Marc Short: Ed Gillespie is not an outsider like Trump

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Marc Short: Ed Gillespie is not an outsider like Trump

White House director of legislative affairs reacts on 'The Story' to Virginia's election results.

This is a rush transcript from "The Story," November 8, 2017. This copy may not be in its final form and may be updated.

MARTHA MACCALLUM, HOST: Thank you so much, Bret. Great coverage from China.

We pick up "The Story" from here. So, you could get whiplash today from the torrent of reaction and the tea leaf reading into last night's Democratic wins in Virginia and New Jersey on election nights, that one day each year, we try to figure out what it says about where we are going.

(BEGIN VIDEO CLIPS)

UNIDENTIFIED MALE, CNN: Even within the GOP you are hearing, this was about Trump.

JAKE TAPPER, CNN: It's a good night for Democrats, and I think it was actually to a degree of Trump and, perhaps even more than Trump-ism.

LAWRENCE O'DONNELL, MSNBC: That man and his party have been sharply rebuked.

(BEGIN VIDEO CLIPS)

MACCALLUM: But sometimes they are right, and sometimes they are wrong.

(BEGIN VIDEO CLIP)

PRESIDENT DONALD TRUMP: It's been what they call a historic event, but to be really historic we have to do a great job. And I promise you that I will not let you down.

(END VIDEO CLIP)

MACCALLUM: Yes, it was one short year ago, can you believe it, when the pollsters and the pundits had to eat some crow after getting the race for the White House stunningly wrong.

(BEGIN VIDEO CLIPS)

CHRIS WALLACE, FOX NEWS, NOV. 8, 2016: I think we are all -- at least I'm coming to the conclusion -- conclusion is the wrong word -- open to the possibility Donald Trump could be the next president of the United States.

CHUCK TODD, MSNBC, NOV. 9, 2016: He blew all of our predictions and models and you name it out of the water. This is -- he is going to feel unshackled.

WOLF BLITZER, CNN, NOV. 9, 2016: Donald J. Trump will become the 45th president of the United States, defeating Hillary Clinton in the campaign, unlike anything we've seen in our lifetime.

(END VIDEO CLIPS)

MACCALLUM: Wowza. Remember all that? So, today the president tweeted this photo to commemorate that one year ago: "Congratulations to all of the 'DEPLORABLES' and the millions who gave us a massive" -- and he reminds us of the numbers just in case you forgot, "(304-227) electoral college landslide victory."

So, after a year of the biggest electoral shock in U.S. history, the GOP, last night, loses an off-year election in a blue state. President Trump weighed in early with a tweet from China with this assessment.

"Ed Gillespie worked hard but did not embrace me or what I stand for. Don't forget, Republicans won four out of four house seats. And with the economy doing record numbers, we will continue to win even bigger than before," he says. So, who's right? Are GOP voters sick of this sporadic pace on Capitol Hill? Definitely. Our independence turned off by President Trump? And Virginia? The answer appears to be yes.

But a year after his astounding win, the president is as frustrated as anybody, no doubt, with the sluggish Congress. So, will his outside forces, perhaps like Steve Bannon, sweep out the establishment candidates and bring in more Trump-ish candidates, and can those candidates win? Earlier this evening, I spoke exclusively to Mark Short, White House Director of Legislative Affairs, and asked him if voters are running out of patience with the GOP leadership, and perhaps the Trump presidency.

(BEGIN VIDEOTAPE)

MARK SHORT, WHITE HOUSE DIRECTOR OF LEGISLATIVE AFFAIRS: I don't think voters ran out of patience. In fact, Martha, if you look at the actual federal races, since Donald Trump won the open seats, Republicans are five for five in those open seats, which included last night: granted a Republican district in Utah, but that gives us 240 house members to help deliver on our agenda. The reality is Virginia's been a state that has continued to trend to the left, and Ed Gillespie is one of the smartest political people I know, but it's a tough environment to run in Virginia right now.

And if you look at what happened last year, I think what Americans embraced was the fact that they wanted an outsider who would come to this town and disrupt Washington, which is what President Trump has been doing: to shake up this town and get it responding back to the American people. And for all of Ed's great qualities, it's hard to say he's an outsider the way that Donald Trump is.

MACCALLUM: But you know, the last time he ran in 2014, he won Loudoun County by 450 fixed votes; last night he lost it by 23,000 votes. So, that has a lot of people scratching their head about whether or not, as I said, there's some frustration with what is going on, both on Capitol Hill with Republicans, maybe more so, maybe it's more about that, and perhaps with the president. I mean, you heard all of the (INAUDIBLE); they believe this is a changing tide of last night.

SHORT: I think it's too early to look at what a changing tide is. I think, in fact, what you're seeing again is that five out of five times voters have chosen to re-elect Republican's open seats in Congress. They want us to deliver on the promises we made. There's no doubt there was a lot of frustration this summer when Republicans failed to deliver on our promise to repeal Obamacare when given the opportunity. Now, we have a chance to deliver on the promises of delivering tax relief to the American people. It's important to make sure this economy continues to turn around and actually propel faster to provide growth, to provide more jobs, and provide more financial security to American middle-income families.

