-- THIS IS A RUSH TRANSCRIPT FOR 'THIS WEEK' on March 26, 2017 and it will be updated.
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UNIDENTIFIED MALE: Devastating defeat. The candidate who campaigned on the art of the deal.
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TRUMP: Real change begins with immediately repealing and replacing Obamacare.
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UNIDENTIFIED MALE: Fails to close on his first big promise.
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TRUMP: And I'm disappointed because we could have had it. I'm a little surprised, to be honest with you.
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UNIDENTIFIED MALE: And after his own party fractures, the president blames Democrats.
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UNIDENTIFIED MALE: Now, the fallout -- how deep is the damage?
What will it take to get back on track?
Does this new presidency need a major reset?
And how will Trump handle the Russian cloud.
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UNIDENTIFIED MALE: We tackle all the tough questions right now.
From ABC News, it's THIS WEEK.
Here now, chief anchor, George Stephanopoulos.
It began Monday morning with a direct rebuke from the FBI director. By close of business Friday, that body blow delivered by his how party.
In the face of certain defeat, the president chose to retreat and in the Oval Office, a humble Trump talked lessons learned.
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STEPHANOPOULOS: But has President Trump learned the right lessons?
Does he and his team have what it takes to turn things around?
All presidents lose fights in Congress. But before this week, no president in our lifetimes has lost his first big one, a loss compounded by the fact that Republicans control both houses of Congress, a loss that comes after a series of missteps that raise serious questions about the president's competence and credibility.
This week, we're going to break down what it all means, analyze the fallout and what's next for President Trump and his agenda.
The two men who led the fight against Trump's bill, House Freedom Caucus Chair Mark Meadows and top Senate Democrat, Chuck Schumer, are standing by.
First, let's bring in our a lot, chief political analyst, Matthew Dowd, here at ABC -- how big a blow?
MATTHEW DOWD, ABC NEWS POLITICAL ANALYST: It's huge. As I said earlier in the week, this health care bill was sort of the piece in political Jenga and if it was removed, everything else sort of falls down and everything related to that.
I think this is the first time we've seen, in this political 20 months, Donald Trump suffer a public humiliation by his own party and it was demonstrated that for all the bravado that he had and for all the ways that he pushed this stuff, he can be beat. And once he's beat, that's a huge problem.
STEPHANOPOULOS: Alex Castellanos, who supported Trump during the campaign, he said here, "we're going to get sick of winning."
ALEX CASTELLANOS, REPUBLICAN STRATEGIST: How are we doing?
STEPHANOPOULOS: You tell me.
This is the Republican Party of a year ago, the one that says no to everything, the one that can't unite around anything, the one that can't inspire people to support anything positive, can't articulate (INAUDIBLE).
It's still there under the Trump White House. So Donald Trump was the fireman. He couldn't rescue the people in the burning building, but the people in the burning building are the Republican Party and the Republican leadership. They're in trouble.
STEPHANOPOULOS: Maggie Haberman of "The New York Times" and CNN, the president called you just a few minutes after he pulled the bill.
Does he get what went wrong?
MAGGIE HABERMAN, "THE NEW YORK TIMES": He was keeping his focus on Democrats. He was blaming the Democrats, saying essentially we needed Democratic votes. We need at least one because we were losing Republican votes and so it's their fault and they'll come back in a year, after Obamacare, quote, unquote, explodes, implodes, he used both. And they will be ready to make a deal and I'll be open to that at that point.
This was an argument that his own advisers, many of them, told him was nonsensical, that you can't blame Democrats when you hold both houses of Congress and you're the majority.
I think that he's processing this and I think we're seeing it over the last 24 hours. He was uncharacteristically quiet for him yesterday.
STEPHANOPOULOS: Until this morning.
HABERMAN: Until this morning.
STEPHANOPOULOS: We'll get into that in a second.
HABERMAN: -- he's coming back punching now, even as most of his aides would like to just move on to the next thing and not keep looking in the rearview mirror on this, which is his default position.
I don't think he knows how to cope with defeat. He sounded exhausted when I spoke to him on Friday.
STEPHANOPOULOS: A very weary President Trump.
STEPHANOPOULOS: And to pick up on the point that Alex just made, Jon Karl, raising series questions, also, for the entire Republican Party.
JONATHAN KARL, ABC NEWS CORRESPONDENT: Well, Republicans have a majority, but they don't have a governing majority. And this talk of well, now we're going to go onto tax reform, forget tax reform.
How are they going to keep the government funded?
In April, funding runs out for the government. Right now, there is not a Republican coalition to turn the lights on, to keep the lights on in the federal government. They, at this point, would need help from Democrats just to do that.
This is a crisis and the White House knows this is a crisis. This is far beyond just losing on health care.
STEPHANOPOULOS: They want you guys to stand by. We're going to come back to you, but now we're going to go to the man who may be most responsible for the defeat. He's the chair of the House Freedom Caucus, Mark Meadows. Congressman Meadows, thank you for joining us this morning.
As I just alluded to, President Trump is up and tweeting this morning and it's about you.
He said Democrats are smiling in D.C. that the Freedom Caucus, with the help of Club for Growth and Heritage, have saved Planned Parenthood and Obamacare. Your response?
REP. MARK MEADOWS (R), NORTH CAROLINA: Well, I mean, if they're applauding, they shouldn't, because I can tell you that conversations over the last 48 hours are really about how we come together in the Republican conference and try to get this over the finish line.
You know, the narrative that your panel is talking about in terms of defeat, you know, this was not a final passage, this was one bill that was going to go to the Senate, get revised, and come back. If it was the final bill, that would be accurate.
