelligence community. He has an obligation to update the commander-in-chief on information like this.

MACCALLUM: So there was supposed to be a hearing to move this ball a little bit further. That open hearing was canceled and now the closed hearing is also in question where you all would like to question again the FBI Director Comey and the head of the NSA as well. Where does that stand? Are you going to have that hearing?

GOWDY: I hope we have it at some point. I hope it's behind closed doors or confidential like every other serious investigation there's on. Almost 100 times, Director Comey and Admiral Roger said they could not answer the questions in that setting. Almost 100 times. So if you really are on a quest for the truth, a quest for facts, why you would pick a forum which guarantees the witnesses cannot answer the question befuddles me.

[19:05:08] So I would love to bring that back, we have to bring them back. They are foundational, seminal witnesses. But almost 100 times, they said they couldn't answer in a public setting. So, I don't why would go that way.

MACCALLUM: All right. Quickly, Mr. Kushner, Jared Kushner is going to answer questions about his meeting with the Russian banker whose bank was under sanctions at the time. What are your questions? What would you want to know about that relationship?

GOWDY: Well, that's going to be a senate investigation. The senate -- he's going to give testimony before the senate, Martha. I'm easy. I want to know every fact that there is to know relevant to our jurisdiction. So, anything dealing with Russia, anything dealing with the -- dealing with the felonious dissemination of classified material, access to witnesses, access to documents and ask all of the questions in a credible, serious way which means do our investigations the way every other serious investigation in the country is done, which is behind closed doors until you have something to report.

MACCALLUM: Chairman Gowdy, good to see you today. Thank you very much for being here today.

GOWDY: Yes, ma'am. Thank you.

MACCALLUM: So, Intelligence Community Chairman Devin Nunes in an interview just a few moments ago defended his decision to go to the White House to view this sensitive intelligence. He said it was the only way he could see it. Watch this.

(BEGIN VIDEO CLIP)

REP. DEVIN NUNES, R-CALIF.: The Congress has not been given this information. These documents. And that's the problem. It was distributed widely through the executive branch, this was from November, December, and January. There was no way I could view that because they couldn't get it to the House Intelligence Committee.

(END VIDEO CLIP)

MACCALLUM: Here now Lieutenant Colonel Tony Shaffer, he's a CIA Trained Intelligence Operative was and Marie Harf, former CIA Analyst and Fox News contributor. So, great panel for this this evening. Good to have you both here.

TONY SHAFFER, CIA TRAINED INTELLIGENCE OPERATIVE: Thank you.

MACCALLUM: Tony, let me start with you. What do you make of that statement? You know, a lot has been said about this skiff and why he had to view it in the White House. Go.

SHAFFER: I understand. Look, I'm a former whistle-blower myself. I have to testify to very similar issues like into wrongdoing the 911 attack. So, I know for a fact that the initial disclosures I made, which were called protected disclosures, were not reflected well by the fact that Congress ask the information, they did not receive it, yet I know it existed. So, I think what you see here is that the fact that the executive branch does not share with Congress everything it could or should.

So, in this case, I think Chairman Nunes was offered access to information probably in a very -- what I would call a skip within a skip, there is information that is even beyond top secret. There's Code word, there's layers, sometimes it's only hand carried. I ran an operation once, everything was hand carry only. So you have no electronic footprints. Sometimes it takes a physical meeting to look at stuff and I don't -- think it's well within the norms of how we do business in the intelligence committee to have to see the stuff.

MACCALLUM: Marie, Trey Gowdy was just saying, you know, there's been so much talk about the process of how this has come about but to him, he said the most important thing is whether or not in the intelligence agencies had turned on the new president and were finding things and unmasking the names of people he was working with and revealing that to other people in the executive branch and elsewhere. Isn't that really the most important thing here?

MARIE HARF, FORMER CIA ANALYST, FOX NEWS CONTRIBUTOR: Well, the most important thing actually is whether and how Russia interviewed in our election. And this is all part of that bigger -- that bigger investigation, the who was unmasked, how they were unmasked and who was leaked to the press, it's part of the bigger investigation the House Intelligence Committee is doing on the Russian interference in our election. But Trey Gowdy is not actually correct that if this was related to unmasking, it is related to the overall investigation.

