This is a rush transcript from "Your World," April 27, 2021. This copy may not be in its final form and may be updated.

NEIL CAVUTO, FOX NEWS ANCHOR: We are live in California, where the effort to recall Governor Gavin Newsom is in full swing and gaining full steam. More than 1.6 million signatures have been deemed valid to force the issue. That's about 100,000 more than state law requires and could set the stage for California's second recall election in less than two decades.

Back in 2003, that groundswell made Arnold Schwarzenegger a governor. No telling what could happen this time.

Caitlyn Jenner is interested. So is the former mayor of San Diego Kevin Faulconer and businessman John Cox, who lost badly to Newsom back in 2018. Many others could follow and probably will, including talk of this woman, Los Angeles bar owner Angela Marsden. Remember her?

This video in the midst of the pandemic last year quickly went viral, as she showed her frustration with a state and a governor that said one thing, but did quite another.

(BEGIN VIDEO CLIP)

ANGELA MARSDEN, OWNER, PINEAPPLE HILL SALOON & GRILL: I'm losing everything. Everything I own is being taken away from me. And they set up a movie company right next to my outdoor patio, which is right over here.

Tell me that this is dangerous, but right next to me is a slap in my face.

(END VIDEO CLIP)

CAVUTO: But Angela Marsden is not done, not by a long shot.

Welcome, everybody. I'm Neil Cavuto and this is YOUR WORLD.

And a message to Governor Newsom: Angela isn't forgetting either. Take a look.

(BEGIN VIDEOTAPE)

MARSDEN: What this governor has put us through, it's traumatizing. You lose your income, you lose your job, and you're out of work for almost a year, over a year, and you get so far behind on your rent.

And you don't know how you're ever going to get caught up or where you're going to land once all this stops. That is traumatizing to people. It's really traumatizing. And so I just -- I hope, I hope and I pray that, with this election, it doesn't become a circus and people take it to heart.

And they get up off that couch and they go out and they get that job and they cast that vote and they don't forget, because while we were losing everything, he was eating and dining out at the most expensive restaurant.

I have it on good accord that his kids skied at Mount Star -- North Star that never closed. His kids were skiing and getting personal teaching through all this.

Our inner-city kids, our kids with single parents are sitting at home alone trying to work a computer, because that's all they have got. Like, they're not out skiing. They're not getting private classes. And these businesses, my fellow business owners, they have lost everything. They have lost what they were going to give their kids as an inheritance.

Some of them are older, and they can't even go get a job and they have lost their source of income. They have lost their dreams. So I hope that we never forget. And, by the way, you were talking about unemployment -- I mean, about minimum wage.

CAVUTO: Right.

MARSDEN: In June or July, they're raising it to $15 an hour on all the small businesses.

I mean, I saw my first profit, Neil, in this month of March, my first profit. And I am trying to be positive, because I'm one of the lucky ones. So I'm constantly fighting my inner self to be positive. But I can't -- I have to be truthful.

The reality is I wake up in night terrors. I wake up wondering, oh, my God, they're going to take away the patio in June. The permit ends in June and not very many people are coming inside. We're at 50 percent capacity with our tables six to eight feet apart. So you can imagine. If you have a 2,000-square foot place, how many people is that going to hold?

CAVUTO: Right.

MARSDEN: And a lot of people don't want to come inside. We're in California. They want to be outside.

So, I finally make a profit in March. It's crazy.

(CROSSTALK)

CAVUTO: You mentioned the governor and this recall election. He's up about eight points from his lows. There's a good possibility he survives this.

If he does, how would you feel about that?

MARSDEN: I honestly -- Neil, I have thought, if someone -- I remember very specifically -- I'm glad you're asking me this.

I remember in the video, when I was in so much pain, I said somebody has to help us, right? And then I realized through this there aren't too many people that are coming through. Maybe it's something we got to do for ourselves.

So, all I can say is, I'm pleading to every -- every Democrat that signed that, every independent that signed that, hashtag #neverforget. Never forget the decisions that this person made, when he didn't have to. He had the science. We have states now that proved that the science was there, Florida, Texas. I mean, I think they just did something in New York; 70 percent of the cases came from people that were isolated inside.

All right, maybe they have made a mistake, or -- so the fact of the matter is, it's poor leadership. And we need accountability. And if this person is going to lie to our face, and smile the entire time, while killing the middle class, strangling the businesses, and putting our great workers on the couch to sit and watch TV and not know how they're going to get out of this mess, don't forget.

