Peter Navarro on new tariffs, NAFTA talks and China trade

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Peter Navarro on new tariffs, NAFTA talks and China trade

White House director of trade policy responds to G7 finance chiefs condemning new tariffs targeting U.S. allies.

This is a rush transcript from "Sunday Morning Futures," June 3, 2018. This copy may not be in its final form and may be updated.

MARIA BARTIROMO, FOX NEWS CHANNEL HOST: Good Sunday morning. Thanks for joining us. New details emerging about a letter President Trump's legal team sent to Special Counsel Robert Mueller, the June 12th summit between President Trump and Kim Jong Un is back on and the strong jobs report rating hopes for Republicans ahead of the midterm elections even as concerns loom about a showdown with key U.S. trading partners. Good morning, I'm Maria Bartiromo. Thanks so much for joining us this morning. This is 'Sunday Morning Futures.'

The White House sparked an international backlash by slapping tariffs on the E.U., Canada, and Mexico as another round of trade talks between the U.S. and China end with a warning from Beijing. And President Trump emphatically declares America must be treated fairly on trade. White House Director of Trade Policy Peter Navarro will join me momentarily live. The president's legal team making its case to special counsel Robert Mueller arguing in a letter sent back in January why the president cannot be subpoenaed.

We'll get reaction from Chairman of the House Intelligence Committee Devin Nunes on that and comments made about the Russia probe by his Republican colleague Congressman Trey Gowdy. Also, former House Speaker Newt Gingrich is here on the historic summit between the President and North Korean leader Kim Jong-un scheduled just nine days from right now. Unemployment dips to the lowest level in 18 years after a spectacular May jobs report out on Friday. How will this affect the midterm elections? Our panel weighs in as we look ahead right now on 'Sunday Morning Futures.'

And new reaction this morning regarding President Trump's decision to implement tariffs targeting some of our closest allies. The decision not sitting well with members of the G7 summit who issued a joint statement strongly condemning the measures. Meanwhile, there is talk of retaliation from the European Union, from Canada, and Mexico. President Trump is defending the move despite the global backlash. He tweeted yesterday, unfair trade practices can no longer be tolerated and the U.S. must be treated fairly going forward. I'm joined right now by a member of his administration. Peter Navarro is the White House Director of Trade Policy. Peter, it's good to see this morning. Thanks so much for joining us.

PETER NAVARRO, DIRECTOR OF TRADE POLICY, WHITE HOUSE: Good morning, Maria.

BARTIROMO: So what's your reaction to what we've heard this morning and this weekend from Canada, France, Germany, the UK, Italy, and Japan who all collectively issued a joint statement excluding the U.S. conveying their unanimous concern and disappointment on these tariffs, are you expecting dollar-for-dollar retaliation?

NAVARRO: I'm not worried about reaction. What we have here is President Donald J Trump taking an action that he promised on the campaign trail back in June of 2016 to defend our aluminum and steel industries from going out of business and extinction. As the president has said we need aluminum steel industries if we're going to have a country. And the problem we have Maria is that we got 20 countries including all of those countries you mentioned flooding our markets with steel, putting 50,000 steelworkers out of business in the last decade.

We have 15 countries flooding our markets with aluminum driving that industry to near distinction, and all we're doing here, all we're doing here, all the president is doing is defending this country's national security sovereignty and economic security from those flood of imports. What we expect is our allies, friends, partners to understand two things. One, that we have the right to do that in the interest of national security. And two, they need to look in the mirror at their own unfair trade practices. For example, Europe, if we try to sell a car over there, Europe charges us a high VAT tax and a 10 percent tariff. They want to sell it here, it's -- we give them a 2.5 percent tariff. That's not fair.

Canada just can't -- just kicks us, kicks us, kicks us on lumber and puts people out of work in Maine. They kick us on dairy, puts people out of work in Wisconsin. So these are our friends, they're our allies, they're - - we engaged strategically with them, but at the end of the day this is a trade dispute and the President is going to defend this country. He stands for American workers and he's standing up for them now. Those American workers are also wondering why they're seeing joblessness, why they're seeing an impact to the very states that voted for Donald Trump for this last election. Are you worried that the very areas that this president is targeting aluminum and steel are going to be the states that actually see higher prices and perhaps job losses?

NAVARRO: So in light of Friday's jobs report which the New York Times apparently ran out of superlatives describing it's -- the height of spin to suggest it could be any unemployment. Look, there's been seven times, seven times since 1970, since the unemployment rate has been reported under four percent and the last two quarters was for this presidency. We have a disproportionate amount of the new jobs being created in manufacturing. We have investment off-the-charts. This economy is so strong that nobody should be worried about any of the spin that anybody's saying.