But here we are in the negotiation process. And really, George, what we're looking at here is trying to make sure that we do one thing: get premiums down for all Americans. And as we look at that, that remains our primary focus.
STEPHANOPOULOS: But congressman, the president says he's going to moving on. and he's blaming you for saving Planned Parenthood, saving Obamacare.
MEADOWS: Well, I mean, at this particular point -- I can tell you, no one has been more self-critiquing than me. I can tell you as I have look at all of this. I said, you know, could I have spent a little bit for time, should I have spent more time with the Tuesday group, more time with Democrats to find some consensus.
And so as we look at this today, this is not the end of the debate. This is like, I had one of my friends call me the other day. He says it's like saying that Tom Brady lost at half time. We're not -- we may be in overtime, but I can tell you at the very end of the day, the most valuable player will be President Trump on this, because he will deliver. He's committed to the American people. And we're committed to helping get there.
STEPHANOPOULOS: I got to say, I've got to say, congressman, it doesn't sound like you and the president are on the same page here. He's not saying that. He's saying you saved Obamacare, you saved Planned Parenthood, and he's ready to move on.
MEADOWS: Well, I know that he's -- he's moving on. As he looks at that, it's incumbent upon us -- I can tell you we had discussions with some of the more moderate members of our conference who were prepared to vote no. And, so, really, it's incumbent upon those two groups, the conservatives and the moderates to come together, hopefully in the coming days, to find consensus, to present something to the president that certainly not only gets him 216 votes, but hopefully 235 votes. As we look at this -- you know, George, you have a long history in the White House. You know how this works. To put a stake in it today would not be accurate, and nor would it be the narrative that this is a great failure for the president. He's done more in 65 a days than any president in modern history. And so let's put it in real perspective where we are.
STEPHANOPOULOS: Well, congressman, I'm not the one putting a stake in it. I think it's the president who has put the stake in it right there by saying he wants to move on, move on to tax reform and other issues.
Chairman, of your energy.
MEADOWS: I do. An I plan to help him with tax reform. I can tell you that, you know, he's got his team working on tax reform right now. And in terms of government funding, I heard your panelists talk about that, there's not going to be an issue there. This is about one thing, it's getting premiums and making sure people are covered, it's making sure that we fulfill our campaign promise, and ultimately that where we'll be.
STEPHANOPOULOS: Let's talk about those issues right now.
You said last month on tax reform that tax reform actually depended on repealing Obamacare. You said I don't see how you can have without the other. So, do you have to repeal Obamacare before you move on to tax reform, in your view?
MEADOWS: Well, you don't have to, but it certainly makes it easier. When we look at lowering the taxes, and part of the reason why it was planned in this measure, was looking at changing a baseline and actually assisting with that tax reform effort.
But, I fully expect that what we're going to see is not only real tax reform, but other measures that come along. And I still believe that there is a good chance, if moderates and conservatives can come together, that we repeal and replace Obamacare, bring premiums down, cover more people, and yet, here we are -- you're right, I have said that this does that make the task more difficult without a doubt?
STEPHANOPOULOS: You say real tax reform. Does that mean any tax cuts must be fully paid for? You're not going to pass tax cuts that are not matched with other revenue increases or spending cuts?
MEADOWS: You know, you're asking a fiscal conservative, so you're asking all the good questions. And that's really where it comes down to, does it have to be what they would say revenue neutral, or do you have to have an offset like with the border adjustment tax?
I think those are going to be the two questions. I think there has been a lot of flexibility in terms of some of my contacts and conservatives in terms of not making it totally offset. And that's a move that we're trying to do to provide real relief and economic growth.
When we start to grow the economy at 4, 4.1 percent, it actually not only increases wages, but it puts more money in Americans' pockets each and every day.
And so, tax reform and lowering taxes, you know, will create and generate more income. And so we're looking at those, where the fine balance is. But does it have to be fully offset? My personal response is no.
STEPHANOPOULOS: Oh, well, that seems like a bit of a shift. How about that border adjustment tax that Speaker Ryan has talked about? Can you support it?
MEADOWS: You know, really, right now, we haven't taken any official position on the border adjustment tax. We'll be talking not only to the speaker on that. We have had a number of meetings with Chairman Brady and others.
But we'll be talking to the administration, as well on what they want to see. I know they have some specific ideas. And as we look to tax reform, the big debate will be over that border adjustment tax. But we're in the information-gathering mode right now.
And I can tell you what most Americans need and want. They need lower intrusion from the federal government in their lives. They need lower taxes so that they can take more of their paycheck home.
And I know that President Trump and those in the GOP Conference are committed to making sure that that happens.
STEPHANOPOULOS: And on the government funding, you said it's not going to be a problem. Now Senator Schumer is standing by. He's going to be coming up next. He said if the president includes funding for the border wall, it's a non-starter with Democrats in the Senate. Also has talked about now the possibility that you would try to defund Planned Parenthood in this government funding initiative.
Do you need that in order to pass government funding in April?
MEADOWS: Well, I think what we need from Senator Schumer is really a willing partner. You know, on this Obamacare repeal and replacement, before he even saw a plan, he said he was against it.
So what we need is some honest dialogue back and forth. Maybe he can comment on that. But to come out and say that he wasn't going help before he even saw a replacement plan really sends the wrong narrative.
Americans want to make sure that we work. I know I reached out to five different Democrats in terms of this repeal and replacement to say, well, what do you need for your district?
And that's what we have got to do. And when we look at a supplemental, what the president is going to find a great flexibility with regards to the conservative and moderate members of the GOP Conference to hopefully get us where we need to be there.
STEPHANOPOULOS: And finally, yesterday morning, the president tweeted out, told people to watch Judge Jeanine Pirro on FOX. And on her program last night that he told people to watch, here's what she said.
