This is a rush transcript from "The Story," December 28, 2017. This copy may not be in its final form and may be updated.

TRISH REGAN, GUEST HOST: Thank you, good evening. It has been an entertaining year. Thank so much, Mike. "The Story" starts now.

Breaking tonight, "the DOJ and FBI need to be investigating themselves", devastating words from House Intelligence Committee Chairman Devin Nunes, just a short time ago in a strongly-worded letter obtained exclusively by Fox News. Slammed the agency at the heart of the Russia probe for a laundry list of offenses that are "tampering Congress' ability to get the truth" behind one of the most crucial components of the Russia collusion probe -- the anti-Trump dossier.

Nunes, essentially writing that Congress can no longer trust the DOJ or the FBI and that the agencies continued to slow vote his committee's request for documents and interviews. This is just the latest in a series of blows to the credibility of Special Counsel Mueller's probe into the Russian collusion. So, where does this investigation go from here? In just a few moments, we're going to get that answer from House Judiciary Committee Member, Louie Gohmert, who joins me exclusively here on set in New York. But let's begin with Fox News White House Correspondent Kevin Cork, live in Washington with more on this bombshell development. Kevin.

KEVIN CORK, WHITE HOUSE CORRESPONDENT: Hey there, Trish, you're right about that. Listen, when we got this letter from Chairman Nunes, we all were like, this is big and it's such an important letter as it relates to the so-called Trump investigation, the Russia probe, and the Trump dossier. For the first time, we're actually seeing what the committee has been saying for quite some time, and what they've been demanding from both the DOJ and the FBI as it relates to the Trump, or if you will, the Steele dossier.

As you showed there in that letter obtained exclusively by Fox News, Chairman Nunes of the House Permanent Select Committee on Intelligence, it scurries the FBI deal, for lack of a better description, stonewalling it and slow footing the information as it relates to those subpoenas. Which were issued, by the way, Trish, over four months ago concerning the dossier? Nunes, by the way, not the only Republican lawmaker right now who is incredibly frustrated by the stonewalling, if you will. And as someone put it to me today, the abject refusal on the part of the FBI and the DOJ to comply.

(BEGIN VIDEO CLIP)

REP. MATT GAETZ, R-FLA.: The problem is in the swamp of Washington, D.C. The biggest alligator is the politicized FBI and Department of Justice, and that's why we're fighting hard to make sure that we've got a fair and equal opportunity for all sides to be heard.

(END VIDEO CLIP)

CORK: But as you can well imagine, there are a lot of critics out there who were frankly saying that this -- talking about the House Select Committee -- this is politics run amok. Among them, you got it right there on your screen -- former FBI Director Jim Comey, who says, "Sadly we're now at a point in our political life when anyone can be attacked for a partisan game." By the way, Trish, I want to give credit where credit is due, our colleague John Roberts came up with that letter today that you saw there.

A very important piece of work by my colleague, thank you and hats off to him. And I should also point out, there is more to the story. I want you to keep your eye on the calendar for January 3rd. That is the date in which the chairman, Nunes, has given both the FBI and the DOJ to come up with all of the documents that were related back to that subpoena, which we saw all the way back in August. Again, that's the third of January, clearly, that's the date we'll be keeping an eye on, Trish.

REGAN: Wow! A fascinating development. Thank you so much to you and to John Roberts. Joining me right now: Mr. Alan Dershowitz, Harvard Law Professor. Good to see you, Professor Dershowitz, and good to have you on a night like tonight.

ALAN DERSHOWITZ, LAW PROFESSOR AT HARVARD: Happy New Year to everybody. I hope that next year is a great one for everybody.

(LAUGHS)

REGAN: Well, happy new year to you too.

DERSHOWITZ: Thank you.

REGAN: The big concern here is that there may be people within the FBI that are slowing down this process, Chairman Nunes wants a lot of answers. There's a lot of questions about that largely discredited dossier, the Trump dossier, if you would, that may have actually been imparted to fed to us by the Russians themselves. Do you think these questions should be raised? And do you worry that politics is playing too big of a role there at the FBI?

DERSHOWITZ: I do. I also worry that politics is playing too big a role in the Intelligence Committee. That's why from day one, I called for an independent, nonpartisan, 9/11-type of the commission of distinguished Americans who were above party politics to look into every aspect of Russia's attempt to influence our elections and other elections. That way we would've had transparency, we would have had the information coming out. Right now, the investigation of the special counsel is behind closed doors. We do not know what's happening. They decide what to leak, and what not to leak. It's the worst possible way of getting information in trying to cure a problem that affects both Democrats and Republicans and all Americans.