MACCALLUM: Chairman Nunes said that this particular part that he talked to the president about was not related to the Russian investigation but we also know that he only saw about a dozen documents and there could be -- there could be more there, Tony.

SHAFFER: Correct.

HARF: Well, and -- well, it was related to the unmasking though. And at the Republican's request, all of the questions about how people were unmasked in these intelligence reports, whether or not they were about Russia had been looked into this broader investigation.

MACCALLUM: Yes. I got. You know, but I think we -- I think we lose sight of what's -- what we're talking about here sometimes. You know, Tony, what we're discussing is whether or not there was an effort and we sat in The New York Times piece, you know, that the Obama Administration was very concerned about, you know, leaving breadcrumbs and leaving these trails. Well, they left a trail wide open and in the prospect -- in the process rather, may have done some illegal unmasking of a different individuals, names who didn't deserve it.

SHAFFER: Right. Look, Marie -- Miss Harf is completely less-informed or ignoring the fact of what they are. The bottom line is, this has nothing to do with anything and Russia. This has to do with sensor communications which were ongoing from the moment the president-elect became the president-elect to his inauguration. And I think that's the issue. What was the legal basis for the collection if that's OK then what was the legal basis for the unmasking? So if that's --- that becomes a question of ethics and legality. And then, most importantly, who disseminated the information to the new York Times especially? And again, this is not -- nothing to do with Russia.

MACCALLUM: You got to follow the trail.

HARF: But the intelligence community is investigating that as part of the broader investigation.

MACCALLUM: Yes. That is the fact. Absolutely. And, you know, I want to ask you one more question about Jared Kushner because now he has come forward with other members of the Trump administrations that he is volunteering to discuss the discussion that he had with the Russian Banker and with the ambassador from Russia. Marie, what would you like to see him ask?

HARF: I'm glad he has come forward. Want I want to know is I think what Americans want to know. What were the extent of the conversations? What was the purpose? What did -- what did the Russians, you know, how did they interact with you? And what was the totality of the reason you were dealing with Russians? And I think, you know, there are so many questions Republicans and Democrats want answered from people like Jared and others.

Chairman Nunes by making the story so politicized over the past week is not the person to lead that investigation. We need an independent either a special prosecutor or a special committee, like Trey Gowdy ran on Benghazi.

MACCALLUM: Tony, just very briefly on Jared Kushner, is there anything that you've seen so far that makes you concern that there was anything on toward there?

SHAFFER: No, look. He's volunteered to come forward, he's actually probably everything I'm hearing, he's cooperating completely. So he's not acting like someone who's got a secret just to want to share. I think that what you see now is a normal process of accountability. And let me say this very clearly, Congressman what he did based on his obligation to protect the nation. So, that's it.

MACCALLUM: Tony and Marie, thank you very much.

SHAFFER: Thank you.

MACCALLUM: Good to see you.

HARF: Thanks, Martha.

MACCALLUM: So coming up at 8:00 tonight on "The O'Reilly Factor," House Intelligence Committee Chairman Devin Nunes, clearly the man of the hour who have been talking about for the last 11 minutes will be on the hot seat. He'll talk to Bill O'Reilly who no doubt will give him some good questions this evening. So stick around for that. And still ahead right here, the White House trying to move on from healthcare and on this Monday pursuing action, action, action, and the words of Strategist Steve Bannon. So can the gang that fumbled healthcare get back to the mat on tax reform? Who will their friends be on that one, by the way? Chris Stirewalt, Charlie Hurt, and Zac Petkanas join us. Plus, as the Rockville rape case put sanctuary cities back in the headlines. Attorney General Jeff Sessions made a surprise visit today to the White House briefing room with a warning shot about federal funding that could go away and some of our country's biggest metropolises. The new rule that he laid out right after this.

(COMMERCIAL BREAK)

MACCALLUM: So after a horrifying high school rape case make citizens wonder how we can let situations like this happen in the first place. The White House has now turned the page on this whole story. Attorney General Jeff Sessions made a surprise visit today to the White House podium this afternoon. He announced that federal grants to sanctuary cities are over and that some money that has already been doled out to these cities will be clawed back. Here he is earlier today.