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JEANINE PIRRO, FOX HOST: Paul Ryan needs to step down as speaker of the house. The reason? He failed to deliver the votes on his health care bill. The one trumpeted to repeal and replace Obamacare. The one that he had seven years to work on.
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STEPHANOPOULOS: Well, you heard it right there from Jeanine Pirro. Breitbart is suggesting that you're one of the people that people are looking to to replace Speaker Ryan. Does he have your support?
MEADOWS: Listen, this is not me. And I can tell you there is no conversations going on right now with regards to replacing the speaker. It's all hands on deck with regards to Obamacare, tax reform, the border wall, and as we start to look at that, George.
Here's the other interesting thing. As we start to look at this, the focus can be on this leadership or whatever. I can tell you that when this bill was rolled out, it had less than 20 percent support among Americans.
The president took it from having probably 80 to 100 either undecided or no votes and got it this close to making sure that it got across the finish line. No one worked harder than the speaker and the president and even those in our conference who had different views to get it across.
This is -- we're not at the end of the game. We're there, literally, perhaps, again, in overtime, but we're there to get this across the finish line. And so we're committed to work with the president, the speaker, the current speaker, and make sure that what we do is get some consensus.
STEPHANOPOULOS: Congressman, thanks for joining us this morning.
MEADOWS: Thank you, George.
STEPHANOPOULOS: And I'm joined now by the Democratic leader in the Senate, Chuck Schumer.
Senator Schumer, thank you for coming.
SEN. CHUCK SCHUMER (D-NY), MINORITY LEADER: Good morning.
STEPHANOPOULOS: I want to get to a lot of things that he raised as well as...
SCHUMER: Let me first wish you happy Greek Independence Day. I wore my Greek colors.
STEPHANOPOULOS: Thank you. You're…
SCHUMER: … the parade in New York.
STEPHANOPOULOS: Right across the park right now. Thank you. (INAUDIBLE).
Let's talk about the president first. He said you're the big loser.
SCHUMER: Well, you know, look, the bottom line is very simple. And that is -- president never called us once about this. They came on board with repeal, which they knew every Democrat would oppose, and no one believes that.
But I would say this, we Democrats, provided our Republican colleagues drop replace and stop undermining the ACA, are willing to work with our Republican friends -
STEPHANOPOULOS: Right now you're going to make a proposal?
SCHUMER: As long as they say, no more repeal. That's a loser. Seventeen percent of Americans liked Trumpcare. That's it. They didn't want it. And stop undermining ACA. And we'll work with them.
We have ideas, they have ideas, to try to improve Obamacare. We never said it was perfect. We always said we'd work with them to improve it. We just said repeal was off the table.
STEPHANOPOULOS: Well, you just heard --
SCHUMER: Can I just make one other point on this, George? For the president to say that he'll destroy it, or undermine it, that's not presidential. That's petulance. Being petulant, not a president. It's not going to work. The job of the president is to make Americans' lives better. And if he, out of anger or vengeance or whatever, starts undermining ACA, it's going backfire on him because he's the president and the American people know he's in charge and they want him to make things better.
STEPHANOPOULOS: Well, you just heard Congressman Meadows right there. He says the repeal effort's not dead.
SCHUMER: Well, it won't succeed. And, you know, there's one point we're missing here. The American people hated Trumpcare. The more they learned about it, the more they didn't like. And you know, not only did we have a totally unified Democratic caucus from Bernie Sanders to Joe Manchin, but I want to salute all the people out there -- the average people, who called and wrote and picketed and protested.
If they keep on this repeal path, they'll get nowhere. And it's mainly because i they want to do what Mr. Meadows does, then all the moderates will jump off. It's -- you know, they have seven kids in the bed and they have enough covers for five. So they ought to get rid of repeal. Drop it. It's been a flop for them because of the substance of repeal. And work with us to improve it.
STEPHANOPOULOS: One of the things that unites Republicans is tax cuts. And I think we just heard some big news there from Chairman Meadows saying tax reform doesn't mean you have to pay for all of your tax cuts.
SCHUMER: If you analyze, George, what went wrong with ACA, the president exhibited two traits that are not very helpful. And if he repeats them in tax reform, they'll get nowhere.
The first is basic lack of competence. You cannot run the presidency like you run a real estate deal. You can't tweet your way through pit. You can't threaten and intimidate and say I'll walk away. It's more complicated.
But even more to the point, the president campaigned as a populist against the Democratic and Republican establishments. But he's been captured by the hard right wealthy special interests. That's who loved his proposal on the Trumpcare, because it gave huge tax cuts to the rich. If they do the same thing on tax reform, and the overwhelming majority of the cuts go to the very wealthy, the special interests, corporate America, and the middle class and poor people are left out, they'll lose again.
STEPHANOPOULOS: So you're not working with the president on tax reform.
SCHUMER: America is not where the hard right is. If he aims a proposal aimed at the middle class and the poor people, doesn't give breaks to the rich -- they're doing great, God bless them, I'm glad they're doing great; they don't need another tax break -- we could work with them. But I don't think they're headed in that direction, and they're going repeat the same mistake they made on Trumpcare with tax reform. (INAUDIBLE). The hard right is great at opposition. Now they're in charge. America is not where the hard right is.
STEPHANOPOULOS: I was struck by something that former Speaker of the House Newt Gingrich said. He said the president should put off tax reform and work right away, particularly with Democrats, on a major infrastructure bill. Would you be open to that?
SCHUMER: Again, it's a question of values. Infrastructure's something we Democrats have put in a proposal. It has the support of our entire caucus, $1 trillion of infrastructure, which creates about 15 million new, good-paying jobs. So we like it.
