Shepard Smith is leaving Fox News. TRANSCRIPT: 10/11/19, The 11th Hour w/ Brian Williams.

Guests: Michael Schmidt, Philip Rucker, Josh Gerstein, Andrew Desiderio

BRIAN WILLIAMS, MSNBC HOST:  Tonight the feds are turning up the heat on Rudy Giuliani now that his two close associates share a mug shot having been arrested just before skipping the country.  And now the President gets a little vague as to whether Rudy is still his attorney.

While a high ranking State Department official alleges that profit-seeking from the President`s friends drove American foreign policy making in the State Department.  The Democrats now plan to, "continue and accelerate promising more testimony is coming."

We`ll also take a good long look at what promises to be another important week ahead.

Plus another Trump Cabinet official is out just tonight just like that as "The 11th Hour" gets under way on a Friday evening.

And good evening once again from our NBC News headquarters here in New York.  Day 995 of the Trump administration now.  Yet again, we have breaking news tonight.  Yet again it pertains to the President`s lawyer and all-around sidekick Rudy Giuliani.

Tonight, "The New York Times" is reporting Rudy is under investigation by federal prosecutors in the Southern District of New York, in effect the Justice Department Manhattan office where he himself once served as U.S. attorney.  The feds are "investigating whether President Trump`s personal lawyer, Rudolph Giuliani, broke lobbying laws in his deals in the Ukraine."  And "are examining Mr. Giuliani`s efforts to undermine the American ambassador to Ukraine, Marie Yovanovitch."

"The Times" goes on to report that "Mr. Giuliani said that federal prosecutors had no grounds to charge him with foreign lobbying disclosure violations because he said he was acting on behalf of Mr. Trump not the Ukrainian prosecutor when he collected the information on Ms. Yovanovitch and the others and relayed it to the American government and the news media."

Today in Washington, members of Congress heard more than nine hours of damning testimony from that former ambassador considered such a critical witness in the Democrat`s impeachment theory.  Marie Yovanovitch is a 33- year State Department veteran.  She served four Republican and 2 Democratic administrations in seven different countries, three as ambassador.

In her prepared statement she wrote that the Deputy of Secretary of State told her that "there had been a concerted campaign against me and that the department had been under pressure from the President to remove me."  As Rudy`s criticism of her, she wrote "I do not know Mr. Giuliani`s motives for attacking me.  Contacts of Mr. Giuliani may well have believed that their personal financial ambitions were stymied by our anti-corruption policy in Ukraine."

And she adds this, "we see the State Department attacked and hollowed out from within."  Yovanovitch was pushed out as Rudy Giuliani pushed Ukrainian officials to look into those baseless corruption allegations against the Bidens.  Today the President was asked about the former ambassador.

(BEGIN VIDEO CLIP)

HALLIE JACKSON, NBC NEWS:  Did you put pressure to have her fired, the Ambassador to Ukraine, Yovanovitch?

DONALD TRUMP, PRESIDENT OF THE UNITED STATES:  Well, she may be a wonderful woman.  I don`t know her.

JACKSON:  Did you pressure them?

TRUMP:  She may be very much a wonderful woman.  If you remember the phone call I had with the president, the new president, he didn`t speak favorably.  I just don`t know her.  She may be a wonderful woman.

(END VIDEO CLIP)

WILLIAMS:  But Trump did bring up Yovanovitch on that July 25 phone call with the President of Ukraine.  He is quoted in the document handed out by the White House as saying "The former ambassador from the United States, the woman, was bad news and the people she was dealing with in the Ukraine were bad news so I just want to let you know that."  He added "She`s going to go through some things."

House Intel Chairman Adam Schiff praised the ambassador tonight.

(BEGIN VIDEO CLIP)

REP. ADAM SCHIFF (D-CA):  I think she is a courageous example for others.  And I think all the members were extraordinarily impressed with her testimony today.  We will continue with other witnesses, not withstanding the administration`s consistent efforts to obstruct our investigation.

(END VIDEO CLIP)

WILLIAMS:  Now, more diplomats are going to be heading to Capitol Hill next week to testify in this impeachment inquiry.  Fiona Hill, former top aide to Trump on Russia and Europe, considered a hawk.  She is scheduled to be there on Monday.  And former Trump donor Gordon Sondland who was awarded -- rewarded for his efforts with the title ambassador to the E.U.  He now says he`s going to testify Thursday after the White House, you`ll recall, blocked his testimony earlier in the week.

For a second night in a row, Trump was front and center at a campaign rally, this one in Lake Charles, Louisiana tonight.  He yet again tore into the impeachment inquiry and a heads up as you may know, he`s now regularly swearing at public events.

(BEGIN VIDEO CLIP)

TRUMP:  The radical Democrats policies are crazy, their politicians are corrupt, their candidates are terrible, and they know they can`t win an election.  So they`re pursuing an illegal invalid and unconstitutional bullshit impeachment.