JEFF SESSIONS, ATTORNEY GENERAL OF THE UNITED STATES: I strongly urge our nation states and cities and counties to consider carefully the harm they are doing to their citizens by refusing to enforce our immigration laws and to rethink these policies. Such policies make their cities and states less safe. Public safety, as well as national security, are at stake and put them at risk of losing federal dollars.

(END VIDEO CLIP)

MACCALLUM: Trace Gallagher has the latest on what this means. Live from our West Coast newsroom. Hi, Trace.

TRACE GALLAGHER, FOX NEWS CORRESPONDENT: Hi, Martha. When the attorney general says the sanctuary cities are "at risk of losing federal dollars," what he's really talking about his law enforcement dollars, meaning the billions and billions given out by the Department of Justice each year to talk pay for things like jails and prisons and to hire more police officers. And it would be a crippling blow for some cities to have to pay back federal money that's already been spent.

By definition, sanctuary cities are those communities that won't abide by federal law and work with immigrations and customs enforcement or ICE. But the biggest disagreement is over cities that refused to allow ICE Agents to arrest illegal immigrants who have committed crimes and are about to be released from local jails and prisons, something that led to the death of Kate Steinle in San Francisco. Listen.

(BEGIN VIDEO CLIP)

SESSIONS: Countless Americans would be alive today and countless loved ones would not be grieving today if these policies of sanctuary cities were ended.

(END VIDEO CLIP)

But no sooner had the attorney general left the White House podium, New York Attorney General Eric Schneiderman, a big Trump critic, said he will fight any efforts to defund his state sanctuary cities. The mayors of Boston, Chicago, and Los Angeles have also vowed not to comply with the DOJ, with L.A. Mayor Eric Garcetti, he's saying, "the Los Angeles Police Department has never participated in programs that deputize local law enforcement to act as immigration agents and on my watch, they never will."

Many legal experts believe the federal government does not have broad authority to use federal funds as a weapon to coerce cities and towns into certain actions but today the attorney general appeared to be saying just watch us. Martha.

MACCALLUM: Thank you, Trace. Joining us now with more, Republican Congressman Sean Duffy, a supported defunding sanctuary cities. And Richard Fowler, is a nationally syndicated radio show host and Fox News Contributor. Welcome to both of you.

RICHARD FOWLER, FOX NEWS CONTRIBUTOR: Good to see you, Martha.

SEAN DUFFY, REPUBLICAN SENATOR: Hey, Martha.

MACCALLUM: Good to see both of you too. Now, it's interesting, Trace touched on -- so much of this is financial, you know, when it goes back to the cities and towns, they're basically saying, you know, it's not that we don't necessarily want to uphold the law, it's that we don't want to get involved in the whole business of immigration, we don't want to incarcerate people, we don't want to process them. You know, it's a not-my-job argument. Sean, what do you think about that?

DUFFY: Well then, don't take federal money if you want help federal law enforcement out. What I think is important, Martha is there's oftentimes collaboration and cooperation between the federal government, the state, and the municipalities. And here we have Donald Trump saying I made a pledge to the American people that I'm going to help keep us safe. And when there is a detainer request that comes up for my --that's hold requested to say we have some very violent individuals who are here unlawfully. And we want you to hold them for so we can -- whether we are going to arraign them, we're iong to prosecute them or we're going to deport them and these communities say no to that, that is absolutely outrageous. It doesn't keep the community safe, it actually makes it more dangerous.

But then when you have good people who come here unlawfully and are actually working, trying to raise a family, you sully their name and their reputation by lumping them in with the worst criminals in our community. So, I think this is outrageous that these mayors are taking this position.

MACCALLUM: You know, in terms of clawing back money, Richard and you look at the Rockville case, it has clearly raised the consciousness in the country of what the consequences are of allowing people into the country. And it makes everybody feel safe. You know, if you're recent immigrants, they have to feel the same way when they look at situations like Rockville.

FOWLER: Oh, absolutely. Here's the thing. If you are a violent criminal, you shouldn't be in this country, that's if you are illegal, right? With that being said, I agree with the Congressman, for those individuals who came here illegally, who are working and really trying to achieve the American dream, we have got to meet them halfway. Donald Trump and Congressman Duffy, they have the majority in the house and the senate and they have the White House, so, instead of using the stopgap measures to sort of -- to treat the symptoms, let's work on treating the cure. Comprehensive immigration reform right now.

