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All in with Chris Hayes, Transcript 5/5/2017

Guests: Michael Burgess, Margie Omero, Jim Manley, Ruth Conniff, David Frum

CHRIS MATTHEWS, MSNBC HOST:  Have you ever seen such a mess effort that whistle past the graveyard?  That`s HARDBALL for now.  Thanks for being with us.  "ALL IN" with Chris Hayes starts right now.



DONALD TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA:  This is really is the group.  What a great group of people.

HAYES:  The party is over as the Trumpcare fallout begins.

REP. NANCY PELOSI (D-CA), MINORITY LEADER:  You have every provision of this bill tattooed on your forehead.  You will glow in the dark.

HAYES:  Tonight, new projections of a political earthquake, but will republicans pay before the Senate passes a bill?

Plus, shades of 2016.  A brazen last-minute hacking of the French election, and all signs point to Russia.

Then, The Washington Post reports that Trump transition team warned Michael Flynn about contact with Russians.  And as the federal investigation of Fox reportedly widens --

TRUMP:  There`s only one Rupert.

HAYES:  New reports that the President speaks with Rupert Murdoch daily.

TRUMP:  What do I have to do with that, Rupert?

HAYES:  When ALL IN starts right now.


HAYES:  Good evening from New York, I`m Chris Hayes.  House Republicans partied in the Rose Garden after passing their health care bill yesterday, but today brought the hangover.  Republicans waking up to the news the Cook Political Report has changed its characterization of 20 House races in the wake of the vote, all reflecting enhanced opportunities for democrats.  Dave Wasserman writing that "democrats aren`t so much recruiting candidates as they are overwhelmed by a deluge of eager newcomers, including doctors and veterans in traditionally red seat who`s have no political record for the GOP to attack, almost a mirror image of 2010," when it was democrats who put their political future in jeopardy by voting for an unpopular health care bill and ultimately paid the price.  Right now 23 republicans represent districts won by Hillary Clinton in 2016.  14 of them voted for the health care bill, and they can expect to see ads like this one from Virginia gubernatorial candidate Tom Perriello spotlighting what Perriello cast the GOP effort to crush Affordable Health Care.


TOM PERRIELLO, VIRGINIA GUBERNATORIAL CANDIDATE:  I`m Tom Perriello and in Congress, I voted for ObamaCare because it was wrong that a million Virginians weren`t covered while insurance companies held all the power.


HAYES:  At the Web site 538, Nate Silver writes the health care bill could be a job killer for GOP incumbents because if republican members should suffer a similar penalty for voting for the ACHA has democrats did for ObamaCare somewhere in the neighborhood of 15 points, it could put dozens of GOP-held seats in play.  Then there`s the energy this vote has generated on the left.  Today a coalition of resistance groups said that in just one day, they received 45,000 grassroots donations to the tune of more than $2 million raised for the eventual democratic challengers to House Republicans who voted to repeal ObamaCare.  At the White House today, Deputy Press Secretary Sarah Huckabee Sanders sought to counter the negative perceptions of the bill.



UNIDENTIFIED FEMALE:  Can those with pre-existing conditions and older Americans be guaranteed that they won`t see hikes in the price that they pay?

SANDERS:  That`s the -- that`s the whole point of this bill is to lower costs across the board, not just for those with pre-existing conditions, but to create competition so you have lower premiums, to give states flexibility.  That`s the entire purpose of reforming this system is to have lower costs.  So, yes, that would be the goal and certainly again the priority of the President.


HAYES:  That may be the goal and the priority, but it is not, as far as we know, the reality, which is part of the reason the bill in an earlier form was polling as low as 17 percent.  And with the Congressional Budget Office set to release its score of the revised bill next week, House Republicans are now bracing for a new round of damaging headlines about what exactly they voted for.  Joining me now, Republican Congressman Dr. Michael Burgess of Texas, Chair of the House Sub-Committee of the House Energy and Commerce Committee, a backer of the healthcare bill instrumental in its passage out of the House.  Congressman, thank you for making some time tonight.  I want to --

MICHAEL BURGESS, UNITED STATES CONGRESSMAN FROM TEXAS:  Always good to be with you, Chris.  How are you?

HAYES:  It is -- it`s always a pleasure.  I`m good.  I want to talk about - - I want to bracket for a second the substance, whether the bill is good or bad, and just focus on the changes that -- of the principles, the House GOP itself espoused.  So, on the House GOP Web site, there was the following sentence.  Americans should never be denied coverage or charged more because of a pre-existing condition.  That was a sort of universal principle that was on that Web site.  It`s now been taken off because that`s no longer the case with this bill, right?

BURGESS:  Well, I disagree that that`s no longer the case.  But here, let me just say this--

HAYES:  Wait.  But why did they take -- why did they take that language off the Web site if it`s no -- if it`s no longer the case?

BURGESS:  I don`t know.  You need to talk to somebody who`s in charge of the -- of the republican Web site, not me.  But I was -- I was deeply involved with this bill as we marked it up in the Committee on Energy and Commerce.  We had a 28-hour markup.  Just to take even a step back, this bill was marked up and passed in a previous Congress in December of 2015.

HAYES:  Right.