(END VIDEO CLIP)

WILLIAMS:  Presuming he will use different language for his speech before Evangelical Christians tomorrow at Values Voter Summit in Washington.

And yes, by the way, there was a departure from the Trump Cabinet tonight.  But that`s going to have to wait for our next segment.  It`s the kind of Friday night we`re having around here.

And for that, let`s turn to our lead off discussion panel in a moment.  First we are joined on the phone by Michael Schmidt, Pulitzer Prize-winning Washington correspondent for "The New York times."  Among those breaking the Giuliani story tonight.

Michael, obviously the headline is a former U.S. attorney is under federal investigation.  More than that, a former mayor of New York and close friend of our President.  But how serious a charge would this be?

MICHAEL SCHMIDT, THE NEW YORK TIMES WASHINGTON CORRESPONDENT (via telephone):  Well, as you`re pointing out it`s pretty unusual because this is the same office where Giuliani rose to prominence in the 1980s, catapulting him to becoming mayor of New York City.  So, it is that office, the most aggressive office in the country, the one with the most talented prosecutors in the country that is going after this issue here.

Now, how serious is it?  Look, cases are often difficult to make, but the problem is that once you head down one path you can often find other things.  Giuliani has been very public about his ties to Ukraine.  And that has probably given prosecutors a lot of insight into where they should examine.  But at the same time, it`s just yet another distraction for the President and we should note the second time that one of his lawyers had found himself under investigation by that office since he became President.

WILLIAMS:  You slipped in a term of art there calling this a FARA case.  Can you tell the folks watching what that stands for?

SCHMIDT:  Yes.  Basically these are lobbying laws that are designed to prevent foreigners from influencing the United States, from using Americans to push what they would like us to do within this country.  So, in this case, were Ukrainians trying to use Mr. Giuliani to impact American policy?  Or did Ukrainians want to have the United States ambassador to Kiev removed?  Why was that ambassador removed?  How is Giuliani using his authority?

If you think about a typical presidency -- and I realize that may be hard to imagine right now.  But in a typical presidency, it`s hard to see a lawyer for the president also being entangled with foreign governments and foreign business men and such.  But that is the situation that Giuliani finds himself in.  And to the average federal prosecutor, it probably looks a bit curious just from the outside.

WILLIAMS:  Last question as I know you were able to join us by telephone.  How was it that Pompeo`s name came up in this today?

SCHMIDT:  It`s specifically on this story.  Pompeo`s name did not come up.  This is -- there was no indication that they were -- that this is anything to do with Pompeo.

And, you know, obviously the removal of the ambassador, though, is something that happened at the State Department.  That ambassador, as you pointed out, was up on Capitol Hill today testifying.  But what was the true motivation behind why the ambassador was removed?

It`s similar to the question about the aid.  What was the true motivation for why the administration withheld aid from Ukraine?  Was it because President Trump just didn`t want to pay a lot of money to European countries that he thought, you know, should be paying for stuff themselves?  Or is it because there was something on the other side?  And these are the questions that have been spawned now here just less than a month since that whistleblower filed his complaint.

WILLIAMS:  Mike Schmidt, "New York Times," thank you so much for calling in on a Friday night.  We appreciate it.

And now here for our lead off discussion on a Friday night, Phil Rucker, Pulitzer Prize-winning White House Bureau Chief for "The Washington Post," Frank Figliuzzi, former FBI Assistant Director for Counterintelligence, and veteran federal prosecutor and former U.S. Attorney Barbara McQuade here with us in our New York studios.

And due to hometown advantage, Barbara you get to go first.  How sensitive a business is it for the Southern District of New York, the Justice Department`s office in New York often jokingly called the sovereign district of New York because of their power?  How sensitive is it to look into a guy like Rudy?  And do you think they are looking into other things as well?

BARBARA MCQUADE, FORMER U.S. ATTORNEY:  It is unprecedented I think for a former U.S. attorney to be investigated by his or her former office.  I`m sure it is considered a matter of very significant magnitude in that office.  But they wouldn`t undertake it if they didn`t believe that there were potentially serious violations of the law.

Mike Schmidt mentioned the Foreign Agents Registration Act which means accepting money from members of foreign government to lobby American businessmen or American politicians.  And that is -- some of the allegations of these two associates in the indictment that was filed yesterday.  And so if he was implicated in that, he could be charged as well.

You know, one really interesting thing is there have been people talking about President Trump throwing Rudy Giuliani under the bus.  We could see at some point Rudy Giuliani throwing President Trump under the bus.  He said today that he was acting with authority of the President of the United States.  He is going to have an opportunity if he is charged to flip and tell what he knows.  And if it`s the President of the United States putting him up to these things, then that could be a serious matter within the impeachment inquiry.