MACCALLUM: Why can't you do both at the same time?

FOWLER: We can but there isn't even Comprehensive Immigration Reform bill on the floor in the house. And that's the question. Donald Trump in the house --

MACCALLUM: Duffy, do you want to respond to that?

DUFFY: Yes. First of all, I will give that point on what we're going to do but Democrats have control of the house, the senate and the White House for two years and did nothing. Here's what we have to do. If you want --

FOWLER: We tried to pass something.

DUFFY: But if you want -- you have control of everything but if you want Comprehensive Immigration Reform, you don't do that by not securing the southern border. You don't do that by letting rapists and murderers stay in the country with mayors who are protecting them. Let's actually work together to keep America safe, get the bad actors out, secure the borders and then have a real conversation about the men and women who come here with our documentation and are productive members of our society. But you can never get to that conversation until you secure the border and get the bad actors out of our country and keep our community safe.

MACCALLUM: Final thought, Richard.

FOWLER: Well, here's the thing, I don't think securing the border as a perquisite to pass Comprehensive Immigration Reform. If Republicans want to do it what they could, this is about the money and this is about the local governments like Bill de Blasio and like Mayor Garcetti saying, hey listen, our job is to keep our city safe, your job is to enforce the immigration laws, if you can't do it, don't expect us to do it. What needs to happen here is Congress needs to be bold, instead of working on tax reform, this issue is more immediate because we have 11 million people here living in the shadows, let's pass Comprehensive Immigration form, they have all chambers. Let's get it done.

MACCALLUM: I hear what you're saying, Richard, but there's no reason why you can't do both at the same time. I mean, there's no reason why --

(CROSSTALK)

FOWLER: Donald Trump is committed to building a wall.

(CROSSTALK)

FOWLER: So, since he's going to build a wall, let's pass immigration reform right now. We could do it.

MACCALLUM: All right. Thank you, you guys.

DUFFY: (INAUDIBLE) let's have a Comprehensive Immigration. Thanks, Martha.

MACCALLUM: Good to see you both.

FOWLER: Good to see you, Martha,

MACCALLUM: Still ahead tonight. The White House again setting at sites high with another ambitious legislative goal. And this time, they're hoping that it will be the trick on tax reform. Chris Stirewalt, Charles Hurt and Zac Petkanas join us to break down the timeline just released by the White House. Plus, President Trump's son-in-law and Senior Advisor Jared Kushner has a new role to bring some business enterprise into overhauling the federal government. The Drain The Swamp move, Governor Mike Huckabee is here with his thoughts on that coming up.

(COMMERCIAL BREAK)

MACCALLUM: Developing tonight, health care is now in the rearview mirror for now, as GOP leadership looks to move forward with their legislative agenda. In the past few hours, Speaker Ryanseen making his way to the White House to huddle with Vice President Mike Pence, chief of staff Reince Priebus, and others, about the next thing on the list. Let's move on to tax reform. Watch.

(BEGIN VIDEO CLIP)

NUNES: We're moving on to tax reform, we got the budget coming up, I think it's more or less a warning shot that we are willing to talk to anyone. We always have been and I think more so now than ever.

REP. KEVIN BRADY, R-TEXAS: We're going to move forward with the boldest tax reform in a generation. We will never stop working. We've been running the parallel track on tax from all throughout healthcare, as well.

(END VIDEO CLIP)

MACCALLUM: Here we go. Here now with Chris Stirewalt, Fox News politics editor, Charles Hurt, political columnist at the Washington Times and a Fox News Contributor and Zac Petkanas, senior DNC advisor who runs the Trump War room. Good to have all of you here tonight.

CHRIS STIREWALT, FOX NEWS POLITICS EDITOR: Hey, Martha.

MACCALLUM: So victory has 100 fathers, Chris, and "TrumpCare" in your opinion is definitely an orphan.

STIREWALT: Yes. For sure. And it really was orphaned even before they got to the end. You could feel both the house leadership and the president starting to step back from it and that was the encouragement that the naysayers and the center and on the right in the house Republican caucus said, well, if you -- if you're not willing to die on this hill, I'm not voting for it, either. And that's how it fell apart.