BURGESS:  Both House and Senate passed a reconciliation bill.  That became the platform of the (INAUDIBLE) for the bill that we had before our Committee, and I thought the committee product after all of the work that was put in was a -- was a very good product.  That`s the one that got pulled from the floor because for some it was not conservative enough.  They wanted that additional state flexibility --

HAYES:  Right.

BURGESS:  -- for a state to say -- for a state to say we don`t want to do community rating --

HAYES:  That`s right.

BURGES:  -- when the governor -- to petition for a waiver.  So that language was added and then Chairman Upton --

HAYES:  OK.  I just I -- but I just -- I just want to establish this basic thing because I feel like one of the things that`s frustrating about this debate is there`s a lot of sort of dissembling obfuscation about what exactly is going on here.  The waivers that are there would allow a state to get rid of community rating.  Community rating is a regulation that says you can`t charge sicker people more.  So if that waiver happened, insurance companies could charge sicker people more, correct?

BURGESS:  Right, but there are protections that are --

HAYES:  Right, but that is true, right?

BURGES:  A state -- A state cannot petition for a waiver if it does not have a hybrid re-insurance risk-sharing arrangement in place and functional when they petition for that waiver.  Look, that was --

HAYES:  This is -- wait a second.  This interesting to me because I`ve now -- I`ve talked to Congressman Cole last night and to you as well.  And the defense is weirdly, don`t affirmatively defend the waiver.  What they basically defense has ended up to is the waiver is really hard to get.  But the waiver --

BURGESS:  No, it`s not --the waiver -- the waiver is there for any state.  Now, I will share with you, Chris, I`m not aware of any state that has really seriously inquired about this waiver authority.  And if there --

HAYES:  Scott Walker, Wisconsin today said that he would look into waiving precisely the community rating mandates in Wisconsin, said that today.

BURGESS:  Very well.  The Senate obviously takes this bill.  I would not expect this bill to get more conservative in the Senate just because of the nature of the body.

HAYES:  But Congressman, wait.  Congressman, you`re doing the same thing.  This is -- this is the pattern for the defenses of this bill.  The pattern that I`ve heard from you and Congressman Cole when I talk about this provision, which is controversial, has people work the up.  Right now, I just want to nail down what it does.  Is the waiver`s hard to get, I don`t know if anyone is going to get the waiver, and the Senate is going to take up the bill.  None of those are affirmative defenses of the principle that insurance companies should be allowed to charge sicker people more, which is what now is enshrined in the bill you passed.

BURGESS:  No.  That the state should have the flexibility to set up products --

HAYES:  To allow insurance companies to do that.

BURGESS:  -- to set up products in their market that are -- that are appropriate for their market.

HAYES:  That allow insurance companies to charge sicker people more?

BURGESS:  And there is a premium support mechanism in place if that does happen.  And do bear in mind, we are only talking about the individual market for someone who has allowed coverage to lapse, that is, they are not in a continuous coverage situation, and they would only be in a non- continuous coverage situation for the year after which they get coverage.  There`s a 30 percent charge that is added to that.  There is the premium support to help them afford that coverage.  And then after they`ve been under coverage for a year, they`re no longer in a lapsed to continuous coverage situation.  So it is a -- I believe it is a manageable situation, but there were people who felt very strongly that states needed the flexibility to set up that the plans that would best serve the citizens of the states.  That is one of the things we heard repetitively from the governors.  We had three roundtables with governors in January and February, and repetitively we heard, we want the flexibility to --

HAYES:  You heard that from republican and democratic governors or just republicans?

BURGESS:  Yes.  Republican -- two roundtables were with republican governors, one was a bipartisan roundtable.

HAYES:  Let me ask you this because you -- the House GOP had its promises.  The President of the United States made a bunch of promises about the health care plan.  And I just want to ask you if they come through in this bill.  The President said the following things about -- he says, we`re going to have insurance for everybody.  CBO says 24 million will lose health care.  Whatever you think about this bill, good or bad, it won`t be insurance for everybody.

BURGESS:  Well, the reason the CBO makes that projection is because removing the individual mandate but --

HAYES:  Right, of course.


BURGESS:  I feel like individual mandate is one of the more pernicious parts of the Affordable Care Act.

HAYES:  I understand that.  All I`m asking is whether the President, who said we are going to have insurance for everybody, this bill does not mean insurance for everybody.

BURGES:  And there will -- and there will be -- there will be access for everyone.

HAYES:  But not insurance.  Access and insurance are different.

BURGESS: Well, coverage -- actual care and coverage are different.  So I can tell you that as a physician.  There are plenty of times that as I saw people who had coverage but weren`t getting care.

HAYES:  Well that -- that I agree with, that this is an argument for single payer.  But here is my other -- my other question, the President said -- and in fact, it was a distinguishing element.  I don`t remember if you -- if you went through the primaries.  Other people were talking about cutting Medicaid, Medicare, Social Security.  The President said repeatedly, save Medicare, Medicaid and Social Security, that he wasn`t going to cut Medicaid.  He attacked other candidates for cutting Medicaid.  This bill represents a cut to Medicaid a $639 billion, correct?

