This is a rush transcript of "Your World with Neil Cavuto" on January 26, 2022. This copy may not be in its final form and may be updated.

SANDRA SMITH, FOX NEWS ANCHOR: Martha, thank you.

The Dow up triple digits earlier, finishing in the red, this after Fed Chief Jerome Powell made it pretty clear that the Fed will start hiking interest rates in March and little to no progress is being made on supply chain issues, all this as U.S. tensions with Russia continue to mount. What the Pentagon spokesman just told me about where things are heading.

That's coming up.

First this, to the Supreme Court shakeup. With Justice Stephen Breyer on his way out. Who could be on the way in? And with inflation here and the potential Russian invasion over there, how will the timing of this news play out?

Welcome, everyone. I'm Sandra Smith in for Neil Cavuto, and this is "Your World."

Justice Stephen Breyer set to retire after the current term, giving President Biden his first crack at filling a seat on the High Court. And we have got you covered with Peter Doocy on how this news rolled out, Shannon Bream on who could be rolling in, and Bret Baier on what role this will play in the midterms.

First to Peter, though, at the White House, where a briefing has just wrapped.

Peter, what did we hear?

PETER DOOCY, FOX NEWS WHITE HOUSE CORRESPONDENT: Well, we didn't hear any kind of detail of what comes next.

The White House doesn't even want to say who here, which official that works here or which official they could bring in is going to be in charge of the search for a replacement.

President Biden was asked briefly about this, but he wanted his focus to be entirely on Build Back Better.

(BEGIN VIDEO CLIP)

JOE BIDEN, PRESIDENT OF THE UNITED STATES: Every justice has the right and opportunity to decide what he or she is going to do and announce it on their own.

There's been no announcement from Justice Breyer. Let him make whatever statement he's going to make. And I will be happy to talk about it later.

(END VIDEO CLIP)

DOOCY: Joe Biden was there at the beginning, almost 28 years ago, when Justice Breyer was before the Senate Judiciary Committee chaired by Joe Biden in 1994.

And now Joe Biden is going to be in charge of picking a replacement. All we know about that is that he's pledged to pick a black woman. We don't know which one, but we do know the White House at least today is not entirely ruling out the possibility that it could be Vice President Kamala Harris.

(BEGIN VIDEO CLIP)

QUESTION: Was someone who was an attorney general of a large state and who served with many key Senate votes be an attractive candidate to the president for an open Supreme Court seat?

JEN PSAKI, WHITE HOUSE PRESS SECRETARY: I see what you did there, Peter.

(LAUGHTER)

PSAKI: But the president has every intention, as he said before, of running for reelection and for running for reelection with Vice President Harris on the ticket as his partner.

(END VIDEO CLIP)

DOOCY: They really don't want to say yes or no to any questions about this, because Justice Breyer has not made an announcement himself.

We do expect the communications strategy and their posture here to change, though, once Breyer makes the announcement -- Sandra.

SMITH: And we're looking for a statement that could come at any moment.

Peter Doocy live at the White House for us.

Peter, thank you.

We will get more on the timing of this with Bret Baier in just a moment, but first to Shannon Bream, who -- on who is on the short list for potential replacements.

What are we hearing, Shannon? Hi.

SHANNON BREAM, FOX NEWS CORRESPONDENT: Hi, Sandra.

I think that the top of the list has got to be a federal Judge Ketanji Brown Jackson. She now sits on the D.C. Circuit. So, she was nominated and has been less than a year on that bench, but many years before that as a federal judge, went to Harvard. She is very well-qualified, very well- respected. And that court is the one we have seen so many Supreme Court justices pulled from, that D.C. Circuit.

So it's kind of like the step between all of the other federal judges and getting that next step closer to the U.S. Supreme Court. It's often viewed as sort of a trial balloon. So she's got a shorter record there, but a longer record as a federal judge, very well-respected, not seen as somebody who is highly partisan, but more moderate.

So, listen, she's been through the Senate twice. The last vote was 53 to 44 just less than a year ago, and she did get Republicans voting for her.

Another judge to watch is Justice Leondra Kruger. She is a justice at the California state Supreme Court. Both of these women have sterling academic credentials. They both clerked at the High Court. They're both relatively young, 51 and Justice Kruger is 45. That may give her an advantage for those who say put someone on there as long as you can.

That would be -- you would think would have a longer legacy, many more years on the court, but 51 still very young for Supreme Court justice as well. Those two, I would say, are clearly the front-runners, but there are other names circulating as well.

SMITH: OK, Shannon Bream on that. She's had the breaking news all day.

Shannon, thank you very much.