WILLIAMS:  As the commercial says he knows a thing or two because he`s seen a thing or two.

Hey, Frank Figliuzzi, what do you assume about the role of surveillance in this case, in this story, and very possibly in the life and devices of one, Rudolph Giuliani?

FRANK FIGLIUZZI, FORMER FBI ASSIST. DIRECTOR FOR COUNTERINTELLIGENCE:  Well, as Barbara alluded to, you don`t have a U.S. attorney`s office going after the President`s attorney and their former boss, Rudy Giuliani headed the office as you said, without them having solid predication to do so.

And when I read the indictment on Rudy`s two associates, I see a level of details, I see quotes, attributions for example to the foreign national number one, times, places, filings that seem to indicate there might be court authorized wiretaps in this case.  And if that`s the case, then it`s possible that Rudy Giuliani was intercepted inadvertently, not that he was the target necessarily, but that he was picked up on electronic surveillance.

If that`s the case, he needs to be much more careful than he`s been today.  The statement that he made to Mike Schmidt in response to Mike`s article, as Barbara said, that I wasn`t working for the Ukrainians, I was working for Trump.  That kind of thing is going to be held up against what they have on tape if they have it, what they have from human sources.

And is usually the case when Rudy opens his mouth, he may have defended himself against the FARA charge today with Mike.  But he certainly threw Trump under the bus by saying, yes, yes, I was working at the direction of President of the United States.  That`s a problem.

WILLIAMS:  Of course Frank, it also means we can get ready for more charges of spying, no doubt.

Hey, Phil, I want to play for you what Trump said prior to departing for Louisiana.  We`ll talk about it on the other side.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  Is Rudy Giuliani still your personal attorney?

TRUMP:  Well, I don`t know.  I haven`t spoken to Rudy.  I spoke to him yesterday briefly.  He`s a very good attorney and he has been my attorney, yes, sure.

(END VIDEO CLIP)

WILLIAMS:  Any echoes of anything familiar there that the President has ever said about perhaps any other lawyers in his orbit?

PHILIP RUCKER, WASHINGTON POST WHITE HOUSE BUREAU CHIEF:  Yes, Brian.  We`ve seen this time and time again with the President where when somebody gets into a scandal or hot water of any kind he tries to distance himself from them.  You know, after Paul Manafort was indicted in the Russia investigation, we heard from the President that, oh, Paul Manafort barely knew him, hardly worked on my campaign even though he was the campaign chairman.

WILLIAMS:  Very short period of time.

RUCKER:  Exactly.  And Rudy Giuliani has been a friend, a close associate of Donald Trump`s for decades now.  They are friendly from New York that predates Trump`s political campaign.  Of course Rudy was his sidekick throughout the campaign in 2016 and has been his most prominent defender on television and one of his lead lawyers for two years now.  So, you know, that`s an interesting distancing we saw at the White House there.

It`s notable, by the way, that President Trump said that Giuliani has been my lawyer, not Giuliani is my lawyer.  We should note also that Giuliani told reporters tonight that he does remain the President`s personal attorney and that his status with the President has not changed.

WILLIAMS:  Barb, you`re our resident former fed.  Help us out on a matter of law.  Ambassador Yovanovitch goes before the committees today for nine hours talking about Ukraine.  At the invitation of the House of Representatives, what if the evidence she shares, the statements she commits intersect with a federal investigation even though it was House sponsored, who does that information get to belong to?  How does that all work?

MCQUADE:  Yes.  Typically both organizations will share information with each other.  There is nothing to prevent the Southern District of New York of separately interviewing her and gathering that information or requesting the transcript from her testimony today.  Where it gets tricky is when one wants to give immunity to a witness because it can impact the other.  We saw that in the case of Oliver North where Congress immunized Oliver North and then that scuttled his testimony in his criminal case.

So they do have to work carefully together and one hopes that the lawyers are talking to each other if they want to go down those parallel tracks.

WILLIAMS:  Frank, what about all the people watching tonight who would be within their rights to say you guys, I thought this whole story, I thought the original sin was Russia`s involvement in our election.  All I`m hearing is Ukraine?

FIGLIUZZI:  Well, understand something that this is the bright shiny object that the administration wants us to focus on instead of Russia.  They want us to think that Ukraine was behind all of the wrong doing, all of the conspiracy to mess with the election and that`s what this is all about.

But here`s the truth.  Russia`s come up again even in the Ukrainian investigation because the two guys arrested that are associates of Rudy`s of course were tied up with foreign national number one.  Foreign national number one is Russian.  This is Russian money flowing into the 2018 election and/or state elections.

So, this hasn`t stopped at all, and it`s the 2018 election.  And there`s no sign of it stopping because the President has dismantled the very body that`s supposed to monitor this, the Federal Election Commission, FEC, doesn`t even have a core (ph) of members to sit and provide guidance, direction, and monitoring for our next election.

