Giuliani negotiations Trump/Mueller interview. TRANSCRIPT: 4/25/2018. All In with Chris Hayes

Guests: Carol Leonnig, Renato Mariotti, Shelby Holliday, David Jolly, Joseph Sellers, Farhana Khera, Joshua Matz, Cornell Belcher, Jess McIntosh

Show: ALL IN with CHRIS HAYES Date: April 25, 2018 Guest: Carol Leonnig, Renato Mariotti, Shelby Holliday, David Jolly, Joseph Sellers, Farhana Khera, Joshua Matz, Cornell Belcher, Jess McIntosh

CHRIS HAYES, MSNBC HOST: Good evening from New York, I`m Chris Hayes. We`ve got breaking news on multiple fronts tonight including damaging new allegations really damaging new allegations against the White House Doctor the President has picked to run the V.A., what happened with the President`s Muslim ban before the Supreme Court today and Michael Cohen says officially for the record, he will plead the Fifth in the Stormy Daniels case. But we begin with the big news from the Washington Post with the report just about an hour old that Rudy Giuliani, the President`s new personal lawyer met yesterday with Special Counsel Robert Mueller in order to reopen negotiations for a presidential interview according to three people familiar with the talks. At one time, at least according to this reporting, the President seemed keen to sit down with Mueller and his investigators even telling reporters "I would love to do it." But Trump reportedly soured on the idea early this month after federal investigators raided the offices and home of his closest associate and attorney Michael Cohen. According to the Post, Giuliani conveyed to Mueller the ongoing resistance of Trump and his advisers to an interview with federal investigators adding that Giuliani pressed Mueller for clarity on when the probe is expected to end. In response, The Post says that Mueller made it clear to Giuliani an interview is essential for investigators to understand Trump`s intent in making key decisions as they seeking to wrap up the portion of the probe focused on potential obstruction of justice. One of the reporter who`s broke the news, Carol Leonnig of the Washington Post joins me now. What were the circumstances of this meeting?

CAROL LEONNIG, NATIONAL INVESTIGATIVE REPORTER, WASHINGTON POST: So remember that Rudy Giuliani basically joined Trump`s legal team just last week and not very many days have passed and he`s already arranged a meeting with Bob Mueller, the Special Counsel and the head of a year-long probe into Russian meddling in the 2016 presidential election and the President`s own actions in whether or not he obstructed justice by seeking to thwart the criminal probe in its early stages and later after Mueller inherited it. So here`s Rudy Guiliani saying let`s sit down and talk and the first couple of things that they speak about according to our sources is whether or not the President should sit for an interview with Bob Mueller, which would cap off and bring to a conclusion the obstruction part of Bob Mueller`s investigation.

HAYES: Rudy Giuliani, it`s a little anomalous to me at least that Giuliani went to this meeting and went just went and talked to reporters about it.

LEONNIG: We have not said nor would we say who our sources are on this story, Chris.

HAYES: No, no, I don`t mean you -- I`m sorry, I`m sorry. I did not mean obviously the Wall Street Journal has on the record quotes from Giuliani so there is -- there are on the record with quotes from the Wall Street Journal. He says that one particular question the President`s legal team is seeking to answer is whether the Special Counsel`s team has made any conclusion about credibility. Mr. Giuliani said do they favor Comey over Trump in terms of credibility. I just want to be clear on that. I`m not saying who your source is or is not but it does seem -- at least he gave on the record talks to the Wall Street Journal and we now know about this meeting.

LEONNIG: Right, we know about this meeting because the Washington Post broke it. I don`t know what Rudy had to say to the Wall Street Journal but I think what`s really significant about this is that basically after a month of the President`s team trying to find a lawyer, a rocky month after his former lead attorney resigned in a disagreement about whether or not the President should agree to this interview, we`re now back to square one about basically what the President has wanted all along was closure on a review of his own actions. Mueller has told both attorneys, the former and the current, this is important for me to learn what the President`s intent and motivations were when he took certain actions. And this will help me wrap up this investigation. A month later that`s where we are again. The difference, of course, this time, Chris, is that the President is not keen to do this interview as he was a month ago and he`s quite sour on the idea.

HAYES: Yes, it means you sort of wonder about how much of this is law and how much of this is politics as Giuliani tries to sort of grease the wheels of this situation.