But here's where the president seems to be headed again -- special interests. Wealthy special interests. Let's do it by tax breaks. The tax breaks he's proposing, 82 cents on the dollar, goes to the financiers. That's one problem. So you're not getting bang for the buck. Two, in the places where those tax breaks will work, you're getting huge tolls. The American people don't want tolls on every highway. And third, it building nothing in rural America and large parts of exurban America because they just can't pay those tolls. So if they want to actually spend some money, Meadows would be vehemently opposed and he'd have to break with the hard right and his caucus, we'll talk to them for sure.
STEPHANOPOULOS: But -- when you look at this, I mean, the president has this -- has this issue now with the Republicans. They're going to try to get together with tax reform and other issues. A lot of people look at this and say, you know, the president hadn't been a Republican for all that long. He had voted for Democrats in the past. And the way to govern on these big issues would be to take a completely different path and go in a different direction and work with Democrats.
Now, it doesn't sound like you're ready to be a real partner there.
SCHUMER: No, it's not me, it's him. He ran as a populist against the Democratic and Republican establishments. He ran as a defender of the middle class. The minute he got into office, maybe led by Vice President Pence and some of the others, he moved so far to the hard right that it's virtually impossible for us to work with him.
If he changes, he could have a different presidency. But he's going to have to tell the Freedom Caucus and the hard right special wealthy interests who are dominating his presidency -- but he didn't campaign for them, he campaigned on the opposite -- he's going to have to tell them he can't work with them and we'll certainly look at his proposals. But it's going to be guided on our values.
On the one hand, we're not going to oppose things because the name Trump is on it, but we're not going compromise our values away and help the well to do and hurt the middle class and the poorer people, that's what he's been doing so far.
STEPHANOPOULOS: Government runs out of money, I believe, on April 28. You can filibuster a government funding proposal. Are you prepared to shut down the government?
SCHUMER: No. We don't want to shut down the government and we proposed to Leader McConnell the same thing that worked last year and the year before, just three simple things: one, no sequester levels of funding. I think they've agreed to that already, both he and Speaker Ryan; two, parity between defense and nondefense.
STEPHANOPOULOS: The president wants a defense increase.
SCHUMER: And slashes the programs that help the middle class the most. We want parity. It worked last year.
And three, no poison pill riders like Planned Parenthood.
Now, that worked last year and we got a budget.
If President Trump would stay out of it, because his budget, done by Mulvaney is so far to the right, slashing middle class things like education, like transportation, like medical research, like clean air and clean water, no, we can't work.
But left alone, McConnell, Ryan, and the Democrats could come to an agreement.
STEPHANOPOULOS: So, the president's defense increases have to be off the table?
SCHUMER: No, they don't have to be off the table, but you can't slash domestic programs.
STEPHANOPOULOS: What about funding for the border wall?
SCHUMER: The border wall should be talked about. It shouldn't be rammed down people's throats for a whole bunch of reasons. First, it's not the best way to protect the border. Everyone agrees on that. Second, it's very expensive. Why don't we use that money for roads. Third, let's give the president a chance to get Mexico to pay it. Isn't that what he told everybody, that we weren't going to pay it? And fourth, it's got a big problem the Republicans are opposing -- Texas, Arizona, because there's eminent domain and you have to take the private land.
So, instead of trying to jam it through on this short-term budget and say take it or leave it, we should debate it in 2018's budget over the summer.
And, by the way, my prediction, it wouldn't get the votes on either the Democratic or Republican side.
STEPHANOPOULOS: Judge Neil Gorsuch. The Republicans have made it clear that he's going to get through no matter what you do, even though you follow through on the filibuster. It's also clear that he's eminently qualified. Even your own senator Joe Manchin has said he should get an up or down vote. Why not?
SCHUMER: Well, 60 votes should be the standard. Why? Because for something as important as the Supreme Court, George, 60 votes makes sense. You get bipartisan support. You avoid judges far right or far left. And each of the four last judges, two by President Bush, Alito and Roberts; two by President Obama, Bagan and Sotomayor, met that 60-vote standard. The bottom line is when we Democrats had a chance to change the rules, we didn't change it for Supreme Court for that very reason. And I'd say to my Republican friends and to the country, if you don't think the candidate can -- if the candidate can't get 60 votes, if the nominee can't get 60 votes, you don't change the rules, you change the candidate.
And one final point, Mitch McConnell is -- it's in his hands whether to change the rules, not ours. And he doesn't come to this court with clean hands, because he delayed Merrick Garland for a year, a year-and-a-half. If they want to change the rules, it would be bad for the country, bad for the congress. We didn't do it. It will be in their last -- one more point, a lot of Republicans don't want to change the rules. I'm not so sure it's..
STEPHANOPOULOS: But you also said this week that it would be unseemly to approve Judge Gorsuch as long as this FBI investigation is going on into the Russian interference in our election. That could take years.
SCHUMER: Yeah, but we didn't say years. What we said is for a months. Let's see where -- look, this is a very important appointment -- lifetime, affects America in huge ways. Judge Roberts came on the court, now Justice Roberts. Citizens United dramatically changed America. Taking away voting rights changed American. Trying to get rid of unions.
So, let's see where this investigation goes for a few months and delay it. It's up to our Republicans colleagues. I hope they'll accept that argument. If the investigation looks like it's nowhere, fine. If it looks like it's really serious, yeah, we ought to consider what I said.
STEPHANOPOULOS: Senator Schumer, thanks for coming in this morning.
SCHUMER: Nice to be here, George.
STEPHANOPOULOS: Roundtable back next. And later, the long time Trump friend and adviser under scrutiny over Russia. Roger Stone is our guest.