WILLIAMS:  Phil Rucker, help me out with one more thing.  In the news room tonight getting ready to go on the air, I thought I heard the President say something in his rally in Louisiana.  We played it back.  The President indeed said something in his rally in Louisiana that I`m going to play for you now.

(BEGIN VIDEO CLIP)

TRUMP:  And we`re going to defeat socialism and put a man on the face of the moon.

(END VIDEO CLIP)

WILLIAMS:  Phil, who`s going to tell him?

RUCKER:  Brian, we`ve already put a man on the moon.  But this --

WILLIAMS:  A dozen of them.

RUCKER:  -- this gets -- yes.  This gets to the President`s, you know, space force priority which is something he`s very proud of and likes to talk about and is a big hit at the rallies.  But, you know, everybody -- any student of American history or anybody who lived through that period of America knows that we put a man on the moon.

WILLIAMS:  Twelve of them.  Total of 24 feet walking around the moon.  It was unbelievable.

RUCKER:  Yes.

WILLIAMS:  I remember it.  Just thought we could use that at the end of our first segment on a long Friday night after another long weekend.  Our thanks to our first round of guest, Phil Rucker, Frank Figliuzzi, Barbara McQuade, and Michael Schmidt for joining us earlier.

Coming up, as we said, another Trump Cabinet vacancy tonight.  Oh, by the way, we have the late report on that and the possible replacement list.

Plus, the increasing concerns over the return of Isis.  Guess why.  And the danger our own Special Forces are in with Turkey on the attack following the green light from Trump.

And late, the insiders who are starting to speak up now as a former U.S. ambassador, a career civil servant, 33-year veteran lays down a marker of her own today bravely in Washington.  "The 11th Hour," as we say, just getting started on yet another eventful Friday night.

(COMMERCIAL BREAK)

WILLIAMS:  This busy Friday night of news saw yet another Trump administration staff shake up.  The President announcing on Twitter, as it`s done now, that Kevin McAleenan who had been the Acting Secretary of Homeland Security since April and the fourth person to serve in that job is now out.  "We have worked well together with border crossings being way down.  Kevin now wants to spend more time with his family and go to the private sector."

Well, we knew the end was near when last week McAleenan actually spoke candidly about his struggle his struggles with Trump`s immigration agenda telling "The Washington Post" in a revealing interview, "What I don`t have control over is the tone, the message, the public face and approach of the department in an increasingly polarized time."  And said "That`s uncomfortable as the accountable senior figure.

Joining us to tonight to talk about his resignation, Julia Ainsley, our NBC News National Security and Justice Reporter, we have also, for the record ask, Mr.`s Rucker and Figliuzzi to stay for further questioning.

So Julia, is it true that Acting Secretary McAleenan is looking to spend more time with his family.

JULIA AINSLEY, NBC NEWS NTL. SECURITY AND JUSTICE REPORTER:  Well, it`s true that he resigned tonight, Brian.  And it actually shouldn`t be a huge big surprise given that interviewed that you just showed with "The Washington Post."

But a few things to note about Kevin McAleenan, he is someone who served under the Obama administration, and has been a long time career civil servant then promoted to a political role.  And it`s true, he lost control like us of the tone because he is someone who did also focused on the push factors, the reasons why people were leaving Central America.  But he should not be seen as a moderate.  This is someone who wrote the memo that justified family separation in 2018 and then this year as acting secretary has overseen the toughest immigration policies yet on asylum which forced asylum seekers to go back into Mexico as they wait for their court hearing.  He`s seeing also this new policy where immigrants have to claim asylum in countries like El Salvador before they can even qualify in the United States.

So, Kevin McAleenan is leaving in part because, yes, maybe he lost control of the message.  He doesn`t like having the political role when he use to have one that was more operational.  But this also has to do with the inner workings of the White House.  He was someone seen on the side of the Jared Kushner and Kushner really saw him as an ally during the government shutdown earlier this year but an ally he did not win over with Stephen Miller.  And we know when it comes to immigration Stephen Miller rules at the White House.

WILLIAMS:  OK.  Short list to replace him?

AINSLEY:  Well, the short list is one name so far at the top which is Ken Cuccinelli.  He is the acting director right now of U.S. Citizenship and Immigration Services.  Before he was named to that job, Trump floated his name as an immigration czar, a new position he was going to make up specifically for Ken Cuccinelli who is very vocal, who goes beyond what Kevin McAleenan would do and would honestly bring in some possibly more extreme positions and policies to that role.

We`ve seen Ken Cuccinelli over the summer talk about ICE raids.  He was pushing for that even though he had no role with ICE, immigration and customs enforcement.  He wanted to be more involved and he pushed for more extreme things the whole way.