BURGESS:  Well -- now, wait a minute.  It represents a cut in the growth of Medicaid, but I don`t recall the President making that statement.  I do recall him making a statement about Social Security and Medicare.  Medicaid is a little bit of a different situation.  There`s no trust fund with Medicaid.

HAYES:  Right, but the President --but the President -- you do -- so right, so we`re on the same page.  This is -- this bill does represent a cut to Medicaid, the President did say multiple times he would not cut Medicaid. 

BURGESS:  It represents a slowing in the growth of Medicaid.  Medicaid spends $550 billion this year.  By ten years` time, it will be spending $1 trillion.  It`s already bigger than the natural health service so the --

HAYES:  But taking money out of the Medicaid line item into the budget, that`s where the savings come from.

BURGESS:  The projected rate of growth, not out of Medicaid.

HAYES:  Right.  All right.  But the President did say he wasn`t going to cut Medicaid.

BURGESS:  I don`t recall him making that statement.

HAYES:  All right.  He did.

BURGESS:  I do recall him making a statement about Social Security and Medicare.

HAYES:  He did.  In fact, it caught me at the time because a lot of times people say they`re not going to cut Medicare and Social Security.  Medicaid is often seen as a program for the poor.  It struck me as really notable back in the campaign trail.  But the President, Donald Trump at time, who is just a candidate distinguish himself by saying he wouldn`t cut Medicaid.  This bill does cut Medicaid.

BURGESS:  No.  This bill cuts the rate of growth in Medicaid, but it does not cut Medicaid. 

HAYES:  That is -- that is --

BURGESS:  And it does give states a stable --

HAYES:  That is -- that is a semantic --

BURGESS:  A stable -- a stable funding program in the -- if a state elects a per beneficiary allotment --

HAYES:  Right.

BURGESS:  They`re fixed at the 2016 beneficiary year, growing at CPI medical plus one.  That`s a fairly generous growth rate under anyone`s projections.

HAYES:  It is -- it is less than the growth rate now, which is where the savings come from.  Michael Burgess, always, always good to have you here.  Thank you very much.

BURGESS:  Great, thank you.

HAYES:  Joining me now, Democratic Pollster Margie Omero, Jim Manley Former Chief Spokesperson for Senator Harry Reid, Ruth Conniff, Editor in Chief of the Progressive Magazine.  Marjorie, you`re a pollster.  Do you buy the Cook 538 redistrict general sense that the vote yesterday means additional political risk for some of those members?

MARGIE OMERO,  DEMOCRATIC POLLSTER:  Well, it certainly gives a very crisp distinction between the two parties, and I think it`s also a reminder that wherever this bill goes, whether it ends up becoming law or passing, whatever happens in the Senate, even for republicans who voted against it, they will all still pay the political cost of something that is unpopular now, that`s not going to become any more popular with time given everything we`ve seen in past similar bills over the past, you, few decades.  When you look at democrats who voted again ObamaCare,  they still -- most of those democrats ended up losing or having to retire.  So there will very much be a political cost attached.

HAYES:  That is a key point, right, because democrats tried to do it both ways.  And Jim, you were -- you were in the Senate at the time.  I remember covering it.  I remember talking to you at the time during the very long process, much longer than this process has played out.  And basically the politics -- it didn`t matter actually whether you voted for it or against it.  What mattered was that people were angry that this thing got passed.  Particularly they were -- they were hardcore republican and they turned out.  Do you think that political gravity acts on members of the Senate right now?

JIM MANLEY, SENATOR HARRY REID`S FORMER CHIEF SPOKESPERSON:  I do.  I mean House Republicans may have been partying like it was 1999 yesterday, but the reality is that this bill is not going anywhere in the Senate.  Senate Republicans understand that.  And as Michael Tomasky pointed out earlier, there`s four moderate republicans that aren`t agreeing to any of this stuff.  What he failed to mention, that there are three conservative republicans, Lee, Cruz, and Rand Paul, that are never going to accept anything short of full repeal of ObamaCare.  So Senator McConnell understands what`s at stake here.  He`s refused to show his cards so far.  I`m not -- I don`t expect him to do so anytime soon because he understands what exactly is at stake.  These guys own this thing like Margie said, come hell or high water.  As the speaker said earlier this week, this is who we are.  This will define us.  Those words are going to come back to haunt him.  I can guarantee you that.

HAYES:  You know, Ruth, I thought about that picture that sort of instantly became iconic of the President standing in the Rose Garden with members of the House GOP Caucus behind him.  There were a few women of the dozens of representatives there, but in this sort of one shot that was going around on twitter, it really felt like, OK, here`s are dozens of white men that just made this vote.  And I thought about the sort of data we have about women being particularly invested in volunteering and giving money and part of the quote, "resistance."  It just seemed to me like yesterday was a poking of the bear as it were to the forces that are aligned against Trump.

RUTH CONNIFF, PROGRESSIVE MAGAZINE EDITOR IN CHIEF:  Yes, absolutely.  I mean the -- and the bear is really getting activated.  I mean, we saw the outpouring at the women`s march.  And you know, really right after Trump`s election, there was a lot of despair.  I was talking to activists about this today, and was being reminded by them, don`t forget.  We thought when Trump was elected, we were going to see the instant repeal of the Affordable Care Act, and in fact, the House was going to be where it was easy.  And instead, in large part because of the tremendous resistance, both organized by groups after the women`s march and also just independent citizens pouring out, coming to their Congressional Representatives` Offices, it was a hard vote.  You know, Trump and Ryan spent enormous political capital to get this thing squeaked through the House, and it`s dead on arrival in the Senate.  So I think it`s important for people to realize that that outpouring has made health care the key issue of the resistance, and it`s a very significant fight.