It's like battered wife syndrome. You're the one that beat me up and took everything away from me. And now you're here to smile and give it all back to me, and I'm supposed to say thank you and what a great relationship I have with my governor?

There has to be accountability -- excuse me -- and truth.

It's funny. I was looking at the meaning of cherry blossoms that came to mind. And it brought me to the story of Washington, Honest Abe. We need -- we don't need another Hollywood in-crowd. We don't need the cool people running the state. We need people who have walked in our shoes.

And we have a chance and an opportunity right now to pick Cinderella, to pick the person that isn't rich, and doesn't run with the cool crowd, but has walked in our shoes and is honest and is going to do everything they can to bring back the middle class, because there is no middle class here.

CAVUTO: Well, Angela, that sounds -- I'm sorry. We're tight for time.

But, Angela, that Cinderella sounds like you.

MARSDEN: Sorry.

CAVUTO: You have a lot of people who support you and like you and really were moved by you.

And I remember, after our prior chats, I mean, all the e-mails I got saying, run this woman.

Would you ever be interested in that?

MARSDEN: Neil, I have thought about it. My biggest concern is, could I really make the change? I'm not -- in politics, like, am I going to be blocked every time? Like, if I say I'm going to do something, I want to make sure it gets done, because it matters. People's lives matter, you know?

And so I have thought about it. I have thought about it because I have been asked a lot.

(END VIDEOTAPE)

CAVUTO: All right, so you never know. Angela Marsden could, could join a crowded field already hoping to take down Governor Arnold Schwarzenegger -- or the governor presently. Schwarzenegger was the last one to do that.

So, we will see if history repeats itself.

Phil Wegmann of RealClearPolitics, Emily Brooks joining us of The Washington Examiner.

Phil, if I can begin with you on whether the governor should be feeling the heat right now. Governor Newsom has picked up from his lows in the pandemic. It could be a contest. A majority of Californians say they like him. Whether that translates and keeps him in office in the fall, if it comes to this, what do you think?

PHILIP WEGMANN, REALCLEARPOLITICS: He should certainly be concerned, because the lesson that we're learning from the pandemic is that it was a political pressure cooker.

No longer were the decisions of politicians removed. Instead, their decisions were front and center when so many people were stuck at home. And what we just heard, those charges of hypocrisy, of the governor acting one way and then ordering other people to act another way, that resonates with people.

The question now, though, is whether or not that populist rage can really feed a groundswell, grassroots effort that could topple someone who is sitting behind a political machine. Like you mentioned, Newsom is well- liked. He's powerful. And he certainly has a lot of resources at his disposal.

CAVUTO: Emily, a couple of things important that I want to get to you about.

One is, congratulations to your marriage. Now you're Emily Brooks. Very -- congratulations there.

EMILY BROOKS, THE WASHINGTON EXAMINER: Thank you so much, Neil.

CAVUTO: But the other important thing is, what happens in California right now?

Because it's over the worst of the pandemic. It's reopening quickly, still has a ways to go. And I'm wondering if time could be the governor's friend here, or there's such ill will, certainly among many in the business community, that he's going to have the devil of a time. What do you think?

BROOKS: Certainly, as things reopen, as people get vaccinated, as people start getting back to normal, start wearing masks outside once they're vaccinated, it is going to be harder for advocates of this recall effort to make their case, because people are not going to necessarily want to be thinking about the terrible time that they had in 2020.

So, that's really important, I think, for those activists to, like you showed in the last segment, #neverforget. They're going to hammer -- have to hammer that home. And, as you mentioned, Newsom's ratings are up from his lows.

And so they're really going to have to shoot down his approval numbers and his ratings if they want to have a real chance at this. But even if he does overcome this, it is an opportunity for Republicans to use Governor Newsom as an example that they can point to and other places across the country, if this does get some national interest and national coverage.

CAVUTO: The national trend might be his friend too, right, Phil?

I mean, the national reopening going on, and now -- and, certainly, Emily touched on it -- the fact that you won't be required to wear masks anymore if you're outside and you have been vaccinated.

I'm wondering if this is the kind of thing that could influence voters, if it indeed comes down to a recall vote in the fall.

WEGMANN: Yes, Emily makes a really good point, because, in the moment, there is that visceral rage. There's that frustration. There's a reason why that video went viral, because people were living in the moment.

The question is whether or not that frustration turns to resentment and then eventually action. I can certainly see an instance where this is sort of a shot across the bow, where voters are registering their discontent with Newsom, but do they actually show up at the polls and vote him out? That's another question.

