Hillary Clinton on tight race, accusations against Trump

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Clinton responds to criticism over Benghazi, private server

'Fox News Sunday' exclusive: Clinton's first interview as the Democratic presidential nominee

This is a rush transcript from "Fox News Sunday," July 31, 2016. This copy may not be in its final form and may be updated.

CHRIS WALLACE, FOX NEWS ANCHOR:  I’m Chris Wallace.

Hillary Clinton's first interview as the Democratic nominee, only on "Fox News Sunday."

(BEGIN VIDEOTAPE)

HILLARY CLINTON, D-PRESIDENTIAL NOMINEE:  America is once again at a moment of reckoning.

WALLACE:  Clinton hits the road on a bus tour of battleground states, then sits down with us for the first time in this campaign.

You say you're the real change agent.  You're offering tweaks, not a dramatic shift.

Clinton on voters not knowing what to make of her.

Americans know what they think of you.  Two thirds of Americans don't trust you.

And --

The e-mails.

CLINTON:  Yes.

WALLACE:  Hillary Clinton, one on one.  It's a "FOX News Sunday" exclusive.

Then, with both conventions wrapped up, the race to November is on.

DONALD TRUMP, R-PRESIDENTIAL NOMINEE:  I don't have to be so nice anymore.  I’m taking the gloves off, right?

WALLACE:  We'll ask our Sunday panel where the contest stands.

All right now on "FOX News Sunday."

(END VIDEOTAPE)

WALLACE:  And hello against from Fox News in Washington.

With the conventions over and just 99 days left, the general election campaign is officially on.  Hillary Clinton and her running mate Tim Kaine are on a bus tour through the Rust Belt.  And we caught up with them yesterday in Harrisburg, Pennsylvania, amid reports that Russia has hacked into Democratic Party file, even a program they shared with the Clinton team.

We sat down with Clinton for the first time in this campaign, and that’s where we started.

(BEGIN VIDEOTAPE)

WALLACE:  Secretary Clinton, welcome back to "Fox News Sunday" and congratulations.

CLINTON:  Thank you so much, Chris.  And it really is good to be here.

WALLACE:  Do you believe that Russia is behind the hacking and release of the DNC e-mails?  And do you think that Vladimir Putin wants to defeat you or see you defeated and Donald Trump elected president?

CLINTON:  Well, Chris, here's what I think we know.  We know that Russian intelligence services, which is part of the Russian government which is under the firm control of Vladimir Putin, hacked into the DNC.  And we know that he arranged for a lot of those e-mails to be released.

And we know that Donald Trump has shown a very troubling willingness to back up Putin, to support Putin, whether it's saying that NATO wouldn't come to the rescue of allies if they were invaded, talking about removing sanctions from Russian officials after they were imposed by the United States and Europe together, because of Russia’s aggressiveness in Crimea and Ukraine, his praise for Putin which is I think quite remarkable.

WALLACE:  So, are you suggesting that Putin would rather see him as president than you.

CLINTON:  Well, I’m not going to jump to that conclusion, but I think laying out the facts raises issues about Russian interference in our elections, in our democracy.  We would not tolerate that from any other country, particularly one with whom we have adversarial positions.  And for Trump to both encourage that and to praise Putin despite what appears to be a deliberate effort to try to affect the election I think raises national security issues.

WALLACE:  Trump after the backlash about his comments --

(BEGIN VIDEO CLIP)

TRUMP:  Russia, if you're listening, I hope you're able to find the 30,000 e-mails that are missing.  I think you will probably be mightily rewarded by our press.

(END VIDEO CLIP)

WALLACE:  Trump said he was just being sarcastic.

CLINTON:  Well, I think if you take his encouragement that the Russians hack into American e-mail accounts, if you take his quite excessive praise for Putin, his absolute allegiance to a lot of Russian wish-list foreign policy position, his effort then to try to distance himself from that backlash which rightly came not just from Democrats, but Republicans, independents and national security and intelligence experts leads us once again to include he is not temperamentally fit to be president and commander in chief.

WALLACE:  You carved up Trump pretty good in your acceptance speech.

(BEGIN VIDEO CLIP)

CLINTON:  Donald Trump says he wants to make America great again.  He could start by actually making things in America again.  A man you can bait with a tweet is not a man we can trust with nuclear weapons.

(END VIDEO CLIP)

WALLACE:  Here is a guy you say is unfit to be president.  Why is this election still too close?

CLINTON:  Too many Americans feel, Chris, like they've been left out and left behind by our economy, by our government.  I understand that frustration and frankly even that fear that some people feel that, you know, it's just not working for them, and they are looking for answers.

I think the kind of inflammatory answers that Trump has provided, blame somebody, blame immigrants, blame Muslims, blame women, blame somebody is attractive in the first instance to people who are looking for answers, but what I’m counting on and what I believe, he has offered nothing to help people.

I believe we have put together an agenda to increase jobs, increase incomes, make our economy grow and be more fair, which is going to appeal to a majority of Americans.

WALLACE:  Good, because I want to talk not about Trump, but about you and drill down into some of the positions that you’ve taken in this campaign.  At a fund-raiser last year you said this, "The Supreme Court is wrong on the Second Amendment."  Now, in the 2008 Heller case, the court said there's a constitutional individual right to bear arms.

What's wrong with that?