And he was someone who`s very vocal on cable news.  He goes on Fox very often and that`s something the President sees as a value and attribute and the person he wants to name to oversee this large law enforcement -- large agency.

WILLIAMS:  Whenever his name comes up we find it irresistible not to run the pictures of him on the floor.  The Republican convention.  He wasn`t always pro-Trump.  He very dramatically through his credentials on the floor and stomped out.

He saw the light, however, went to CNN on their payroll and was really known as a guy they could go to who would never say anything negative about the President almost publicly campaigning for the job.  He may be on the precipice of now tonight.  Julia Ainsley covers this whole world for us.  She`s been kind enough to stay up late and report on it for us tonight.  Julia, thank you for that.

AINSLEY:  Thank you, Brian.

WILLIAMS:  Mr. Rucker and Figliuzzi also remain.

Phil Rucker, people are seeing two parallel congruent, never to cross tracks.  One of a kind of recklessness and another of these encroaching investigations that all of them, all of them together could be an actual threat to the life blood of this administration.

RUCKER:  Yes.  That`s exactly right, Brian.  And there are a couple of things that are really interesting at the moment that we`ve seen in the last couple of days because earlier this week the White House put out a memo, a legal memo, to the House basically declaring war on this impeachment investigation saying that the White House would block administration officials from testifying, block the sort of memos and other documents that the House investigators are seeking and stymying this investigation at every turn.  And yet today we saw the former ambassador to Ukraine testify at length and in a really stunning account of what is happening inside the State Department.  Next week we`re going to hear from Fiona Hill, President Trump`s former Russia policy adviser and a national security counsel.

We`re also going to hear from that ambassador to the E.U., Sondland.  And they are doing so in open defiance of the White House`s orders.  And it just shows the limitations of this White House and of this President in corralling this process which seems to be expanding every day.

WILLIAMS:  Frank Figliuzzi, explain this for us.  Syria is a mess, there was a report today some U.S. special operators might have been targeted, certainly were fired upon.  It was reported perhaps because their retreat has not been fast enough after the Trump green light to Turkey.

This was a tweet today from Brett McGurk, the former special presidential envoy to the coalition to defeat Isis.  He writes "Secretary Mnuchin today briefed from the White House podium that Trump signed an authorization to impose sanctions but that no sanctions have been imposed.  This is meaningless nonsense.  A 100,000 people are already displaced and U.S. soldiers are being fired upon.  What`s the bar for sanctions?"

Frank, the question for you, what is going on?

FIGLIUZZI:  Well, Brian, we`re missing something here.  There is no logical reason for the President approving Turkey`s incursion into Syria and abandoning our allies in the form of the Kurds.  And now as you just reported, now we see U.S. troops actually endangered by Turkish incoming fire.

How many U.S. soldiers will have to get injured?  How many Kurds will have to die?  How many Isis fighters will have to escape and make their way out of Syria to pose a real present threat to us before some red line is crossed where these so-called sanctions actually kick in?  We are missing the motivation for the President to do this and allow Turkey to do it.

It`s like telling someone I approve of you blowing the doors off a prison as long as the guards don`t get hurt and the inmates don`t escape.  It doesn`t work that way.  These sanctions are a warning that rings hollow.  And I`m very concerned about a possible resurgence of Isis.

WILLIAMS:  To Frank Figliuzzi, to Phil Rucker, and Julia Ainsley before that, our thanks for hanging around tonight and taking our questions.

Coming up for us, another legal set back in the President`s battle to keep Congress from looking at his finances when we come back.

(COMMERCIAL BREAK)

WILLIAMS: Another blow today to the President`s efforts to conceal his finances. Federal court has denied Trump`s appeal to block a Congressional subpoena.  We`ll get through this.  For among other things his tax returns.

Congress is demanding to see eight years of Trump`s financial records as part of an investigation into whether the President has broken any laws.  Trump`s lawyers try to argue Congress doesn`t have a right to those documents because they lack a legislative purpose.  But the D.C. Circuit Court knocked down that argument in pretty plain English, "Contrary to the President`s arguments, the Committee possesses authority under both the House rules and the Constitution to issue the subpoena".  The Committee was engaged in a legitimate legislative investigation.  Trump will almost certainly appeal the ruling.

Here to talk about all of it tonight, Josh Gerstein, Senior Legal Affairs Contributor for POLITICO and still with us we`ve asked Barbara McQuade to stick around and take more of our questions.  Barbara, this is a statute that allows the House to do this.  This is going to be tough to fight, but the folks watching tonight won`t guessing, I have two questions.  How long would an appeal take?  Is this going to take forever?  And should the liberals get all excited and hot and bothered that this means they are going to -- Americans are going to be able to file through the President`s former tax returns?