Now to Bret Baier, anchor of "Special Report."

Bret, lots to get to here, because there's a lot happening here, there's a lot happening abroad, potentially. And this administration has a lot on its plate.

To Shannon Bream and to Jennifer Griffin's reporting on this.

Jennifer Griffin putting out just a moment ago this is obviously a complicated decision, and a lot of factors involved. We're getting some reaction, some brand-new reaction from Senator Manchin. I'm sure you also just saw he just issued a new statement on the retirement of Supreme Court justice prior, saying that: "He's dedicated much of his life to upholding the rule of law. And we're grateful for his service," wishing him a happy and fulfilling retirement.

He did go on to say: "I take my constitutional responsibility to advise and consent a nominee to the court very seriously." He looks forward to meeting with and evaluating the qualifications of Biden's nominee to fill the Supreme Court vacancy.

This leaves us off with where this all goes from here. What are you hearing, Bret?

BRET BAIER, FOX NEWS ANCHOR: Well, good afternoon, Sandra.

I think that this is first the first good news for Democrats in a while. In other words, it's something to talk about besides sinking poll numbers and a tension tinderbox on the Ukrainian Russian border.

I do think that there will be an expedited process here. Senator Schumer, majority leader, has said he's going to really push forward with this. But, remember, the official announcement hasn't come, and you have all these senators weighing in on the announcement that has been official from Breyer himself.

SMITH: Right.

BAIER: And I think that that -- it tells you a lot.

We're being told that Breyer told the White House his intentions last week. Somehow, that news gets out. And it seems like that this was a kind of a political leak of one way or another. Whether Breyer is upset with that or just surprised at how it came out, it wasn't how he envisioned it.

And, obviously, he planned to do this move. I think that there will be this effort to get someone in the pipeline. And the ideal goal is to get someone seated, obviously, before the first week in October, when the next term starts.

SMITH: Interesting, the reaction that we're getting right here at the top of the 4:00 hour.

We also just heard that Mitch McConnell weighed in, in a very similar fashion that the president, Joe Biden, did a couple of hours ago, Mitch McConnell just saying he's afraid to put the cart before the horse. He says: "Justice Breyer has not yet made an official announcement. He's entitled to do whatever and whenever he chooses to. And when he does that, I will have a response to his long and distinguished career."

That being said, going back to your original statement, Bret, you said this is good news for Democrats, something else to talk about, but perhaps, Bret, it's also something else that Democrats can unite behind, considering they have been so divided on so many of these big issues.

BAIER: Right.

And, historically, if you look at, for example, Senators Manchin and Sinema, when they have been faced with nominees to the bench that come from this administration, they have largely voted for them, almost unanimously.

And this particular justice retiring would be not an ideological switch. So it's possible that whoever they pick would be kind of left-leaning and would not affect the court as much, although some of the rulings, the decisions by Breyer that he weighed in on were fairly moderate in their -- over his span of his career.

I think they have the votes, Democrats do. So look for one of the people that Shannon just talked about to be put up fairly quickly. And we will see. I think the Kamala Harris stuff is a little bit out there. But you never know. You never know.

(LAUGHTER)

SMITH: Interesting. It was one of the first questions that Psaki got in the Briefing Room today.

Just real quickly, having spoken with the Pentagon spokesperson, Admiral John Kirby earlier, we also heard from Secretary Blinken today, saying that the ball is in Russia's court as far as what happens next with this potential invasion of Ukraine.

Bret, from your view, and from whom you are talking to, what are you hearing about Putin's next move?

BAIER: It's all in Putin's mind, but I think there's a consensus in the intelligence community and the Defense Department that they believe it's imminent. They believe it's going to happen.

There's criticism about the way that this was handled with negotiating with the Russians, in that they handed over this private response that was not public, and to demands. The Russians have already said it's not good enough, what was handed over by the U.S.

But we don't know the details, other than Secretary Blinken saying they didn't give away the farm. So I think that there's a lot of doubt, but not doubt that the threat is there and that they believe, the U.S. government does, that they're going to move in, the Russians.

SMITH: And one real quick final thought on other big news. As we know, it's a top issue for voters, and that is inflation.

And we did get some indication today -- and it did move markets -- that the Fed may be looking to start raising interest rates in March. Had a big market reaction. The Dow ended up finishing lower on the session. As you can see, it was in green for most of the day, Bret.

But this is this is what President Biden said needed to happen. He punted to the Fed to do something about these high prices. Final thought on that?

BAIER: Yes.

Well, I think the markets heard no raise right now, and got excited for a little bit today. But it's already baked in the cake that those increases are coming, as you well know, Sandra.