This is a story that's truly remarkable and Donald J. Trump has brought in tax cuts deregulation and trade policies that are working for the American working people. And guess what, on Friday they opened a $1.5 billion groundbreaking aluminum rolling mill in Ashland, Kentucky. Why is that important? It's the heart of Appalachia, and Appalachia is the heart of poverty in America. And guess what, the starting salary at that plant is going to be$65,000 in a community where the average median household income is $44,000 well below the national average.

BARTIROMO: All very good --

NAVARRO: No president, no president has fought the war in poverty better than Donald J. Trump. African-American employment and Hispanic employment is at record lows. So all this idea about people worried about losing their jobs, not going to happen in the Trump economy.

BARTIROMO: Well, because we haven't seen the impact of these tariffs yet. That's the -- precisely why I bring up this point. I mean, I recognize what the president and the administration has done in terms of triggering economic growth, animal spirits once again. The Atlanta Federal Reserve just said that we're looking at 4.7 percent growth for the second quarter so things are good. But the point is once you actually see these higher tariffs and these countries, our allies by the way, fight back and raise their tariffs, that's only going to increase prices is it not? It's going to force producers to actually increase their prices and ultimately fall on the consumer. So how much of a threat are these taxes going to have in terms of cutting into economic growth and the very strong growth that we've seen?

NAVARRO: So I guess -- I guess my point here would be that we've already seen the impacts of the tariffs. Remember, we imposed tariffs on solar panels and dishwashers many months ago. Donald J. Trump had the courage and vision to do that. We haven't seen any of these dire consequences you mentioned. All we've seen is additional new investment in two industries which are critical in terms of creating well-paying jobs for working men and women in this country. So what I would say to the American people is they listen to this spin.

They have to understand that the spin out there amongst the intelligencia and the elites is that we should keep doing what we've been doing for the last 15 years. And as Donald J. Trump said in a tweet yesterday, we lose close to 800 billion a year and the trade war we lost that long ago because the failure of the courage in leadership of people like Barack Obama, George Bush, and Bill Clinton who by the way got us into both NAFTA and China into the WTO which are the two worst deals in American history. So what we're doing -- the president he's just -- he just amazing when he looks at the chessboard. I mean, every single economic indicator, consumer confidence up, business confidence up.

BARTIROMO: Right.

NAVARRO: Fixed investment double what it was --

BARTIROMO: But we're looking ahead -- we're looking ahead and trying to understand what the impact is. I want to get to China so give me a moment though. But first on Canada, before we move on to China. Canada has already said, Justin Trudeau came out said we are going to match dollar for dollar. Is this more about NAFTA or is this the same issue as the other countries? Because you're making a national security issue here, where's the national security with Canada?

NAVARRO: So the national security issue is not about Canada or China or Turkey or any other country that sends us aluminum or steal. The national security issue is a flood of imports from 20 countries that are putting our aluminum steel businesses out of business. And so the national security issue is basically us looking outward defending ourselves against that flood of imports so that these industries can thrive. And guess what, the day those tariffs were announced, Granite City, Illinois this U.S. steel had announced that plant would be reopened, Hawesville, Kentucky, there was a plant that day Century Aluminum, $150 million worth of new investment in modernization, so all of this is working.

This is not aimed at any of the countries that those tariffs are put upon. They're not aimed at those. They're simply defending our industries and we just have to keep making that point and keep working with our allies. Now in the NAFTA thing, Maria, it's very important. There's no connection at all, none whatsoever between the actions taken on the tariffs and the NAFTA negotiations. They are two separate matters. The NAFTA negotiations have been going on for many months now and they're continuing. There's hundreds of people on all sides that sit around tables trying to work that out.

BARTIROMO: So, if there is a new NAFTA deal, will the President remove these tariffs from Mexico and Canada then?

NAVARRO: These are two separate unrelated events and should be treated as such.

BARTIROMO: So no, the answer is no.

NAVARRO: They're two unrelated events. And guess what, there's only two things that are going to happen with the NAFTA renegotiations. Either we're going to get a deal for the American people that basically reduces the trade deficit with Mexico and then allows us to build more fair factories here or we're going to leave NAFTA. The option of staying in the status quo won't hold. And that's the problem. The status quo on trade whether it's with China, with NAFTA, with the Europeans, it just isn't working for the American people. They beat us because they don't play fair. They have higher tariffs than we do, higher non-tariff barriers, and this President, it takes courage and vision to stand up to the swamp, trust me on that.