HAYES:  The dead on arrival in the Senate, I`m not sure if that`s true.  Jim, since you`re the -- you`re the -- you`re Harry Reid`s Chief of Staff here, you`re sort of expert in this area, what do you think about that?  I am -- I hear people say that, and I guess it means in a literal sense they`re not going to build this language.  But I don`t put it passing voting -- passing something.

MANLEY:  There`s no guarantee that that`s, in fact, going to happen given the dynamic I mentioned earlier.  A member -- again Chris, they`re playing with a very narrow margin, they`re going to try and jam it through under the so-called rules of reconciliation, so they`ve got a very narrow margin.  It`s 52-48 right now.  They can only afford to lose a handful of votes.  But the reality is that even if they can get it through the Senate -- and, again, I don`t think it`s guaranteed -- the question then is what exactly, if anything happens in the House because those -- any modifications the Senate are going to make to make it more palatable if you will --

HAYES:  Right.

MANLEY:  -- I assume are going to be highly objectionable to the House Freedom Caucus, which will lead them once again to refuse to take yes for an answer.  And also one other thing.  Let`s disabuse anyone of the notion that this is going to operate under so-called regular order where there`s going to be a conference committee.

HAYES:  Yes, no way.

MANLEY:  After what -- the abuse of process we`ve seen right now, if and when the Senate gets their act together -- and I can`t guarantee you that`s going to happen -- I can tell you one thing.  They`re going to try and jam the House six ways to Sunday.

HAYES:  Margie, I am of the theory that the political repercussions of this expand immensely if they are -- they are substantively successful.  Which is to say if they actually were to pass a repeal of ObamaCare out of the Senate, it`s signed by the President, that`s when you`re going to see a sort of nuclear backlash.  If they fail paradoxically, I think the backlash and the political danger of the standing members of the Republican Party is less.  What do you think of that?

OMERO:  I think that`s right because ultimately people are going to be looking at this through the lens of what does it mean for me.  What does this mean for my own care?  And if they are successful in putting the lives of millions of people at risk by jeopardizing their insurance and their coverage, then people are going to feel really nervous and justifiably so.  Now, to be sure this debate as it -- as it continues, I could see why republicans would want to speed up the process because a protracted debate makes people even more nervous.  But we want to hear those -- the discussion of those details.  I mean people want to know what the -- what the policy is going to entail.  And this rushing it through just to have a political win on the board is something that`s going to put all members at risk, even if they`re not successful.  And if they`re successful in repeal, for sure you`re going to have a lot of voters really up in arms.

HAYES:  Well, and the big question now, Ruth, I think is to Jim`s point, like the political pressure is there, it`s not an easy thing for the Senate to do this.  But the question is, can the opposition sustain, you know, really bring to bear the kind of pressure that we saw particularly in the run-up to that first vote in the Town Halls?  Can they do that?  Is there the organizational capacity and desire to do that in the Senate?

CONNIFF:  I think so.  I mean, for one thing, don`t forget, Senators have to run statewide.  So in the House, at least a lot of these Freedom Caucus Members have gerrymandered districts that are so conservative that they feel like they can go out and attack Jimmy Kimmel and his newborn son and not pay a political price for this.  That`s not true in any statewide race.  You know, of course in Montana we have a special election in the House coming up that is statewide.  So, you know, I think you are going to see enormous outpouring of worry, people genuinely feel that their lives are on the line.  They don`t want to lose their health care.  This is a tremendously unpopular measure.  You`re trying to take something away from people that they already have.  I don`t think this is going away anytime soon.

HAYES: To Ruth`s point, the republican candidate in Montana, in Montana, red Montana, refused to endorse it but was caught on tape yesterday praising the health bill, but wouldn`t say it in public, which tells you a lot about the politics of this.  Margie Omero, Jim Manley and Ruth Conniff, thanks to all of you for being with me.

CONNIFF:  Thank you.

HAYES:  We have lots of breaking news tonight.  The Washington Post now reporting the Trump transition team warned Michael Flynn about contacting the Russian Ambassador.  Plus an astounding story.  2016 all over again, a massive data leak in the final hours of the French election.  Russians are the main suspects yet again.  The incredible details of another brazen attack on democracy next.


HAYES:  With less than 48 hours till French voters head to the polls, the campaign of presidential front-runner Emmanuel Macron says it`s been the victim of a massive and coordinated hacking attack.  Thousands of documents were posted online today, what appeared to be e-mails, internal memos, even screen shots of purported bank records.  According to the Macron campaign, the trove includes fake documents intended to spread disinformation.  They compared the document don`t to the hacking last year of e-mail linked to U.S. Presidential Candidate Hillary Clinton which the American Intelligence Community attributed with high confidence to Russia.  We do not have confirmation about who carried out this latest attack, but Macron`s opponent, far-right nationalist Marine Le Pen is widely seen as an ally of the Kremlin.  She visited Putin during the campaign.  And just last week, security researchers warned that Macron had been attacked by the same Russian hackers who targeted Clinton.  I`m joined now by David Frum, Senior Editor of the Atlantic, former Speech Writer for President George W. Bush.  I am struck by the brazenness of this.