MACCALLUM: Let me ask you this, Mark, we have a full screen that shows 12 GOP legislators who have decided not to run again. You know, in most of these cases, if they were sure they were going to win again, it's unlikely that they would be making this choice. What does that tell you?

SHORT: No, I don't agree with that, Martha. I think if you look in many of these districts were members are choosing to retire, they're in very safe Republican districts. In many cases, they're choosing to retire for their own reasons, and I think it's well. I think that Washington has become a frustrating place for many members. We are anxious to accomplish more, and the president's going to stay focused on delivering the promises he made to the American people.

MACCALLUM: All right. Let's talk about that -- let's talk about tax reform and how you think it's going. I know you are part of a meeting where the president phoned in, and you all met with -- a couple of you, you and Gary Cohn, I believe, met at the Library of Congress with some Senate Democrats. What was their reaction to this tax reform bill that is getting a lot of mixed reviews, shall we say, at this point?

SHORT: Well, Martha, I think that what Democrats has said, is they want to ensure that the tax reform package is focused on middle-income families. And for many of these Democrats that in states that Trump won back in 2016 and the upper Midwest, these are states that have seen manufacturing jobs flee America in large part because our corporate tax system is so outdated. So, they're looking for the same things we are; the question is: whether politics will stand in the way. Because what we're delivering on is what the president promised, and what they say is needed in our country. Again, the question remains: will they cross the divide and say this is better for our country, or will this remain a partisan dilemma?

MACCALLUM: So, will they?

SHORT: Look, we are hopeful they will come home. We are having meetings with them to try to say we want your support, we want you to help improve the bill, we want this to be bipartisan, but if they ultimately choose not to, we believe we can get this done with Republican votes.

MACCALLUM: Yes. There are some takes on this, one is from The Wall Street Journal's, Richard Rubin, that makes it look like ten years out. If this is a bill that leaves a lot of people, half of them, fewer than half of U.S. households, still getting any tax cut by that point, and a third would see their tax liability change by less than $100. Do you agree with those numbers?

SHORT: No. I absolutely don't agree. In fact, even the joint taxation committee, which is certainly not a Republican-leaning organization, it's a bipartisan group, has said that every income bracket will receive tax relief. What some people are doing is cherry-picking data because their taxes come down significantly in the first few years, and then in off years, some of the tax credits that we're getting rid of and making the tax code simpler, those fade out.

And so, people see, perhaps, in an aberration in a year, but overall in the 10-year window, everybody's income tax bracket, those taxes go down. So, we're delivering all we have promised, Americans are going to get the tax relief they deserve. In fact, if an average family today makes $59,000 in income in America, what estimates have said is they'll see $4,000 in wage increase and up to $1200 specifically in tax relief. So, we're delivering the tax relief from the targeted income levels we said we would do.

MACCALLUM: All right. When? When does the White House believe that this is going to happen? We watched, you know, Labor Day, we watched Thanksgiving, the end of the year, when is it going to be and do you think it'll pass?

SHORT: Well, yes, we're looking forward to that tomorrow hopefully, Ways and Means Committee pass it out of committee, it comes to the House forward before Thanksgiving. Returns to the Senate, we hope to provide it before Christmas on the president's desk for a bill to sign.

MACCALLUM: All right. So, before Christmas, by the end of the year. Mark Short, thank you very much. Great to see you tonight. Thanks for being with us.

SHORT: Thanks, Martha.

(END VIDEOTAPE)

MACCALLUM: Here with more: Charlie Hurt, Washington Times Columnist; and Jessica Tarlov, Senior Director of Research at Bustle.com, both are Fox News Contributors. Welcome to both you. Good to have you guys here tonight.

CHARLIE HURT, FOX NEWS CONTRIBUTOR AND COLUMNIST FOR THE WASHINGTON TIMES: Hey, Martha!

JESSICA TARLOV, SENIOR DIRECTOR OF RESEARCH, BUSTLE.COM: Hey, Martha.

MACCALLUM: Charlie, this is a repudiation of Trump-ism. This is in part of Virginia, for example, Loudoun County, which I pointed out, which wanted Ed Gillespie to win last time around. 23,000 votes against him this time, what does that really tell you?

HURT: Well, without a doubt, it was a bad night for Republicans in Virginia last night. And the enthusiasm that we saw among Democrats across the board, and I'm glad you went outside -- close to Washington but outside of the direct suburbs of Washington, where Democrats were obviously very, very enthusiastic, and that's a real problem for Republicans going forward. But I have a hard time trying to hang too much of this on Donald Trump. I mean, Ed Gillespie is hardly the face of Trump-ism. He's a former RNC Chairman, a former lobbyist in D.C., former White House Chief of Staff. He's hardly sort of the outsider that Donald Trump ran as. I think what -- in as much as we, you know, this is a reflection of --

MACCALLUM: So, you're saying he was a bad candidate, that he couldn't have won? I mean, if Bannon backed him? The president was tweeting all over the place about him the day of the election, but it took Ed Gillespie a long time to sort of cozy up and saddle up to them.