SMITH: Yes.

BAIER: And I think that inflation is the thing that's going to affect votes the most when you get to November.

SMITH: A big deal.

All right, Bret, thank you. We will see you at 6:00, "Special Report."

BAIER: You bet.

SMITH: Thank you.

Stocks tumbling this afternoon, as I just mentioned, late in the day after the Federal Reserve did signal it's planning to push those interest rates up sometime soon, possibly March, and try to bring inflation down.

FOX Business' Susan Li's been tracking the action for us.

So, Susan, markets reacted. They didn't seem to love it. But it wasn't a steep sell-off, so that's going on here?

SUSAN LI, FOX NEWS CORRESPONDENT: Yes.

Yes, so, Sandra, trying to forecast Federal Reserve action and interpreting Fed-speak is really an art form on its own on Wall Street. And really trying to figure out what the Central Bank is going to do in order to tackle sky-high inflation is a main reason that U.S. stock markets have had the worst start to a new year in 90 years.

And traders are really on edge that the Central Bank will have to get a lot more aggressive when it comes to raising interest rates. For now, though, you heard the Federal Reserve keeping interest rates on hold for now, close to zero. They are dialing back on stimulus by cutting monthly bond purchases, down to $30 billion each month, and signaling, as you mentioned, that interest rates will be going up in a few months.

(BEGIN VIDEO CLIP)

JEROME POWELL, FEDERAL RESERVE CHAIRMAN: I would say that the committee is of a mind to raise the Federal Funds Rate at the March meeting, assuming that conditions are appropriate for doing so.

We have our eyes on the risks, particularly around the world. But we do expect some softening in the economy from Omicron.

(END VIDEO CLIP)

LI: So that's the clearest indication yet from the Federal Reserve that interest rates will be going up in the springtime.

And that was enough to start moving Treasury yields higher, which then moved stocks lower, and all three U.S. stock indices falling during the Jerome Powell press conference. And that reversed a sharp rally, which was the best of the year so far, heading into that press conference.

And that's really a continuation of the volatile trading action that we have seen so far this week, with stock markets three wildly from sharp losses to gains and also vice versa, like today.

Now, Microsoft is a great example that up-and-down trade, America's second biggest company managing, though, to keep some of its rally after predicting faster growth. You have Tesla reporting this hour, and then, tomorrow, we have Apple issuing its report card -- Sandra.

SMITH: Markets always unpredictable, extremely unpredictable in the trading days we have seen so far this week.

LI: Yes.

SMITH: All right, quite a month it's been for the U.S. stock market.

Susan Li, thank you.

Now to the showdown with Russia. U.S. fighter jets arriving in allied territory as the world watches our last-ditch attempts at diplomacy. So, where is this heading? Hear what Pentagon spokesman John Kirby just told me.

And, first, Russia. Now the top Republican on House Foreign Affairs is warning, China may be timing an invasion of its own. Mike McCaul just being briefed by Secretary of State Antony Blinken. What is he learning?

We will find out.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SMITH: We know that Secretary Blinken just spoke. He said -- quote -- "The ball is in Russia's court."

So what does Putin do next?

JOHN KIRBY, PENTAGON PRESS SECRETARY: Well, we hope that what Mr. Putin does next is move some of those troops away from Ukraine and out of Belarus and de-escalate the tensions.

(END VIDEO CLIP)

SMITH: Pentagon spokesman John Kirby telling us earlier on "America Reports" that he hopes Russian President Vladimir Putin will start pulling back those troops from the Ukraine border, this as more U.S. military equipment continues to arrive in Ukraine and F-15 fighter jets have now been dispatched to Estonia.

Jennifer Griffin is at the Pentagon. She's got the very latest from there.

What do we know at this hour, Jennifer?

JENNIFER GRIFFIN, FOX NEWS NATIONAL SECURITY CORRESPONDENT: Hi, Sandra.

Well, the next three weeks are going to be crucial, as we see how this brewing security crisis, one of the worst since the end of the Cold War, unfolds. I'm told we're in for a very dangerous and dynamic few weeks.

Today, as you mentioned, six American F-15E fighter jets deployed to Estonia, a Baltic state that belongs to NATO, which has felt very jittery, given Putin's latest moves. This is all part of the U.S. and NATO effort to bolster its eastern front with defensive weapons to reassure NATO allies like Estonia that Article 5 still applies, and the U.S. and the rest of the alliance will defend their allies.

Thousands of U.S. troops remain on heightened alert, but have not been given the order to go yet. Remember, none of these troops would be sent to Ukraine. NATO does not want to play into Russian propaganda suggesting that it is the aggressor, but up to 40,000 NATO troops could be activated if Putin invades.