DAVID FRUM, THE ATLANTIC SENIOR EDITOR:  Well, at this point I don`t know how anybody manages to cast a vote in good conscience for a candidate who is -- unless they have been hacked by the Russians.  It does seem to be the good -- the good housekeeping seal for a modern democratic politician.

HAYES:  It`s sort of remarkable to think about the Russians if they did do it and again, we`re somewhat speculating although it`s informed speculation for all the circumstantial reasons and the reporting about what`s happening to Macron.  But that Russia feels that they can do this, I mean it`s kind of in the light of the day.  Like if the Clinton-Clapper was sort of a sneaky thing they did at night, this was -- everybody has been watching this happen and unfold in slow motion.

FRUM:  Well, what price did they pay for interfering in the election of the United States?  That would seem to be the most reckless, the most dangerous, the most audacious thing you could possibly do.  And that story, I think, is bigger than a lot of people understand.  They have done things like copy voter rolls, which they have warehoused and are going to use again in the future.  We don`t know for what nefarious scheme, but they were very successful.  They have paid no price.  So why not try again?  In a funny way for them, although France, of course, is a less dominant country than the United States, the stakes here may even be higher because here you`re playing for the breakup of the European Union.

HAYES:  Yes, I want to -- I mean, the stakes -- it is really important I think for folks to have been following this (INAUDIBLE) to understand the stakes here because, in the wake of Brexit, it really does feel like a Le Pen victory would be the end basically of the EU.  And it`s kind of understood that way, right?

FRUM:  Right.  She has talked about busting out of the Euro Currency, which would have enormous repercussions for the European Banking System, and she`s pretty hostile to the European Union.  Maybe some way of cobbling it together would be found, but it would be broken as a strategic actor.  What Russia wants -- look, Russia has an economy about the size of Italy`s.  Russia on its own is not a tremendously powerful company as compared to a United Europe.  But a disunited Europe, it is a supremely power player, and that`s what it`s aiming for, just as been aiming also by way to break the tie between the United States and Germany, the foundation of European security since the second world war.  That was another one of the benefits of the election of Donald Trump.

HAYES:  Do you -- was it -- I understand, I know you were just in France recently and talking to folks about the election there.  Was the sense that -- did the stakes there feel sort of epic and grand because they sort of feel that way, I think, to a lot of the rest of the world, particularly because of Le Pen and her lineage in what she would represent and what Le Pen would represent at the head of the French stake?

FRUM:  What was spooky about being in Paris last week was just the heavy visibility of security everywhere.  And security with, you know, machine guns open.  When you enter a newspaper office, there would be security guards very visible.  There were security guards very visible in a lot of places and again always with brandished machine guns.  And at least I was not outside of Paris on this trip, but you did have a sense of insecurity and danger.  That was present in all of the downtown places.

HAYES:  Whatever happens on Sunday, and it`s a strange situation because there`s a media blackout right now as many European countries have in terms of the final part of the campaign, places can`t campaign.  In some places, you can`t actually report on it.  Whatever happens on Sunday, and it will matter a tremendous amount what happens, but it seems to me that this will reverberate back very intensely and acutely to American politics.

FRUM:  Well, if the worst should come to the worst.  But you know, one thing that is going to happen in this blackout period is this creates an opportunity for people on social media to interpret material maliciously.  There`s some guess -- I`m not going to repeat because there`s no foundation to it.  Some of the things that may be in this dump, but there are rumors about what it`s going to be.  It can now be magnified by the French version of social media and there will not be an opportunity to correct if those documents are falsified as the MacroN people say that happened.

HAYES:  Yes.  And if fact, Macron gave a very interesting interview about two weeks ago and he sort of pre-butted the possibility of rumored innuendo about him and his financial dealings because it`s fairly clear that his team knew that they were under attack and that there might be a sort of sustained assault.

FRUM:  Well, and Le Pen has signaled in advance, that`s one of the things that makes me more nervous about this, the main lines.  You know, Macron was an investment banker and he worked for a bank that carried the name of the Rothschild family. 

HAYES:  He`s a bigger caricature.

FRUM:  But it is so important to understand that the idea of Rothschild -- this is one of the most ancient tropes of French anti-Semitism, going back to the1880s and a famous journalist named Edward (INAUDIBLE), the idea of the Rothschilds in particular as the controllers of France.  This is -- this is something with deep lineage in French politics and it`s getting an airing again incredibly in the 21st century.

HAYES:  All right.  David Frum, thank you for your time.

FRUM:  Thank you.

HAYES:  Up next, more breaking news on former National Security Adviser Michael Flynn and what the Trump transition team knew about his contact with the Russians.  Stick around.



TRUMP:  The information was provided by who I don`t know, Sally Yates, and I was a little surprised because I said it doesn`t sound like he did anything wrong there.  But he did something wrong with respect to the Vice President, and I thought that was not acceptable.  As far as -- as far as the actual making the call.  In fact, I`ve watched various programs and I`ve read various articles where he was just doing his job.