And, again, he has a lot of things going in his favor, as the vaccine gets rolled out, as things get back to normal. Sort of the bad times recede from memory. I think that arguing that he screwed up as things are reopening and returning to normal, it's difficult, but, certainly, it's something that the governor cannot ignore.

CAVUTO: All right, guys, I want to thank you both very, very much.

As they were speaking, we are getting a couple of things that could indicate the economic comeback we're seeing right now. Two big technology bellwether names are out with earnings after the bell. And both Microsoft and Alphabet, the parent of Google, had better earnings and revenues than thought. Both stocks are up in after-hours trading.

This is a very crucial week for technology stocks. Apple will be teed up tomorrow, also expecting some pretty strong numbers. This is the wind at the economy's back and. This is what reflects it.

Now, whether it helps someone like a Gavin Newsom in California, that might be a stretch, but it's out there.

Stay with us. You are watching "Your World."

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JOE BIDEN, PRESIDENT OF THE UNITED STATES: Starting today, if you're fully vaccinated, and you're outdoors, you need -- and not in a big crowd, you no longer need to wear a mask.

(END VIDEO CLIP)

CAVUTO: All right, that was welcome news to a lot of Americans who have had it with the mask thing.

But, again, this is limited to those who've already been vaccinated, and only among those who are vaccinated, and outdoors, at that. They did not stipulate what type of crowds it should be limited to, but, bottom line, it's a start.

Peter Doocy at the White House with more.

Hey, Peter.

PETER DOOCY, FOX NEWS WHITE HOUSE CORRESPONDENT: Neil, good afternoon.

That sound bite you just played represents a major policy shift from the federal government. But there is still some fine print when it comes to face coverings.

(BEGIN VIDEO CLIP)

BIDEN: I want to be absolutely clear. If you're in a crowd like a stadium or at a conference or a concert, you still need to wear a mask, even if you are outside.

(END VIDEO CLIP)

DOOCY: Picnics and small gatherings with friends are OK for fully vaccinated people now.

The president says he hopes it'll be safe for everybody by the Fourth of July, if the pace of vaccinations keeps up. For more than a year in the campaign, in the transition, and in the White House, Joe Biden has urged Americans to follow the science.

And today, on his way to make this announcement about the science of safety of being outside without a mask, especially if there are not any people around, the president made a long walk without any people around in a mask, eventually explaining why when asked by a reporter.

(BEGIN VIDEO CLIP)

QUESTION: You chose to wear a mask as you walked out here. What message were you sending by wearing a mask outside alone?

BIDEN: Watching me take it off and not put it back on until I get inside.

(END VIDEO CLIP)

DOOCY: And the new CDC guidance is mostly limited, mostly applies to limited outdoor activities.

The CDC director said today she still believes that people are safer indoors with masks even if they have been fully vaccinated -- Neil.

CAVUTO: Peter, thank you very much for that, Peter Doocy outside the White House.

Martin Bazant with us right now, professor at MIT.

And the good professor was looking into all of this social distancing stuff and these rules that have been in place for the better part of the year right now, found some remarkable things.

Professor, thank you for taking the time.

What do you think, first, Professor, before we get into your work and study, about what's happening and the recommendation on the part of the Biden industry, CDC, more to the point, that it's OK to drop the mask outside among fellow vaccinated folks?

MARTIN BAZANT, MASSACHUSETTS INSTITUTE OF TECHNOLOGY: Well, this seems like a very reasonable plan, certainly starting cautious, but I think welcome to many people, of course.

CAVUTO: All right, so what about those who are not the fully vaccinated yet or haven't even started that process?

Is this a good idea? What do you think?

BAZANT: So, to address the issue of outdoor transmission, it's important to recognize that there are two basic modes of transmission of COVID-19 and other respiratory diseases, which are carried by droplets that contain the pathogen, the virus in this case.

So, one is short-range transmission through puffs of breathing and so- called respiratory jets, and also coughs, which can send larger droplets into the air. That kind of respiration leads to short-range risk that is effectively addressed by distancing, social distancing.

And if you're outside, that can still be potentially a risk of transmission. On the other hand, what my work focuses on is...

CAVUTO: What about -- but what about indoors, then, Professor? I mean, what -- are their rules of thumb on that today? I mean, are we questioning this whole distancing thing?

I mean, some were saying six feet isn't necessary now, three feet is good enough. What's the accurate answer?