(BEGIN VIDEO CLIP)

KIRBY: Well, what we have said is, he's got a lot of combat power already in place, which means he has options available to him right now.

And without getting into any predictions, we have to be ready in case this happens very, very soon.

JENS STOLTENBERG, NATO SECRETARY-GENERAL: NATO is a defensive alliance. And we do not seek confrontation. We will take all necessary measures to defend and protect all allies.

(END VIDEO CLIP)

GRIFFIN: Ukraine, which is not a member of NATO, but an important ally, just announced through its Defense Ministry that it would begin arming 130,000 militia forces against a renewed Russian invasion.

The U.S. has delivered a written response to Russia's demands. The next weeks will determine whether Putin opts for diplomacy or war with Ukraine, which promises to be extremely bloody and many at the Pentagon believe would drag Russia into a quagmire -- Sandra.

SMITH: All right, Jennifer Griffin live at the Pentagon for us, thank you.

Earlier, as I mentioned, I asked Pentagon spokesman John Kirby about the situation on the Ukraine border, and he said it was his hope that Putin would pull back.

(BEGIN VIDEO CLIP)

SMITH: I heard you say hope. Is it your hope?

Do you have any further knowledge today that Putin would intend to back off of that border?

KIRBY: We have seen nothing -- and I have said this just recently here at the Pentagon -- we have seen nothing that makes it clear that Mr. Putin is willing to de-escalate the tensions and to move goes troops away.

And so, here at the Pentagon, our job is to defend this nation, to defend our national security interests, and certainly those of our allies in NATO.

So we have to assume that we have got to be ready.

(END VIDEO CLIP)

SMITH: All right, with us now, former Deputy Undersecretary of Defense General Jerry Boykin.

Thank you very much, sir, for joining us.

LT. GEN. JERRY BOYKIN (RET.), U.S. ARMY: Thank you.

SMITH: General, do you believe at this point, based on what we're hearing from the Department of Defense and from the Pentagon, that there will eventually be a war over Ukraine?

BOYKIN: Well, I thought Kirby's response, as you would expect, was very, very measured.

And when you ask him about the issue of, is this his hope, I thought he revealed that there is probably an expectation that Putin is going to cross that line.

Now, I don't think that it'll be right away. And I believe that, unless something significant happens between now and probably the next three or four weeks, I think he's going across the line. The wind is in his sails right now. The weather's right. He has staged for it in all three sides of the Ukraine. And how long is he going to be willing to hold those forces in place there without actually using them?

And I think that the odds are that he will, in fact, invade Ukraine.

SMITH: But, still, what you hear from the Biden administration, the White House has continued to say they believe that they can take a serious path of diplomacy to avoid this conflict.

Do you believe Putin's made up his mind at this point, or do you think diplomacy could actually resolve this?

BOYKIN: Well, yes, I am not sure that diplomacy alone -- and let me be clear about this -- diplomacy alone can bring this to what we would consider an acceptable conclusion, because I don't think that our present president today carries enough credibility for diplomacy to work.

Now, I do think that now would be a very, very good time to go ahead and reimpose the sanctions on the Nord Stream pipeline. That should get the Germans' attention, if it doesn't get Vladimir Putin's attention. But I think that diplomacy is -- has to play a part in this.

But I don't think that Putin is going to be real impressed with diplomacy that is not backed up by a history of action and resolve. And that is the case right now.

SMITH: General, do you believe our allies are on board? You mentioned Germany. We know that they get half their natural gas from Russia. About a third of their oil comes from Russia. You said, obviously, imposing those sanctions now can be something that we could do now that would get their attention.

Do you say that because you don't believe that they would be on board with this fight and join the fight if Putin was indeed to invade Ukraine?

BOYKIN: Well, I think the Germans have already shown that they're -- they're just not 100 percent into this with us.

They have refused to allow the British airplanes to deliver material to the Ukrainians or to the Baltic area by using their airspace.

SMITH: Yes.

BOYKIN: And they have also declined to provide any materiel to the Ukraine, and they're talking about providing a nonlethal aid in the form of a hospital.

So, I mean, I think it's very clear that the German, because of their ties to the Russian energy, their -- I mean, what are they -- 50 percent of their...

SMITH: Nat gas.

BOYKIN: ... natural gas comes from Russia.

Well, they have gotten themselves into a bind. And then look at Turkey.

SMITH: Yes.

BOYKIN: And I think that Turkey, being the second largest military in NATO, I think that Turkey has probably demonstrated that they're not going to be into this with us.