BARTIROMO: Well, it takes -- it takes courage to stand up to China I get that. I want to ask you about China because here's the headline of the morning in terms of China. I'm reading an article right now and it says China says all trade progress is off if the U.S. imposes these tariffs. Are we willing to throw away the relationship that we have with China to push tariffs and restrictions on the country?

NAVARRO: Well, let's look at the relationship we have with China. We have a $371 billion trade deficit in good which basically ships off two million manufacturing jobs to China every year. That's not so good. We had General Mattis talking about the activity in the South China Sea with respect to China building up all their island, there artificial islands and of course, the big issue that we're fighting -- the president's fighting with Ambassador Lighthizer is this theft of our crown jewels of technology. They take our technology, Maria. Everybody knows they steal it. But they also force the transfer of it, they evade our export controls, and they're coming over here. The Chinese state-owned enterprises coming over here with bags full of money and buying up places like Silicon Valley. So that's a relationship with China that structurally needs to change. We'd love to have a peaceful and friendly relationship with China but we also are standing firm on the idea and the President is the leader on this and he's known this for decades.

BARTIROMO: How far are you willing to go? How far are you willing to go, Peter? China wants to take its companies public on the floor of the New York Stock Exchange. Are you going to push back if they don't stop stealing and say you can't even take your companies public in New York?

NAVARRO: See, I'm not the right person to ask on that. Donald J. Trump is the president. I'm part of a large trade team that interacts with all of the agencies. We sit in places like the Situation Room and talk about how this is going to go.

BARTIROMO: Right, understand. I understand but you're trying to stop China from stealing intellectual property. Peter, they don't even admit it. They say they don't do it. So how do you change a situation where you can't even get them to agree that they are in fact stealing I.P.

NAVARRO: Well we have a -- in motion the president has said that come June 15th they'll be targeted tariffs so on the China 2025 high-tech industries of the future that they tried to take from us and they'll be set investment restrictions on June 30th to prevent them from coming in and buying companies that are in things like artificial intelligence and robotics which by the way are not only the industries of our economic future but they're also the industries that are very important militarily.

BARTIROMO: I get that --

NAVARRO: So the president is taking measured, thoughtful, strategic steps. He's -- this started again back in June of 2016 where he said in Pittsburgh that he would crack down on Chinese theft in intellectual property. He's just doing what he said he's going to do. Its promises made, promises kept and this president is amazing. Just look at the numbers.

BARTIROMO: Peter, it's good to have you on the program. Thanks so much.

NAVARRO: Thank you, Maria.

BARTIROMO: President Trump is doubling down on claims that the FBI meanwhile crossed the line when using an informant to investigate his campaign's ties to Russia. House Intelligence Committee Chairman Devin Nunes will join me next on that. Follow me on Twitter @MariaBartiromo, @SundayFutures. Let us know what you'd like to hear from Congressman Nunes. He's up next as we look ahead on 'Sunday Morning Futures' back in a minute.

(COMMERCIAL BREAK)

BARTIROMO: Welcome back. A letter to Robert Mueller from President Trump's attorneys pushes back on a potential subpoena for the President's testimony in the Special Counsel's Russia investigation. This 20-page letter dated January 29th argues that the White House and transition team have already handed over documents related to the investigation and that the President cannot be forced to testify. Lawmakers also claimed President Trump cannot obstruct justice since he has absolute authority over all federal investigations. House Intelligence Committee Chairman Devin Nunes is joining me right now from the World Ag Expo in Tulare, California. And Congressman Nunes is also a member of the House Ways and Means Committee. Congressman, it's good to see you this morning. Thanks for joining us Mr. Chairman.

REP. DEVIN NUNES, R—CALIF., CHAIRMAN, HOUSE INTELLIGENCE COMMITTEE: Great to be with you as always. Thank you.

BARTIROMO: I want to ask you about this letter in a moment, but first I got to ask you about one of your colleagues Congressman Trey Gowdy and his remarks recently on Fox News when he spoke with our own Martha MacCallum. You've been joining us now for several weeks for over the last year as you continue to investigate what it was that launched the FBI's investigation into Trump potential collusion with Russia, is that right?

NUNES: Yes, that that's correct. And I think that Mr. Gowdy's comments that he made earlier in the week --

BARTIROMO: Wait a minute, we're going to show those. We're going to show those comments. We go this on -- first -- look, I just want to make sure that this is -- that -- your investigation is looking into how that investigation launched. So here's what Trey Gowdy said to Martha just last week.