REGAN: Yes. It's well put and well said. In other words, it does affect all of us. We do not want Russia intervening in our elections. And, you know, as we gather some of this out information, occasionally, it sorts of looks like they may have done more on the Clinton side. I mean, given that her team was originally commissioning this dossier. But that aside, I guess, you know, I just -- Robert Mueller -- many of them are calling for him to step down. You know, Chairman Nunes is concerned about the politics at play, as are you on both sides, do you think his credibility, Robert Mueller's credibility of him and his team has been compromised?

DERSHOWITZ: I do, I think that it has been. I think he has not conducted the kind of investigation I expected from them because I knew him and he had an excellent reputation. He should've been more careful about staffing, you have to make sure that everybody who is investigating a president or a former presidential candidate is above reproach, (INAUDIBLE). You should have asked them about any tweets, the messages that they sent. Several of those people should never have been in on the investigation. I think that we have real problems of credibility, but those are all going to help Donald Trump because the pressure is now on Mueller to show the world that he can be fair.

And the way that he can show that he'll be fair is to lean over backward and make sure he does not go after President Trump on phony obstruction of justice charges or emoluments charges. What he should be looking for is any hard evidence of real crimes outside of presidential authority. I don't think he's going to find it, but that's what he should be looking for. Because, otherwise, I think his credibility is damaged. Look, it's the hardest job in the world to investigate a sitting president or a candidate for president, and you just have to do it without making any mistakes. He's made too many mistakes.

REGAN: Well, I'll tell you, you've been telling me from the very beginning here how concerned you were just that once you have the special prosecutor involved, they keep digging and digging -- and that's their job to dig and dig and dig, and they want to find something. Anything, right? Because, otherwise, they feel that they haven't got with what they're set out to do.

DERSHOWITZ: And the American public says, why did we give you so much money for you to come back and say you found nothing? Look, they're going to find the low-hanging fruit -- they already indicted, you know, three people. I do not think the Michael Flynn indictment is going to get them very far because Michael Flynn was offering himself to rent or to buy. He was basically saying through his lawyer, look, if the president wants me on his side, he should pardon me. If the president doesn't pardon me, then I'll go on the other side and be a witness for Mueller. But he's already admitted that he lied to the FBI and I think his credibility --

REGAN: And to the vice president.

DERSHOWITZ: -- and the vice president, but that's not a crime, but it is a crime to lie to the FBI. And his credibility has been destroyed. And any good defense attorney could rip him apart on the stand. He also saved his son from being prosecuted. And so, I don't think he's a very great value as a witness; he might be able to give them leads or tell them who else to see, or provide the documents. But as a witness on the stand, he's virtually worthless.

REGAN: So, how do you sum this up right now? I mean, given that, so far, we do not have anything. So far, they haven't come up with anything that certainly hasn't gotten leaked anyway out there. Do they need to wrap it up soon for the good of the country?

DERSHOWITZ: I would hope so. I think I hope they've decided -- and it would be very smart if they did not to look into obstruction of justice, not to look into emoluments, not to look into anything that's a function of the president doing his job, even if you disagree with the way he's done it. And to just look to see if there any real crimes, you have collusion, although the president denies there's any collusion. Even if they prove collusion, that's not a crime. Collusion is not criminally punishable, except if it's in a business context in violation of the anti-trust laws. So, at the moment, it doesn't seem like they have very much at all except, you know, a few indictments against the few people for the political equivalent of jaywalking that is failing to sign documents in the proper way, failing to disclose this away. It's not -- it's not getting anywhere.

REGAN: Well then, if that's the case, they're doing nothing but wasting a lot of our resources right now.

DERSHOWITZ: I think that's right.

REGAN: It is wonderful to see you tonight. And I hope you're getting a few more dinner invites or you know. Maybe you can make some friends with the conservatives there in town.

DERSHOWITZ: Well, the liberals make better dinner parties. So, I'm losing several pounds now, which is making my wife very, very happy.

(LAUGHTER)

REGAN: There's an upside to everything, right?

DERSHOWITZ: I say what I say on principle. I've been saying the same thing for 50 years no matter who's the president. My real friends stand by me. My political opportunist friends condemn me. But I'm going to continue saying what I believe.

REGAN: Well, Alan Dershowitz, we thank you for doing that.

DERSHOWITZ: Thank you.

REGAN: Thank you so much. All right. Here right now for more reaction: Texas Congressman, Louie Gohmert, Member of the House Judiciary Committee. It's good to see you again.

REP. LOUIE GOHMERT, R-TEXAS: Good to see you again, Trish, thank you.

REGAN: Wow! So --

GOHMERT: And you've got to love Alan Dershowitz, he is consistent no matter what you agree or disagree.

REGAN: You know, and we need that out there, because, you know, right now things have become so divided and so polarized, and so political. And all we want is the truth.

GOHMERT: Exactly, that's what we're looking for.

REGAN: And I know that you know, Devin Nunes is trying to pursue that, and the FBI doesn't want to give him what he needs.