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BARACK OBAMA, FORMER PRESIDENT OF THE UNITED STATES: Don't undo things just because I did them. I don't have pride of authorship. I said today in a forum on health care, if the Republicans can come up with a system that insures more people, cheaper, better, I will be the first one…
STEPHANOPOULOS: I can tell by your smile, you don't think they can do it.
OBAMA: Well, I'm skeptical that they can do it mainly because for seven years now, including when we first tried to pass health care, I said to them, OK, if this doesn't work, tell me what does?
STEPHANOPOULOS: So is Obamacare going to survive?
OBAMA: I think it will.
(END VIDEO CLIP)
STEPHANOPOULOS: (INAUDIBLE) President Obama right there. Let's talk about this now with our "Roundtable." And let me go first to Matt Dowd.
Well, the chair of the Freedom Caucus says no, Obamacare repeal is not dead. They're going to come back. I think that is unlikely given where the president is right now. It also seems unlikely that this brand-new coalition with Democrats is in the cards listening to Chuck Schumer.
DOWD: Well, to me, we're in a very difficult time with these huge problems facing the country and two political parties that really can't govern at all in the course of this. I think the Democrats first would be very smart if they called the president's bluff. They basically said here's the bill to fix Obamacare. Now are you going to support it or not? And basically, in many ways, because of the Republican Party, you can't support it.
I don't think this is --
STEPHANOPOULOS: Well, it seemed on that, that Schumer was willing to go there assuming we repeal was dead.
DOWD: But I don't think this is going to fundamentally change and Donald Trump could decide he's going to take a different tack for two reasons. First, Donald Trump would have to become somebody he's not, right? He would have to become somebody that the American public would now support. The majority of the country doesn't support him.
KARL: Or become somebody who he was. I mean, he's been all over the map. I mean, at one point, he supported single-payer health.
DOWD: I don't think it's a question of policy. He'd have to become a different person.
KARL: He was a Democrat for most of his life.
DOWD: He'd have to become a different person. The problem with most of the Democrats now, 90 percent of the Democrats dislike him and will not support him no matter what he does.
And the second problem in this is that he just can't move this ball anymore. This is not a thing he can do with a lack of support of his own party, and now the lack of support of Democrats.
STEPHANPOULOS: And now -- picking up on what you were saying, also sort of fixing problems, you have to first confront them, accept them. And it does seem like the president is in a bit of denial amid these big questions about both his competence, which you saw Senator Schumer raise, and his credibility.
HABERMAN: I think that's right. Look, he came into office actually with, I think, some people willing to work with him. You remember that first day when he was inaugurated. It was very schmoozy with the senator who just departed, with Nancy Pelosi. That evaporated pretty quickly, both because of his own actions and then because the Democratic base was not in a mood to compromise in any way.
The president doesn't quite realize that, in politics and really in governing, you can't just wave a wand and everything we said yesterday just goes away. Which he's very used to doing. He's used to sort of making his own weather, for lack of a better way of putting it. And he's also used to a consequence-free environment. That's not the case right now. He really is stuck. And everyone I have spoken to in the White House over the last two days basically was in wait and see mode to see what it's like tomorrow when everybody returns to Washington and what mood Congress is in.
STEPHANOPOULOS: So, Alex, put yourself in the White House. You're in the Oval Office.
CASTELLANOS: Go on.
STEPHANOPOULOS: You're right there with Steve Bannon and Jared Kushner --
CASTELLANOS: Do I have to.
STEPHANOPOULOS: What would you tell the president to do tomorrow morning?
CASTELLANOS: I think the president needs an agenda. He can't wait for a divided Republican Party in the House, in the Senate, to provide an agenda for him.
STEPHANOPOULOS: So he's got the write the tax bill?
CASTELLANOS: So he's got to put together a tax bill. And it's got to be a tax bill that is -- the entire party can support. Tax cuts. Something that actually produces growth. And it can't be the old language. He has to say, look, either we're going to open this economy for growth, or not. We're going to grow Washington's economy, or we're going to grow your economy, your local economy, America's economy.
We're going to either open it up, get rid of all of these old, outdated regulations that are limiting your life and your opportunity, or we're going to let all this political artificial Washington dealmaking, let that be your future.
KARL: I listen to that --
CASTELLANOS: If he can go there --
CASTELLANOS: But that's not who Donald Trump has been. And, you know, we just saw it here. The guy who knew the policy couldn't inspire people to support it, Ryan. The guy who could inspire people to support the policy didn't really understand it. That was Donald Trump.
DOWD: The problem for Donald Trump is Donald Trump's success was not driven by any policies. It was driven by personality. And the majority of the country now doesn't like his personality. And Congress now, in his own party, has taken on that personality and beat him. That's his fundamental problem.
STEPHANOPOULOS: But it was also deeper on Obamacare. They didn't like that bill. That bill was a huge tax cut for the wealthy. It was going to be paid for by older, working class people.
DOWD: Well, the substance --
STEPHANOPOLOUS: People got that by the end.
Listen, I want to get to the substance on the tax reform as well. Listening to Alex, listening to Congressman Meadows, we're not talking about tax reform anymore. We're talking about tax cuts.
KARL: Well, the idea of tax reform is you basically have the net tax rates stay the same. You lower it, you lower the rate, but you close loopholes. So the amount coming in is the same.
I mean, what -- if what you're saying is true, what Meadows hinted, we'll just have one -- another big tax cut, look at what it does to the debt, look at what it does to the deficit. This was a candidate, Donald Trump, who actually said he was not only going balance the budget but pay off the debt!