HAYES:  Back in February, President Trump was still defending his fired National Security Adviser Michael Flynn.  Tonight, three days before former Acting Attorney General Sally Yates is scheduled to testify before the Senate, a breaking story from The Washington Post sheds some light about what the Trump transition knew about Michael Flynn and why the Trump transition team says it was raising red flags as early as November about Flynn`s contact with the Russians.  That report and why it could be a very big deal, next.


HAYES:  Breaking news tonight, the Washington Post reporting that Michael Flynn, the presidnet`s former national security adviser was warned by senior members of then President-elect`s Donald Trump`s transition team about the risks of his contacts with the Russian ambassador weeks before the December call that led to Flynn`s forced resignation. According to the Post, transitional officials were so worried about Flynn that the head of Trump`s national security council transition team asked Obama administration officials for a classified CIA profile of Russian Ambassador Sergey Kislyak.

The document was delivered within day, officials said, but it is not clear that Flynn ever read it.

Joining me now, Greg Miller, national security correspondent with The Washington Post, who helped break this story, and Michael Isikoff, chief investigative correspondent for Yahoo news.

Greg, let me start with you, what really struck me about this was we know about the calls on  sanction day, those are the calls and the repeated contact that ultimately got him fired, but apparently he was having lots of contact with the Russian ambassador right after the election?

GREG MILLER, THE WASHINGTON POST:  Yeah, in fact Kislyak had previously told us that he had been in contact with Flynn extensively before the election, and Flynn has since acknowledged that he knew Kislyak for several years.  Kislyak was involved in setting up a trip that Flynn made to Moscow when he was still head of DIA.

HAYES:  And this is the Trump transition officials saying that they got worried about how much Flynn was talking to Kislyak?

MILLER:  Yeah.  I think that the most interesting thing here to me and the most significant thing is that even within the Trump transition or Trump team, you had these sort of experienced national security people who were saying, what in the heck is going on here?  Our incoming national security adviser is having regular contact with the Russian ambassador, that`s not good.  And they`re trying to do things.  They`re trying to intervene and trying to sort of make him snap out of it.

HAYES:  Particularly we have to say, Michael, in the context of what had just happened in the election of course, which is the growing certainty by all the parts of the intelligence community the Russians had just pulled off this sort of audacious intervention in the American election.


And look, the remarkable thing here is, number one, that there were concerns that Flynn didn`t realize that all his communications with the Russian ambassador would be monitored by U.S. intelligence.  This is a guy, Flynn, who had been the director of the Defense Intelligence Agency.  He should have known that, and that`s been one of the striking aspects of the story all along, that he didn`t realize on December 29th that everything he said to Kislyak would be picked up by U.S. intelligence.

But, yeah, to the larger question is, look, there may have been these transition officials who were concerned about these communications that Kislyak -- that Flynn was having with Kislyak, but was the president of the United States or then-president-elect concerned at all?  The one thing we don`t know is to what extent was Flynn briefing Donald Trump about all of these communications, and was he forwarding messages to the president-elect?  That`s the key and most important question.

HAYES:  Do we know that, Greg?

MILLER:  No, we don`t know that.  I mean, that is an important, huge question that looms over all of this, and it`s part of the reason there was such interest in the news a couple weeks ago, that Flynn was exploring and interested in immunity -- before giving any testimony to the congressional committees that are investigating this.

HAYES:  I have to say Sally Yates is testifying about this on Monday.  There`s a certain degree to which one might theorize there`s a little bit of prophylactic from the Trump people seeking to sort of separate themselves from Flynn at a time when she`s going to testify.  There`s also this story, Michael, and I want you to comment on this.  This is the AP reporting, that the Obama team -- that the outgoing White House during the transition became concerned about the Trump team`s handling of classified information after learning that highly sensitive documents from a secure room at the transition`s Washington headquarters were being copied and removed from the facility.

Obama`s national security team decided to only allow transition officials to view some  information at the White House, including documents on the government`s contingency plan for crises.  They were scared that those would leak.

MILLER:  Yeah.  I mean, look, that is interesting although it`s hard to know what to make of it until you know who it was that was removing the documents and what the documents were.

HAYES:  For what purpose, right.

MILLER:  Yeah.

HAYES:  Michael, what are you looking for, for Sally Yates` testimony on Monday?

ISIKOFF:  Well, it`s going to be really interesting, because Sally Yates has made it clear that she went to Don McGahn, the White House counsel, to warn him that Flynn could be compromised because what he was saying publicly, what the White House was saying publicly was not true.

HAYES:  Right.

ISIKOFF:  And she knew this because she was able to examine or get reports on the classified transcripts of the U.S. intelligence surveillance of Kislyak.

Now, it`s not clear -- and I would be surprised if Yates is going to be able to refer to what`s in those transcripts.

HAYES:  Well, that`s -- right.  What`s in the box is the question.

ISIKOFF:  She`ll presumably be able to say, I saw something that concerned me, and I took it to the white house, to Don McGahn, but she won`t be able to say what it was she saw that raised that level of concerns.