(BEGIN VIDEO CLIP)

REP. TREY GOWDY, R—S.C.: I am even more convinced that the FBI did exactly what my fellow citizens would want them to do when they got the information they got and that it has nothing to do with Donald Trump.

(END VIDEO CLIP)

BARTIROMO: Congressman, what does Trey Gowdy say there?

NUNES: Well, what he's really talking about there is that Trey Gowdy believes that he has been told multiple times by the Department of Justice that Donald Trump, President Trump is not a target of this investigation. He believes that he's been told that multiple times and so he comes to the conclusion, well, if they were only going after Russians, if the FBI was only going after Russians and Donald Trump is not a target of this investigation, then what is all this about? And so the mainstream media continues to ignore that piece that Mr. Gowdy I think has clearly said now on multiple occasions but was very clear about it last week and that President Trump is not a target of this investigation in his own mind.

Now you have to remember that Mr. Gowdy loves the FBI and the Department of Justice. I think all Americans want to have a good Department of Justice and FBI doing their job. And if they're targeting Russians or Chinese or what-have-you, that's what we expect them to do. However, the challenge we have in this is that they actually targeted a political campaign that was Donald Trump, and that's where I think that even though Mr. Gowdy believes that the President is not a target of this investigation, his campaign is and I think that's where the challenge occurs.

BARTIROMO: So do you think then that the FBI did the right thing in terms of investigating the campaign looking for Russia interference?

NUNES: Well, you know, Mr. Gowdy has you know, under what he's heard, he believes the FBI was doing the right thing. And you know what could solve this? For a year we've been waiting, almost a year now we've been waiting for documents from the Deputy Attorney General. So Deputy Attorney General Rosenstein could provide all the documents, all the information that we need this week and we could write a report. We could write a letter by Friday that says hey, looks like the FBI, it looks like the FBI did everything right. We could -- we could finish this by Friday.

BARTIROMO: Stay with us -- stay with us Devin Nunes, I want to ask you about this, stay with us.

(COMMERCIAL BREAK)

BARTIROMO: And we are back with House Intel Committee Chairman Devin Nunes. And Mr. Chairman, you were just saying a moment ago that we could clear all of this up this week if you were to review the documents. Are you telling us you have yet to see the documents that you've requested from the Department of Justice which gives you a timeline into how this investigation into the Trump campaign started?

NUNES: That is correct. So last August, we issued a subpoena. We should have been provided all of this information that we've been asking for over and over and over again. We issued a new subpoena. And so now we've been waiting. We've attended two briefings. They were very small briefings, not a lot of information but we were happy it was progress. We believe that there are some documents information that we will review this week. What I would say is if you don't have any anything to hide, the Deputy Attorney General knows that Mr. Gowdy would love to exonerate the Department of Justice and the FBI so just provide us all the documents, everything that we're asking for. Let us comb all the way through it and we'll issue a letter on Friday and we'll be done with this, and we'll be -- and we'll be able to say look the Department of Justice and FBI did nothing wrong. There was no FISA abuse that occurred here. There was no issue of opening a counterintelligence investigation into a campaign. There was no issue with looking at how that investigation was opened. If there was any five eyes intelligence that was actually used to open in this investigation, we'd like to see it because we have yet to see it. Those are all outstanding questions, not to mention the questionable timeline of the of the briefings that we have had where we know that the counterintelligence investigation was opened in late July. Well, that's fine. So if that's all the information you have then why are there -- these other strange activities leading up to late July particularly in the spring?

BARTIROMO: I'm just trying to understand this because you broke the news on this program more than a month ago that you've looked for reasons and catalysts to understand how an investigation was opened and launched into the Trump campaign and you said to us based on the five eyes intelligence of all of the -- our partners across the world that there was no intelligence that you could find that was launched that investigation. And yet here you have your colleague Trey Gowdy saying the FBI did the right thing. So I'm trying to understand where the disconnect is.

NUNES: Well, I think on what Trey Gowdy is saying and we got to be very careful because the media has tried to make a bigger deal about this than what it is. What Trey Gowdy is specifically talking about is this small slice of the investigation that we're looking at as it relates to whether or not informants -- an informant or informants were used that's what he's referring to when he talks about that the president's not a target of this investigation. I believe that Mr. Gowdy knows very well and he's been instrumental in helping us get to the bottom of the FISA abuse that that did occur. That is -- that is absolutely for sure.