So I don't think that this is -- there's unity in NATO right now, in spite of the fact that the president keeps saying there is.

SMITH: Yes.

BOYKIN: Not to mention the fact that he has alienated the French previously because of the submarine deal with the Australians.

So I don't think there's the kind of unity that we need at this particular moment in NATO.

SMITH: That's a big statement, sir.

And John Kirby insisted that the Germans are on board and that they do have -- that we do have their support in the fight.

And we will see what happens next.

Appreciate you joining us, sir. Thank you very much.

BOYKIN: Thank you.

SMITH: As the Federal Reserve's making a plan to bring inflation down, is the White House pushing a plan that could actually drive prices up?

And ranking member of the House Foreign Affairs Committee, Michael McCaul, is saying another invasion threat is looming, this time from China. He's here.

(COMMERCIAL BREAK)

SMITH: Tesla shares going in reverse after-hours.

Elon Musk's electric car company beating Wall Street earnings and sales estimates, but says supply chain problems may have held things back a bit. Shares down 3 percent.

We're back in 60 seconds.

(COMMERCIAL BREAK)

SMITH: Big meeting at the White House today, President Joe Biden pushing his spending plans with some major CEOs, despite inflation.

To Hillary Vaughn on Capitol Hill. She's got the very latest from there.

Hello, Hillary.

HILLARY VAUGHN, FOX NEWS CORRESPONDENT: Hello, Sandra.

Well, the president has not made much headway with Congress on Build Back Better, so he has turned his attention to the head of major companies to try to address concerns that Build Back Better would be bad for business. Corporate CEOs at the White House today, including from GM, Ford, Microsoft, Etsy, and HP all at the White House to talk up the legislation that the president once again today says is the cure for high prices ailing the economy.

(BEGIN VIDEO CLIP)

BIDEN: Real challenges. We have got to get -- get prices in check and -- for working people out there.

And that's why the last component of my plan is so important and why the support of these incredible business leaders means so much.

(END VIDEO CLIP)

VAUGHN: White House sources telling us that the CEOs think that the benefits of Build Back Better actually outweigh any potential tax hikes that would tag along with it.

But this corral of top corporations is not sitting well with some on Main Street, who say the new taxes on the table would crush them. The president of the Job Creators Network saying this: "Even the scaled-down versions of this spending and climate bills are a one-two gut punch for the same small businesses who were already contending with a labor shortage, ever rising inflation and energy costs."

And, Sandra, it's no surprise that some of these car companies at the White House today are supporting the legislation. There's a big fat tax credit for electric vehicles in Build Back Better -- Sandra,

SMITH: Hillary Vaughn live on Capitol Hill for us.

Hillary, thank you.

And, as we reported earlier, the Federal Reserve this afternoon signaling it's ready to push those interest rates higher to try to get inflation lower.

So, is this any time for Washington to call for even more spending?

Let's get the read from FOX business contributor Gary Kaltbaum, because, Gary, we have been talking about how all that spending has pushed all those prices higher.

So, in an inflationary environment, wouldn't spending more money and the president's plans only make the situation worse?

GARY KALTBAUM, FOX BUSINESS CONTRIBUTOR: It boggles the mind, economics 101, 201 and 301, and says, if you keep priming the pump, inflation keeps going higher.

And we are not at the point yet where it's really out of control, where we need to get some Paul Volcker-like moves. But if they keep going this route, we may end up that way. And all this talk about interest rates staying down at 1 or 2 percent, we may start seeing them at 5 percent. And then all heck breaks loose in the economy.

And I got to add the other component. To think that businesses and the consumer, ordinary Americans that just had to deal with two years of a pandemic, which is still going on right now and hopefully gets better, to tell them we're going to take a few trillion dollars out of the economy now and put it into our hands is just absolute insanity.

It's a sin. And the fact that those auto companies are agreeing, it's not an accident that they are getting some big tax credits, currying favor with the White House.

SMITH: And it's the White House who has really punted to the Federal Reserve to tackle inflation, because the Federal Reserve, there was indications that they would start to tackle the interest rate situation, this easy money environment we have been living in, if inflation exceeded 2 percent.

Well, that ship has sailed for quite some time. I mean, for months now, we have been over 5 percent inflation. So, arguably, the Fed, many make the case, has waited too long and exacerbated an already bad situation.

But, that being said, the Federal Reserve did indicate today that they are going to start raising interest rates. The markets were OK with that until he held that press conference. And then Powell indicated that there was quite a bit of room to raise interest rates.

So, the struggle, Gary, to try to paint this picture very simply, is they have got to step in to tackle inflation, raise interest rates, but they can't raise them too much because that could cripple the economy.