CLINTON:  Well, I think what the court said about there being an individual right is in line with constitutional thinking.  And I said in the convention, I’m not looking to repeal the second amendment.  I’m not looking to take people's guns away, but I am looking for more support for the reasonable efforts that need to be undertaken to keep guns out of the wrong hands.

WALLACE:  And the Second Amendment includes an individual right to bear arms.

CLINTON:  Yes, but that right like every other of our rights, our First Amendment rights, every right that we have is open to and even subject to reasonable regulations.

WALLACE:  I just want to pursue this a bit.  Heller, Justice Scalia, he said that the right to bear arms is reasonably limited.  He let the door open to regulation.  If you're elected president, you're going to appoint the Ninth Supreme Court justice.

CLINTON:  Um-hmm.

WALLACE:  Are you saying you do not want to see the Heller decision, the individual right to bear arms overturned?

CLINTON:  No, I don't, but here's what I do want.  And I want to be very clear about this: I want the Congress to step up and do its job.  I want to get out of the horrible cycle we're in, where we go and mourn dozens, hundreds, thousands of people killed by gun violence.

Everybody says, oh, let's pray, let's send our hearts and our feelings, and then nothing happens.  We're better than this.  The gun lobby intimidates elected officials.  The vast majority of Americans, including gun owners, support the kind of common-sense reforms that I’m proposing.

WALLACE:  On immigration, you say you would go even further than President Obama in deferring the deportation of people in this country illegally, and you say if Congress doesn't act, that you would support even tougher executive action.

I want to ask you about separation of powers, because the Constitution is clear.  All legislative powers reside in Congress.  It doesn't say if Congress doesn't act, the president can do whatever he or she wants.

CLINTON:  Well, let's sort that out, because it's an important question.  When it comes to immigration, I believe strongly that comprehensive immigration reform with a path to citizenship is not only good for people living under the shadow of deportation, it's good for the economy.

So, I think this is on the must-do list.  I hope after this election, that Congress that voted in a bipartisan way in 2010 and 2013, to actually take action, will come back and say, "OK, let's do this together."

WALLACE:  But if they don’t --

CLINTON:  Well, if they don’t --

WALLACE:  -- what gives you the right to do executive action?  I mean, that's Congress's position.

CLINTON:  No.  There is a lot of precedent, legal precedent, about how presidents enforce the laws.

Let's look at deportation.  Whoever is president gets to determine what the priorities are.  My priorities are deport criminals, violent criminals as fast as we can.  Deport anybody that we think even has a passable link to terrorism.

But don't go rounding up hard-working mothers and fathers, taking them out of the factories or the hotels or the homes where they're working, making these disappear and leaving their children alone.  That doesn't make any sense to me.

WALLACE:  But if you're talking about executive action that's going to affect not a few people or 100 people -- I understand prosecutorial discretion, but that's going to affect millions of people, aren't you changing the law?  Aren't you writing the law?

CLINTON:  No, because here's what I think.  The Supreme Court has sent back for trial the challenges to the president's authority, to take categories of people and remove the threat of deportation.

WALLACE:  As president, you would be able to name the justice who could break the tie.

CLINTON: Well, but first let's go and have the trial.  That is true that I hope that I will have that chance, because it's not just that.  It's Citizens United.  It’s a lot of things that I think the current court got wrong -- got wrong, respectfully, for our democracy, for how we govern ourselves.

WALLACE:  So you'd like to see all those things change with your Supreme Court justice?

CLINTON:  Well, whoever the next president is will get to appoint at least one, maybe more Supreme Court justices.  And there are a lot of decisions that I approve of that this court has made, first and foremost, marriage equality.  But there are decisions that I do think that when taken to their natural conclusion have hurt our democracy, undermined our economy.

WALLACE:  What about precedent?

CLINTON:  The precedent is absolutely in line.

You know, I taught law.  I’m a recovering lawyer.  I know that precedent is something that you look to, but I also know that courts can take a look at precedent and determine that maybe they weren't right the first time.

WALLACE:  You say you're the real change agent in this campaign, but I think it's fair to say that you're building on the Obama agenda.  You're not rejecting it.  Sixty-nine percent of Americans think that we're on the wrong track.

We just found out that GDP growth in last quarter was 1 percent.  It’s the slowest economic recovery since 1949.  And you're offering tweaks, not a dramatic shift.

CLINTON:  Well, I think what I’m offering are proven results.  I think what I’m offering is that we can build on where we are.

We have dug ourselves out.  We're standing, but we’re not yet running.  I’m not happy with the status quo.  I’ve said that repeatedly.

WALLACE:  But you're offering more government programs --

CLINTON:  Well, let’s --

WALLACE:  -- more spending, more entitlements, more taxes --

CLINTON:  No --

WALLACE:  -- more tax penalties and credits.

CLINTON:  Well, but let's unpack that.  What I’m offering is the biggest job creation program since World War II.  And I hope to be able to --

WALLACE:  But it's infrastructure, that's what Obama did.

CLINTON:  But he didn't get to do enough, and he didn't get enough support from Congress.

It took years this time under President Obama to do something.  We’ve got roads, bridges, tunnels, ports, airports, water systems, all failing, all being less than efficient in a time when we want to lift on the economy and take on the rest of the world.  And we’ve got some new challenges.  We need a new electric grid.