LEONNIG: I would think any good lawyer and Mr. Giuliani certainly is one, any good lawyer is going to want to size up the prosecutor in the case and figure out where do we stand, what do you need, what`s the status and when have you those conversations, there`s an interesting kind of tell I`m sure about whether or not the probe is really going to wrap up as Mueller has allegedly told again the previous lawyer and the current one.

HAYES: All right, Carol Leonnig with that breaking story, who broke the story, great reporting from the Washington Post. Thank you.

LEONNIG: Sure.

HAYES: With me now to help explain what this means to the Mueller investigation, former Assistant Watergate Special Prosecutor Jill Wine- Banks, former Federal Prosecutor Renato Mariotti. I`ll start with you. What do you -- what do you think about this?

RENATO MARIOTTI, FORMER FEDERAL PROSECUTOR: So, you know, frankly what this tells us is that Giuliani`s proclamations that he was going to end the investigation within two weeks are just that, you know, proclamations that really have no basis in reality. He got nowhere beyond where John Dowd went. I mean, Mueller is not wrapping up the investigation anytime soon. He wants to wrap up the obstruction piece of the investigation but he wants to interview Trump and before he does that which makes a lot of sense. Any prosecutor would want to interview them in this circumstance. And really Giuliani is not going to be able to work any kind of magic, either Trump sits for the interview or he ends up taking the Fifth after being subpoenaed. Those are his choices.

HAYES: Is that what you think the choices are, Jill?

JILL WINE-BANKS, MSNBC LEGAL ANALYST: I agree completely with my friend Renato and -- except for one thing. He cannot take the Fifth Amendment. That would be political suicide. Michael Cohen can take the Fifth Amendment but the President of the United States cannot say I can`t answer questions because they might incriminate me in another matter. That just is not politically acceptable.

HAYES: But you know what, Jill, I mean, I have heard that and I understand why you say that, but you know, I would have thought not releasing your tax returns was political suicide. There`s lots of things he`s done. I mean, honestly, I think if it comes down you either sit down and talk or plead the Fifth, he might plead the Fifth.

BANKS: I agree that he might do it because I`m predicting what a totally sane person would do. And he has gotten away with so much that he doesn`t have to act in the way that a predictable person would act. He is -- the only thing predictable is his unpredictability and his ability to get away with doing things that no other person let alone no other President could possibly get away with. That would be complete chaos in the Congress if the President said I`m not answering questions because they would incriminate me. And even though a judge in a trial would say the jury can`t draw a conclusion from that, let`s face it, juries do draw conclusions. They know what it means. They know that it means if he answered the questions, the answers would tend to show that he was involved in a crime.

HAYES: I should say the President has that view which he has enunciated many times. Here he is talking about his view of people that plead the Fifth Amendment.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: When you have your staff taking the Fifth Amendment, taking the Fifth, so they`re not prosecuted.

Fifth Amendment, Fifth Amendment, Fifth Amendment. Horrible. Horrible.

Her staffers taking the Fifth Amendment, how about that?

Five people taking the Fifth Amendment. Like you see on the mob, right? You see the mob takes the Fifth. If you`re innocent, why are you taking the Fifth Amendment?

(END VIDEO CLIP)

HAYES: If you`re innocent, why are you taking the Fifth Amendment which brings us to the other big legal development today, which Michael Cohen says based on advice of counsel, this is in the Stormy Daniels case, I`ll assert my Fifth Amendment rights in connection with all proceedings in this case to the ongoing criminal investigation by the FBI and U.S. Attorney for the Southern District of New York. What do you think?

MARIOTTI: You know, Chris, the other thing that happens in the mob is your lawyer gets his home raided because he`s (INAUDIBLE) crime. So I got to say, you know, that quote doesn`t age very well for the President. But look, as to Michael Cohen, of course, he`s taking the Fifth. That`s exactly the right thing for him to do. He`s the subject of a federal investigation. Anything he said in the civil lawsuit would be used against him. Now, what he`s trying to do is get the judge to delay the case, the civil case because in a civil case, taking the Fifth can be used against you. So he`s actually in a tough spot. Either he would have to testify in the civil case and have the prosecutors use that against him in the criminal investigation or he could potentially have what`s called an adverse inference where the -- where the judge could assume something negative from his -- from him taking the Fifth. So he`s trying to get the judge to push it off. I predict the judge will give him some short stay in that case.