So, it's a delicate balance. Markets didn't like that quite a bit of room comment to raise interest rates. We're left wondering how high they will go.

KALTBAUM: And a delicate balance for the markets.

Remember, a huge part of the mark -- the economy over the last few years has been the market and the wealth effect. You use -- lose the wealth effect, and that is a big problem for the economy. So, Jay Powell, I think, has boxed himself in. He's darned if he does and doesn't at this juncture.

But I must tell you, he's got to raise rates. The last time we had 7 percent inflation, I think Fed Funds were above 10 percent.

SMITH: Wow.

KALTBAUM: The only reason that this low is because he has been spending around the globe $30 trillion of printed money, zero percent rates and negative rates around the globe.

And I think the chickens are coming home to roost. And he's walking a real fine line going forward now.

SMITH: Well, there's no doubt the markets, Wall Street's enjoyed the rally.

KALTBAUM: Yes.

SMITH: In the meantime, we will see what happens next and how markets react.

Gary, great to have you. Thank you. And good to see you.

KALTBAUM: Thank you, Sandra.

SMITH: OK, so, with Ukraine still on high alert, is there another invasion threat on the horizon?

Ranking Member of the House Foreign Affairs Committee Michael McCaul predicting it. What he says needs to be done to stop it -- next.

(COMMERCIAL BREAK)

SMITH: All eyes on Russia and Ukraine, as tensions continue to escalate, but could China be the next threat?

My next guest warning, China could invade Taiwan, and soon, ranking member of the House Foreign Affairs Committee, Texas Republican Congressman Michael McCaul.

Good to have you here, sir.

REP. MICHAEL MCCAUL (R-TX): Thanks, Sandra.

SMITH: What is your prediction? Lay it out for us. What do you see happening?

MCCAUL: Well, I have seen the plans, the Russian plans.

They are very aggressive, a very aggressive timetable. When you look at the troop deployments, they are surrounding Ukraine with very -- a lot of troops, 100,000, 75,000 more on the way, tanks, artillery, now joint exercises in Belarus.

It's getting very serious. And the time -- the time is running out. My concern is, there's no deterrence. And we all -- we know from history that weakness invites aggression.

Neville Chamberlain and Hitler demonstrated that. Reagan talked about peace through strength. And every time we talk to the administration -- I just got off a phone call with the secretary and the leadership. And it's always, what are we going to do after an invasion, not what are we going to do to stop an invasion from happening in the first place?

SMITH: That's a big statement, because there's been big questions.

And we have seen the White House asked about this many times, why we're not being more proactive when it comes to Putin. Why are we waiting for him to make the next move? Blinken said it today publicly. He said, the ball is in Russia's court.

MCCAUL: Right.

SMITH: Your statement would lead us to believe there's more we could be doing now to stop this from happening.

What is that?

MCCAUL: Yes, don't let Putin to dictate the terms. That's what he's doing.

He's dividing and weakening NATO. He is showing a force on the border. What we need to be doing is sending more lethal military aid to Ukraine. And I have legislation to do that. I think it actually could be bipartisan.

And I also think that we need coalition forces in Eastern NATO countries like Poland and the Baltic states to show Putin that we're serious. If we don't do this, an invasion is certain. And then what's going to happen after that? There's no plan for a post-invasion of Ukraine.

And why is it so important to the American people? Because, after Afghanistan, there was such a projection of weakness by President Biden, that our foreign adversaries became emboldened. And now they're testing this president.

Putin's always wanted Ukraine, the breadbasket of Russia. Energy is a big part of this, to control the Black Sea. President Xi would love to take over Taiwan. The ayatollah is building a bomb. And Kim Jong-un just fired off two rockets this month, claiming he has hypersonics.

SMITH: To your prediction now about the Chinese possible invasion of Taiwan, what are you predicting could happen there? I know you're tying it to the mixed messaging that we're getting on the Russia-Ukraine situation.

MCCAUL: Well, President Xi is watching.

And he's watching what's happening in Ukraine. If we look weak, if we don't project strength, and Putin invades Ukraine, which is likely -- I hate to say that -- he will take that as a signal that now he can go into Taiwan with no consequences.

I always find that, if you have consequences to bad behavior, you stop bad behavior. We're not seeing that right now. Of course, President Xi will wait until after the Olympics before he makes this type of move.

But just similar to what's happening in Ukraine, we're also seeing Taiwan be surrounded on the sea and the air by forces of the CCP in a very strong projection of force. We have to show deterrence in the region, both in Eastern Europe, but also in the Indo-Pacific.

SMITH: You mentioned that you just got a briefing from Secretary Blinken, as I understand it.