BAZANT: Exactly.

So, that's what I was just getting to, that the other type of transmission would be airborne transmission carried by so-called aerosol droplets, which are very small and the size of the human cell, about few microns or less. And those droplets are carried throughout the air, and can be, in fact, inhaled and potentially transmitting infection anywhere in a well-mixed space indoors.

So the way to think about these two modes of transmission is the way we understand the risks from smoking. So, if you're in the presence of a smoking person, and that person breathes directly on you, that's the short- range respiratory jet. That kind of transmission is protected against by distancing, and is most serious when people are not wearing masks.

On the other hand, we also know that, when the smoke breathed out by a smoker is carried away in the room, it becomes diluted, but it's still there. And that's what we call secondhand smoke.

And so the way to think about aerosol or airborne transmission indoors is that there are infectious respiratory droplets that are hanging around in the air. And over time, the risk of transmission does increase. And what my work has done in our recent publication is to provide a quantitative assessment of the time that you can spend in a space, given factors such as the ventilation rate and the size of the space and the number of occupants.

CAVUTO: And what have you concluded, Doctor? I mean, what -- if there are some general rules of thumb that we should keep in mind and things that might -- we might want to avoid?

BAZANT: Yes.

So, I guess the number one thing to keep in mind is that distancing is not protecting you against airborne transmission. So, I think we all understand the benefits that we can get from being three feet or six feet apart, which would give even more protection against those short-range jets.

But we have to keep in mind that anywhere in a room, there is a risk. Now, it doesn't mean that we should be terrified of being in indoor spaces. But we have to, essentially, take advantage of the quantitative guideline that we propose here to assess whether a space really is safe or not.

Now, thankfully, many spaces today, I believe, are relatively safe for transmission. And that's what our guideline would predict, while some others may not be. So, generally large, well-ventilated spaces without a high-occupant density are generally quite safe, especially when one is wearing masks, which is a very efficient way of lowering the transmission that we also quantify.

But we want to be careful about smaller, less ventilated spaces where we spend longer periods of time.

CAVUTO: So, Professor, let me ask you.

I mean, would you feel comfortable going to a baseball game? Now, you're in the Boston area, so that would be a Boston Red Sox game. I don't wish that on anyone.

But, but I'm wondering whether you would feel comfortable in an environment like that.

BAZANT: So, again, our research does not affect -- does not address outdoor transmission.

CAVUTO: Right. Right.

BAZANT: But I do feel that, generally, outdoor spaces are much more safer than indoors. And, in fact, outdoor transitions are quite rare.

So, I would generally feel safe at outdoor spaces, although maybe not in large crowds, though. So it depends on where I'm sitting or where I'm standing in such an event.

CAVUTO: Got it.

So, Yankee Stadium would be a lot better than, let's say, Fenway, if -- well, that's a whole 'nother issue.

Professor, thank you very, very much. Very interesting read on this, inside vs. outside, how to handle that.

All right, in the meantime, all attention on the president's address to a joint session of Congress tomorrow night. It will be different. And I'm not talking about just the fact that he will only be addressing 200 there to keep distancing in effect for that big address to the nation, but what he's going to say.

That could be eye-popping -- after this.

(COMMERCIAL BREAK)

CAVUTO: You know, when the president usually addresses a joint session of Congress, they cram 1,600 people into the well of the House, this time no more than 200.

But it's not who's going to be there. It's all the big numbers the president's going to be spouting tomorrow.

(COMMERCIAL BREAK)

CAVUTO: All right, so what's another $1.5 trillion added to the roughly 2.25 infrastructure plan that the president is trying to get through Congress right now?

There's another measure of that could bring all that spending up to $4 trillion or maybe more.

Jacqui Heinrich has more from Capitol Hill.

I guess, Jacqui, he's going to outline this all tomorrow night, right?

JACQUI HEINRICH, FOX NEWS CORRESPONDENT: That's what we expect, Neil.

The Americans Families Plan is expected to cost around $1.8 trillion, addresses at childcare, paid family leave, free community college and free pre-K. Combined the American Jobs Plan, that would bring the proposed spending to around $4 trillion.

It would amount to one of the most sweeping overhauls of this system in a very long time. But even before its formal announcement, some progressives are saying they want even more.

(BEGIN VIDEO CLIP)

SEN. ELIZABETH WARREN (D-MA): Childcare is infrastructure. Infrastructure is all about people being able to get to work, roads, bridges, communications. And childcare is part of that.