MCQUADE:  Yes, so a couple of things.  Number one, I think that President Trump`s strategy will be to stall and drag this out as long as possible.  I think the ruling itself on the merits is not surprising.  But the next thing he could do is to ask the Circuit Court of Appeals to reconsider on bank with the full bench.  So, that would be the next step.  And then take it to the Supreme Court, try and kick it to next term, and so maybe delaying a decision until after the 2020 election.  So, that clearly is part of the strategy.

The other question about, does this mean the public will get to see these things?  Not necessarily.  It will go to the Committee for their consideration.  Their legitimate legislative purpose is to consider whether the ethics in government act needs to be amended in any way.  And so that doesn`t necessarily mean these will be shared with the public, but they will get to see them.

But as we discussed earlier, sometimes when you see evidence of one thing, it can lead to questions about other things and could lead to other investigations.  And so as the court said today, just because they are seeking something for a legislative purpose does not prevent them from using it for some other purpose such as impeachment.

WILLIAMS:  Josh, I don`t know if you`re able to express a judgment on this, but do you think Democrats have put too much time and hope and worry into this?  Is this a shiny object in relation to the larger impeachment inquiry which on its own seems to have legitimate steam now?

JOSH GERSTEIN, SENIOR LEGAL AFFAIRS CONTRIBUTOR, POLITICO:  Well, it strikes me, Brian, as it could be sort of an overtaken by events situation.  I mean, you talked about the Russia inquiry which seems in some respects to be sort of fading into their rear-view mirror.  And even these debates about Trump`s taxes don`t seem quite as urgent as they did just a month or so ago before we had this whole Ukraine mess on the radar screen.  And the fortitude that it seems to have given to Nancy Pelosi to move forward with a fairly explicit impeachment inquiry.

So, I think you`re right.  It might be that there`s too much time invested in this.  And it could be that the House decides to move forward with impeachment before it has the answers in many of these lawsuits that are now pending in the courts.

WILLIAMS:  And Josh, let the folks know who are watching how it is that the Manhattan district attorney came in late with their own claim to the President`s finances?  How does that claim differ from the other?

GERSTEIN:  Well, I think that`s a more direct effort to get his tax returns.  This D.C. Circuit case is really about his accounting records and possibly doesn`t cover his tax returns.  It might just be some of his financial documents.  But that`s just another effort in New York to take another route to try to get at Trump`s taxes using a state grand jury subpoena and a judge, a federal judge up in New York City earlier in the week rejected the President`s efforts on that front.  That will go to another federal appeals court in about 10 days for them to hear arguments on it.  So, you have things moving in different realms.

And frankly the odds are that in at least one of these cases the President is going to lose, maybe in all of them, and it`ll have to go to the Supreme Court to see if they can give him a stay or if the majority he has there conservative majority is willing to give him a stay that will hold this issue at bay as Barbara says possibly through the election.

WILLIAMS:  Counselor, let`s say I just made you justice McQuade.  Could you make an argument that the American public has any kind of inherent or legitimate right to see the President`s finances?  Or has it become just a de facto part of American life over the last few presidential cycles that our candidates have been willing to share them publicly?

MCQUADE:  Yes, you know, as a matter of public policy, I think the American people like to see presidential tax returns.  But courts are in the business of deciding laws.  They decide whether something is required by statute or whether there`s a constitutional protection there.  And that`s the end of their job.  Their job is to interpret the laws that are on the books.  And so it would really require the passage of a new law to require, instead of just this norm and this expectation that we`ve had since the 1970s, that the presidents share their tax returns with the public so we can understand the sources of their income.

WILLIAMS:  Let`s maybe get Congress off their recess first before we try to get exert too much here.  Two of the very best with us on a Friday night.  Josh Gerstein and Barbara McQuade, our thanks as always.

And coming up, the latest reporting on what happened today behind closed doors that former Ambassador to Ukraine told her story to Congress to reporters following all of it with us when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REP. DENNY HECK (D-WA):  I just sat through eight hours that went like a New York second.  It was that amazing, that powerful, that impactful and just feel very fortunate to have been there.

(END VIDEO CLIP)

WILLIAMS:  That`s a strong reaction there to any kind of testimony on Capitol Hill.  Fact is he was talking about the former Ukrainian Ambassador`s testimony today.  Marie Yovanovitch accused the White House of having questionable motives.  She expressed her deep disappointment and dismay.  She warned that we are seeing the State Department attacked and hollowed out from within.  And we say that gets your attention.

Here with us tonight for more, Jonathan Allen, our Veteran NBC News National Political Reporter and Andrew Desiderio back with us, Congressional Reporter for POLITICO.  Gentlemen, welcome to you both.  Andrew, I`ll start with you.  What was generally the reaction, what we got to see was her prepared for delivery opening statement.  But when you see a Member of Congress like that, yes he`s a Democrat.  Yes they have a side in this.  Again, it gets your attention.