HURT: Yes. I don't want to say he was a bad candidate simply because, I think, he ran a very admirable campaign. But we have to admit, his biography was not the greatest biography in this environment, especially if you're trying to appeal to Republican voters. Let me just say this one thing: in as much as this was a repudiation of Donald Trump, all we learned is that a state that didn't like Donald Trump a year ago still doesn't like Donald Trump.

MACCALLUM: Still doesn't like him. Pun a little bit more.

(LAUGHTER)

MACCALLUM: All right. So, Jessica, what -- you know, what's the message for the Democratic Party in all of this, Jessica?

TARLOV: That we've got to keep the energy up. I mean, this was the -- I mean, Ralph Northam was supposed to win, but by a slimmer margin. That was a big surprise here, that it was as wide of a margin. Obviously, getting all those delegates is a very big deal. Having our first transgender woman elected to office is something that Democrats certainly wanted and supported.

That's something good about the inclusivity and the diversity of our party that we have African-American lieutenant governor, et cetera. But I think, first and foremost, this is about energy; all the past year since the Women's March, Democrats have been worried, can we keep this up? Can we get people to turn out? Can we get our coalition there? And we did that in Virginia last night and we did that in New Jersey, and we're going to need to do that in 2018 as well.

But I agree largely with Charlie's assessment, I think that the president did hurt at Gillespie in the end. That MS-13 ad, actually, Ed Gillespie's campaign manager came out and commented about that and said that, actually, it was a mistake because it energized Democrats to come out against, and people who might not have cared as much maybe would've even gone that way. But it was an identity politics play, which Republicans do not as well as Democrats.

MACCALLUM: All right. Let me squeeze one more here for Charlie. Charlie, when you look at that list of Republicans who were saying, I don't think I'm going to go through this over the course of the next year. And you look at all of the early polls and looks and gauges of these states, it does not look good for Republicans. Are they faulted the way they were last time in the polls, or is this for real?

HURT: No, I think that it is for real, but I think the bigger problem in a lot of those cases is that they know that in a primary, they could get destroyed by a candidate who is running more on a populist, Trumpist message.

MACCALLUM: Good point.

HURT: I mean, that's a big reason why a lot of those people are choosing not to run again.

MACCALLUM: All right. I got to leave it there, guys. Thank you very much, Charlie Hurt and Jessica Tarlov.

TARLOV: Good luck, Martha. Bye, Charlie.

MACCALLUM: So, stay tuned to Fox News. Donna Brazile will be on with Tucker Carlson tonight. That is must-see appointment viewing. You're going to watch, right, Jessica? We don't want to miss it at 8:00 tonight, that happens.

And still to come right here on "The Story," the GOP bill. Will you really get a tax cut? Will less money come out of your pocket and go to the federal government? House Majority Leader, Kevin McCarthy, joins me with the late details on the latest version, and we have the whip count and what they think Democrats -- Republicans need to do in the House.

And Democrats in distress tonight as Donna Brazile, the aforementioned, now calls the Clinton campaign -- she says, it was a cult. You couldn't even get in there, it was a cult, those people surrounding her. So, given Brazile's concerns also about Hillary Clinton's health, you've got to ask yourself, why wasn't that a bigger story at the time? Across the board?

But first, President Trump in China. A most important stop on this tour. President Xi, he will meet with, he wants to find a way to end the nuclear standoff with North Korea, but they are at odds on so many things. Marc Thiessen and Lieutenant Colonel Michael Waltz on what is at stake in China at this moment with President Trump, when we come back.

(BEGIN VIDEO CLIP)

TRUMP: History is filled with discarded regimes that have foolishly tested America's resolve.

(COMMERCIAL BREAK)

MACCALLUM: So, about two hours away now, President Trump will sit down one-on-one with President Xi. The president arrived at the most crucial shop of this Asian trip, a 12-day trip. It will be a test no doubt in Beijing of wills between two very strong leaders who want their countries to dominate on a global scale, and economic scale, and certainly with regard to national security for their respective countries. Chief White House correspondent, John Roberts, is live traveling with the president tonight in Beijing and he has the story for us. Hi, John.

JOHN ROBERTS, FOX NEWS CHANNEL WHITE HOUSE CORRESPONDENT: Martha, good Thursday morning to you from Beijing. It's also going to be a test of friendship and cooperation as well, and how the North Korean crisis unfolds in the next weeks and months may well rest on what happens here in the next 20 hours.