(END VIDEO CLIP)

HEINRICH: Senators, including progressives Elizabeth Warren and Bernie Sanders, want President Biden also to expand Medicare, to lower the eligibility age, and include vision, dental, hearing, and lower prescription drug costs.

And another group of House Democrats want to expand and make permanent the child tax credit. But Republicans are still reeling from the $1.9 trillion COVID relief package the Democrats passed without GOP support and also the ongoing infrastructure talks.

(BEGIN VIDEO CLIP)

SEN. JOHN BARRASSO (R-WY): Tomorrow night, when the president addresses the nation, he usually stands behind the seal of the president.

What it really ought to say tomorrow is not seal of the president. It should say sold out to progressives.

Act three of this socialist spending spree is free everything, free childcare, free college.

(END VIDEO CLIP)

HEINRICH: For some Republicans, the issues aren't unworthy. Senator Kennedy said childcare spending should be targeted and affordable. But there is some broad feeling among the GOP that there's no limit to the Democratic agenda.

And they feel their proposals could make the country less competitive. President Biden is also preparing an executive order to increase the federal minimum wage to $15 an hour for federal contractors. That would be a 37 percent pay hike.

Now, the White House wants to pay for legislative initiatives by raising the top income tax rate and also increasing the capital gains tax. But when Wall Street got wind of that last week, they responded in a pretty unfavorable way, the markets. The proposal is still in the works. And, like infrastructure, it's unclear if this legislation will try to be passed as one package or as multiple packages.

But it is still very much being -- being crafted, Neil.

CAVUTO: All right, a lot to craft there.

HEINRICH: Yes.

CAVUTO: All right, Jacqui Heinrich in the Capitol.

Thank you very much for that, Jacqui.

Want to go to Montana Republican Senator Steve Daines on all of this.

Senator, very good to have you back.

Elizabeth Warren said that childcare is infrastructure. Do you agree with that?

SEN. STEVE DAINES (R-MT): Well, I don't think we're reading the same dictionary, Neil.

It might as well be Elizabeth Warren and Bernie Sanders giving the speech tomorrow night. This is massive increases in spending, unlike we have ever seen before in our nation's history, massive tax increases, the largest tax increases in over 50 years.

This is truly the far left progressives have taken over this administration. And, sadly, and, frankly, I mean, fearfully, they're having their way. And this is not just idle talk. This is where they want to take this country, further into, debt massive tax increase.

Remember, President Clinton, he cut capital gains tax rates in 1997 by 40 percent. Biden, he wants to double the rates on capital gains. That will discourage investing and savings.

Neil, you always remember, if you tax something more, you get less of it.

CAVUTO: All right. Now, of course, at the time, Bill Clinton also raised the top individual rate. But you're right. He offset it with those lower business and investment-related rates.

But the Democrats come back, Senator, and tell me, well, at least we're coming up with a plan to pay for all of this. Republicans never even considered doing the same.

What do you say?

DAINES: Well, first of all, we shouldn't be paying for all of this. We shouldn't be spending all of this.

There's a difference between spending and investing. Republicans want to see a reasonable true infrastructure plan. It's roads. It's bridges. It's airports. It's waterways. It's ports. And there is a way to pay for this.

We just proposed this in the last couple of days. And that is, we have got nearly $2 trillion of unspent funds from the COVID relief packages. This economy is roaring back. Vaccination levels are going up. We have got plenty of money out there, and that's already been allocated, that isn't even spent that we could redirect a small part of that for true infrastructure, infrastructure that the average man and woman on the street would say, yes, that's infrastructure.

It's not free community college or childcare.

CAVUTO: So, when some of your Republicans come up with ideas to pay for your much skinnier infrastructure plan -- I think it's in the vicinity of $600 billion to $650 billion -- you do leave yourself open to user fees, tolls, that sort of thing, I don't believe gas tax, as far as I understand.

But you are open to that sort of thing. Are you specifically, Senator?

DAINES: No, I don't think we need to. I don't.

We -- take a look at the dollars that we already have allocated that are not yet spent. That is where -- the first place we should go. The American people don't want to see their taxes go up, their user fees go up, gas taxes go up. We don't need to.

There is a path forward here. I think the Democrats, they like to raise taxes. There's success envy going on within the Democrat Party. That's led by Bernie Sanders and Elizabeth Warren. Unfortunately, that far left, radical agenda, that's front and center.

CAVUTO: But when you say, Senator -- but, just to be clear, when you say a lot of money is not yet spent -- and you're quite right. It's in outer years, where they're going to retrofit schools and all of that.