ANDREW DESIDERIO, CONGRESSIONAL REPORTER, POLITICO:  It was a very strong reaction.  This was a break through moment for House Democrats in their impeachment inquiry from start to finish.  Her opening statement really truly was a top to bottom scathing rebuke, not just of Donald Trump and of Rudy Giuliani but of these efforts more broadly to undermine faith and trust in American institutions.

She said bluntly that countries like Russia, for example, and China and North Korea and Iran love when that happens and it allows them an avenue to sort of undermine U.S. foreign policy in that way.  So it`s really, you know, unprecedented for someone like her who has really been shunning the limelight since she was forced out of her role in May to come out like this and to do it in a way in which she was essentially defying the Trump administration which said that she should not be testifying.  She had apparently asked for a so called friendly subpoena which would give her a legal recourse to be able to do this.  And she wanted to show up.  She wanted to tell her story and I think that`s why you saw that reaction from Congressman Heck.

WILLIAMS:  Hey, Jon, as you know, not a week goes by we don`t quote Carl Bernstein as having said famously Republicans were the hero of Watergate.  Do you think we`re seeing a plot line change in real time now that may result in us someday hearing that the insiders who chose to step forward and speak were perhaps the heroes of this story wherever it takes us?

JONATHAN ALLEN, NATIONAL POLITICAL REPORTER, NBC NEWS:  I certainly think we`re moving in that direction, Brian, in terms of getting to the truth of what happened inside this administration, what happened outside the administration in terms of Rudy Giuliani, the President`s lawyer, in terms of the Ukrainians who were -- American -- Ukrainian born Americans who were arrested yesterday.  What we`ve got is a situation now where people who -- the White House doesn`t want to talk are going to Capitol Hill.  We saw the White House Counsel`s letter earlier this week saying the administration was not going to participate in any of this.  And yet we have the former ambassador to the Ukraine testifying.

We have Gordon Sondland next week supposedly ready to testify.  This is not going to hold.  More and more people are going to talk.  There are people who are no longer members of the administration who are going to talk.  And it`s happening behind closed doors right now, but this will all come out in public at some point.  The House will move forward.  If there are articles of impeachment on the House floor, and I think everyone expects that at some point.  You will see it all laid out in detail.  If there`s a trial in the Senate, and I think that will happen, you will have a prosecution essentially and a defense.

WILLIAMS:  So, now, Jon you just took me into the next thing I wanted to ask you.  The Democrats continue by any standard I think it`s inarguable from where we sit to lag so badly in messaging, meaning the President gets a free shot, free media, free sound broadcast out on all the networks unanswered every day.  That has been true.  It`s still true.  But are the Democrats feeling their power in the non-communications realm?

ALLEN:  It`s really odd, Brian.  At this point, I think they kind of are.  I believe they think that they are simply gathering evidence at this point, that the President is not dealing in a situation where the facts, where the evidence, where the law is on his side, where every day there are revelations either through the House committee or through the southern district of New York or through the news media that are bad for the President that reveal more of the story behind what we saw in the partial transcript the White House revealed from that call.  And ultimately that`s building a case for them.

And, you know, what we`re also seeing is the people who are coming out to defend the White House are sort of the all stars of the conservative, you know, Trump echo chamber right now.  The people that are rushing to the cameras, rushing to the microphones are the usual suspects.  When Members of Congress reconvene next week, that`s going to be the real test.  When you see House Republicans come back, when you see Senate Republicans come back, the test is going to be, is it more than the Jim Jordans, the Mark Meadows, Matt Gaetzs coming out to the cameras to talk to defend the President.  Is it going to be a much broader set of people?

Are we going to a lot of what we`re hearing from the Mitt Romneys and the Rob Portmans who say what the President did was not good, what the President did was bad, and are somewhat reserving judgment at this point?  Are we going to hear a lot of Republicans say I`m not ready to commit to anything?

WILLIAMS:  Yes.

ALLEN:  Or I have to be somebody that sits in judgment of all these evidence.

WILLIAMS:  Andrew, I got a headline from POLITICO, Trump predicts senators will quash impeachment, as some people would say.  His allies aren`t so sure.  Is the new liberal great white hope that Republican senators are going to suddenly have an attack of conscience?

DESIDERIO:  As of this moment right now, it is a pipe dream to think that they can secure a conviction of Donald Trump in the Senate and for him to be thrown out.  What we have seen ever since from the summer until now is that public polling in terms of support for impeachment has been steadily rising.  It lagged around the 30s all summer when Democrats were struggling to sustain momentum during the Mueller report.

And over these last couple of weeks even since Pelosi sort of wrapped her arms around the idea of an impeachment inquiry in a more formal matter, you`ve seen support for impeachment jump into the 50s and even the 60s in some polls.  And I`ve heard Democrats say all along that there might come a point when it is no longer politically advantageous, politically expedient for Republicans to remain in Donald Trump`s corner.  And that is the point in which you could potentially see a turning point that as you say liberals have been waiting for for this entire time.  But again, I don`t see that happening any time soon or at least not with the current facts that we have right now.