President Trump is going to go into his meetings this morning with the Chinese President Xi Jinping, asking him to do more, asking for full implementation of the United Nations' Security Council Resolutions against North Korea, but say that's only a baseline. The president would like Xi Jinping to do other things like at least temporarily cut off oil exports to North Korea, freeze North Korean bank accounts in the same way that the United States Treasury Department has, and take all of the North Koreans who are here working in China, and send them all home.

What's not clear at this point though is, A. how much sway Xi Jinping really has over Kim Jong-un, then how much sway he really wants to have? Because China really kind of likes the ideas, North Korea standing as a cultural and political buffer to South Korea that's aligned with the United States and China. And looking way down the road, China doesn't particularly like the idea of a reunified Korean Peninsula that's aligned with the United States.

So, it's in his interest to keep Kim Jong-un in power, though it's likely not in his interest for Kim Jong-un to be developing nuclear weapons, or even be the subject of the U.S. military attack, because that's not good for regional stability, and China likes the way its economy is going. And the economy is in regional instability, a robust economy's, at least, in regional instability don't necessarily go hand-in-hand. Don't forget, there's also another big issue, this is authority one between the two countries, that's the $347 billion trade deficit that the U.S. is running with China. That will be a big topic of conversation as well.

And then later this week, maybe tomorrow or Saturday, President Trump is expected to meet with Russian President, Vladimir Putin, on the sidelines of the APEC conference in Da Nang, Vietnam. I'm told this morning by the National Security Council, that meeting is not yet set, but both sides are open to it. So, if I were a betting man, Martha, I'd say it's likely going to happen. Martha.

MACCALLUM: Fascinating. John, thank you very much. So, with North Korea topping the agenda as John just laid out during this trip, President Trump delivered a hugely consequential speech before the South Korean national assembly in Seoul last night. He delivered some of his strongest words yet for the rogue regime. Watch this.

(BEGIN VIDEO CLIP)

TRUMP: Today, I hope I speak not only for our countries, but for all civilized nations when I say to the North do not underestimate us, and do not try us. We will defend our common security, our shared prosperity, and our sacred liberty. We will not permit America, who are our allies, to be blackmailed or attacked. We will not allow American cities to be threatened with destruction. We will not be intimidated. The weapons you are acquiring are not making you safer, they are putting your regime in great danger. Every step you take, down this dark path, increases the peril you face.

(END VIDEO CLIP)

MACCALLUM: Not a lot of wiggle room there. The fascinating speech last night. Marc Thiessen American Enterprise Institute scholar and was chief speechwriter under President George W. Bush; Lt. Col. Michael Waltz, is a former Green Beret Commander and former Counterterrorism Advisor to Vice President Cheney, both are Fox News contributors. Gentlemen, welcome, good to see you both tonight.

LT. COL. MICHAEL WALTZ, FOX NEWS CONTRIBUTOR, FORMER GREEN BERET COMMANDER AND FORMER COUNTERTERRORISM ADVISOR TO VICE PRESIDENT CHENEY: Glad to be with you.

MACCALLUM: You know, the words, the language of that speech, very forceful. President Trump the other day suggested that North Korea come to the table, that it was time to talk. So, what you make of this sort of, you know, a 1-2 punch that he's giving them?

MARC THIESSEN, FOX NEWS CONTRIBUTOR AND FORMER CHIEF SPEECHWRITER UNDER PRESIDENT GEORGE W. BUSH: Well, first of all, it was a terrific speech, it was a forceful speech as a Reagan-esque speech. And it was the -- if there's going to be a diplomatic solution, North Korea has to believe that the military option is on the table. So, what I think President Trump was trying to do was make very, very clear last night that he is willing to take military action against the North Korean regime. The problem is the North Koreans really don't believe it, and it's going to take not just words, but actions to make to disabuse them of the notion that they're -- that they're untouchable.

I think President Trump has a model for what to do, and it's what he did a few months into his presidency in Syria, after the Syrian regime violated, once again, Barack Obama's red line on not using chemical weapons. After repeatedly doing so, it took him about less than two days to launch a military strike on the base that had launched that chemical attack and that sent a signal to the Assad regime: you are not going to do that again or you're going to face even worse. And I think Donald Trump has to send a similar signal to the North Korean regime.

He has to say to the North Koreans: your days of testing nuclear weapons and ballistic missiles are over; I'm declaring North Korea a no-fly zone for ballistic missile and a no-test zone for nuclear weapons and if you try to test them we will take them out, period.

MACCALLUM: So, basically, Marc is saying that the president needs to put on a redline, Col. Waltz, and if it is stepped over, there has to be a military response. What do you say?

WALTZ: Well, I think, that's absolutely right. And, Martha, just to take a moment, this is such a hugely consequential meeting here with President Xi. The North Korean issue that Marc was just talking to is absolutely the immediate issue, and they have to believe the North Koreans and the Chinese have to believe that either China will take care of this problem or we will.