HAYES: There`s a question, Jill, about how much of the strategy here is legal and how much is political particularly with Rudy Guiliani. What do you think?

BANKS: It is a combination of both. They have to protect the political side. But there are some legal things. I would say that in the case of the Cohen taking the Fifth in the civil case, it is inevitable that he has to do that. I would say that it`s not a fear about Stormy Daniels. And it`s not even possibly a fear about how many Stormy Daniels payments there are because I would predict that there`s more than the two that we know about for hush money. But that it`s probably related to business transactions that skirt the line. There were probably payments that might be considered bribes in connection with some of the housing that`s been built in New York and maybe even overseas. So I would say that the problems that are facing Cohen are far beyond just hush money payments and that are facing the President as a result of that. But it`s absurd to think the President will be the one who will decide which documents get to be seen by prosecutors. He can assert or he can waive his attorney/client privilege. And if he`s innocent, why doesn`t he wave the privilege and let all the documents go forward. It isn`t Michael Cohen`s privilege, it`s the client`s privilege. But the client doesn`t get to decide which documents are privileged. The prosecutors or the special master can do that, not the President, not the client.

HAYES: This is references to new reporting that says Trump and Cohen and their attorneys are ready to conduct a review they say of the material seized during the FBI search of Cohen`s premises. Renato is that going to fly.

MARIOTTI: I think that they`re trying to present to the judge a streamlined of a proposal as they can say look, it`s not going to slow down the prosecution. I suspect you know, what she`s trying to weigh right now is can I give them the special master to have an appearance that -- you know, to take away their arguments that there`s something unfair here in a way that won`t slow things down. I think she`ll probably give him a special master and demand a sort of a streamlined process.

HAYES: All right, Jill Wine-Banks and Renato Mariotti, many thanks to both of you. Next, more big news, shocking new allegations continue to come out about the President`s pick for V.A. Secretary. What we`re learning about the man that his co-workers called toxic, abusive and volatile. Those are all the quotes in two minutes.

(COMMERCIAL BREAK)

HAYES: Major new allegations tonight concerning the conduct to the man Donald Trump tapped to lead the V.A. and oversee the health care of 9 million veterans, White House physician Ronny Jackson. Democrats on the Senate Veterans Affairs Committee released a summary of fairly devastating testimony from 23 of Jackson`s current and former colleagues many of whom are still in the military outlining claims Jackson irresponsibly handed out prescription drugs, created a hostile work environment and was repeatedly drunk on the job. According to the summary, Jackson was known as the candy man for his willingness to hand out prescription drugs at will and was said to have private stocks of controlled substances. The report also alleges Jackson was often drunk, he wrecked a government vehicle, a secret service going away party that he once could not be reached because he was passed out drunk in his hotel room while on duty. Again, this is all testimony from Dr. Jackson`s current and former colleagues. Though I should note here, they are not named. They were released by the committee anonymously. And here are the quotes, again, anonymous, his colleagues describing him as "the most unethical person I`ve ever worked with, toxic, abusive and volatile, despicable and dishonest, screaming tantrums, vindictive, belittling and the worst leader I`ve ever worked for one person saying. One person saying, "working at the White House Medical Unit was the worst experience of my life." The Ranking Democrat on the Veterans Committee, Senator Jon Tester stressed the allegations have not been confirmed.

(BEGIN VIDEO CLIP)

SEN. JON TESTER (D-MT), RANKING MEMBER, SENATE VETERANS AFFAIRS COMMITTEE: These aren`t my accusations, these are accusations by active and retired military personnel that have come to us. We`re just trying to follow up to make sure what`s true and what`s not.

(END VIDEO CLIP)

HAYES: Dr. Jackson today told NBC News he "never wrecked a car and that he was still moving ahead with his attempt to be confirmed." A short time ago, White House Deputy Press Secretary Raj Shah was asked whether the Trump -- where the Trump administration now stands.

(BEGIN VIDEO CLIP)

RAJ SHAH, DEPUTY PRESS SECRETARY, WHITE HOUSE: We need evidence to be presented to corroborate these allegations. You know, right now you have people who have gone on the record to say one thing, defend him, you have independent assessments defending him. You have President Obama`s own statements defending him and you have uncorroborated allegations.