GOHMERT: Yes, one of the things that created problems with Jeff Sessions' recusal is in getting responses. Jeff has to, well, I recuse myself on that area, so I can't really get involved in the response. But I think he's going to have to lay down the law that looks, regardless of what the response is, get it to Congress now.

REGAN: Do you think they're deliberately delaying?

GOHMERT: I think the people that have these answers are, I absolutely do. Because, look at what's happened, for eight years, they have snubbed their noses at Congress, they haven't provided anything. I am still waiting eight years later to get the response from the Justice Department that I ask Eric Holder: give me the documents you gave to convicted terrorists in the discovery of the Holy Land Foundation trial. Now, to Jeff's credit, he's got people that are getting me the documents, but Holder is saying, well, there may be issues of confidentiality. I said you gave them to the terrorist, I think you can give them to members of Congress. Well, that's the kind of problem we've had for eight years. It's getting better, but we're not there yet. So, we have got to have answers.

REGAN: Let me -- the big question and the big concerned is that the FBI might have used that dossier.

GOHMERT: Exactly. Not only that, Trish, but also, don't forget they probably used the visit between, the meeting between Donald Trump Jr. and the Russian lobbyist that didn't have a valid visa, that Loretta Lynch had to specifically approve so she could come in and meet with Trump. He was totally set up. There was nothing to benefit, like they have promised, to help them with the campaign. And so, we realize, uh-oh, since they have been denied the warrant by the FISA court the first time, now they come and see Donald Trump Jr.'s meeting with these questionable Russians that Lynch approved, of course. And then, you've got this dossier, this is too much. I think they used both, but we've to see, we need the answers to know.

REGAN: Congressman, I'm amazed by that, because I got to tell you, you know, this thing was floating out there. The journalists have seen it, organizations have seen it, and nobody published it until, well, Buzzfeed, if you can call them a journalist organization decided to. Because they knew it was tainted, they knew it read like a piece of fiction, if I read the whole thing, and so any credible person would look at that and say, well, I've got to take this one with a grain of salt. Another FBI? And again, we don't know that they did that. What I think that --

GOHMERT: Well, we do know somethings that support it, though. Like, you have a member of the Justice Department that's meeting with Steele that did the Russian dossier. I mean, holy cow, how deep is this? It's -- this is much deeper than anything that they would've ever thought about.

REGAN: I mean, so the Russians could've played us in this? I mean, they could've said, Christopher Steele, all of that information, which then caused our law enforcement to open this investigation. I mean, it is wild. And again, none of this is proven out, but I understand why you're asking me questions.

GOHMERT: Well, it's really outrageous. We just never expected that the Justice Department would participate with a political party's campaign. We know that much is going on. They did work with Fusion GPS, and isn't that the truth? It was a fusion of the Russian information. False as it was with the Democratic Party, with the Justice Department. They did fuse all of the things together, so Fusion GPS's name is appropriate, but we've got to get answers. And I think at this time, even though he's recused on some of the stuff, he can still -- the A.G. can still come in and say, I don't care what the answers are, get them to Congress now. Get them out there now. I don't care if it embarrasses you, get them out there now, or you're out the door quicker than the messages are.

REGAN: All right. Well, lots of interesting things to come, I would imagine. Good to see you.

GOHMERT: We need to get them. It's so good to see you, Trish.

REGAN: Good to have you here in part.

GOHMERT: Glad to be here.

REGAN: Happy New Year!

GOHMERT: Happy New Year!

REGAN: Still to come, everyone, shocking new statistics about the number of illegal immigrants who came into the U.S. during President Obama's last year in office. And it could help bolster President Trump's argument to get something done. Plus, one major Democratic voice is calling out his own party, saying it's time for new blood, first-generation, young generation as leaders. Ed Henry is here with that surprising story next.

(BEGIN VIDEO CLIP)

HOWARD DEAN, FORMER DNC CHAIR AND PRESIDENTIAL CANDIDATE: I think my generation is going to get the hell out of politics, start coaching and start moving up this next generation.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

REGAN: Developing tonight, as we approach the one-year mark for the Trump presidency, the Democratic Party is still trying to determine its future, its vision, its leaders, and its face. And in a surprise move, today, former DNC chair and one-time Presidential Candidate, Howard Dean, said it's time for a new generation to take over. Watch him here.

(BEGIN VIDEO CLIP)

DEAN: I'm very much for somebody who's younger. I think my generation is going to get the hell out of politics, start coaching and start moving up this next generation.

UNIDENTIFIED MALE: So, that means no Bernie Sanders, no Joe Biden, for example?

DEAN: They may well run. I'm going to be supporting somebody who's younger in the next generation. I don't know who is yet.