And I think President Trump is on the path to make them believe this, but the long-term problem, the truly strategic issue here is President Xi believing that he is now the United States' equal in terms of a world superpower. And he just laid out, if you read his speech, in the 19th Communist Party Congress, the path to actually exceed the United States.

And if you look the reactions from gobbling up natural resources around the world, currency manipulation, cyber-attacks, the theft of our IP, we've become accustomed in the United States to dominating space, air, and sea. The Chinese are on the precipice of challenging us in taking a lead because of the theft of our technological edge over the last 20 years.

So, President Trump has to push back. I think he knows President Xi will respect strength. He will also respect, as President Obama never fully figured out, a personal relationship between the two leaders. So, there is so much at stake here for the United States as a leader of the free world. I just can't underscore how consequential this summit is going to be.

MACCALLUM: Marc, what do you think about that? The argument that China has an edge in a lot of ways, and that we've allowed that to happen over the last, I don't know, probably 25 years, right?

THIESSEN: Right. Absolutely. And look, I mean, Bret played it at the end of his show, just China, China, China, China, China from during the campaign. But what President Trump has done is he's put that issue's not on the back burner so much, but he's deemphasized them because he's trying to use that as leverage with the Chinese to get them to take serious action on North Korea. And this is another thing that he's trying to get -- he's not just targeting Kim Jong-un when he says these things. He's also targeting the leadership in Beijing because I don't think they believe that he's willing to take military action.

And so, I think, he needs to reset their expectations in Beijing on this trip. That, yes, he really is willing to take out a North Korean missile, and he's willing to stop to take out a North Korean nuclear test site. And it will be limited to that, because if the North Koreans don't retaliate, just like the Syrians didn't retaliate, then that will be it.

MACCALLUM: Well, this is a president who prides himself on his ability to negotiate, and the conversation that he's about to have in about two hours from now with this president is, as you say, just hugely consequential and fascinating, we'd like to be a fly on the wall. Thank you very much, gentlemen, good to see you both.

THIESSEN: All right. Thanks, Martha.

MACCALLUM: Coming up next.

(BEGIN VIDEO CLIP)

DONNA BRAZILE, FORMER CHAIR, DNC: It was a cult. I felt like it was a cult. You could not penetrate them.

(END VIDEO CLIP)

MACCALLUM: Wow! Donna Brazile, not done hurling attacks at Hillary Clinton and the Clinton campaign. She kept going today in a very big way, Law Professor Jonathan Turley's here. Plus, why he says, Clinton is getting a free pass in the scandal department. Also, the final amendments on the GOP revised tax form are still being worked on at this hour on Capitol Hill, so what is in it? And what does it really mean for you? We are going to ask House Majority Leader Kevin McCarthy some tough questions about the tax bill coming up.

(COMMERCIAL BREAK)

MACCALLUM: So one year ago tonight, about an hour from now, it started to sink in at the Clinton campaign that they were going to lose, and it was shocking. And while Hillary has had many folks that she placed blame on, Donna Brazile was the head of the DNC, and a close friend and advisor to the Clintons for many, many years, has ideas of her own on this now. Watch.

(BEGIN VIDEO CLIP, "MORNING JOE"/MSNBC)

JOE SCARBOROUGH, HOST: It should have never been a close race.

(CROSSTALK)

BRAZILE I agree with you on that, Joe.

SCARBOROUGH: Bottomline it for us, why did they lose? Was it, at the end of the day, arrogance?

BRAZILE: Yes, Joe. It was a cult. I felt like it was a cult, you could not penetrate them.

(END VIDEO CLIP)

MACCALLUM: Fascinating, right? Trace Gallagher live in our west coast newsroom with what else we're learning from Donna Brazile tonight. Hi, trace.

TRACE GALLAGHER, FOX NEWS: Hi, Martha. Along with calling the Clinton campaign a cult, Donna Brazile says the campaign was incompetent and had taken on the odor of failure. She says when she offered advice for more support, the campaign brushed her off. Even last week, Brazile says when she warmed former Clinton campaign manager, Robby Mook, that her book was, quote, dripping with a little hot sauce, meaning controversial, Brazile claims she was again dismiss. But now it appears Brazile herself was watering down the hot sauce, saying she never claimed the Democratic primary was rigged in Hillary's favor.

But here's what she wrote, quoting, I had promised Bernie Sanders when I took the position of interim chair of the DNC that I would get to the bottom of whether or not Hillary's team had rigged the party process in her favor, so that only she could win the nomination. Brazile goes on to write, quote, by September 7, the day I was making this call to Bernie, I had found my proof and what I have found broke my heart. And today, she was pressed on MSNBC, watch.

(BEGIN VIDEO CLIP)

BRAZILE: I did not say the process was rigged. I said I went to find out.

UNIDENTIFIED MALE: But then you said you came back -- you've said proof of it being rigged in the piece, no?