WALLACE:  But a lot of it is government.  That’s my point.

CLINTON:  No, but it's going to be public/private sector.  I mean, I’m looking for ways to start an infrastructure bank, seed it with federal dollars, but bring in private investors who want to make those commitments.  I believe that America is ready for this, Chris, because we need to rebuild our infrastructure, which will create millions of jobs and lay the foundation for many more millions to come.

(END VIDEOTAPE)

WALLACE:  Coming up, much more from our exclusive interview with Secretary Clinton.  We asked her about Benghazi and the e-mails and her biggest concern when she gave her acceptance speech.  You'll be surprised.

(COMMERCIAL BREAK)

WALLACE:  A look outside the beltway at Pennsylvania's state capitol in Harrisburg, where we have the first interview with Hillary Clinton since she became the Democratic nominee.

Perhaps the biggest challenge the Clinton campaign faces now is trying to deal with the doubts that millions of voters have about her honesty.  We asked her about the key flashpoints -- Benghazi, and her private e-mails.

(BEGIN VIDEOTAPE)

WALLACE:  One of the most dramatic moments in the Republican convention was when Pat Smith, the mother of Sean Smith, one of the people who died in Benghazi, stood up before the convention and blamed you for her son’s death.

(BEGIN VIDEO CLIP)

PAT SMITH, MOTHER OF SEAN SMITH:  I blame Hillary Clinton -- I blame Hillary Clinton personally for the death of my son.  That’s personally.

(END VIDEO CLIP)

WALLACE:  She and the father of Tyrone Woods both say that on the day that their sons' bodies were returned to the United States, that you came up to them and you said it was all because of a video, not terrorism.  Now, I know some of the other families disagree with this, and I know you deny it.

The question is, why would they make that up?

CLINTON:  Chris, my heart goes out to both of them.  Losing a child under any circumstances, especially in this case, two State Department employees, extraordinary men, both of them, two CIA contractors gave their lives protecting our countries, our values.  I understand the grief and the incredible sense of loss that can motivate that.

As other members of families who lost loved ones have said, that's not what they heard -- I don't hold any ill feeling for someone who in that moment may not fully recall everything that was or wasn't said.

WALLACE:  One reason that people question your account, and this gets to the important question of trust, is because that day at Andrews, you never talked about terrorism.  You talked about the video.

(BEGIN VIDEO CLIP)

CLINTON:  We've seen the heavy assault on our post in Benghazi that took the lives of those brave men.  We've seen rage and violence directed at American embassies over an awful internet video that we had nothing to do with.

(END VIDEO CLIP)

CLINTON:  No, that’s not -- that's not fair.  If you go back and read everything that I said that day, I quoted people who talked about it being terrorism.  I had already said it was terrorism.  There was no doubt it was terrorism.

I think there's been a confusion in the minds of some and exploiting that confusion for the advantage of others --

WALLACE:  But I have a quote here that said --

CLINTON:  But look at everything I said, because this goes back on all the investigations.  There were riots, there were protests, there were efforts to breach our embassies.

WALLACE:  Yes, but not in Benghazi.  That wasn’t what that is about.

CLINTON:  No, but I’m just telling you, we were looking at the whole world.  The whole world was aflame.

WALLACE:  The e-mails --

CLINTON:  Yes.

WALLACE:  I want to ask about one aspect, what you told the American people.

(BEGIN VIDEO CLIP)

CLINTON:  I did not e-mail any classified material to anyone on my e-mail.  There is no classified materials.

I am confident that I never sent nor received any information that was classified at the time.

I had not sent classified material nor received anything marked classified.

(END VIDEO CLIP)

WALLACE:  After a long investigation, FBI Director James Comey said none of those things that you told the American public were true.

CLINTON:  Chris, that's not what I heard Director Comey say, and I thank you for giving me the opportunity, in my view, clarify.

Director Comey said my answers were truthful, and what I’ve said is consistent with what I have told the American people, that there were decisions discussed and made to classify retroactively certain of the emails.

I was communicating with over 300 people in my e-mailing.  They certainly did not believe and had no reason to believe that what they were sending was classified.

Now, in retrospect, different agencies come in and say, well, it should have been, but that's not what was happening in real time.

WALLACE:  But in a congressionally hearing on July 7th, Director Comey directly contradicted what you had told the public.

(BEGIN VIDEO CLIP)

REP. TREY GOWDY, R-S.C., CHAIR, BENGHAZI COMMITTEE:  Secretary Clinton said there was nothing marked classified on her e-mails either sent or received.  Was that true?

JAMES COMEY, FBI DIRECTOR:  That’s not true.

GOWDY:  Secretary Clinton said, "I did not email any classified material to anyone on my email.  There is no classified material."  Was that true?

COMEY:  There was classified material e-mailed.

(END VIDEO CLIP)

WALLACE:  He directly contradicted --

CLINTON:  Well, I --

WALLACE:  Well, let me just say -- he not only directly contradicted what you said, he also said in that hearing that you were extremely careless and negligent.

CLINTON:  Well, Chris, I looked at the whole transcript of everything that was said, and what I believe is, number one, I made a mistake not using two different e-mail addresses.  I have said that and I repeat it again today.  It is certainly not anything that I ever would do again.