(END VIDEO CLIP)

REGAN: Fox News Chief National Correspondent Ed Henry is live in Washington with the story tonight. Ed, this is interesting for him to say that. And I guess the big question is: who have they got?

ED HENRY, FOX NEWS CHIEF NATIONAL CORRESPONDENT: Well, Trish, it's a good question, because even if Nancy Pelosi would step down, as the House Minority Leader, it's not like the people waiting in the wings for congressional leadership or the likely Democratic presidential contenders are fresh faces. Take a look, Pelosi and her number three in the Democratic Leadership, Congressman James Clyburn, both 77 years old. Her secondary command, Stenny Hoyer, he's 78. That led Democrat, Linda Sanchez, to declare earlier this month: all three should step down, not just Nancy Pelosi.

More important than their ages, is the fact that several fellow Democrats have been going after Pelosi for her lack of fresh ideas. Expressing anger, for example, on her for initially calling Democrat John Conyers an icon and voicing doubt about the sexual harassment accusers before he eventually had to step down himself. A moderate Democrat from Ohio who challenge Pelosi and lost, Tim Ryan, said that in his home district, Pelosi is actually less popular than President Trump, and that toxicity makes it hard for Democrats to win top races in swing districts where all the Republicans have to do is run T.V. ads tying the Democratic candidate to Pelosi. Watch.

(BEGIN VIDEO CLIP)

REP. SETH MOULTON, D-MASS.: I've been calling for leaders to step down and to allow a new generation of leaders to step up and lead our party forward for a long time.

REP. LINDA SANCHEZ, D-CALIF.: I think that we have this breadth and depth of talent within our caucus, and I do think it's time to pass the torch to a new generation of leaders.

REP. KATHLEEN RICE, D-N.Y.: Nancy Pelosi was a great speaker, she is a great leader, but her time has come and gone.

REP. NANCY PELOSI, D-CALIF.: I respect any opinion that my members have, but my decision about how long I stay is not up to them. I think I'm worth the trouble, quite frankly.

(END VIDEO CLIP)

HENRY: So, Pelosi wants to hang on. And some Democrats talking about her in the past, but here's the thing: some of the Democratic presidential contenders who inspire the most passion on the left have been around about as long as her. Former Vice President Biden, 75; Senator Bernie Sanders, 76; Senator Elizabeth Warren is a relative newcomer at 69-years-old. Howard dean explicitly said that is why he will not be endorsing any of those folks highlighting younger faces like Senator Kamala Harris, L.A. Mayor Eric Garcetti. Howard Dean predicting that like the GOP side the last time, Trish, there are likely to be about 17 Democratic candidates for president, if nothing else that's going to make the media very, very happy.

REGAN: That is for sure. Ed, thank you. It's good to see you again. I know I'm going to get to see even more of you tonight. 11:00 p.m., when you fill in for Shannon Bream, we'll be watching.

HENRY: I want you to stay awake.

(LAUGHTER)

REGAN: I'll be there. All right. Thanks so much, Ed. Here with more right now: Brad Blakeman, he served as Deputy Assistant to President George W. Bush; and Capri Cafaro, the former Democratic Ohio State Senate Minority leader. Good to see you both. You know, Capri, you and I have been talking about this for a while. But it looks like, some sort of main players like Howard Dean are waking up to it as well, the Democratic Party needs new blood.

CAPRI CAFARO, FORMER DEMOCRATIC OHIO STATE SENATE MINORITY LEADER: It is way, way overdue, Trish, there's no question about that. And I think that you know, others in the party need to listen to Howard Dean. I mean, here's a man who actually led the Democratic Party to victory in, you know, almost a decade ago now. And so, I think that he is absolutely right on, and I'm sure that it does not surprise anyone. Tim Ryan, who you played a clip of, who challenged Nancy Pelosi, he's my member of Congress, and he's absolutely right that while certainly, we all have respect for the work that leader Pelosi has done over her tenure, she is more unpopular than President Trump amongst Democrats in many places. You know, including in our home community in Northeastern Ohio, so I think we need to see not only younger people coming into the ranks in the Democratic Party but a diversity and where the folks come from. Because the middle of the country and our voice is being stomped out by the voices of the coast.

REGAN: You know, you get Nancy Pelosi, a very wealthy woman from California who represents what I think, you know, many Democrats are fearful, the party has sort of morphed into. You know, I grew up in an Irish Catholic family, and my dad grew up in a very big Irish Catholic family, and for them, you know, you are a Democrat like you were Irish and like you were Catholic, and it was very working class. And there was a sense that you needed to do more to help the middle-class. And look, this whole last election cycle, Brad, when you look at how Hillary Clinton, you know, refused to go and talk to, you know, minors in Pennsylvania, that had a big effect on people. And it seems as though increasingly with the Nancy Pelosi's and Hillary Clintons of the world, the Democratic Party has become a kind of, sort of, let them eat cake and they forgotten about the very people that they used to serve.