Now, that's obviously impossible. But the idea of just a big tax giveaway and no tax reform --
CASTEALLANOS: Trump could sell this. Look, we're not going to reduce this debt by choking the economy. First thing we got to do is produce growth. And the way to produce growth is to open up this economy. That requires two things. Limiting political artificial regulations from Washington. And, two, putting more money in people's pockets who grow the economy.
STEPHANOPOULOS: His sale --
CASTELLANOS: So growth first.
HABERMAN: I agree with you.
CASTELLANOS: Growth first could sell tax cuts.
STEPHANOPOULOS: What are you guys agreeing on? Go ahead.
HABERMAN: I don't think he can sell that. I mean, I think he can't sell that in part because he is really not a details-oriented person, particularly when it comes to policy. And so he has always spoken in these broad purple hues. But actually when you get down to the nitty-gritty, he doesn't really always sound like he's that familiar with it.
CASTELLANOS: He's good at brands, though. He's good at branding things and people, you know.
HABERMAN: But his brand is really--
CASTELLANOS: The "build that wall". Make Mexico pay for it. Lyin' Ted.
STEPHANOPOULOS: But Alex, Alex --
DOWD: There's no appetite. There's no appetite. For me, there's no appetite in America right now for tax cuts for the wealthy. There's an appetite in America for building infrastructure. There's an appetite...
CASTELLANOS: Maybe for opening up the economy.
DOWD: But if that's contingent on tax cuts for the wealthy, it's not going to happen.
DICKERSON: I don't know if Republicans -- I mean, Meadows may have been there, but that Freedom Caucus was all about controlling spending. It was all about balancing the budget. These were the guys that didn't want to raise the debt ceiling. I think the more interesting question is what does he do in the short run? Does he exact political revenge for those who defied him?
Look, those Freedom Caucus members...
STEPHANOPOULOS: We're told that Steve Bannon wants an enemies list.
DICKERSON: Well, I'll tell you, it wouldn't be hard to compile one. Look at the Freedom Caucus, you have somebody, for instance, like an Alex Mooney. He's a congressman from the second district in West Virginia. This was a district that Trump took by 75 percent. This is coal country. This is a place where Trump is more popular than the congressman.
Is he going to support a primary...
FEMALE: That district is the one I have heard mentioned most frequently over the last two days by Trump advisers, many of whom are still advocating, look, we're not going to go after everybody, but we should pick a couple of targets.
STEPHANOPOULOS: But what does that get them?
CASTELLANOS: Not much, because...
HABERMAN: It gets them, I agree with you that when we have, you know, they have a Supreme Court nominee who they need to have approved. They have a budget issue coming up in a month where they really -- they have major, major issues ahead of them, but they also are aware that there has to be in their minds -- and again, I'm not saying that there's a great answer either way, but in their minds, they have to demonstrate that there is a political price for going against the president.
DOWD: If Donald Trump wants to find his number one enemy, he should buy a mirror.
STEPHANOPOULOS: Well, that's going to be the last word today. Thank you all very much.
Coming up, after that stunning House intelligence committee hearing on Russian interference, we're going to talk to one of the Trump associates under investigation. Roger Stone is next.
STEPHANOPOULOS: Up next, the long-time Trump friend facing questions about contacts with Russia. You see him right behind me. Roger Stone is next.
(BEGIN VIDEO CLIP)
REP. ADAM SCHIFF (D-CA), RANKING MEMBER, INTELLIGENCE COMMITTEE: On August 8th, Roger Stone, a long-time Trump political adviser and self-proclaimed political dirty-trickster boasts in a speech that he has communicated with Assange, that more documents would be coming, including an "October surprise."
In the middle of August he also communicates with the Russian cut-out Guccifer 2.0, and authors a Breitbart piece denying Guccifer's links to Russian intelligence. Then later in August, Stone does something truly remarkable when he predicts that John Podesta's personal emails will soon be published.
"Trust me," he says, "it will soon be Podesta's time in the barrel."
(END VIDEO CLIP)
STEPHANOPOULOS: That is the top Democrat on the House Intelligence Committee raising questions in Monday's hearing about Trump associates and Russian interference in last year's campaign.
And we're joined now by the man he was talking about, a long-time friend and adviser to Donald Trump, political strategist Roger Stone, who has written a new book "The Making of the President 2016."
Mr. Stone, thank you for joining us this morning. I know you volunteered to appear and answer the questions of the House Intelligence Committee. Have they accepted your offer? And have you asked for or received any type of immunity in exchange for testifying?
ROGER STONE, POLITICAL STRATEGIST & TRUMP ADVISER: They have only confirmed that they received our offer to testify voluntarily. And I have requested that that be in a public section -- session, because the three things that the gentleman from California, who is largely full of "Schiff," said are incorrect.
I never made any reference to John Podesta's email. There were a dozen stories about his business dealings published after that...
STEPHANOPOULOS: But you said, "Trust me, it will soon be Podesta's time in the barrel." That was your tweet. And two months later the emails came out.
STONE: Correct. But, George, does it say #WikiLeaks, #Assange? He said, Stone predicted that his emails would be hacked. No, I didn't. I never said anything of the kind.
STEPHANOPOULOS: And you've -- we know that there's an active FBI investigation now as well. Have you been contacted by the FBI, you or your lawyers? Any requests for an interview or information?
STONE: I have not. What I think you refer to the surveillance that I'm under that was referred to on page 1 of "The New York Times "on January 20th. This is on the basis of no probable cause and no evidence whatsoever. The communication he referred to with Assange is through a mutual friend, an intermediary, as it were. I did not admit it; I announced it.
Secondarily, as I have said, the reference to Podesta is general. It is not specific. And, by the way, he does have his time in the barrel shortly thereafter.
STEPHANOPOULOS: You -- you have also made --
STONE: This is a scandal in search of evidence.