I take classification seriously.  I relied on and had every reason to rely on the judgments of the professionals with whom I worked.  And so, in retrospect, maybe some people are saying, well, among those 300 people, they made the wrong call.

At the time, there was no reason in my view to doubt the professionalism and the determination by the people who work every single day on behalf of our country.

WALLACE:  Let's talk about the Clinton Foundation and allegations of pay-to-play, the argument, the allegation that foreign companies and foreign countries either donated big money to the foundation, or paid your husband for big money for speeches in order to influence your work as secretary of state.  In the first 12 years after he left the White House, President Clinton made 13 speeches for which he got $500,000 or more.  Eleven of those 13 were while you were secretary of state, and they were all paid for by foreign interests.

Are we to believe that's just a coincidence?

CLINTON:  Well, there's no truth to any of these allegations.

(CROSSTALK)

WALLACE:  Well, I mean, it is true that they gave -- that they did make these speeches.  They are all (ph) by foreign interests, and he was getting much bigger speaking fees.

CLINTON:  He got -- he gave speeches as soon as he left the White House all the way up until the last year, and he spoke all over the world, as well as throughout America, to all kinds of groups.

But let's get to the nut of your question.  I’m really proud of the Clinton Foundation.  I am proud of the work that it does.  Thanks to the Clinton Foundation, 9 million more people in our world have access to HIV/AIDS drugs because they negotiated contracts that made them affordable.

And there is absolutely no connection between anything that I did as secretary of state and the Clinton Foundation.  So, people can say that, but I’m proud of our philanthropic work, our personal/family philanthropic work, the work of the Clinton Foundation.

I'd like to see Donald Trump's tax returns to find out how much philanthropy he's ever done.

WALLACE:  In your acceptance, you address people's continuing doubts about you.

(BEGIN VIDEO CLIP)

CLINTON:  I get it that some people just don't know what to make of me.

(END VIDEO CLIP)

WALLACE:  Forgive me, Secretary Clinton, but the Americans know what they think of you.  Two thirds of them don't trust you.

CLINTON:  Well, here's what I know, Chris.  I have work to do to make sure people know what I have done and what I will do.  That's part of what this convention was about.

I feel very comfortable that the more people learn about what I have actually done -- not the caricature, but the real deal, as my husband said in his remarks, they will understand why I was elected twice to the United States Senate, in the second time with a 67 percent vote, why my former opponent, President-elect Obama, trusted me to be secretary of state.  Every time I run for an office, though, oh my goodness, all these caricatures come out of the nowhere and people begin to undermine me because when I left office as secretary of state, 66 percent of Americans approved of what I did.

WALLACE:  You don't think that there’s any legitimate reasons people would have doubts about your -- to use the phrase in the polls -- honesty and trustworthiness?

CLINTON:  Well, I think it's fair for Americans to have questions.  I hope you’ll ask Donald Trump why he is so untrusted by the American people.

WALLACE:  I have.

CLINTON:  I have a long record of public service that's actually produced results for people.  So when I talk about what I want to do in public life, what I want to do as president, people can go back and say, hey, you know what?  She said she was going to get health care for America's children.  She did.  Eight million kids now have health care and their families don't have to worry about losing their house to take care of their sick kid.

I’m proud of my record of public service and the results that I’ve gotten to help people have better lives.

WALLACE:  It's been 96 years since women got the right to vote.  A couple questions, has it emotionally fully sunk in yet the barrier you broke?  One more barrier to Americans' full participation in the process, and how emotional was Thursday night for you?

CLINTON:  It was way over the top emotional.  My biggest concern going out there to make that speech Thursday night was whether or not I could control my emotions.

WALLACE:  You say whether you could control your emotions.  What was your concern?

CLINTON:  That I would start crying.  I mean, that was my big concern.  Also watching my daughter and having her waiting on stage when I came out, I was -- I was pretty concerned about whether I’d make it through the speech.

WALLACE:  You talked a lot in the convention about your mom and about her hard childhood and about her resilience and the lessons she taught you.  I wonder in these last few days, have you been thinking of her?  And what do you imagine she's thinking of you?

CLINTON:  Oh, Chris, I thought about her -- well, I think about her every day.  And particularly during the convention, I thought a lot about her when Chelsea got up to speak, because she and my daughter were so close.  And I thought a lot about her when I walked out onto the stage to deliver that address.

And actually, that was the part of the speech that concerned me the most.  Every time I talk about my mom, I get very overcome.  She wouldn’t -- you know, she wouldn't like what you saw at the Republican convention, where, you know, just the outrageous things that were said and the kind of normalization of really offensive rhetoric in our politics.  She wouldn't have like any of that.  She was a big FOX viewer, I will tell you.

WALLACE:  Really?

CLINTON:  Yes, she was.  And I --

WALLACE:  Why didn't you take that from her?

CLINTON:  Well, I once said to her -- and she would get upset, I'll be honest with you, she would get upset when some of the people who had on would say these terrible things about me.  And that was when I was a senator running for president and for the first two years of being secretary of state.

I would say, well, mom, if it upsets you so much, why do you keep watching?  She said, I like some of the people and I have to know what the other ones are saying, so I can understand and be against it.

So I think she had a very strategic reason for watching.  She said to me one time, you know, Hillary, I don't understand.  You were such a wonderful child to raise.  You never gave me a minute's trouble or worry, then you become an adult and you get into politics and I just worry all the time.