MACCALLUM: Well, it's a wounded puppy to be sure. And there are some who are trying to revive it out there. I talked to Rand Paul about that which we'll see in just a moment. In terms of this idea, Charles Hurt, of working with Democrats, is that -- I mean, in what want fantasyland are they going to all come together and decide that they can, you know, make tax reform happen when one side is going to want huge spending cuts to do that and the other side won't let them cut anything?

CHARLES HURT, FOX NEWS CONTRIBUTOR: Sure. Well, you know, one of the things that Donald Trump, you know, he likes to talk about how he knows how to strike deals and understands how to work the art of the deal.

MACCALLUM: So far, so good.

HURT: Exactly. He's never -- he's never worked with Congress before. And this is what happens when the greatest dealmaker on earth deals with Congress. But so, yes, no, it is a real problem. But I also think, you know, the White House has to be careful about how much they blame the freedom caucus for the defeat of this -- of the repeal and replace plan because, you know, standing on the side lines where all those Democrats who were standing there for partisan reasons, refusing to take part in fixing the mess that they created.

And I think Donald Trump is hoping that in the long run, he -- when ObamaCare gets even worse and more people are upset and fed up with it that they will then come back to the table and he'll figure out a way to make a deal. And for someone like me, that's a problem because I'm sure that whatever deal he would strike with the Democrats is going to be a lot worse than the ones that he's working with the public.

MACCALLUM: Yes. I mean, that is the problem for conservatives because he wants to win and, you know, we read the Art of the Deal and we know how it ends. He learns from these kinds of mistakes and, you know, tries to grow from them and tries to figure out what to do better next time. So, Zac, he's looking around the room and he's saying, you know, I used to be a Democrat a long time ago, maybe I can make friends with some of these folks and we can have a win together. Is there a new reality where that happens?

ZAC PETKANAS, DNC SENIOR ADVISOR: Democrats have said from the very beginning that Republicans would like to work with us to improve this legislation, to expand access, to continue to bring down premiums, to provide additional --

MACCALLUM: How about if it cuts taxes enormously and flatten out the tax codes, are they going to be up for that?

PETKANAS: Democrats have also said they are willing to work when the values align. Massive tax cuts for the wealthy, massive tax cuts for the Goldman Sachs executives that populate Donald Trump cabinet that is simply not in the cards for some of the Democrats that are interested in working with the administration. To be perfectly honest, I don't think of the Democrats are the biggest problems that Donald Trump faces with tax reform. What we saw the health care reform, it is the Republicans, and which he had zero political capital. Republicans in districts that Donald Trump went back by massive margins that the so they will take a hike. I don't think we should be looking at Democrats. He should be looking at his own house.

MACCALLUM: Ultimately, he is got to put together a majority of 216, 218. He has to find them and make it work. Where are they? Are they in the freedom caucus or elsewhere?

CHRIS STIREWALT, FOX NEWS DECISION DESK CORRESPONDENT: I think they have been trying to spin out of whole cloth. They have been doing it wrong. Come up with a plan that you believe in. Come up with a plan, an idea that you care about those matters to you, that aligns with your view of the world. We don't know the details of what is and Trump's tax plan. If it is what Kevin Brady talked about, the biggest overhaul of the tax code since 1986, when they did it last, that is a huge deal. It is an enormous undertaking. It will take months and months, lots of lots of the salesmanship and tenacity that will depend on Donald Trump believing in this plan. Were they did with the health care was they threw together this thing with bailing wire and chewing gum and said, I think this works and it's an improvement. I'm sure that to the minds of the people who drafted it, it was an improvement. The president didn't believe in it. Or he evidently didn't, because he didn't sell it. He has got to own it and sell it on taxes.

MACCALLUM: He tried. I would say they tried in the president got very involved in this. Try to pull it over the finish line. We'll see if they can get it next time. Thank you, good to see you, always good to see you all.

Coming up, President Trump's son-in-law Jared Kushner taking the helm of a new White House team that is going to rethink how Washington does some of its business, very interesting plan. We'll talk about that coming out. Governor Mike Huckabee will join us with his thoughts on that when we come back. Plus, a popular messaging app that is known for its encryption turns out to be at the center of the London terror investigation. Now, there is a debate over privacy and security that has a couple of companies saying, no way.