BRAZILE: I've said, no. Really, I've got -- you know, I've got little St. Anthony here, honey. And I said I will get to the bottom of whether or not Hillary's team had rigged the party process in her favor.

(END VIDEO CLIP)

GALLAGHER: St. Anthony the saint of honesty, apparently. Brazile also said she felt betrayed by CNN anchor Jake Tapper in the wake of her decision last year to share Democratic debate questions with Hillary Clinton prior to a CNN debate broadcast. She said Tapper took a swing at her, calling her unethical and journalistically horrifying, even though she didn't work as a journalist, but rather a CNN commentator. And speaking of journalistically horrifying, the opinion page of our corporate cousin the New York Post, is now asking how it's possible that campaign reporters failed to uncover Donna Brazile's claim that because of concerns about Hillary Clinton's health, Brazile tried to replace Clinton with Joe Biden. The Post think it wasn't reported because the media was too focused on defeating Donald Trump. Martha.

MACCALLUM: Yeah. Great piece today by Michael Goodwin. Trace, thank you very much. So my next guest wants to know why the Clinton campaign and the DNC are being given somewhat of a pass for their scandals, but they continue to pile on President Trump. Jonathan Turley is a constitutional law attorney and a George Washington law professor. Professor Turley, always good to see you, thanks for being here tonight.

JONATHAN TURLEY, CONSTITUIONAL LAW ATTORNEY: Thank you.

MACCALLUM: Your piece is fascinating. It says the laws all being flat, which is taken from Thomas Moore, Clinton supporters searched for legal shelter after months of lowering the standards to target Trump, what do you mean by that?

TURLEY: Well, for many months I've been objecting to what I see as a reinterpretation of criminal laws that are adopting such low and amorphous standards that you could charge anybody with most anything, and that's dangerous. But there's this cottage industry of coming up with crimes as you can charge President Trump with. And the result, I think, is that we're going into a very dangerous period where we're using criminal laws as an extension of politics. But what's curious is that now that Hillary Clinton, her campaign, happened to be accused of very similar types of conduct in some respects, many of these same experts are retreating to the narrowness of the criminal code and saying, you know, you can't extend the code that far, and there's really no need to investigate. I just don't think you can have it both ways. It seems to me at this point, and I supported the appointment of special counsel, I think you have to investigate all of this, because the American people are divided. They have no faith at all in the political system, or their leaders. The best the government can offer is really some answers, and I don't see how you can investigate one side and not the other at this point.

MACCALLUM: Yeah. And I remember Hillary Clinton being interviewed the other night and she said, you know, well, our opposition research was just opposition research, that's what everybody does, even though it included paying essentially the Russians to do research and to come up with this dossier on Donald Trump. Now when you flip it over to the other side, that kind of behavior, different circumstances, but similar behavior that has been accused, is clearly seen as collusion.

TURLEY: Yeah. And what's very odd is that some of the things that Hillary Clinton is accused of do not require the same type of gymnastic linguistics that we saw on the Trump side. It doesn't mean that she is guilty of a crime. I'm skeptical that either of these politicians could be charged with a crime, either Trump or Clinton. But she's accused of Uranium One deal of a pay to play scheme. You have $500,000 made it into the Clintons personal account, millions of dollars were given through the foundation. There was a link that's been suggested to a decision of the state department. Now does that mean she committed that crime? Of course not. But that would be a crime. I mean, that's a cognizable crime, you don't have to stretch the code. So I don't see why or how people can maintain this position that, well, we have to keep investigating President Trump, but there's nothing there to investigate for Clinton.

MACCALLUM: It will go one of two ways, either that's a neutralizing factor or it just fuels it all, and I have a feeling that the latter turns out to be the case. Jonathan Turley, thank you very much, always good to see you, sir.

TURLEY: Thanks, Martha.

MACCALLUM: So still to come tonight, this picture is not what it seems. Why the back story is becoming a disturbing trend, when Ben Shapiro joins us coming up.

But first, breaking news now on Capitol Hill tonight, GOP lawmakers leave without a final tax reform bill. So what are the sticking points, folks? House majority leader Kevin McCarthy joins us with a brand- new update tonight on that breaking news when we come back.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI, D-CALIF.: What is happening in these rooms, not as tax reform, not as tax cuts, but a tax scale.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

MACCALLUM: So moments ago, the house ways and means committee left Capitol Hill with no final tax reform bill, some of the most contentious issues, one of the big holdups, the state and local tax deduction. Here now, house majority leader Kevin McCarthy. Good to see you, sir. Welcome, good to have you on The Story tonight.

REP. KEVIN MCCARTHY, D-CALIF., HOUSE MAJORITY LEADER: Thanks for having me on the show.

MACCALLUM: So Paul Ryan said earlier today when he was talking to Brian Kilmeade, everybody's rates will go down, everybody's exemption goes out. Is that really true? Everybody -- every single American across this whole country, their tax rate is going to go down?