BARTIROMO: Right. The dossier was unverified and that was used to get a FISA warrant.

NUNES: Yes, and there's new information actually this week that the media is ignoring. So the New York Times has reported in the past that the Australian ambassador -- Australian High Commissioner is the one that brought this to the attention of the United States government. Now, typically that would have gone through FBI channels. It would have went through the Embassy in London and would came across officially across the pond officially --

BARTIROMO: And it didn't?

NUNES: That's what we -- and it didn't. And that's what we would like to have seen. Now, this week we now know that Mr. Downer, the former Australian ambassador, High Commissioner in London said that he had given it to -- the information to the Australian ambassador in the U.S. Well, now we know that that's not true. So Mr. Downer now has claimed that in an Australian newspaper but we now know from sources that have now spoke to different media outlets the Australians are denying that that's how this happened, that the Australian ambassador in the United States had nothing to do with this. And quite frankly, that's what we want our partners in Australia to do. We don't think that they should be investigator and looking into political campaigns and then willy-nilly throwing that information over to the U.S. government and then opening investigations in the political campaign. That's not what we want to see.

BARTIROMO: So, if the president -- if the president is not a target, why are we talking about a potential interview with the special prosecutor? Back to the letter that that Fox News has obtained and that is basically a letter from the senior legal team outlining the -- outlining the reasons why the President should not sit with Robert Mueller and is not going to be subpoenaed and should not be so. If he's not a target, why did they have to send this letter?

NUNES: Well, I agree with you, right? So this is the difference. So Mr. Gowdy believes that he's been told by the Department of Justice on several occasions that Mr. Trump is not a target. But what I keep going back to is that we'll, wait a second, we know for Mr. Comey, he said that the Trump campaign was the reason that they opened up the counterintelligence investigation. So they did open up an investigation in the Trump campaign. And so look, maybe -- I'm not a lawyer. Maybe there's a legal definition - - legal definition as to why he's not part of this. However, I don't think that's the case here. I mean, I just think that it's impossible to believe in normal America, if you open up into the Trump campaign, you absolutely are opening up into Donald Trump himself. That's my opinion. Mr. Gowdy doesn't think so. He's a lawyer. He's worked with DOJ. I don't know who's right but it's one of the things that we have to get to the bottom of.

BARTIROMO: You are investigating the State Department right now to try and understand how the information has flowed ultimately getting to the FBI to launch this investigation. What can you tell us about your investigation into the State Department?

NUNES: Well, that was the new information I was referring to just a little bit ago is that the New York Times had reported that Mr. Downer, the Australian High Commissioner had brought this information through official channels through five eyes intelligence. That didn't happen. We have people in the State Department who say that they absolutely -- that they were involved. So people in the U.S. State Department have admitted they were involved so now we're trying to figure out well, who at the state but Department was involved, did Mr. Downer take this information to the State Department, is that what happened? And did the State Department then take that to the FBI because somehow all the normal procedures and processes were short-circuited in this investigation? And why is this important? It's important because they opened up an investigation into a political campaign, Maria, a political campaign. Not -- we're not talking about you know, terrorism. We're not talking about something criminal. They used our intelligence services by opening up a counterintelligence investigation.

They did not have to convene a grand jury, none of that had to happen here which is why it really falls on the House of Representatives, it falls on the Intelligence Committee. And this is this is why people should be nervous. There's a very few people in this country who can actually get to the bottom of what happened here. I prefer not to have to be doing this. There's a lot of important work that we could be doing but the American people are counting on Congress to get to the bottom of this. We're the only ones with the -- with the classification that -- with the with these clearances that matter to get to the bottom of the situation. And so, even though we don't want to be doing it, we're the ones that have to do it because if we don't who will? And I just don't think members if they're being honest, all the members of my committee don't believe that the counterintelligence capabilities should be used to target a political party, none of -- none of my members on the Republican side.

BARTIROMO: Real quick -- congressman, we're going to take a short break but I've got to ask you about the Google story wherein the search results it says Nazism as an ideology for the Republicans, you as a California congressman. We'll be right back with that stay with us.

(COMMERCIAL BREAK)

BARTIROMO: And I am back with House Intel Committee Chairman Devin Nunes. Mr. Chairman, you've got the primary in California next week and you've also got an I.G. report forthcoming. What are you expecting from the Inspector General's report with regards to the e-mail investigation of Hillary Clinton?