BRAD BLAKEMAN, FORMER DEPUTY ASSISTANT TO PRESIDENT GEORGE W. BUSH: It is a sense of entitlement, it is an intrenchment. But to give Capri a little break, I will say that the challenge is not only for Democrats, it's for Republicans as well. We have to have opportunities in both parties for the younger generations to come up and have the opportunity to serve. I believe that service in an elected capacity should be an opportunity, not a career. There should be serviced, and then you need to go home. Our founders did that.

Our founders were a diverse group of people who were lawyers, and doctors, scientists, and they serve their government, and then they left for their professions. And I think that's the big problem for both Republicans and Democrats. It's up to the people to determine the term, but what I'm saying is the party can have their own internal term limits. The problem is these candidates raise money. And how do you go to a guy who's got $5 million in the bank, and say, you what your time is up? He'll tell you to take a hike, primarily.

REGAN: Go ahead, Capri.

CAFARO: Well, I mean, that's a whole separate problem, frankly. I mean, you have members of Congress that are running on two-year cycles that are doing nothing but raising money in order to just keep their job. I mean, people need to be more focused on the actual job of legislating, but the way that the structure of campaigning is and campaign finance, they have no choice but almost to make fund-raising their full-time job.

REGAN: No, and we did a lot on this last night -- just how much money is pouring in on both sides. And so, this is a frustration people have with Washington. So, this may get back to, sort of, the new fresh young blood that's coming in that isn't beholden to all of the special interest, Brad.

BLAKEMAN: There's no doubt about the outside money has become a pollution to the electoral process. I wrote an article a couple of years ago for Fox News.com about campaign finance reform, and I suggested that you should only donate money to a candidate that you can vote for, so it follows your vote. That would take so much of the outside money out.

REGAN: That's a good idea. We're going to dig that one out. Hey, it's good to see you, guys. Thank you so much, Brad and Capri.

BLAKEMAN: Absolutely.

CAFARO: Thank you.

REGAN: Still to come, everyone, President Trump's strongly worded response tonight to these pictures, showing Chinese ships secretly delivering oil to North Korea. And a shocking new report on illegal immigration in the United States. The record number that entered our country and President Obama's last year in office is positively astounding. We're going to break it down with David Wohl and Richard Fowler right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PRESIDENT DONALD TRUMP: The number of new illegal immigrant families who have crossed the border so far this year already exceeds the entire total from 2015. They are being released by the tens of thousands into our communities with no regard for the impact on public safety or resource.

(END VIDEO CLIP)

REGAN: That was then candidate Trump at the Republican national convention pushing a cornerstone issue of his presidential campaign. And tonight, new immigration data could play a prominent role in the debate over a system overhaul. William La Jeunesse has that story for us tonight.

WILLIAM LA JEUNESSE, FOX NEWS CORRESPONDENT: Well, Trish, those numbers are important because they will help shape the debate in Washington as Democrats push to legalize dreamers, and the administration hopes to end chain migration which has been U.S. policy for the last 50 years. So, according to a new analysis of census numbers the U.S. has seeing a surge of new immigrants, 1.8 million likely for 2016, highest in U.S. history, and 53 percent higher than just five years ago. By contrast, President Obama's last year saw more guest workers and foreign students, virtually no interior or work site enforcement, and no deportation for a visa over states, plus a surge in Central American women and children. Also, for the first time, President Obama allowed spouses of visa holders to work that encouraging more relatives to join green card holders already here in the U.S.

Now, this graph shows where immigrants are coming from, compared to 2005 to 2015, Mexican immigration is cut in half from 400 to under 200,000. Central Americans are up 100,000, Asian immigrants and immigrations from the Middle East double, from Europe it's about flat. Family immigration is a huge multiplier effect, 70 percent of all immigrants according to the White House in the last decade have entered through family-based visas, and we're seeing the effects of it today. But no one is asking how many immigrants can the schools absorb? How many can the infrastructure support? What level is optimum to assimilate? No one is looking at the big picture. That's something you'd hope congress would address in the New Year. Trish, back to you.

REGAN: Thank you so much, William. Here now with more, David Wohl, he's an attorney and conservative commentator, and Richard Fowler, he's a nationally syndicated radio talk show host and Fox News contributor. So good to have you guys here. David, I'm starting with you.

DAVID WOHL, ATTORNEY: Hey, Trish.

REGAN: You know, it just seems kind of obvious. I'm all for people coming here that want to work hard, that want to contribute, that want to be American and be an American. I mean, this is a basic part of immigration, you would think, and yet we've got lottery systems and chain migration, and I don't know if we're putting our best interest first, am I right?