MCCARTHY: Yes, because this is what happens, we double the standard deduction. So if you're single, instead of the first 6,000 tax free, it's now 12. A family, if you're a couple, the first 24. If you're a family, an average family of four, the first $55,000 you make is tax free. But then we even lower small business, which creates more jobs, to the lowest rates it's been prior to World War II. Everybody's rate is going down.

MACCALLUM: So there's a bunch of issues here. First of all, you know, people in states like California, I'm sure you're hearing quite a bit from folks at home, because if you lose your state and local tax deduction and you're in a high tax state like New York, New Jersey, California, Illinois, these are the people who are coalescing around voting against this bill. And the number according to the latest whip count goes as high as 14. You can only lose 22. So how are you going to get them onboard? And many of them say, no, no, no, my taxes will actually go up if I lose that deduction?

MCCARTHY: Well, that's just not true. And remember, I'm from California. So what we do in this bill is you lower the rate, you double the standard deduction. Fewer people actually have to itemize. But the other thing that we do here is we eliminate the AMT. So if you take a household in California that has a high salt, which is stated local, what happens is that AMT is actually worth more than that and we eliminate there. We also keep property tax, the average property tax that America.

MACCALLUM: Up to $500,000, right?

MCCARTHY: No, that's a home deduction.

(CROSSTALK)

MACCALLUM: But there's a cap on that property tax.

MCCARTHY: It's $10,000, but you know what the average American pays in a property tax? Twenty five hundred.

MACCALLUM: Yeah.

MCCARTHY: So if you just look at one item, then you'd.

MACCALLUM: That's not true in most of New York, New Jersey or California, it's a lot higher than that, but go ahead.

MCCARTHY: But if you look at the overall tax bill, if you eliminate the AMT, you lower the rates, you move up the standard deduction. What happens is you would pay less tax when you do your entire tax reform. And so that's what happens. I have taken all the IRS data for every congressional district, I have walked members through it, so they can see where it is, and that is the uniqueness of what we have. And from day one, what's going to happen at the start of the New Year, people are going to see more in their paycheck. They'll actually take more home.

MACCALLUM: All right. Well, I think everybody hopes that that is absolutely true. You know, accountants scrambling across the country and people getting out the back of the neck and trying to make sure that what you say is true. And if it isn't true, I'm sure they're going to hold you guys -- your feet to the fire on it.

MCCARTHY: They should hold our feet to the fire. But remember this, the Washington Post -- because the Democrats came out, Nancy Pelosi, and said that the middle-class is going to pay more. They didn't get one Pinocchio, two Pinocchio, or three Pinocchio, the Democrats over the senate got four Pinocchio's. The most you can because.

MACCALLUM: I hear you. Is the tax cut going to be retroactive for all of 2016?

MCCARTHY: No, it's not going to be retroactive for 2016. This is going to be going forward. But there is one element that will be retroactive to September 27, and that's 100 percent expensing for business. So business can make that expensing now, buying that new manufacturing.

MACCALLUM: Right. So they'll do it at the higher rate and the argument is that that's going to be better for them. One more question, corporate tax rates going to 20 percent, is that going to be stretched out over the next couple of years? Or is that going to be effective as of this 2017 tax year?

MCCARTHY: We currently have in our rate right now that it goes into effect. And the one thing people have to think about this corporate rates they had a study come out, that mean 4,000 more dollars into household incomes.

MACCALLUM: All right. You just said that we have it in right now. So I'm thinking that mean that when the senate has it there some wiggle room there, am I right?

MCCARTHY: I think the senate may have a different version. They're going to come out tomorrow. We're going to move this bill out of ways and means tomorrow. We'll have this on the floor next week. The senate will then pass theirs and we'll go to conference. But the one thing you have to remember, they're all tax cuts.

MACCALLUM: All right. Did you feel like there was a message sent last night in that election to all of you?

MCCARTHY: Well, I think that was a very good message to everybody. We need to get this done, and I think it's going to help get tax reform past.

MACCALLUM: All right. Kevin McCarthy, thank you so much, always a pleasure to talk to you, thanks for coming on tonight.

MCCARTHY: Thank you.

MACCALLUM: So when tragedy strikes, we often hear messages like this from our leaders.

(BEGIN VIDEO CLIP)

TRUMP: I also want to take a moment to continue sending our thoughts, prayers and deepest condolences to the victims of the horrific assault on a church.

(END VIDEO CLIP)

MACCALLUM: But in today's politically charged environment, even statements like that have become controversial. Ben Shapiro weighs in on that next.

(COMMERCIAL BREAK)

MACCALLUM: Vice President Mike Pence in Texas tonight meeting with people who lost loved ones in Sunday's devastating church attack. Attending a prayer vigil where he delivers this powerful message.

(BEGIN VIDEO CLIP)

VICE PRESIDENT MIKE PENCE: Encourage every American looking on. Keep this community, keep these precious families, families of the fallen, families of those who are recovering from their injuries, and all of those affected by this horrendous act of evil, in your prayers. Prayers make a difference.