NUNES: Well we're a little disappointed in that that this has been delayed another week. In my experience with this is a lot of time the lawyers get a hold of it and they start to water down the report. So it was supposed - - we were supposed to receive it this week. Now it's been pushed to next week. I know there are some interviews with FBI officials on this this week. These are also officials that we're very interested in because a lot of the Clinton e-mail investigation team are the same people that are involved with the scandals that we're interviewing and we're investigating.

BARTIROMO: And you've got the primary in California on Tuesday, right before that primary, you being a California Congressman, I want to get your take on this because basically as an ideology of the California Republican Party less than a week before the primary, Nazism shows up in the -- in the search results from Google. Google displayed the information in the knowledge panel next to search results which listed Nazism alongside Fiscal Conservativism, Market Liberalism, and ideologies of the state GOP. Your reaction sir?

NUNES: Yes. So we're on the front lines out here in California, I always say this. You know, I'm used to getting attacked. I enjoy getting attacked by these crazy leftists but I think what the American people need to understand is that there is bias against conservatives and Republicans all across this country. And now as you see things, it's always been there with newspapers and television but now as you see it's getting into the internet. You know, it's one of the challenges we have with Millennials. So somebody types in Republican and up comes Nazi.

Well, nobody wants to be affiliated with Nazis. So this is one of the challenges we're having with Millennials. I just looked on Twitter, Drudge, The Drudge Report is being censored today. So for the last three or four days, you know, I haven't been able to get on the Drudge Report because it's being censored on Twitter. So this censorship of conservatives and Republicans and conservative values continues in this country. And here in California, we're on the front lines. I just hope that at some point people realize there's a reason why California is not doing as well as the rest of the country. California is a great, great state.

BARTIROMO: Are we going to see new legislation to try to stop social media from censoring conservative ideas then?

NUNES: Well, the best thing would be is for there to be something -- where a new search engine that actually doesn't censor conservatives. I think there's a free market solution here if somebody can compete with Google. If they can't, then ultimately we're looking at monopolies and then that you know, that brings in a whole other set of circumstances is are these companies Facebook, Twitter, Google, Apple etcetera, are they monopolies and should they be reined in? I would hope we don't have to go there. I would hope that they, you know, just don't get involved in politics and don't censor conservatives and Republicans. But if they continue to do it then we have to move obviously to hearings on these issues.

BARTIROMO: Congressman, it's good to see this morning. Thanks so much.

NUNES: Thank you, Maria.

BARTIROMO: We'll see you soon, Congressman Devin Nunes. Joining me right now is Former House Speaker Newt Gingrich. He's a Fox News Contributor and Author of the new book Trump's America which is out on Tuesday. Congratulations Mr. Speaker. It's always a pleasure to see you.

NEWT GINGRICH, FOX NEWS CHANNEL CONTRIBUTOR: It's good to be with you.

BARTIROMO: Thank you so much for joining us. Your thoughts on this Google Search. You searched California Republicans --

GINGRICH: Well, two things. First of all -- first of all, I think that Google has an obligation to have some system of fixing things like this and being able to do within a couple of hours and I do think they run a risk that they're going to start getting hearings if in fact this is used as an engine of left-wing propaganda, people are going to demand I think real reform. Let me also say and Devin Nunes has been very courageous but let me also say about California. I think John Cox is going to be in the runoff for Governor. I think that makes an enormous difference in California both because the truth is Lieutenant Governor Gavin Newsom is not running that well. Californians is increasing, I think 65 percent of them now believe the cost of living is too high. The Democrats passed a huge gas tax increase and I think that John Cox has a real shot at changing politics in California.

BARTIROMO: Well, what about the midterms? So that's your -- that's our take on Tuesday's primary but you know, there's been a lot of conversation that there's going to be this blue wave, that the Democrats are going to continue to get more seats and you heard Nancy Pelosi say I will be the next Speaker and when I am the next Speaker, I will reform taxes, in other words, raise taxes and do away with the President's tax cut plan. Well and her Deputy said flatly he would raise taxes. That reminded me of Walter Mondale in 1984 saying I promise you I will raise your taxes.

BARTIROMO: It's not a very good selling line right before the midterm.

GINGRICH: Well, I think for everyone in America who thinks that the cost of living is too low, the Democrats are a great party for them because they will raise taxes as they have in California with this huge gas tax increase. I actually believe we are closer to a red wave than a blue wave. Now if you went back to December, frankly, I was concerned the huge generic gap. We had not yet passed the tax cuts. Things didn't feel right. People were upset that they'd had a year and things hadn't been accomplished. But starting with passing the tax cuts, with what President Trump has done consistently on conservative judges on deregulation, on trade negotiations, what he's done with North Korea, I think people now have a sense that we're moving in the right direction.