Was there anything specific that you can share with us that he was identifying as a possible threat on that front, on a possible invasion of Taiwan?

MCCAUL: Well, we didn't talk about Taiwan. We talked more about Ukraine.

But I think the fact that we're pulling out nonessential employees from the embassy, just like remember we were doing that in Afghanistan, sends a message about what -- how high the threat level actually is.

He talked about trying to resurrect the INF Treaty that President Trump did away with, because the Russians were violating that treaty. And he thinks that he can talk his way out of this

Look, you leverage the diplomats. You want them to succeed. But if they don't have strength and leverage behind that force, they fail. And what I don't see right now is any strength or leverage to -- the tough rhetoric is great, but if you don't have the action and the backing of the United States military and our NATO allies behind it, it doesn't mean anything.

SMITH: And where we started, you just said that you believe that a Russian invasion of Ukraine is likely, sir.

With what sort of force should that be met? And do you believe that our allies are completely on board?

MCCAUL: Well, I don't think we will have any troops on the ground in Ukraine.

But we do have a presence with NATO and our NATO-allied countries. So I -- that's the problem. What force will be used to meet a Russian invasion? That's why we need the deterrence right now, and not after an invasion happens.

The reason why I'm concerned about the timing is because of the timeline and the plans themselves and the aggressive nature of what I'm seeing on the border with these troops and artillery.

The Belarus operation joint exercise, very, very concerning. The cyberattacks, be afraid, they say, very concerning. And once they get into the springtime, these tanks can't -- they can't operate on the ground as the -- they go into a springtime force.

SMITH: Right.

MCCAUL: So, they -- I think it's going to happen soon, and we need to stop it.

SMITH: Appreciate you joining us, Congressman. Thank you.

MCCAUL: Yes, thanks, Sandra.

SMITH: OK, so with crime in New York City flaring up, some residents in New York City, throwing down.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: You have got repeat violent felony offenders over and over and over and over again. When is enough, enough?

(END VIDEO CLIP)

(COMMERCIAL BREAK)

SMITH: Looking live at Ferguson, Missouri, now, where we just got word two officers have been shot there.

Mike Tobin has the very latest.

Mike, what's the update from there?

MIKE TOBIN, FOX NEWS CORRESPONDENT: Well, the update is that one of the officers was shot in the abdomen.

And, according to St. Louis Police Chief John Hayden, he is in very critical condition, one of two police officers who was shot. They're both young officers in their mid-20s. One had been on the force for 2.5 years. One had been on the force for 3.5 years.

And they had pulled over a car that was suspected in connection with an overnight homicide. There was a shooting outside of a North St. Louis Club called the Royal Palace Club. Someone was shot in the head and killed on the scene there.'

So, these police officers pulled over a vehicle. There were four individuals inside this vehicle. And someone opened fire. And that's where you have the one officer shot in the abdomen, the other in the leg. They have both been transported to the hospital. We are waiting for updates on their condition.

And the location of all of this is very near the location where Mike Brown was shot by Officer Darren Wilson, sparking the weeks and weeks of protests in Ferguson, Missouri -- Sandra, back to you.

SMITH: Mike Tobin with the update from there. Our prayers with those two police officers. Mike, thank you.

And we will continue to get an update on their situation.

Officers increasingly in the line of fire, as crime surges.

Retired NYPD Lieutenant Joe Cardinale joins us now to discuss.

Thanks so much, sir, for being here.

Just brutal. Another horrific story of two cops shot there in Ferguson, Missouri. We hope for the absolute best outcome for them.

But what is going to be done to just bring an end to this? It is every day stories like this, it seems.

JOE CARDINALE, FORMER NYPD LIEUTENANT: Well, Sandra, thanks for having me.

And it's going to continue to happen as long as we have politicians who refuse to address the issue that's at hand right now. And that's the rampant assault on police officers.

I mean, here in New York, we have had the bail reform. And it starts way before that. I mean, we had Governor Cuomo in there since 2011. And he made it his mission from 2017 on until the present to appoint people in the parole board that release these killers of the police.

I mean, three of my friend's father, Harry Ryman -- all right, three of those killers were released. So, when you have bail reform that's not working, and you go on a mission to release these criminals, these animals that go out there and just destroy everybody's life, what do you expect is going to happen?

They just are emboldened to do whatever they want. And there is nobody challenging them but the police departments. And their hands are tied.

SMITH: Joe, we only have a few seconds left, but we just got where the president's going to meet with Adams here in New York City.

You think anything good can come from that, getting together here?