So, she would worry, but she would be encouraging and she would say what she said to me when I was 4 years old in the face of a bully, because honestly I think that describes my opponent.  I feel I have to get out there, go back out there, stand up to him, not just on my own behalf, because I can take care of myself, but on behalf of all these other people who he has so mistreated in this campaign.

WALLACE:  Secretary Clinton, thank you.  Thanks for talking with us.

CLINTON:  Thank you, Chris.

WALLACE:  Safe travels.

CLINTON:  Thanks a lot.  Take care.

(END VIDEOTAPE)

WALLACE:  Up next, we'll bring in our Sunday group to discuss Clinton and Trump and what to look for over the next 99 days.

Plus, what would you like to ask the panel about where the presidential race stands now that both conventions are over?

Just go to Facebook or Twitter @FoxNewsSunday, and we may use your question on the air.

(COMMERCIAL BREAK)

WALLACE: Coming up, the general election is officially on.

(BEGIN VIDEO CLIP)

TRUMP: Trump is going to be no more Mr. Nice Guy.

CLINTON: Imagine him in the Oval Office facing a real crisis.

(END VIDEO CLIP)

WALLACE:  We’ll ask our Sunday panel where the race stands post conventions next on FOX NEWS SUNDAY.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

CLINTON: He’s taken the Republican Party a long way, from morning in America to midnight in America.

TRUMP: I thought she’d give me a big, fat, beautiful congratulation. You know, if she did that, would that -- would that have been cool?

(END VIDEO CLIP)

WALLACE:  Hillary Clinton going after Donald Trump at the Democratic Convention and Trump apparently disappointed she wasn't nicer to him.

And it's time now for our Sunday group. Syndicated columnist George Will, Fox News political analyst Juan Williams, Julie Pace who covers the White House and the campaign for the Associated Press, and GOP strategist Karl Rove.

Well, Karl, your thoughts about Clinton and her strategy, reaching out, both at the convention and in our interview?

KARL ROVE, FOX NEWS CONTRIBUTOR: There's a tension in the attempt to conduct the kind of campaign she needs to conduct in order to generate the Obama coalition and reaching out to independents and Republicans. And we saw this in her speech and we also saw it in the interview. Obviously a big concern is the economy. And at the convention she said Obama doesn't get credit, but then she turned and said, we’ve got all these problems, no pay raise, social -- lack of social mobility, income inequality, people are being left behind and here are my answers and my answers are, let’s have another big stimulus bill, let’s have clean energy jobs, like Solyndra, let’s have Obamacare. We need to take care of our health care problems. We need to have free college, not for everybody, but for anybody who makes less than $125,000 a year. And we need to infrastructure banks, which she repeated this morning. Exactly the kind of, you know, insider deal. Let’s say -- use taxpayer money to put -- to -- to set up something that private people can make money off of.

And how are we going to pay for all of this? The Democratic Party is no longer the party of main -- of Kaines (ph). It is now the party of Willie Sutton. She said, we’re going to raise taxes on the 1 percent and corporations. And why? Quote, "that's where the money is." Well, we have the 1 percent who’s already paying 38 percent of the tax burden. We have the highest corporate tax rates in the country. These kind of things are not -- these are the things that Republicans hate, independents are highly dubious about.

And then, finally, the Supreme Court. Whenever she starts talking about the Supreme Court, it's the thing that causes Republicans, who are deeply suspicious of Donald Trump, to rally to his side because she's talking about appointing a liberal justice to the Supreme Court which will affect everything from the Second Amendment to the -- to the environment, to immigration. You name it, she wants executive powers (INAUDIBLE) nominee (INAUDIBLE).

WALLACE:  Well, she said she’s -- I mean there were some things, Supreme Court decisions, she said she wants to overturn, like Citizens United. And, obviously, she would like to see the court go in the favor of Obama on deportation, deferring that. But she said she doesn't want to overturn gun control and Heller.

ROVE: Well, I've -- I’ve gone to her website. And while you were interviewing her, I went to her website. She is -- she is, frankly, incomprehensible on most things when it comes to gun control. She makes severity points on her website. She wants to ban, quote, "military-style weapons." Well, what are those? Are those hunting rifles that have more than one cartridge in the rifle at any given time? And how is she going to do that, confiscate everybody who’s got an AR-15 that they use for -- today lawful purposes?

She talked about expanding the ability of trial lawyers to sue gun manufacturers. That’s not -- got nothing to do with gun control. That is benefiting a particular interest of the Democratic Party and a funder of her campaigns. And then she talked about terror lists and no-fly lists. Well, we have a comprehensive bill before Congress that has drawn bipartisan support, supported by Senator Cornyn. Throw her support behind that. This really is, frankly, more about symbolism than it is real action.

WALLACE:  Julie, it’s clear from the clip we ran at the beginning about turning morning in America midnight in America. And, frankly the fact that she sat down with us, first time in the campaign, that she is trying to reach out to independents, she is trying to reach out to Republicans who may be disaffected or uncomfortable with Donald Trump. How much is the Clinton camp counting on that?