(COMMERCIAL BREAK)

MACCALLUM: Developing tonight, the president tapping his senior advisor and son-in-law Jared Kushner to lead a new office in the White House, it is called the office of American innovation with the aim of challenging the conventional bureaucracy in D.C. They are tasked with reshaping the old Washington order. They just love that in Washington when people want to reshape the order. We will be joined by Mike Huckabee, governor, first, let's go to chief national correspondent, Ed Henry, for details on how this will work, some of the very big names part of the team.

ED HENRY, SENIOR NATIONAL CORRESPONDENT: Good to see you, Martha. Major policy goals of this new office, slowing down the bureaucracy in order to get the government more focused on boosting the economy, by unshackling businesses from regulation. There also seems to be a clear political goal. Chief Economic Adviser Gary Cone and other power players inside the White House are trying to pivot away from that stunning loss on health care to actually focusing on creating jobs. The White House statement declaring tonight, "this office will bring together the best ideas from government, the private sector, and other thought leaders to ensure that America is ready to solve today's most intractable problems and its position to be tomorrows challenges and opportunities." The office will focus on implementing policies and scaling proven private sector models to spur job creation and innovation. Eyebrows raised today when the president son-in- law Jared Kushner, who already has a full plate who is also put in charge of this new office, nothing new to see presidential into men's accumulate more and more power. Remember, Valerie Jarrett to the last administration. And Kushner clearly bring some business credentials to the task, but the 36-year-old also has very little government experience. And remember his father-in-law had already asked them to take on that monumental task of crafting Mideast peace. He is a lot on his plate, Martha

MACCALLUM: He sure does. Ed, thank you. Here with his reaction, Governor Mike Huckabee, Fox News Contributor. Governor, always good to see you, welcome. He is got a lot on his plate, Jared Kushner.

MIKE HUCKABEE, FOX NEWS CONTRIBUTOR: A lot and this is going to be a plateful like thanksgiving feast, because two big things you will find. Number one, everybody says, let's operate government like a business, but government is in a business and it doesn't quite operate like one. You can make it more businesslike but you can't fire their principal players. You can't fire the legislators. You can't fire the lobbyist that worked against you. You can't fire bureaucrats who have civil service protection. You can't fire the judiciary. Quite frankly, it is a wall of opposition everywhere you turn. The second thing that he finds is that everybody has a patron saint. Every agency, every program, has people who are the protectors of those programs. It is a very important thing to do and I am thrilled with the president has stepped forth to do it.

MACCALLUM: A couple things that are on their list are the V.A., which it does seem could deal with a bit of privatization, some things along those lines might be helpful to the V.A. Also, air traffic control is something that they want to reorganize, as well. What about the increasing power of Jared Kushner in the White House?

HUCKABEE: It's a good thing, because the president trusts him. The single most important thing the chief executive has to have, he has to have people around him that he trusts. I think Jared Kushner is a very smart business guy. He understands how business works. What he has to do is surround himself with a smart government people who know how government works and then, both of those people need to surround themselves with a whole bunch of lawyers, because everywhere they will turn, they will find legal obstacles to what they want to do and a whole room full of lawyers fighting them every single step of the way. Plus, Martha, here is a one of the differences in dealing with business and government changes. In business, you can do it and you don't have to tell anybody in the press what you are doing or why you are doing it. You just fire people, you hire people, but when you are dealing with government entities, it is all there in the sunshine for the world to see and so you better know what you are doing because it will be criticized and expose like they cannot possibly believe.

MACCALLUM: You know people are intrigued by the power circle in the White House and it's interesting that Steve Bannon, who has a lot of roles in the White House, is not part of this group, especially since part of the ml for this group sounds like deconstructing the administrative state, which is something that is very near and dear to his heart. Why wouldn't he be involved in this?

HUCKABEE: We don't know that he won't be involved. Steve Bannon is also busy doing 100 different things right now. I don't think there is anything to be read into that. Steve Bannon is a very trusted advisor to the president. I think he is brilliant, one of the smartest people that Donald Trump put in the west wing, as is Jared Kushner. He has a lot of people, but there are a lot of obstacles and challenges in front of him. It's not that every person in the White House can be a part of every project. I wouldn't read anything whatsoever into what Steve Bannon not being on this particular project - and in fact, he might be in the background somewhere with some ideas of his own.