Would you take that money planned for a year or more from now and put it into infrastructure? In other words, would you not be doing the retrofitting of schools and all of that stuff that is within that legislation?

DAINES: Remember, Neil, that $1.9 trillion so-called COVID relief bill was mostly a liberal wish list.

We already had $500 billion unspent from the last COVID package passed in December. There is -- we are awash in spending at the moment. We don't need to raise taxes, increase user fees. Redirect some of those COVID dollars that were actually planned for the next five or six years, bring that back, invest it in real infrastructure.

That's the first place I would start.

CAVUTO: But, just to be clear -- I get what you're saying, Senator, but a large chunk of that that is set for -- I think to kick in next year, was towards schools and all of that getting back and getting back in the groove, and to prevent the next sort of bad reaction to a virus, God forbid, if it should come.

Would you be open to spending that money? Because it's still unspent, because that's the plan, for it to roll out next year.

DAINES: What we agreed to as Republicans is targeted COVID relief. That was around $500 billion. They spent $1.9 trillion.

Let's focus on solving the current problem, which is the COVID-19 pandemic. Neil, we have looked at the numbers. There is so much money that is unspent that we can redirect, reallocate and fund the infrastructure without user fees or taxes.

CAVUTO: Is the school thing part of it, Senator?

DAINES: Sure. Yes.

CAVUTO: I know I'm badgering on this issue, but the school thing is a large chunk of that unspent dough.

Are you against that? I just want to be clear.

(CROSSTALK)

DAINES: Listen, it was a chunk, Neil, that was planned to be spent from '23 through '28.

You tell me why that's COVID-related, going out all the way to 2028. We can target dollars for the schools to address immediate need in the next 12 to 18 months. But a lot of this money was part of a liberal wish list.

It was an excuse for the Democrats to fulfill their liberal wish list. Those are the dollars we could redirect to real infrastructure.

CAVUTO: All right, we will see what happens, then, on that front.

Senator Daines, great seeing you again.

Sits on the Finance Committee, Republican from Montana.

Fair and balanced, a view from a Democrat who says: Forget about spending too much. We're not spending enough.

Stay with us.

(COMMERCIAL BREAK)

CAVUTO: All right, you just heard from a Republican senator who says, right now, Democrats are spending too much. You have Bernie Sanders leading a host of others saying they're not spending enough.

Representative Ro Khanna joins us right now, the California congressman, who is nice enough to join us.

Congressman, I know you are joining those lawmakers who are urging an expansion of Medicare eligibility and all of that. But a lot of this stuff costs. And something like that could be hundreds of billions of dollars.

I'm just wondering, how do we pay for all this?

REP. RO KHANNA (D-CA): Well, it's going to save money, expanding Medicare.

If you talk to businesses and CEOs, they will tell you 20, 30 percent of their payroll is health care costs. They don't want to be in the health care business. That's why manufacturing is going offshore. It's why working-class wages have stagnated. So, I think it's going to free up small business and entrepreneurship.

But the way we pay for it, Neil, is what President Biden is proposing, which is commonsense measures. Three specifics. He's saying let's eliminate the step-up basis when you die. Right now, if I buy a million dollars of stock in Facebook, sell it for $10 million -- or hold on to it until I die, it becomes $10 million, then I give it to one of my kids, they don't pay capital gains tax on it.

That's absurd. He wants to close that. He wants corporations to pay some tax, not zero percent. And he wants for people who are over a million dollars -- making over a million dollars to equalize the capital gains and ordinary income tax rate.

And you know who did that? President Reagan in 1986. So, these are commonsense proposals.

CAVUTO: Of course, we had a much lower capital gains tax rate, right?

KHANNA: Fair enough.

CAVUTO: I guess what I'm asking, though, is that I see the standpoint on the part of you and many others in your party to come up with creative ways to raise money, to raise taxes. Not nearly so creative when it comes to just pairing all that money that's going out.

Why is that?

KHANNA: Actually, we have proposed cuts. Our military budget is 53 percent of federal discretionary spending.

And I have gone -- I even went on Laura Ingraham's show, and she said that we need to cut some of the bloated defense budget. Pulling out of Afghanistan, which has been bipartisan, that's going to save us money, we shouldn't have been deployed overseas.

And I do think we need to make sure that money going out is effectively spent. And if Republicans want to work with us to make sure that's happening, I'm all for that.