WOHL: Yeah. I mean, it's quite incredible when you think about it, Trish. How about we get a say in who comes into our country, who legally immigrates to our country, and what we do with illegal immigrants? The good news with Mr. Trump, by the way, as we just found out today that the apprehensions of the worst of the worst, the MS-13 gang members, and other violent game members is up 83 percent over the last year. So those are the people Mr. Trump said he was focusing on, and that's precisely what he's doing, the apprehension, the prosecuting and the deportation. Now DACA is coming up, we all know that in the next three to six months. Democrats desperately want legal status dropped to 800,000 of these immigrants who came here as children, but in exchange for that, Mr. Trump is going to get a big deal, he's going to get funding for the wall, he's going to get an end to chain migration, as you said. He's going to get merit-based migration, which means that the best, and the smartest, and the most educated people come to America first. And by the way, there are plenty of those people from all over the world.

REGAN: Absolutely.

WOHL: So Trump has got it going on. He knows what he wants to do and he's going to get it done.

REGAN: Richard?

RICHARD FOWLER, FOX NEWS CONTRIBUTOR: I think it's hard to say what's going to be in this deal. I think it is very true that we will see DACA get done in the New Year, and I think that's because Democrats have pushed for it. And the reason we're having this debate is because the president ended DACA irresponsibly, and so now we're having this conversation. I don't know if we'll end chain migration? And let's remember who chain migration benefited? Remember, the Trump family came here under chain migration, so did Melania's family because they've came also on the chain migration. So, chain migration is a program that has allowed for this country to thrive, right? Because we are a nation of laws and we can all agree on that. But as you said at the beginning of the segment, Trish, we're also a nation of immigrants, and that's what makes America great. It's because they've all come here with their culture, with their idea, and they're allowed to create -- open up businesses, create companies, and be part of the American dream.

(CROSSTALK)

REGAN: I hear you. But, you know -- by the way, we're in a different place than we were 100 years ago or even 60 years ago for that matter.

WOHL: We've got people that are coming here specifically to kill us, and that's a big problem. We can no longer say, well, you can bring your aunt, your uncle, your cousins and your kids over because they're related to you, we just can't do that anymore. The world has been under siege with violent terrorists from the Middle East. And that's why, by the way, Mr. Trump's extreme vetting is taking place, that's why the travel ban has taken place in certain places, because he's the first guy that had said from the White House that, you know -- political correctness is no longer going to be my guiding tool. I'm going to do what's right for America. We are going to be safe, and I will do whatever it takes, and those are three of the tools he's going to use.

FOWLER: A couple of points on that. Point number one, Barack Obama in his last year as president supporting more people than Donald Trump did in his first year as president, number one. Number two, this idea that of painting all immigrants as trying to kill us I think is absurd. For you to come into this country.

WOHL: I didn't say all. I didn't say all, I said a lot.

FOWLER: Well, a lot I think is absurd, right? For you to come to this country.

WOHL: Will you tell that to the people in San Bernardino?

FOWLER: You are pointing to one or two or three different cases, 99.9 percent of the individual that come to this country they work really hard. Most of them work one, two, three, four, five jobs to make ends meet for their family, and all they want to do is pursue the American dream. And this idea that you say a lot paints all of these immigrants with a broad brush and that's wrong.

REGAN: I think what we're talking about here, Richard, is reforming the system so that those people who are working 3 or 4 jobs and wants to embrace everything that's great about this country so that they can come here, because sure we do need them and we want them, we don't want to turn people away that want to embrace and help all of us. But maybe.

(CROSSTALK)

WOHL: Richard is correct in that issue. And by the way, Democrats who said that Mr. Trump would send ICE out to individual homes and raid them and deport people in mass, obviously, he's not doing that because he has deported less people, 50,000 or so. Barack Obama.

(CROSSTALK)

FOWLER: But you can't have your cake and eat it too. You can't say that, oh, President Trump is way better on border security, he's way better on immigration, when President Obama was actually better on border security and better on immigration than President Trump is.

(CROSSTALK) WOHL: He caught people and released them.

FOWLER: He deported more people than Donald Trump did.

REGAN: You know what, that doesn't even matter at this point. What matter is that we fix this for the future so that we do not have people coming here that can't take care of themselves, can't support themselves, that becomes a drain in the system, and we don't want people that want to try to kill us.

(CROSSTALK)

FOWLER: And once again, Republicans sent it away. There was an immigration reform on the floor four years ago and Republicans blocked it.

WOHL: And it's going to get past now.

(CROSSTALK)

REGAN: Good to see you both, Happy New Year.

WOHL: Happy New Year to both of you.

REGAN: fingers cross, good things to come in 2018. Coming up everyone, a big announcement on Capitol Hill, the powerful Republican who says her work is done. She's going to be here for an exclusive interview. But first, two bombings in two days, and terror is being blamed for both. Is this just the beginning of another surge of ISIS? Lieutenant Colonel Michael Waltz is here with his take, next.