JULIE PACE, THE ASSOCIATED PRESS: Well, I think that they look at this election and there's no doubt that when it comes, particularly to her domestic policies, that she is much more in line with the Obama coalition than she would be with some independents and Republicans. But you hear this phrase from the Clinton campaign a lot and it’s "permission structure." They feel like there are independents and Republicans out there who are just unnerved by the idea of Donald Trump being commander in chief, but they’re not going to suddenly wake up one day and like Hillary Clinton or align with her on most policies, but they want to give them a permission structure to line up with her. And they feel like a steady hand on foreign policy, a steady hand on commander in chief, someone who understands military threats, threats from abroad, that could be what leads some of these people to line up behind her.

WALLACE:  We asked you for questions for the panel, and we got this on Facebook from Joe Ranger. He writes, "How does the panel feel about Democrats actively pursuing traditional Republican voters and independents disaffected by the Trump effect?"

George, as someone who was so disaffected by Donald Trump that you’re no longer a Republican, how do you answer Joe?

GEORGE WILL, FOX NEWS CONTRIBUTOR: Well, there are a number of them out there, people who are just queasy and they're looking for permission, as they say, to do this. I don't know how many there are. In 2004, the architect of the Bush re-election campaign, also known as Karl Rove, said there were, what, 7 percent, you thought, undecided that year. Clearly, and I think you’d agree, there are many more of those 7 percent --

ROVE: More than twice as much. We had the largest number of undecided that we’ve had since 1992.

WILL: Right. Now, so there are some Democrats, and these are the Democrats who wanted Elizabeth Warren to be her running mate, said, look, there are more Democrats and liberals than Republicans and conservatives. Let's united the Democrats and we win that way.

The problem for Republicans is the day after the convention, the government released the statistic you cited in your interview with Mrs. Clinton 1.2 percent growth in the second quarter. If Mr. Trump --

WALLACE:  Slowest recovery since 1949.

WILL: Right. If Mr. Trump were into making arguments, that would be the argument to take to the country. But he doesn't do that. Instead, his persona keeps getting in the way. And the persona is what is making people queasy. Mitt Romney had an extremely united Republican Party in 2012, and he lost. And when we talk about how many are involved here, 537 Florida votes turned the presidency in the year 2000. So, marginal differences can make huge differences.

Furthermore, I think Mrs. Clinton has to run against the argument that some conservatives make, which is the point of voting is to express an opinion and not voting is an expression of opinion.

WALLACE:  So, big picture, Juan. At the end, now we’ve had the Republican Convention in Cleveland, Democratic Convention in Philadelphia, where do you see this race now?

JUAN WILLIAMS, FOX NEWS POLITICAL ANALYST: Well, I mean let's look at the mechanics of it, Chris. So if you were with rebuilding America now, which is the Trump super PAC, where are they focusing? Where are they putting their money and their ads? The answer is Pennsylvania, Ohio and Florida. So they think if they can get those states into the Trump column, they have a chance to win, to get towards the 270 electoral votes. We’ve seen this weekend Mrs. Clinton, where you interviewed her in Pennsylvania, she's going to go on to Ohio. Trump and Pence, Ohio, Florida. So we can see that that is the focus right not.

But what you look on the ground, you come into some really strange conclusions. Trump's campaign has run no ads. Mrs. Clinton has run 30,000 ads. Trump’s campaign has about 60 staffers. Mrs. Clinton has about 600 staffers. This is a big difference in terms of the mechanics.

And then you think about those states I mentioned to you. In Florida, the Hispanic vote is nowhere near going for Donald Trump. John Kasich, in Ohio, the governor, is strongly anti-Trump. No Republican has won Pennsylvania since 1988. And despite the Trump effort to move the base of the Republican Party from the south into the industrial Midwest, on the theory that the trade argument made by Bernie Sanders could get some disaffected white males to come over to Trump, what we have seen so far is Hillary Clinton reaching out, I think pretty strongly, to white women in those areas saying she's about family and kids. That was a theme of that Democratic Convention.

WALLACE:  Karl, is it that bleak for Trump? I mean, and, as the architect of 2000 and 2004, what would you be advising Trump now in terms of where to go and what to say?

ROVE: I think Juan has depicted some of the contrasts in the style of campaigning, but there is a reason why the Trump campaign is focused on Florida, Ohio and Pennsylvania. If they win those three states plus everything that Mitt Romney won, they will be at 273 electoral votes and go into the White House.

Pennsylvania is up for grabs. Democrat friends of mine who are involved in the Clinton effort readily acknowledge the state is changing. Since 2012 there's been a 200,000 vote shift in registration in Pennsylvania away from the Democrats and towards the Republicans. Similarly in Florida, since 2012, there's been a 300,000 vote change in registration towards the Republicans and away from the Democrats, in a state that Barack Obama won by 94,000 votes last time around.

These states are going to be in contention. But one of the reasons why they’re going to be in contention all the way to end is both major political parties are being disrupted. The Republicans have a problem with college educated, particularly women, but also men. The Democrats have a huge problem with blue-collar, high school educated men and women. As a result, that's why we have the highest numbers of undecided that we’ve had since 1992, and that’s why both political parties have nominees who are drawing a less than historic average among their own party’s adherence. And it’s going to be a close race all the way to the end. But -- but --

WILLIAMS: But, Karl, I think you would acknowledge that --

ROVE: But let me -- let me -- let me -- let me finish.

WILLIAMS: OK.