So I think it will probably not be -- while there may be some atmospherics and theatrics, and certainly if she speaks as strongly as some people think she will, it will get a lot of headlines.

But I`m not sure it will get us further to the bottom of the story of what exactly Flynn did say to Kislyak.

HAYES;  All right.  Michael Iskikoff and Greg Miller, thank you for your time.

Still ahead, it was a government agency required to have their office TVs turned to Fox News?  What we know about that bizarre story ahead.

Plus, tonight`s Thing One, Thing Two starts after the break.


HAYES:  Thing One tonight, the best people.


TRUMP:  I have the best people.  I have the best people.  I have the best people.

We`re going to use our best people.

I know the best people.  I know the best people.

S so we`re going to get the best people.

I know the best managers.

We have the best people.

I know the best deal makers.

We`ve got the best people.

We have the smartest.

The best people in the world.

The best people in the world.

We have the greatest.

We`re the best people.

We are unbelievable.

I`m the best.  Oh, I`m good.  But we have the best.


HAYES:  So far, the best people haven`t fared so well.  In addition to the firing of Trump`s national security adviser who is under federal investigation, you had a slew of Trump picks withdraw their nominations including Andrew Puzder for labor secretary, Todd Ricketts for deputy commerce secretary, Philip Bildin (ph) for navy secretary and Vincent Viola for army secretary.

So since President Trump couldn`t get his first choice for army secretary, he nominated someone else for the job.  How did the second best guy do?  We found out today, and that is Thing Two in 60 seconds.


HAYES:  President Trump`s second best pick for army secretary, Tennessee State Senator Mark Green, was tapped less than a month ago, but his nomination drew rapid criticism on a range of issues including comments he made last September at a Tea Party event saying being transgender is a disease and a mental disorder, and saying he agreed with a woman who declared we need to take a stand on the  indoctrination of Islam in our public schools.

Green was opposed by more than 40 civil rights group, by a group of 21 current and former faculty members at military academies and universities, and members of the Senate armed services committee.  Senator John McCain called Green`s comments very concerning and just this morning Senator Tammy Duckworth, a veteran who was wounded in combat, wrote if he doesn`t appreciate the importance of a diverse, inclusive army, he is not fit to leave it.

This afternoon, Mark Green became President Trump`s second army secretary to withdraw his  nomination.


HAYES:  An extraordinary internal email service today reportedly from the food and drug administration White Oaks campus in Maryland and revealed by science reporter Paul Thacker.  And the email read in part, a decision from the current administrative officials has requested that all monitors under our control on the White Oak campus display Fox News.

The Senator said they were unable to change any of the monitors to any other news source at this time.  And here`s what one of those FDA monitors reportedly looked like on Wednesday, the day that email went out.  Fox News clearly visible.  Today the FDA issued a statement there was no directive or memorandum from the administration that went out to employees about broadcast news  channels displaying on monitors in common areas throughout the FDA`s White Oak campus.

You will note that`s a very specific denial that does not dispute the existence or authenticity of the internal email, and The Wall Street Journal reports that this morning after the email surfaced in public, some FDA monitors were switched away from Fox News.

But perhaps more concerning than whether Fox News is on TVs in government buildings is a new report the chairman of that company, Rupert Murdoch, is on the phone with the president nearly every day.  That is next.


HAYES:  It`s no secret that President Trump and Fox News founder Rupert Murdoch are close, so close that according to the New York Times White House correspondent Maggie Haberman the president speaks to Murdoch now almost every day.   They even got a chance to meet up face-to-face last night at a black tie dinner honoring American and Australian veterans of World War II battle.


RUPERT MURDOCH, CEO, NEWS CORP:  It`s my distinct honor to introduce the commander-in chief and the president of the United States, my friend, Donald J. Trump.

TRUMP:  And thank you for my very good friend Rupert Murdoch.   There`s only one Rupert that we know.

I want to thank the American-Australian Association for hosting this event, which I`ve been contributing to by the way for years through Rupert.  Every year he`d send me this letter could you please give money?  I say what do I have to do with that, Rupert?  And I just keep sending him money, money, and now I realize, that was money well spent.  That`s right.   Right, Rupert?

For years I`ve been -- I`ve been doing my thing for Rupert.


HAYES:  Donations and daily phone calls between two old friends are one thing, even sort of warming, but this is all happening while the president`s own Justice Department is actively investigating Fox News.  And there were new revelations in that federal probe today from The Washington Post.  Federal prosecutors are looking into whether Fox New channel and its parent company tried to disguise a $3.15 million payment to a former employee who said she had a 20 year affair with the network`s former chairman, Roger Ailes.  And from the The Wall Street Journal investigators are also looking at Mr. Ailes`s and from the Wall Street Journal investigators are also looking at Mr. Ailes`s use of prominent private investigator Bo Dietl to probe the backgrounds of people perceived to be a threat to either Mr. Ailes or the channel.

Mr. Dietl, who is running for mayor in the Republican Party, confirming to The Wall Street Journal that he was used by Fox News for that purpose twice.

Joining me now, New York Times reporter Michael Schmidt who has been reporting on the turmoil at Fox News and MSNBC contributor Sam Seder, host of the Majority Report podcast.