(COMMERCIAL BREAK)

REGAN: New tonight, terror being blamed for two attacks in two days, leaving more than three dozen dead, sparking new fears of a new rise in ISIS overseas. Senior foreign affairs correspondent Greg Palkot has the story for us.

GREG PALKOT, FOX NEWS SENIOR FOREIGN AFFAIRS CORRESPONDENT: The word from Russian President Putin today is that blast at a supermarket in St. Petersburg yesterday was terrorism. An IED was planted in the store, it left 13 people injured. Officials say the device contained 7 ounces of explosives and enough shrapnel to really create some damage. No one had claimed responsibility, but at an event today Putin described it as a terror attack and that another was thwarted recently in that city. Apparently, a reference to a tip from the CIA about a possible string of planned bombings. Now there had been a few other bombings and attacks in that city. And Putin went on to say today, if security agents met any more resistance, the terror suspects should be, quote, liquidated on the spot. Seven suspects were arrested in connection with the thwarted plot, they were said to have links with ISIS.

Meanwhile, over in Afghanistan, that country's ISIS offshoot, it was claim responsibility for a horrific bombing today, a packed Shite Muslim cultural center was a target, suicide bombers walked right into the center. They had a gathering there. They have enough seen death and destruction through other explosions around the outside of the building. The latest figures we're getting is 41 killed, 84 wounded, that include students, women and children. Now, Shite's targets have increasingly been hit by the Sunni extremists, ISIS in Afghanistan, it was started in something like 2015, it has been growing in strength as ISIS has been fading in other places like Iraq and Syria. Back in Afghanistan between ISIS and Taliban, that remains a very dangerous place. Trish?

REGAN: Greg, thank you very much. Now here with more, Lieutenant Colonel Michael Waltz, he's a former green beret commander and is a Fox News contributor. Very good to see you, colonel. Wow, we were just talking about how there's been such an improvement in the fight against ISIS, and they have far less territory, but they almost don't need territory, right? I mean, because they can do so much damage in these lone wolf style attacks. Do we work with Putin, can we work with Putin on this as we tried to deal with this serious issue?

MICHAEL WALTZ, FOX NEWS CONTRIBUTOR: Trish, you know, President Trump is absolutely correct and that ISIS is defeated as a state, and as an Islamic state, but it's not defeated as a movement. And certainly, Islamic extremism is not defeated as a movement. You know, frankly, I'm surprised that Russia hasn't been on the receiving end of more of these attacks given that it sided with the Assad regime in Syria, and its airplanes have literally bombed and strait the Sunni opposition for years now. So, I think given that Putin just signed a major agreement with the Assad regime, which is aligned with Iran to expand its presence long term and permanently in Syria. I think that we're going to see more of these attacks. You know, in Afghanistan, 20 of the 40 of the world's recognized terrorist groups exists in the Afghanistan-Pakistan border region. And this is why President Trump's decision was so bold and so critical to stay engaged there. Look, either we're going to fight it and fight this war in places like Kabul or Kandahar, or we're going to fight it in Kansas City. And Trish, if I could just mentioned a number of these groups, the terrorist groups and the number of rogue regimes both Iran, North Korea, Syria are using American citizens as hostages and as bargaining chips against the United States. And tonight, as we speak, they're being tortured, they're being held, they have to be front and center in our strategies whether we're dealing with rogue regimes or we're dealing with these terrorist groups to get these Americans home.

REGAN: You brought up North Korea, and that's increasingly a problem for us. Well, we have new pictures that suggest China is selling oil to North Korea, and this is something the president was not too happy about, especially considering that he had been trying to talk to President Xi and had him at Mar-a-Lago, et cetera. Let me share with you the tweet that he put out today. Frankly saying that they got caught red-handed, very disappointed that China is allowing oil to go into North Korea. There will never be a friendly solution to the North Korean problem if this continues to happen. So, China, colonel, tells us that they're all on board for the sanctions, and then they go sell oil to North Korea? So, how are we going to trust anything China say in this whole dialogue?

WALTZ: Trish, for decades now, literally, decades, China has agreed publicly that North Korea must be denuclearized. They just agreed to a another round of U.N. sanctions, which Nikki Haley deserves credit for getting both the Chinese and Russians on board. But, the proof is in the pudding with enforcement, the Chinese on the one hand just really released custom numbers saying that they cut off oil and gas. That they cut off food stuffs to the North Korean regime, but yet we have this evidence of black-market and other nefarious dealings. So the Chinese have it on their shoulders to peacefully stop this program before it becomes a menace to the world. And I think the president is right in not rolling the dice that Kim Jong-un is a rational actor, and not rolling the dice on an American city and saying, China, you take care of this program or we will.