STEPHANOPOULOS: You have also admitted communications with this Guccifer 2. What exactly did you discuss, and did you ever use encrypted apps like Signal or Telegram to communicate with Guccifer?
STONE: No. In fact, the inference that my communication -- actually my exchange with Guccifer 2, which is entirely on Twitter, both public and private, in which I have now made entirely public, constitutes collusion with the Russians is absurd. Number one, I don't concede that Guccifer is a Russian agent. Go online, there are more theories about that than --
STEPHANOPOULOS: Our intelligence officials believe he was.
STONE: I understand. They also said there were no -- that Hussein had weapons of mass destruction. Just because the intelligence services say something, as we know from history, does not make it true.
STEPHANOPOULOS: So you're confident these investigations will turn up no information that contradicts your account?
STONE: Well, let's finish with Guccifer. My communication with him is now entirely public. It is benign. Not exactly 007 stuff.
Secondarily, the timing of my communication is after, not before, I write a story for Breitbart regarding the hacking. And I never defend him from not being a Russian agent in that piece. As Mr. Schiff says I don't even mention it. It's not even in the piece because I was unaware of that charge at the time I wrote it.
STEPHANOPOULOS: You're a long-time --
STONE: So again --
STEPHANOPOULOS: Sorry. You're a long-time friend and business partner also of Paul Manafort, who has also volunteered to appear before the committee, also part of this investigation. You actually recommended that Donald Trump hire him during the campaign. Are you confident he did nothing wrong here?
STONE: I have been a friend of Paul Manafort's for, I don't know, almost 50 years. We go back to Young Republicans together. He has vehemently denied any wrongdoing and I choose to take him at his word.
I reiterate again, I have had no contacts or collusions with the Russians. And my exchange with Guccifer 2, based on the content and the timing, most certainly does not constitute collusion. My brief exchange with him is six weeks after the hacking of the and publication of the DNC documents, which I'm accused of colluding with him on. In other words, I would need a time machine in order to collude.
STEPHANOPOULOS: White House asked about you and the other associates this week. Here's what Sean Spicer had to say in the White House briefing room.
(BEGIN VIDEO CLIP)
SEAN SPICER, WHITE HOUSE PRESS SECRETARY: I heard names thrown around before that were hangers-on on the campaign. Mr. Stone is somebody the president has known for a long time. He played a role early on in his campaign, but ended that role in August of 2015. And I don't know at all when the last time they even spoke was.
(END VIDEO CLIP)
STEPHANOPOULOS: Let me -- let me bring that question to you, because I was struck by an article in "Politico" this morning about the president's long-time executive assistant, Rhona Graff. You were quoted in saying that if you want to speak to the president, you go through Rhona. So when was the last time you spoke with him?
STONE: You know, I have made it my policy not to disclose or discuss my conversations with the president. They happen from time to time. It has been awhile now. But I remain a steadfast supporter of Donald Trump. I think he has the potential to be one of our greatest presidents, perhaps even greater than Ronald Reagan. Even given this health care setback, it's just a setback. Not a defeat. I'd point out to you that the courts and the Congress thwarted Franklin Roosevelt throughout most of his first term. He just re -- got back up and tried something else. If something failed, he tried something else. Trump is that kind of president.
STEPHANOPOULOS: Chairman Nunes said he's under this big cloud, the Russian investigation. How does President Trump get out from under it?
STONE: Well, let's have the testimony, George. In other words, you have a bunch of Congressmen here who I believe have defamed me. I saw demagoguery, fear-mongering, red-baiting, and half-truths, in many cases just flat-out lies.
In America, we're supposed to have chance to see the evidence against us and face our accusers. I'm very anxious to do that. If Mr. Page and Mr. Manafort do the same thing, frankly I think the whole Russian meme, which really starts as a Clinton campaign press release, is finally put to bed.
There is no collusion, none -- at least none that I know about, in Donald Trump's campaign for president.
STEPHANOPOULOS: We will be watching the hearings. We will be watching for your testimony. Mr. Stone, thanks for joining us this morning.
STONE: George, thank you for having me here and giving me a chance to tell my side of it.
STEPHANOPOULOS: Up next, the man leading President Trump's efforts to roll back environmental regulations, EPA administrator Scott Pruitt.
(BEGIN VIDEO CLIP)
TRUMP: We are preparing new executive action to save our coal industry. Scott Pruitt, a Kentucky native,will turn the EPA -- environmental -- will turn the EPA from a job killer into a job creator. You watch.
(END VIDEO CLIP)
STEPHANOPOULOS: The president in Kentucky previewing the new executive order he'll sign the this week to relax regulations on power plants. It's his latest move to undo President Obama's environmental initiative, which have included a review of fuel efficiency standards for cars and a relaxation of clean water regulations.
And we are joined now by the man he's put in charge of the effect, the head of the EPA, Scott Pruitt.
Mr. Pruitt, thank you for joining us this morning.
SCOTT PRUITT, EPA ADMINISTRATOR: George, good morning.
STEPHANOPOULOS: So, is the executive order coming this week? And what specifically will the president be proposing?
PRUITT: George, the president is keeping his promise to the American people this week. With respect to this executive order that's coming out on Tuesday, the Energy independence executive order. And as you indicated, this is about making sure that we have need a pro-growth and pro-environment approach to how we do regulation in this country.
For too long, over the last several years, we have accepted a narrative that if you're pro-growth, pro-jobs, you're anti-environment; if you're pro-environment, you're anti-jobs or anti-growth. And that's just not where we have been as a country throughout our existence. We have made tremendous progress on our environment. And we can be both pro-jobs and pro-environment. And the executive order will address the past administration's efforts to kill jobs across this country through the clean power plant.