MACCALLUM: Governor Mike Huckabee on day 67. We have to remind ourselves that we are only 67 days and sometimes it feels more than that. Good to see you, as always. Thank you Governor.

HUCKABEE: Thank you Martha.

MACCALLUM: Thank you. Still to come tonight, a Facebook owned messaging app is finding itself at the center of the London terror investigation. As of now, the messages are being hidden from the authorities. Should businesses be compelled to share what is on those apps with the authorities? The debate, straight ahead, plus, after the White House efforts to undo ObamaCare derailed, President Trump says he may turn to Democrats to pass future legislation. Up next, we have Senator Rand Paul, if he now regrets his decision to stand in President Trump's way on this.

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PRESIDENT DONALD TRUMP: they are friends of mine. I am disappointed because we could have had it. I am a little surprised, to be honest with you.

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REINCE PRIEBUS, WHITE HOUSE CHIEF OF STAFF: I think the president is disappointed in a number of people that he thought were loyal to him that weren't. He wants to make sure that people don't get left behind, wants to make sure there is competition in the marketplace so that rates are lower and that people can choose their doctor. If those three things are incompatible with some members of the Republican house, then, it is going to be incompatible. We need to work with moderate Democrats to make sure that that happens.

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MACCALLUM: President Trump's Chief of Staff Reince Priebus addressing the idea of loyalty and extending an olive branch to Democrats there in a wake of the house failed to undo ObamaCare last week. Some might say the White House is directly calling out those who stood in public opposition to that legislation, including perhaps my next guest, joining me now, Kentucky Senator Rand Paul.

Senator, good evening, and good to have you here tonight, what do you make of that? There is an indication that the White House has thrown up their hands and said, no more dealing with the freedom caucus. We will do some outreach to Democrats.

SEN. RAND PAUL, R-KY.: I think loyalty and fidelity are very important. But I think our loyalty should be to the oath to uphold the constitution as conservatives, to believe in fiscal conservatism, and federalism, that most power should remain with the states and the people. I think you will find the House freedom caucus to be among the most honorable and principled men and women in Congress. I don't think there's a question of loyalty when we are talking about principle. I think there's a way out of this, though. The house leadership bit off more than they can chew. One of the huge bill to pass that had a lot of things that were objectionable to conservatives. What if we start with a modest bill, start with a bill that has very little and it, except for what everyone agrees, every Republican agrees, then, build from there? I think that approach would work better.

MACCALLUM: What do you say to those who say you got a lot of what you wanted in this bill? Maximum of income to receive tax credits, allows you to choose traditional block grants, something you talk a lot about free of the list goes on, in terms of requirements for able-bodied adults to be able to get Medicaid if they can work, and they have to work, a trillion dollars in ObamaCare tax. A lot of folks say that they really met those folks in my freedom caucus pretty much halfway.

PAUL: I think what we started with. We stopped a lot of stuff in a bill that was objectionable. ObamaCare light was objectionable part it became less bad over time. It was headed in the right direction. I think compromise is possible on this. But we are to start with what we agree on, virtually all of us agree on repealing the taxes, repealing the individual mandate. Let's put a list of things before all of us and say, what are the things that we generally all agree to? Instead of putting before us things we didn't like, the Cadillac tax, subsidies, Medicaid expansion.

MACCALLUM: I like the idea that you had put forth, but I think now they look at it and say, all of those very pure ideologies are admirable. You talk about the honor of the Republican freedom caucus, as you see it. If you can't get it across the finish line, what good is it really?

PAUL: I think we can. I am optimistic. I don't think this is over. I just came from meeting with House conservatives and they said they are still working and talking to everyone about this issue. We are still reaching out to the White House frankly on this issue. We'll continue to meet with them. I think there is a solution. I think the way to look at this, do we have to however everything or can we start out of the three agree on? Rather than forcing everyone into a box, saying that everyone has to accept this, Conservative got to accept this. I think there is a lot of common ground, having a less expensive bill, may be a more modest repeal bill that just includes the things we all think should be repealed.