But the key is -- and, look, Larry Summers, who has warned about inflation, he said that we can spend up to $5 trillion -- that's Larry Summers -- if it's productive investment, if we're building our roads, our bridges, providing Internet to rural America, competing with China.

Why aren't we talking about what China is spending? Look at what they're doing. We keep talking about the Chinese competitive threat. Look at what they're spending. Do we want to be left behind?

CAVUTO: Well, they don't run deficits, and they don't have debt, right?

So, I guess what I'm asking you, Congressman, is, if this keeps going at this pace, we won't be able to afford this. With all the tax increases and everything else the president's proposed on the rich and those with $400,000 income and the capital gains thing and all that, for all of that, it is still little more than half the monies that are being appropriated to spend down the road.

Is it fair to say, sir, that other people are going to have to start kicking in dough, not just the rich?

KHANNA: No, I don't think so, because I think the productive investments are going to lead to an extraordinary amount of growth.

And when you have a low interest rate, low inflation environment, and if you're investing in things that are going to grow the economy 3, 4, 5 percent, then that's going to expand the tax base and will allow us to pay down our debt.

And so I guess it depends on, do you believe in the possibility of American economic growth? I believe in it. I believe that you can grow the economy, just like President Reagan.

CAVUTO: But you would have to have lot of growth. But you would have to have a lot of growth, right, Congressman? For it to pay for all of this spending, you would have to hope for something like an Internet boom that the Clinton administration enjoyed to get anything like that, right?

KHANNA: You would have to hope for the type of growth we saw in the 1980s and 1990s.

But I believe we can do it. I believe, with A.I....

CAVUTO: All right.

KHANNA: ... with quantum computing, with synthetic biology, if we get -- if we have the Internet go to rural America, think of all the millions of talented Americans who are not participating in the economy right now and don't have the opportunities who would have those chances.

I believe we can have 4 percent, 5 percent growth. And I guess -- I guess, if you don't believe that, if you believe in secular stagnation, and you don't think America is going to grow, then you would be more concerned.

But I believe we're going to boom as a country.

CAVUTO: All right, we will see.

We didn't get that kind of growth during the Obama years. We didn't get that kind of growth, a little, maybe a little more during the Trump years. So we'd have to go quite far back, right? But it's possible. I guess it's possible.

Congressman Ro Khanna, thank you very, very much. Enjoyed having you on.

KHANNA: Thank you. Appreciate it.

CAVUTO: All right. We will see -- we will see how all that sorts out.

By the way, we're getting word now that the FBI is indeed looking into of a probe of that police shooting in Maryland, but it's not done. It is not done by a long shot -- after this.

(COMMERCIAL BREAK)

CAVUTO: I just want to correct something I said before, that the FBI is opening a civil rights probe into that police shooting in North Carolina. I might have said Maryland. I apologize for that.

Anyway, we have got Griff Jenkins in Elizabeth, North Carolina, with the very, very latest.

Hey, Griff.

GRIFF JENKINS, FOX NEWS CORRESPONDENT: Good afternoon, Neil.

We are less than four hours from a curfew kicking in at 8:00 p.m. here in Elizabeth City, which, after six nights of peaceful protests, may cause some clashes with the police, as we have seen in other cities when they enforce these curfews.

And what they're likely going to be upset about was the Brown family attorneys today in a press conference releasing the results of an independent autopsy that showed Brown was shot five times, with the fatal shot being to the head.

Lead attorney Ben Crump described that shot this way. Take a listen.

(BEGIN VIDEO CLIP)

BENJAMIN CRUMP, ATTORNEY FOR FAMILY OF ANDREW BROWN JR.: Now, you all know from the death certificate that it was a penetrating gunshot wound to the head.

But, attorney Sellers, is what they did not know was that it was a kill shot to the back of the head.

(END VIDEO CLIP)

JENKINS: Now, Pasquotank County Sheriff Tommy Wooten, who has been under increasing pressure to release video and resign, putting the statement out saying: "I want answers about what happened as much as the public does. The private autopsy released by the family is important and I continue to pray for them during this difficult time. However, a private autopsy is just one piece of the puzzle.

"The independent investigation being performed by the SBI" -- that's the State Bureau of Investigation -- "is crucial. And the interviews, forensics and other evidence they gather will help ensure that justice is accomplished."

Meanwhile, last night, the protests were demanding, of course, Wooten release that video. We may get that eventually tomorrow. But it comes as FOX News' new poll shows that only 33 percent of Americans favor reducing funding for police, as opposed to moving into another area; 62 percent favor -- oppose that -- excuse me -- 33 percent favor, 62 percent oppose.