ROVE: I would agree, though, with -- with Juan that the style of campaigning, the fact that we have this very unconventional campaign that is based around personality, based around their persona, run in an entirely different way, spends more time worrying about Twitter than he does about get out the vote, more time about, you know, his rallies than he does big data, that this is going to be an interesting thing to see how it plays out.

WALLACE:  Julie, quick.

PACE: Well, I was just going to go to 2004 and data. Your campaign in 2004 was really instrumental in -- in formalizing and organizing get out the vote efforts. And I think that if this is a close race, in the end, you do have to give an edge to the Clinton campaign because they actually have mechanisms in place to go out and find their voters and make sure they get to the polls.

WALLACE:  Well, guys, you're stealing time from the next segment, and I want to talk to you about some other stuff. But, you know, this isn’t going to be the last conversation we have. We have 99 days.

We have to take a break here. When we come back, we'll look at some of the key factors in this race starting this week, including a new controversy involving Donald Trump and the parents of that slain Muslim-American soldier. Back in a moment.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

CLINTON: Donald Trump painted a picture, a negative, dark, divisive picture of a country in decline.

TRUMP: She makes it sound like everything’s rosy dory. It's not rosy dory, folks. People are pouring across the border. We have no idea who they are.

(END VIDEO CLIP)

WALLACE:  Trump and Clinton with two very different views of the state of our nation. And we're back now with the panel.

Well, Karl, you know, this is the way it works. Obviously the party that does not hold the White House is going to say things are going to hell in a handbasket, and the party that does hold the White House will say, well, things aren't great, but they're OK and we're going to make them even better. Who’s on firmer political ground at this point, Trump with the -- the statement of pessimism and -- or Clinton, relative optimism, but we’ll make things better?

ROVE: Well, Trump has the better argument to make because -- like, for example, 40 percent of the American people think we're in a recession. We're not, but that's what they think it is.

WALLACE:  But they feel we are?

ROVE: They feel we are. The problem is, is that neither one of them has an advantage on what will win the argument, which is, what is it that you’re going to do? She’s laid out something is not particularly palatable or popular. He has yet to lay out something other than mere platitudes. And even if he’s laid out something like a tax plan, he rarely campaigns on it.

I would say this, though. It's really remarkable that we have two president candidates, neither of whom has confidence in modern sound systems and feel obligated to scream at every single opportunity, whether it’s in front of their respective conventions, or at their campaign rallies.

WALLACE:  Yes, I -- I feel, with both of them, I should say, this is a microphone.

Trump is involved in -- in a brand-new controversy in the last couple of days. At the Democratic Convention, the father of a young Muslim-American, who came to this country, enlisted in the Army and was killed tragically by an IED -- a car -- a car bomb in Iraq in 2004, he called out Trump for his ban on Muslims saying, if it had been up to Trump, his son had never -- would never have been able to come to America in the first case. Trump responded this week on the ABC show "This Week." Let's take a look at both of them.

(BEGIN VIDEO CLIP)

KHIZR KHAN, SON DIED IN IRAQ: Have you even read the United States Constitution? I will -- I will gladly lend you my copy.

TRUMP: He doesn't know that. I saw him. He was, you know, very emotional and probably looked like a nice guy to me. His wife, if you look at his wife, she was standing there, she had nothing to say. She probably -- maybe she wasn't allowed to have anything to say.

(END VIDEO CLIP)

WALLACE:  Juan, this story is blowing up.

WILLIAMS: Well, it blows up, Chris, because it's really speaking to something I think that was emphasized by the Clinton campaign at their convention, which is a sense of who we are, our values as American people. So Mr. Khan powerfully said that if you go to Arlington Cemetery, you can see there people who are of all races, all religions, all creeds, including Muslims. And then went on to add that Mr. Trump has sacrificed nothing. Mr. Trump, as you know, did not serve in the military, got several deferments from Vietnam. But then Mr. Trump responds, as we saw in that clip, by saying that Ghazala Khan, the wife, who was there in a headdress, had nothing to say and may be restrained by her faith and told to have nothing to say. Mrs. Khan then came back and said that she has trouble speaking any time the picture of her son, her dead son, is shown, and that she’s overcome by grief. I think that people on either side of the aisle, conservative or liberal, Republican or a Democrat, knowing what Mr. Trump has said about John McCain, a loser because he was a prisoner of war, is similarly affected by the idea that you would speak negatively about a gold star mother. A woman -- I can't imagine losing one of my boys to something like that. That’s unbelievable. But I’m not sure it’s a game changer. We’ve been looking for game changers with Trump all along.

WALLACE:  Well, I -- let me pick up on that with you, George, because, you know, Trump has made these kind of comments before, specifically as Juan said, back last summer, a year ago, when he said that John McCain wasn't a war hero. It didn't hurt him particularly in the Republican primaries. Does it hurt him now that we're in the general election?

WILL: The straw that broke the camel's back did not break the camel’s back. It was the cumulative weight, the critical mass of straws. And the question is, will there be a critical mass of these things? Just when you think American politics has hit rock bottom, Mr. Trump rises, or stoops, to the challenge of saying there is no rock bottom to American politics and certainly attacking gold star parents is one of these things.