MACCALLUM: I understand you are hopeful and there are signs that people hope that this isn't dead. Then, you have people that Governor Kasich of Ohio on the hill today with representative Dent, Nancy Pelosi speaking out, saying, we wouldn't be willing to listen. In the end, if that is the coalition that forms, you may wish that your folks had gone along with this deal.

PAUL: We'll be surprised if we see Democrats cooperating on repeal of ObamaCare. This is a Republican chance to repeal ObamaCare. ObamaCare is a disaster. I think ultimately we will find a consensus, but it takes time. I mean 17 days is not very long.

MACCALLUM: How much time do you need?

(LAUGHTER)

PAUL: Nobody can predict when we come to an agreement, but I can say, I think the forces are still moving towards an agreement. As we speak, there are people on Capitol Hill still talking about an agreement and we haven't given up on this. I promise you, the house freedom caucus, senate conservatives, we do want repeal, that is what we run on, but we didn't run on replacing ObamaCare with another program.

MACCALLUM: All right. Senator Rand Paul, always good to have you with us, thank you very much.

PAUL: Thank you.

MACCALLUM: Coming up next, a popular messaging app could be used to find out if the London terrace suspect was plotting or communicating with someone else, he texted from it, moments before the scene that you see. Now, the companies don't want to help out the investigators, former Green Beret Ben Collins here, on the debate between privacy and security.

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MACCALLUM: And tonight, we are learning chilling new details about the British-born man who turned to terror, killing four innocent people in London last week. Investigators now focusing on an encrypted message that he sent just moments before he drove that car over the bridge, he did it on an app called WhatsApp. It is owned by Facebook and now, the company is refusing to give investigators access. Here now, Ben Collins, a U.S. Army Special forces veteran and former Green Beret who served three tours of duty in Afghanistan. Ben, welcome, good to see you tonight.

BEN COLLINS, FORMER SPECIAL FORCES OFFICER: Thanks, Martha.

MACCALLUM: First with the encryption, it's not as easy as it sounds.

COLLINS: Not at all. The way that these were, it is called end to end encryption. If I was to send you a message on WhatsApp, I send it, it gets scrambled as it leaves my phone, and it goes through the servers, when it gets to your phone it gets unscrambled. If I have a key to unscramble it, you do, too. There is essentially a blind messenger in between, and that is WhatsApp. They can't actually read it. For things like this, the specific case, they are not able to read it, and you are stuck with cracking, if you can have the device, this individual's phone, the London terror, they can get to that message through that phone. They will have to get into the phone and read that message. It is not like they will find it -- it depends on the technology company, but on the server.

MACCALLUM: There was an Israeli company that did crack the code for iPhone on San Bernardino, because it was a different technology?

COLLINS: Correct then they were attacking the device not the encryption tool. Things like I message that you use on the iPhone, those are not encrypted.

MACCALLUM: In terms of -- I thought it was fascinating, you are more concerned with further down the digital pipeline and how this person becomes a terrorist. Tell us.

COLLINS: Correct, because at the point of end to end encryption one-to-one messages, they have gone through the recruitment process, someone is directing them. Peel it back. Start with websites like Facebook and YouTube, where somebody sees may be a video of dead civilians and may play their music, these are well put together things. Then come with person goes and maybe goes into a chat room on a public site, or through comments and chat, and as they start, they radicalize themselves, that is when they can start, when someone reaches out from the terror network like ISIS, and they say, let me invite you to a one-on-one conversation on WhatsApp. That is how it moves.

MACCALLUM: They also learn how to stab someone wearing a vest, which is how they would happen to the officer in this case. Ben, thank you. Good to have you here tonight as always.

COLLINS: Thanks Martha.

MACCALLUM: Finally, tonight, as the White House pledges to turn to tax reform, here is the quote of the night from cowboy writer Will Rogers. The only difference between death and taxes is that death doesn't get worse every time Congress meets. Let's hope they can turn that reputation around, folks. Thanks for watching everybody. I am Martha MacCallum. We will see you back here tomorrow night at 7:00 p.m., up next, the Bill O'Reilly, talking to Chairman Nunes. We will talk to you tomorrow.

"The O'Reilly Factor" is on tonight.

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