And as a result, for example in the Senate I think, I can't imagine -- I don't know of anybody who's a serious student who believes the Democrats have any hope of winning Senate. Well, in fact, we're likely to gain seats. I think that Menendez in New Jersey is in trouble because of his scandals. I think that we're very likely to pick up Florida because Governor Scott's a very strong candidate. Then you add in the other Trump States starting with West Virginia, North Dakota, Indiana, Missouri where light could end up being somewhere between plus two and plus six in the Senate. Well, how can you talk about a blue wave if we're gaining votes? I think what happened yesterday in Minnesota where the Democrats went crazy and all of their establishment candidates were defeated the state convention by hard left people, I think -- I think Tim Pawlenty is going to come back and be governor again. We may actually gain governor seats next year this year.

Again, how can you talk about -- the House becomes the issue and there I think it's very simple if we go out and communicate the economic growth issue and communicate, we want to make your life better. That means more jobs more take-home pay, lowest African-American unemployment in history. I think we have a chance to do surprisingly well in the House, maybe become the third time in a century that a presidential party actually gained seats in an off-year election. So I would predict today we're closer to a red wave than a blue wave in terms of the fall campaign.

BARTIROMO: I want to ask you about North Korea. Let's take a break because it seems now this summit between the President and Kim Jong Un is on. It is now nine days away. More Newt Gingrich right after this short break, stay with us.

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BARTIROMO: We're back with former House Republican Speaker Newt Gingrich, Fox News Contributor. Let me ask you Newt, we have this summit now in place June 12th. The president is expected to meet with Kim Jong Un. I'm trying to understand the motivation on Kim Jong Un's part. Why would he go to the table? Is really going to denuclearize?

GINGRICH: Let me -- let me say first of all until they actually walk in the room that day, don't assume it'll happen. I could imagine at breakfast that morning the whole thing blowing up. I mean, this is -- what's happened is the president through tremendous pressure and Mnuchin at Treasury has done a great job of really helping tighten down on the sanctions and the result is that the North Korean economy is in real trouble to such a degree that I think that Kim Jong Un reached the conclusion that he was in danger of having the whole regime implode economically. On the other hand, his father and his grandfather and he have spent three generations enormous privation, huge slave labor camps, tremendous amount of pain building nuclear weapons and missiles. So the question becomes for him, can I cut a deal which enables me to survive or if I sell out everything we've been trying to do, do I get deposed by all these people who have spent their lifetime doing it? If I don't do it, do I end up with my economy collapsing totally?

BARTIROMO: So he's afraid?

GINGRICH: So he's -- I think he's coming in out of fear. The South Koreans have played a huge role in this because they really were frightened that Trump was prepared to go to war and war would be a disaster for South Korea because so much of North Korea's artillery is within reach of Seoul, artillery and missiles. So the question becomes for Trump, can he find and he's got very smart people around him. I mean, Secretary of State Pompeo, Secretary of Defense Mattis, Chief of Staff Kelly, the National Security Adviser Bolton, these are all smart guys.

BARTIROMO: Right.

GINGRICH: Can they find a formula to get the first two or three real steps. You know, you let it, American inspectors, you get three McDonald's. You let in the American inspectors and you denuclearize the first four bombs and you get two golf course.

BARTIROMO: It's a process.

GINGRICH: You know, and I think you have to expect as the President himself said I think yesterday, it's not going to be one magic meeting and everything is solved, but I think the world is grateful that we are talking rather than getting ready to go to war and I think that the President wants it to work if he possibly can.

BARTIROMO: Yes. All right, we'll be watching that. It's great to see you, Newt.

GINGRICH: Great to see you.

BARTIROMO: Thank you so much, former Speaker of the House Newt Gingrich. We'll be right back with our panel, Mark Penn, and former Senator Al D'Amato right here as we look ahead on 'Sunday Morning Futures' back in a moment.

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BARTIROMO: Welcome back. President Trump's lead attorney Rudy Giuliani on the defensive threatening to go to court if special counsel Robert Mueller issues the president a subpoena. Giuliani reacting after a letter from President Trump's legal team to the Special Counsel argues against obstruction of justice. The twenty-page letter sent in January by attorney Jay Sekulow and then Trump lawyer John Dowd lays out the case on why the president should not sit down with Mueller. Our panel today former Clinton strategist Mark Penn. He's the Managing Partner of the Stagwell Group and Chairman of the Harris Poll, also Author of 'Microtrends Squared.' Also with us is Al D'Amato, former New York Senator and Fox News contributor. It's good to see you both.