CARDINALE: Well, Mayor Adams has to distance himself from the people who want to defund the police. And he has to get down to the nitty-gritty and get the people in there that make a difference of protecting the police and the people of the city of New York.

He cannot do it with the people that he stands on the podium with who are outright haters of police. It just doesn't work.

SMITH: It's a big job and a big challenge.

Joe, happy to see you.

We are going to continue to follow the story there in Ferguson on those two cops just shot.

Thank you very much.

We're going to have more after this. We will be right back.

(COMMERCIAL BREAK)'

SMITH: Lawmakers reacting to news that Supreme Court Justice Stephen Breyer will be retiring.

Chad Pergram on Capitol Hill with the very latest from there.

Hello, Chad.

CHAD PERGRAM, FOX NEWS CONGRESSIONAL CORRESPONDENT: Good afternoon, Sandra.

Well, confirmation hinges on three things, the math, the math and the math. Democrats must stick together to confirm a nominee in a split Senate. Vice President Harris could break the tie if GOP vote as a bloc.

Senate Minority Leader Mitch McConnell says, don't put the cart before the horse.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R-KY): We don't even know who the nominee is yet. So, that's something that the president has an opportunity to make, should there be a vacancy.

And Justice Breyer will determine when and if there's a vacancy.

(END VIDEO CLIP)

PERGRAM: And, surprise, everyone will focus on Kyrsten Sinema and Joe Manchin.

Lindsey Graham of South Carolina says elections have consequences and Democrats can confirm a justice without GOP help. Everyone is watching the pick.

(BEGIN VIDEO CLIP)

PSAKI: Commented on this previously.

The president has stated and reiterated his commitment to nominating a black woman to the Supreme Court, and certainly stands by that.

(END VIDEO CLIP)

PERGRAM: Senate Majority Leader Chuck Schumer expects the president to adhere to his promise to pick a black woman.

Schumer says the Senate will be deliberate, but he wants the nominee confirmed -- quote -- "as soon as possible" -- Sandra.

SMITH: Chad Pergram on Capitol Hill for us.

Chad, thank you very much.

PERGRAM: Thank you.

SMITH: Let's get right to former Deputy Assistant Attorney General Tom Dupree on all of this.

Tom, great to see you.

We have had a few hours to think about this. So, any ideas who the president might pick to fill the vacancy?

TOM DUPREE, FORMER JUSTICE DEPARTMENT OFFICIAL: Sandra, at this point, I think the two likeliest candidates are a judge on the D.C. Circuit Court of Appeals named Ketanji Brown Jackson and a justice on the California Supreme Court named Leondra Kruger.

I think both of them have been talked a lot about. They both have fairly long paper trails, and they're going to be pretty well-known to people in the Biden White House.

And, certainly, in the early hours after this big news broke this morning, those are the two candidates most of us are watching pretty carefully.

SMITH: Much will be made about his retirement and the timing of his retirement. Did anything about this surprise you, Tom?

DUPREE: What surprised me a little bit, Sandra, was the timing, in that, normally, traditionally, historically, Supreme Court justices announce their retirement at the end of the term in June, right when the court breaks for its summer recess.

The fact that Justice Breyer made this announcement or allowed word of his retirement to leak in January tells me that everyone involved understands the importance. There's a ticking clock here. They need to get their new nominee through before the midterm elections and before a potentially Republican Senate comes into power, because, at that point, all bets are off and the game changes entirely.

SMITH: Tom, what will Breyer's legacy be on the court?

DUPREE: I think he will have a legacy as a liberal pragmatist.

He always aligned himself with the liberal bloc. He also was known for having very academic, scholarly questions. Those of us who argued before him kind of laugh about it, because he loved giving lawyers these very lengthy, tortured, elaborate hypothetical questions that often would take minutes to answer.

So, he had a little bit of the academic in him, a bit of the professor. But I think his legacy will be as a justice who was liberal, who was pragmatic, and who really did care about our nation and the law and the Constitution, and did his best to get it right, even if we conservatives didn't always agree with the outcome.

SMITH: I will never forget talking to Supreme Court Justice Neil Gorsuch a couple years ago, when he told me what a funny guy he is, and he tests out a lot of his knock-knock jokes on the other justices. That always stuck with me.

Great to talk to you, Tom Dupree. It's been a while. Good to see you.

DUPREE: Great. Thank you, Sandra.

SMITH: OK.

That was a busy news day, for sure. And we will leave it right there, because "The Five" is going to come on in just a moment.

Tune in tomorrow 1:00 p.m. Eastern time for "America Reports." We'd love to have you.

Thanks for joining us. I'm Sandra Smith.

And "The Five" starts now.

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