His adherence have said from the first, from last -- from June when he -- in 2015 when he entered the race, he tells it like it is. It's never been clearer to me what the antecedent of the pronoun "it" is. Today the antecedent of the pronoun is flaws intimidated about this gold star couple that we saw on there. And then begins a minuet that we’re now familiar with. (INAUDIBLE) must to their duty and they call the office of Mitch McConnell and they call the office of Paul Ryan and say, well, what do you think about this? And they say, well, we disagree with this, too, but he still ought to be president of the United States.

I really can hardly wait to hear what Mike Pence has to say about this when he's asked today or tomorrow, as surely he will be, what he thinks of these remarks. The good news is this. The point of campaigns is to give voters information on which to base their decision. And they're getting a lot of relevant information.

WALLACE:  I want to, trying if we can, get through two other issues. And one of the them, women. It was quite a moment, a Thursday night. I felt it. I’m sure you felt it, Julie. For the first time in our history to see a woman out on that stage accepting the cheers of the crowd and becoming the first major party nominee for president. In case anybody missed the point, Hillary Clinton made it for them. Here she is.

(BEGIN VIDEO CLIP)

CLINTON: Standing here as my mother's daughter and my daughter's mother, I'm so happy this day has come. I'm happy for grandmothers and little girl and everyone in between.

(END VIDEO CLIP)

PACE: Julie, how big an advantage does the Clinton camp think that is, this sense -- and we saw it with Barack Obama, whether you necessarily agree with them or not, the chance to make history, the chance to break down another barrier?

PACE: Well, it’s interesting with Hillary Clinton because I think in part because we have lived with her for so long in the public eye that you sometimes forget that actually this is a huge milestone for American politics, whether you’re a Democrat or a Republican. And you’ve seen them, slowly through the course of this campaign, embrace that culminating in this convention where it was such a -- such a headline of this convention.

I think that, for Clinton, anything that she can grasp on to that creates more enthusiasm among the Democratic base is to her advantage. That is one of her -- one of her weaknesses, enthusiasm among Democratic voters. If you talk to Democratic women, if you talk to some of these independent and Republican women, particularly older women, mothers who live in suburbs, these are the voters she needs and these are the voters that seem to be most motivated by this.

WALLACE:  We had some more history this week with Donald Trump seeming to invite the Russians to get into the presidential campaign to try to find Hillary Clinton's e-mails and to make them public. Some Democrats called that treason. Some Republicans called it wild overreaction.

Karl, where are new.

ROVE: Donald Trump's statement inviting the Russians to release the 30,000 missing e-mails from her private server was a sign that sarcasm does not travel well on television. He would have been better off making -- going a different direction on that besides calling on the Russians. He's now in a little bit of a quagmire. He ought to get out of it by -- by saying very clearly that what -- what he was doing was making a joke, but -- but -- but saying that -- putting the issue back into the dialogue by saying, it is a question of whether or not she’s  being honest and trustworthy with the American people. If he were smart, he’d play off your interview today and use her words to indict her. She said, that’s not what I hear Director Comey say. Well, as the rest of America heard what Director Comey said, not what she thinks he said. And then she said, I relied on and had every reason to rely on the judgment of the professionals with whom I worked. Who is she blaming for having done that server? Who’s the lawyer who authorized her? Who’s the person who told her to set it up? Who are the professionals whose judgement allowed her to rely on these e-mails.

WILLIAMS: Am I -- am I allowed to interrupt you for a moment here and say you’ve moved brilliantly away from the topic that the interviewer, Mr. Chris Wallace, brought --

ROVE: Thank you. Thank -- thank you. I appreciate the -- I appreciate the --

WILLIAMS: Because the idea that an American politician would invite a foreign government to become involved in our politics, Karl, you know that's wrong. You know that that invites traitorism (ph).

ROVE: Well, if he -- if he -- if he --

WILLIAMS: The word "traitor" comes to mind.

ROVE: No, no, if you had listened closely, you would have said -- heard me say that he shouldn't have done it. And he shouldn’t have done it.

WILLIAMS: Oh, he said -- absolutely. And I'm glad that you're very clear.

ROVE: But just --

WALLACE:  Real -- real quickly because one of us --

ROVE: Just like -- just like John Kerry should not have --

WALLACE:  Real quickly.

WILLIAMS: Oh, he we go again.

ROVE: Accused -- accused -- accused us of --

WALLACE:  Guys, 30 seconds.

ROVE: (INAUDIBLE) al Qaeda involved.

WALLACE:  George Will, just don’t pay any attention to them because you wrote a column about this today. What do you make of Trump’s seeming affinity for Vladimir Putin?

WILL: Last summer he was asked about that reports, some of the evidence that Mr. Putin kills journalists and political opponents. He said, our country does plenty of killing also, and at least Trump's a leader. He admires strength, as he understands it. That's why he semi-admires Saddam Hussein and those who conducted the massacre in Tiananmen Square.

WALLACE:  Thank you, panel. See you next Sunday. To be continued. And we’ll be back in a moment with a final note.

(COMMERCIAL BREAK)

WALLACE:  One last look at the Susquehanna River in central Pennsylvania, where we sat down with the new Democratic nominee this weekend.

It is good to be back in Washington. And if you noticed something different today, while we were gone, they built us a brand-new set. We hope it will add something to our conversation with our guests and panel.

And that's it for today. Have a great week. And we'll see you next "Fox News Sunday."

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