And Michael, we keep getting more and more stories that make lead me to believe there is a very serious active and quite significance investigation of Fox happening?

MICHAEL SCHMIDT, NEW YORK TIMES:  Yeah, I mean, look, there was a big deal made about Lorretta Lynch meeting with Bill Clinton on the tarmac for about a half an hour back in the summer of 2016 and now we have the president talking to Rupert Murdoch on a nearly daily basis.

This is a serious federal investigation.  It`s being run by -- out of the southern district of New York.  In involves the Postal Service, which that office usually uses certain agents from there.  And they`re really looking at how Fox paid these women, and whether this was properly disclosed to shareholders, whether the payments were disguised.   And it`s just yet another thing in this Fox story that continues to drag the network down.   They continue to be hit with lawsuits and even though Bill O`Reilly`s gone, it doesn`t seem like they`ve solved the problem.

HAYES:  Every day there seems to be a lawsuit.

I want to just hang a lantern on Bo Dietl, who is an interesting figure, private detective on air Fox talent, close to Roger Ailes.  The accusation was that Ailes had him got dig up dirt on accusers -- Andrea Macriss (ph) who, of course, sued Bill O`Reilly, Gretchen Carlson who sort blew the thing open. For awhile he was cagey about it.  Today, he said, yes, that is what I did.

SAM SEDER, HOST, MAJORITY REPORT:  Yes, it explains why he was on air so much, right.

But let me just add one more thing about that investigation.  If the southern district of Manhattan`s office sounds familiar because that`s where Preet Bharara was before he was fired after he was told that he would be sticking around. 

But it also -- it`s not just that Rupert Murdoch is being, or his entities are being investigated which could mess up his Sky news deal in Britain, not to mention charges here, but on the other end of it he`s also giving advice as to who should be on the FCC at a time where he`s looking to buy a huge -- in fact, the largest independent group of television stations in the country and needs a waiver because of his other interests in these markets.

And so that is like on the other side of the situation.

HAYES:  That`s a very good point.

SEDER:  That it seems to be somewhat of a conflict of interest that you actually appoint the people or have a say in it as to who may end up granting that waiver.

HAYES:  I was kind blown away by this from your colleagues, Maggie Haberman and Glenn Thrush, Michael.   The president`s relationship with Mr. Murdoch is deeper and more enduring than most in his life, which is -- that`s an intense thing, almost maybe a little sad.  And the two commiserate and plot strategies in phone calls according to people close to both.

SCHMIDT:  Well, the interesting thing is that Trump and Murdoch weren`t always close.  In the `80s and `90s in New York City, Murdoch sort of looked down on Trump even though he was a central player in The New York Post daily coverage.  You know, all of Trump`s divorces played out in those papers.

But the real relationship is between Murdoch and Kushner.   When Kushner bought the -- you know, Kushner holds an enormous amount of power in this administration and several years when he bought the New York Observer, he reached out to Murdoch, you know, the ultimately publisher, the ultimate media mogul, to learn from him, to build a relationship with him and that is something -- so it`s not just that Trump has Murdoch has access to Trump, he also has access to Kushner who may even have more ability to influence things in the government.

SEDER:  Well, as long as we`re expanding the circle, Ivanka Trump was Rupert`s Murdoch`s children younger children with his most recent marriage the trustee of their trust fund, one of five people who sat on a trust fund that I think was rumored to be hundreds of millions dollars worth of worth.  She sat down from that in December before she became one of the top advisers--

HAYES:  Ivanka, yeah.

So, here`s the other thing about what a closed loop this is, right, also Fox is -- you know, tows the administration line.  The president watches Fox and tweets about Fox all the time.   The Fox people go on it all the time.  This is the -- president is just apropos of nothing the other day, tweeting the following: congratulations to Fox and Friends on its unbelievable ratings hike.

Also tweeting, "the fake news media is officially out of control.  They will do or say anything in order to get attention.  Never been a time like this."

This is essentially a White House outlet.

SEDER:  Yes.   It`s hard to know where Fox begins and ends versus the White House at this point.   I mean, particularly, like you look at where how much of the staff has come from Fox in terms of being analysts and what not.

HAYES:  Michael, I wonder do we think that there`s -- is this a relationship of convenience or something deeper?

SCHMIDT:  I don`t know, the funny thing is that Trump went out of his way to help O`Reilly.  When the allegations came up about it, O`Reilly at the beginning of April, the only real person to come out and really stand by O`Reilly was Trump.

HAYES:  The president.

SCHMIDT:  Who said that he shouldn`t have settled all those lawsuits.  Imagine if Barack Obama had come out in support of a big television personality who is been accused of sexual harassment.  You know, ultimately that, you know, the president wasn`t able to help O`Reilly as he left.

SEDER:  I mean, also, the president has been widely accused of sexual harassment and so I guess -- aside from the idea that they were probably friends, there`s also a strategic point.   You know, you don`t want to be the most famous sexual harasser in the country.

HAYES:  Well, there`s the idea -- right, that they`re making it up which of course is the line the  president used when multiple women came out to accuse him of sexual assault.

Michael Schmidt and Sam Seder, thank you very much.

That is All In for this evening, the Rachel Maddow show starts right now.