REGAN: OK. So, we want him out of there. We do now want a Kim Jong-un run -- nuclearize the regime.

WALTZ: To be clear, the policy is not regime change. The policy is Kim Jong-un -- China, you can have your puppet governments, you can have your surrogate, but we're not going to allow his finger on a nuclear-capable ICBM capable of taking out an American city. And it's worth pointing out that our ground-based missile defense in California and in Alaska is only about 50 percent effective. I'm not willing to take that bet once a North Korean ICBM is in the air.

REGAN: I've got to leave it there. But I will only point out there are a lot of economic options here. In other words, we can get tough with China and it doesn't have to be using the military. We can actually say, you know what, we're not going allow this trade, we're not going to allow our corporations to be over there and, by the way, get all their technology stolen.

WALTZ: That's right. And the secondary sanctions against the Chinese entities doing business are critical. We have to do everything before a military option is on the table.

REGAN: Absolutely, we need to move a few dollars and not any lives here.

WALTZ: That's right.

REGAN: Thank you so much. Good to see you.

WALTZ: All right, thank you.

REGAN: Fresh from a major legislative victory for the White House, one powerful Republican says her work is done. Tennessee congresswoman Diane Black is here to get a big announcement for you. That's next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TRUMP: It included the repeal of the individual (INAUDIBLE) which is a disaster. That's (INAUDIBLE) half the privilege of paying a lot of money so that you don't have to buy health insurance, all right? The most unpopular thing which most people thought should have been unconstitutional, but we revealed it.

(END VIDEO CLIP)

REGAN: That was President Trump talking about what could be the next big agenda item for his administration, a revisiting of health care reform. Earlier this week, the president predicting Republicans and Democrats will eventually, he said, quote, come together on the issue. Well, he might have to do it without a key committee chairman. In an op-ed on foxnews.com, Tennessee Congresswoman, Diane Black, announcing she will step down as chairman of the house budget committee, because she's running for governor in 2018, in her home state. Chairman Black, she joins me right now in an exclusive interview. It's so good to see you and, I guess, congratulations are in order.

REP. DIANE BLACK, R-TENN.: Thank you, it's good to be with you this evening.

REGAN: So, walk me through what's next. I know you're leaving, and we're going to talk about your plans in a moment, but what do you anticipate being this, sort of, front and center policy agenda item there in D.C. in '18?

BLACK: So, first of all, I think that we looked back on this last year, and I'm very proud and honored to have served as the budget chairman where all three of these measures, conservative bold measures came through my committee at the beginning of the year. We repealed and had a replacement for Obamacare, unfortunately, the senate didn't follow through. We were able to put out the most conservative budget in 20 years, and begin attacking our deficit spending. Again, the senate did not follow through on their measure. But we did at least change that conversation and the culture there in the House of Representatives, and I think that that will continue this year.

And then, third is to get the tax reform, which really helps those in the middle income and get results for our economy. So I'm very proud of that. And I think that there will be now an effort to maybe go back and look at health care and say, what can we do besides what we did in the tax reform bill of repealing the individual mandate, which will gives people an opportunity to be able to buy the insurance they want at a price they can afford, that's the beginning of this. But there's a lot of other things that can be unraveled in that bill as well.

REGAN: I mean, look, you've got the repeal in, but not the replace parts. So, you know -- but it's going to be challenging. I mean, he may need to bring everybody together, I'm sure that everybody is going to want to weigh in on this. I've looked at it many different times, many different ways, congresswoman, there is not an easy fix for health care. I mean, if it were, somebody else would have figure it out by now.

BLACK: It's not. But I will tell you that here in the state of Tennessee, we were doing it the right way. We had policies within our state that we had that single-payer system. We were the pilot project here in the state of Tennessee. I was the state legislator. When we repealed that and put something in place that really did give people an opportunity to choose what they want at a price they could afford. And when Obamacare came along, we were told here in the state of Tennessee by the Obama administration, no longer can you do what's working in your state.

REGAN: Well, you may have an opportunity to do much more for your state. You're running for governor?

BLACK: I'm running for governor, and I said that I was going to congress to do three things. I've been able to do that. And now I'm going to bring that bold conservative agenda back to the state of Tennessee, a state that I've served in state legislator that I loved. And I'm looking so forward to being back in my state and being a part of the solution here in our state.

REGAN: Well, good luck to you, Happy New Year.

BLACK: Thank you.

REGAN: Congresswoman Black, thank you. We're going to be right back.

(COMMERCIAL BREAK)

REGAN: This is a nice way to end the night, check out this picture just posted by Donald Trump Jr. on Instagram, showing his dad, President Trump, well, photobombing his son and brother Baron there at Christmas dinner. It's pretty cute. I'll see you back here tomorrow night at 7, and tomorrow on Fox Business.

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