AL D'AMATO, FOX NEWS CONTRIBUTOR: It's good to be here.

BARTIROMO: Should Donald Trump sit with the Special Counsel Mueller?

D'AMATO: I don't believe so. Not unless there are limitations placed in terms of the time, in terms of the questions so that he and his counsel have an opportunity to review.

BARTIROMO: But why? Some people might say look, if you have nothing to hide why not just sit with him? Mark, what do you think?

MARK PENN, FORMER CLINTON STRATEGIST: Well 64 percent in my latest poll of the American public says hey, I think the President should sit with Mueller. So as we found working with President Clinton, it's hard to say no. The question is can he limit it? Maybe written questions would be the best solution.

D'AMATO: Which is I think Mark has got a good point. The questions have to be limited so that you can see that the scope is proper etcetera. And I would not advise him to sit down unless his attorneys have assurances in terms of time and the scope and the question.

BARTIROMO: Let me let me move on to the investigation into the FBI and the Department of Justice we just heard from Devin Nunes. Mark, you've been writing op-eds for The Hill. You've really -- you're a Democrat, you worked for the Clintons, and yet you've been really neutral and just calling balls and strikes. How do you see things today?

PENN: Well, I still see that we don't have the answer here. How this got started, why there was an independent council, why there are people from the Clinton -- who represented the Clinton Foundation on Mueller's staff? Well you know, all of these questions here remained unanswered and Mueller seems to have runaway power you know, using Stormtrooper tactics almost. I mean, I don't want to go overboard but to really go after people and their family in the ways that he has for unrelated offenses is really all the kinds of things our Constitution was set up to prevent.

BARTIROMO: Do you think that perhaps the FBI and the DOJ are waiting for the clock to run out? That maybe they feel that the Democrats will win Houses in November and then we will not hear another word about this story?

PENN: Oh I do. I do absolutely think there's been really considerable delays. Look, even those Page-Strzok text didn't come out for five months.

BARTIROMO: Lisa Page and Peter Strzok.

PENN: Right. Mueller didn't reveal them when he was asked to by the -- by the House Committee to say why did you fire those people. They kept that under wraps and would never have let the American public know how biased they were, were it not for the Inspector General.

D'AMATO: Well, the fact is thank God for the Inspector General. I agree with you. He's the only one in the Justice Department that is doing justice, number one, but he's limited in terms of what he can do. Secondly, I have to tell you there's an old adage. People don't change their stripes right. Mueller has always been a prosecutors prosecutor. He doesn't care what the facts are, what the law is. If he's determined and he's after somebody, he's determined to get him --

BARTIROMO: You're saying he's after Trump.

D'AMATO: Absolutely.

BARTIROMO: What do you think, Mark?

PENN: Oh he's absolutely after Trump. There's no question about that. Look this --

BARTIROMO: You don't think he's just following the facts where the facts lead him?

PENN: What facts? I mean --

BARTIROMO: Well, he's had guilty pleas, he's had indictments.

PENN: He's got indictments on unrelated charges. The only one that's even conceived related to the Russians and that was a show indictment and lo and behold they showed up and said OK fine, where's your evidence. I mean, this really have been tactics to pressure people to as other people say compose. They haven't been to the subject-matter of a Trump-Russia collusion and I think he's even farther distant from any kind of obstruction of justice charge because it doesn't appear that the President did anything but fire the FBI Director.

BARTIROMO: We could have whatever FBI Director he wants, right? I mean, he's the new President.

PENN: Well, look, I think that that memo was pretty strong. I don't think there aren't -- there are -- there's any circumstance under which he couldn't obstruct justice if he -- if he took a bribe or something.

BARTIROMO: Yes.

PENN: But if he just decided that the FBI Director was unfair and had messed up these investigations, it seems to me he's totally justified in firing him.

D'AMATO: He has a total right to fire one. I agree with Mark.

BARTIROMO: Right. We will leave it there. It's great to see you both, gentlemen.

PENN: Good to be with you.

BARTIROMO: Thank you so much, Senator D'Amato, Mark Penn, always a pleasure. That'll do it for us on 'Sunday Morning Futures.' Thanks so much. I will see you next week on "Mornings with Maria" from 6:00 to 9:00 a.m. Eastern on the Fox Business Network. Stay with Fox News. "Media Buzz" is up next after this short break.

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