Obviously, House Democrats are in the evidence collection phase which is very important right now.  There haven`t been any public hearings which is something Republicans have been talking about in terms of their angst about the process of this.  You can`t have impeachment unless all the evidence is aired out there in public.  So we`re going to have to see these witness interview transcripts at some points.  We`re going to have to see the full text messages like the ones we got last week.  So, that stuff all has to come out in order for that bipartisan support to build for this before we can even have a discussion about that.

WILLIAMS:  Two guys in the game sharing their reporting with us.  Jonathan Allen, Andrew Desiderio, we appreciate it very much.

And coming up, a look at the stacked week awaiting all of us next week in Washington.

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WILLIAMS:  We have a preview of next week in Washington you`ll be comforted to know.  Congress returns after another hard-earned two-week recess.  For starters, we`re supposed to hear from Fiona Hill Monday.  This is another insider wants to come forward, talk about what she witnessed on the inside.  Until recently, she was Trump`s top aid in Russia and Europe.

NBC News confirming she plans to testify that, "Rudy Giuliani and E.U. Ambassador Gordon Sondland circumvented The National Security Council and the normal White House process to pursue a shadow policy in Ukraine.  Ambassador Sondland will get his chance to answer for that accusation on Thursday.  You may recall, he is the guy who flew from Brussels to Washington just to testify a few days back, but his testimony was pulled at the last minute.  Now he says he will comply with a congressional subpoena.  We recommend watching us every night to find out how it goes.

Another break for us.  Coming up, folks in the cable news business aren`t easily surprised, except for what happened this afternoon right across the street from here.

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(BEGIN VIDEO CLIP)

SHEPARD SMITH, ANCHOR, FOX NEWS:  Even in our currently polarized nation, it`s my hope that the facts will win the day, that the truth will always matter, that journalism and journalists will thrive.  I`m Shepard Smith, Fox News, New York.

(END VIDEO CLIP)

WILLIAMS:  The last thing before we go tonight, man, that was the shot heard around the media world.  And just like that, Shepard Smith, the pride of Mississippi -- excuse me -- and a Fox News staple, see how choked up I am over this, is gone.  He apparently told no one, he was doing this, headed for the elevator.  When it was done, when he signed off, Fox then cut to Neil Cavuto who was stunned, forced to react in real-time on live television.

(BEGIN VIDEO CLIP)

NEIL CAVUTO, ANCHOR, FOX NEWS:  I`m Neil Cavuto and, like you, I`m a little stunned and a little heart broken.  I don`t know what to say.

JOHN ROBERTS, NATIONAL CORRESPONDENT, FOX NEWS:  Just trying to compile my thoughts, too.

CAVUTO:  Yes.

ROBERTS:  Neil, I walked out here to do the hit and suddenly got hit by a subway train.  Holy Mackerel.

(END VIDEO CLIP)

WILLIAMS:  Shepard Smith`s afternoon broadcast was an island of truth telling in the age of Trump at a time when his employer and so many of his on air colleagues have moved hard right, double down on Trump.  And the age, the idea of Trump.  That meant increasingly, Shep Smith was left to speak truth to power.

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SMITH:  It`s crazy what we`re watching every day.

UNIDENTIFIED MALE:  Yes.

SMITH:  It`s absolutely crazy.  He keeps repeating ridiculous throw-away lines that are not true at all and sort of avoiding this issue of Russia as if we`re some kind of fools for asking the questions.

Journalists are not the enemies of the people.

He decries fake news that isn`t and disseminates fake news that is.  Fake China pays the tariffs, the wall is going up, historic inauguration crowds, Russia probe is a witch hunt.  You need an ID to buy cereal.  Noise from windmills causes cancer.  It is endless.

(END VIDEO CLIP)

WILLIAMS:  How to put this, Fox is hardly the only cable news outfit with a daytime personality that differs from prime time when attitude and opinions comes out.  And, yes, tongues were wagging today over the fact that Trump`s guy Attorney General Barr met with Rupert Murdoch just yesterday.  But Fox says the decision was Shep`s alone.  And while it was a surprise, he had planned it for today.

Contractually, we`re told he can`t work anywhere else for a while, but at age 55, with his integrity intact, he has an open lane ahead of him.  It should also be said, because these days it counts for a lot, Shep Smith is a nice guy.  He has a lot of friends in this business and even more admirers.

And where our modest outfit is concerned, that`s our broadcast for this Friday night and for this week.  Thank you so much for being here with us.  Have a good weekend and goodnight from NBC News headquarters in New York.

 

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.                                                                                                     END