And, Neil, the big question is whether or not we will all see that video. Tomorrow at 10:00 a.m., a hearing to see if a judge will sign off, after the sheriff filed a motion yesterday to get it out to the public -- Neil.

CAVUTO: Griff Jenkins, Elizabeth City, North Carolina.

Thank you, Griff, very, very much.

Want to bring you up to date on this development in the Persian Gulf right now, where three Iranian fast boats were approaching U.S. Naval vessels. It got pretty messy, got pretty heated. And it got pretty dangerous.

Our Jennifer Griffin will give you an update right after this.

You're watching "Your World."

(COMMERCIAL BREAK)

CAVUTO: All right, Iran getting provocative again.

Jennifer Griffin, our national security correspondent, on some, shall say, unsavory behavior? That's putting it mildly.

Jennifer, what can you tell us?

JENNIFER GRIFFIN, FOX NEWS NATIONAL SECURITY CORRESPONDENT: Well, Neil, we're getting some new details about an incident that occurred late last night in the North Arabian Sea in the Persian Gulf.

There were two U.S. vessels, a Navy vessel, the USS Firebolt, and a Coast Guard patrol boat, that were approached by three Iranian Revolutionary Guard navy boats. They're small gunboats. They were armed. And they started getting within 68 yards of the U.S. vessels.

The U.S. vessels tried to try to issue a warning, bridge-to-bridge radio warning, as well as through loudspeakers. Eventually, the U.S. vessel the Firebolt had to fire warning shots. That is when the Iranian boats disappeared.

But, again, this was a tense moment. It's something that hasn't happened in the Persian Gulf, with Iranian fast boats approaching U.S. vessels, for the past three years -- back to you.

CAVUTO: Jennifer, I want to continue pursuing this, because this is a big deal here.

Now, we are looking like we're going to be reengaging in those nuclear talks with Iran. Surely, it must be cognizant of that backdrop for an action like this. So it makes you wonder who is sort of firing the orders on this.

GRIFFIN: Well, I think it's very clear that there are certain forces in the region, as well as within the Iranian Revolutionary Guard Corps, that probably do not want negotiations to start again for the -- with regards to Iran's nuclear program.

And so you're seeing the Iranian Revolutionary Guard flexing its muscles. They don't like diplomats like Mohammad Zarif talking to the U.S. and other European negotiators. And so you're seeing a tension play out within Iran between the Revolutionary Guard Corps, who are trying to assert itself and provoke the U.S. military.

This was a tense moment just last night. And, again, we haven't seen something like this in the past three years.

CAVUTO: I am wondering as well, then, what our response was then. It looks like we were taken aback by this. What did we do specifically? What are we promising since?

GRIFFIN: Well, I think, right now, you saw these -- this naval vessel, the USS Firebolt, show extreme -- very professional behavior, fired the warning shots.

And that's when the Iranian Revolutionary Guard naval vessels sped off. This used to be something that happened quite frequently, and they -- they're really more of an annoyance, a testing for the U.S. -- the Fifth Fleet, which is based out in Bahrain. There was a Coast Guard vessel with the USS Firebolt this time.

But, again, the U.S. Navy, very professional, fired the warning shots, and the Iranians bolted, if you will.

CAVUTO: I did want to get into very quickly, if I could, Jennifer, these charges against John Kerry, the former secretary of state, as a private citizen, was talking, lobbying with the Iranian higher-ups, some even said sharing secrets, Israeli secrets.

Do we know anything about that? He's denied it all, but what do we know?

GRIFFIN: Well, he's denied it.

And, remember, former Secretary of State John Kerry had a relationship with Mohammad Zarif back when they did negotiate the nuclear accord.

CAVUTO: Right.

GRIFFIN: So, that relationship proceeded.

But John Kerry denies that he revealed any secrets. Those Israeli airstrikes in Syria had been in open press reports. If we remember back to that time period, Israel was targeting inside Syria, and what -- and it had been reported from -- through the Israeli press that they had done.

So, Kerry's denying it. But, again, all of this is serving as a backup drop. Israel and certain elements of Iran do not want the nuclear talks to begin again. They do not believe -- the government of Israel doesn't believe that those talks will go anywhere.

CAVUTO: All right, Jennifer Griffin, national security correspondent.

Thank you for all that, Jennifer.

That will do it for us.

Here comes "THE FIVE."

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