STEPHANOPOULOS: This order is likely to face some legal challenges. It could take some time to work through the courts. And, as you know, coal jobs have been declining for a long time. We heard the president's promise right there. Most of the job loss predates the Obama initiative. I want to put up a chart right there. It showed the biggest drops came over several -- a decade ago. And you have about the same number of coal jobs now as you did a decade ago.
So, are you worried at all the president is making a promise to coal country that he just can't keep?
PRUITT: Well, it's not just the short-term, George; it's the long term. And it's clear that the past administration had a very anti-fossil fuel strategy -- coal, natural gas, and the rest. And so this is a promise he's keeping to the American people to say that we can put people back to work and be pro-environment as well. This clean power plant is something that the Supreme Court, as you know, has said is likely unlawful. And so there's been a stay against this clean power plan.
So, our action starting on Tuesday, shortly after the executive order, will make sure whatever steps we take in the future will be pro-growth, pro-environment, but within the framework of the Clean Air Act. And it will be legal.
STEPHANOPOULOS: But will it bring back coal jobs?
PRUITT: I think absolutely it will. It will bring back manufacturing jobs across the country, coal jobs across the country. Across the energy sector, we have so much opportunity, George. And the last administration had an idea of keeping it in the ground. We need to more more independent, less reliant upon foreign energy sources. And this is an opportunity.
We know this week, this past week, the president approved the Keystone Pipeline. So, it's transportation issues, it's development issues, it's putting people back to work both in the energy sector, but also the jobs it creates in the manufacturing sector and across our economy.
STEPHANOPOULOS: If the president follows through on this order and his promise to reverse vehicle pollution rules, there is no way for the United States to reach its commitments under the Paris climate agreement, which of course was reached in 2015. Here's how one Nobel Prize-winning climate expert, Mario Molina, described the impact. He said the message, they, the Trump administration is sending to the rest of the world is that they don't believe climate change is serious. It's shocking to see such a degree of ignorance from the United States.
PRUITT: George, we're actually at pre-1994 levels right now with respect to our CO2 footprint. Now, why is that? Largely it's because of innovation and technology both in the coal sector and the natural gas sector. Horizontal drilling has allowed there to be much more conversion to natural gas in the generation of electricity.
You know, we've got to keep in mind, it's not just jobs that are going to be created by the president's action here. It's also lower electricity rates for our consumers across the country, because when you take coal generation facilities, natural gas facilities, and you put them aside and focus only on certain types of ways to generate electricity, it's causing double-digit increases across the country as it relates to consumers. That's not good for our economy on the consumer side and it's not good on the manufacturing side.
STEPHANOPOULOS: But I was asking about the Paris Climate Agreement. Don't these initiatives mean that the climate agreement is a dead letter as far as this administration is concerned?
PRUITT: Well, the Paris accord is something, as you know, that's non-binding. It was not a treaty, as such. The Clean Power Plan is not tethered to the Paris accords. And so this is an effort to undo the unlawful approach the previous administration engaged in and to do it right going forward with the mindset of being pro-growth and pro-environment, and we can achieve both.
You know, since 1980, George, we have seen a…
STEPHANOPOULOS: But can we achieve the commitments made…
PRUITT: … 65 percent…
STEPHANOPOULOS: under the Paris Climate Agreement? Can we achieve those commitments…
PRUITT: Well, let me finish.
STEPHANOPOULOS: Go ahead.
PRUITT: Look, since 1980, we've seen a 65 percent reduction in those pollutants that we regulate under the ambient air quality standards. We have done great work as a country striking the balance between jobs and our environment.
This past administration, I think, took steps that were anti-jobs and anti-growth. And the Paris accord, I think, represents that.
STEPHANOPOULOS: The -- California acted this week to tighten fuel emissions standards, going in exactly the opposite direction from what President Trump is proposing. We're showing a headline from yesterday's New York Times right there.
Do you intend to let California's actions stand or move to take away their waiver under the Clean Air Act?
PRUITT: I mean, what we should be doing, and you mentioned the CAFE standards, and within the last week-and-a-half, the president and I were actually in Detroit announcing that we were going to keep our word as a country to re-evaluate those in April 2018, which was the original promise to the auto industry.
We ought to focus on efficiency, fuel efficiency for cars that people really want to buy, George. You know, this process of building cars that no one purchases in order to meet these standards that were previously set actually is counter-helpful to the environment, because people don't buy the new cars. They keep older cars.
STEPHANOPOULOS: But will you let California go forward?
PRUITT: And so that's something we're going to be evaluating over the next -- you know, through April of 2018.
What this CAFE standard combined with the Clean Power Plan and the executive orders sends a message to the American people that we're going to do what we can to make sure that we produce jobs and growth while also being sensitive to the environment, and making sure that we reintroduce common sense into the discussion.
You mentioned the Paris accord. You know, what was wrong with Paris was not just that it was -- you know, failed to be treated as a treaty, but China and India got away, the largest producers of CO2 internationally, got away scot-free. They didn't have to take steps until 2030.
So we penalized ourselves through lost jobs while China and India didn't take steps to address the issue internationally. So Paris was just a bad deal, in my estimation. But, we're trying to focus on getting things right here domestically, and making sure we operate within the framework of the Clean Air Act.
STEPHANOPOULOS: Mr. Pruitt, thanks for your time this morning.
PRUITT: Thank you, George.
STEPHANOPOULOS: We'll be right back after this from our ABC stations.
STEPHANOPOULOS: That is all for us today. Thanks for sharing part of your Sunday with us. Check out "WORLD NEWS TONIGHT" and "GMA" tomorrow morning.