(END VIDEO CLIP)

MACCALLUM: You think those words would not be controversial, but they are not. In fact, going over well with some critics, who are now suggesting that the expressions, thoughts and prayers, is politically charged and that it's wrong. Listen.

(BEGIN VIDEO CLIPS)

SEN. CHRIS COONS, D-DEL., CNN: We see a pattern and elected officials saying we need to send our thoughts and prayers to the families, to the victims, but then not proposing any action.

DON LEMON, CNN: Thoughts and prayers, thoughts and prayers, thoughts and prayers.

Thoughts and prayers didn't stop a troubled person from buying assault grade weapons.

SEN. KRISTEN GILLIBRAND, D-N.Y.: Thoughts and prayers are not going to stop the next mass shooting.

(END VIDEO CLIPS)

MACCALLUM: Joining me now, Ben Shapiro, editor in chief of dailywire.com. Ben, thoughts and prayers, you know, we say it a lot, unfortunately, these days, because we are constantly covering massacres and responding to them, which is in and of itself just a devastating situation that this country finds itself in. Nevertheless, they're genuine, but they're getting criticized.

BEN SHAPIRO, DAILYWIRE.COM EDITOR IN CHIEF: Yeah. Well, I think a lot of the criticism is coming from people who really don't necessarily disagree with thoughts and prayers, but they think if you disagree with them politically your thoughts and prayers must be insincere. So what they really say is that if you vote with them for gun control, then you don't have to either think or pray, and if you do think and pray and devote with then and those thoughts and prayers are sincere, but if not, then your thoughts and prayers are really just cover for you wanting to do nothing.

This is dramatic misunderstanding of what thoughts and prayers are for, particularly prayers. Well, prayer is design to do -- you know, as a religious person, as an orthodox Jew, I pray at least three times a day and regularly between after every meal. And the idea of a prayer is not necessarily to change policy. It's to change yourself, it's to change your community, it's to better yourself, so that God smiles with more favor upon you and your community. It's not always supposed to be just fuel in the tank that you go out and pass gun control proposal the left likes.

MACCALLUM: Well put. We're looking at a situation in another part of this story, and we have covered many of these where there are incidents that occur on campuses and communities where there is a racial or hate incident, crime, how you will, where it turns out that that's not exactly what happened. And we instantly sort of jumped the gun and assume that it is what it appears to be. One was at an air force academy where someone scribbled something on message boards and they were given a severe talking to by the lieutenant general there. Who said if you're outraged by these kinds of words then you're in the right place, and gave everyone a serious talk to over the matter, which would make sense if it turned out that that were true. However, that wasn't what happened at all. What's going on here?

SHAPIRO: Well, I mean, in a lot of these cases, what seems to happen is that the first headline that comes out is an allegation is made of something terribly racist happening at a college. And usually it's in a college and academy, because those are institutions where the administration is particularly sensitive given all the civil rights laws that apply to public universities. Particularly, they have to respond right away and they have to sound off right away, and they have to give credence to the allegations right away. Now, listen, we should take allegations seriously, but we have seen a lot of cases now. It's not a small number of cases. We've seen a lot of cases where people make allegations of a racist slogan that's been drawn or a racist object that has been put out in public view, and it turns out that it was put there by somebody who actually promulgated the story, or it turns out that it had nothing to do with racism in the first place. This is why it's necessary at all of these cases that we actually wait for the evidence to come out before we start condemning universities as racist, or all college students as racist. We live in a really, really delicate time where every allegation -- no one wants to be seen as taking these things non-seriously. No one wants to be frivolous about thus stuff. But that sort of leads to the opposite problem in many cases where we don't even wait for the evidence to come out before jumping on it with both feet.

MACCALLUM: Yeah. Well put. And, you know, the problem is that this part of the story never gets covered, when it turns out that the Muslim teenager on the subway was actually not attacked by anybody. The only thing that ever gets attention of the first part of the story, and it just feeds into this beast that is so problematic, as you point out. We've got to leave it there, thank you very much. Always good to see you, thanks for coming on. So coming up next, a big win for religious freedom at the nation's oldest catholic university, when we come back.

(COMMERCIAL BREAK)

MACCALLUM: So an update now about a story we told her about last month, a victory for religious freedom. Georgetown University, the nation's oldest Catholic university, has ruled that Love Saxa, a group that advocated that marriages between a man and woman can remain on campus. A student had filed a complaint saying that the group's definition of marriage was hate or intolerant. They try to rob the Catholic value student group of their funding at Georgetown, but it didn't work. The Catholic university now says the Catholic students they can keep their club.

So that is our story for tonight. Stay tuned. Tucker Carlson with Donna Brazile as his guest is coming up. We'll see you back here on "The Story" tomorrow night, 7:00 PM. Have a good night, everybody.

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