UNIDENTIFIED FEMALE: Has Jackson denied all the allegations.

UNIDENTIFIED FEMALE: Are you preparing for him to withdraw, Raj? Are you preparing for him to withdraw?

SHAH: We`re prepared for everything.

(END VIDEO CLIP)

HAYES: Prepared for everything. Joining me now to discuss all this Wall Street Journal Reporter Shelby Holliday and former Republican Congressman David Jolly. Shelby, I`ve never quite seen something quite like this.

SHELBY HOLLIDAY, REPORTER, WALL STREET JOURNAL: It`s hard to square. It`s very -- you know, it`s a fast-moving story. But this is not somebody the President plucked out of some civilian job on his own. This is a guy who served two other administrations and came highly recommended. All of a sudden we`re hearing the bad side or the dark side. And I think what -- first of all is most concerning is that you have an alleged drunk pill- popper candy man around the president. Nobody wants that no matter who the president is. And secondly, you have somebody who I don`t think he can withstand this nomination process but the President gave him an off-ramp the other day. He said, hey, I don`t think this is worth it for him. If I were him, I would -- I wouldn`t deal with this. This is too much. The President defended him but he gave him this opportunity to step aside and so far he`s not doing that so it`s very hard to wrap your mind around.

HAYES: It is and I mean, there`s two things there, right? One is that Barack Obama wrote handwritten assessments about how great he was, right? People in Obama White House talked very highly of him. Then you got the -- David, you`ve got this really damning document put out by the committee which I think is just going to be a very hard thing to overcome unless all 23 of these people are lying.

DAVID JOLLY, FORMER CONGRESSMAN: Sure, by 23 peers or people who know him, Chris, but we can`t overlook the bigger picture here which is this is an individual who was largely unqualified arguably to run the V.A. in the first place, right? Somebody who was nominated by tweet based on his own loyalty to the President but with no experience and being the administrator of such a large department. He should have been defeated on those grounds alone. But at this point, frankly to save his dignity, nonetheless the nomination itself, he really should withdraw. He is not qualified. These questions will follow him even if he have is nominated. He will be a secretary in controversy for as long as he survives at the V.A. The right thing for him to do is to withdraw if the President won`t make that statement on his behalf.

HAYES: And to be clear, David, this is n0t -- he would not be alone. I mean, first of all, those hearings are going to be a spectacle. I mean, some of those people are going to come forward and actually give on the record testimony I imagined. But now you`ve got -- you`ve got two other folks in the administration in hot water. Mick Mulvaney goes before the Banker`s Association to tell them about all the work he`s doing deregulating the Consumer Protection Bureau and in telling them that he needs their help to work over Congress so that they can work together on the same team on this agenda, he tells them to give money to Members of Congress. He said, "We have a hierarchy in my office in Congress. If you were a lobbyist who never gave us money, I didn`t talk to you. If you were a lobbyist who gave us money, I might talk to you." He said this on the record to the bank industry conference basically. Senator Sherrod Brown of Ohio has called for him to step down, what do you think?

JOLLY: He should step down. Chris, this is a bigger issue than I think he realizes or maybe any of us tonight. There could actually be criminal exposure here tonight. He confessed to pay to play behavior while he was in office. There`s something called the honest services fraud. It was used in the case around Jack Abramoff and a sitting member of Congress, it was used in Enron, Jeffrey Skilling. The courts are sometimes lukewarm to it but the reality is if he denied honest representation to people who were not paying him, federal prosecutors could bring charges against Mick Mulvaney based on an on the record confession that he made about pay to play.

HAYES: I should note that he said earlier in the speech the constituents he always talked to, is the lobbyists were in two categories. They lobbyist were the ones that gave him money and didn`t give him money. Meanwhile, Scott Pruitt is heading to the Hill and he`s facing a ton of fire.

HOLLIDAY: Well, and what`s so ironic is I was just reading up on Scott Pruitt in his opening statement and realized Mick Mulvaney is one of the people who pledged to investigate Scott Pruitt. So you got this --

HAYES: Because he`s got another job at OMB. Right.

HOLLIDAY: Right. I think the opening testimony is very telling. He will not address any of the ethics issues on his own. I guess he`s waiting for members of Congress to grill him. And then according to The New York Times, internal documents show he`s prepared to throw other EPA administrative staff under the bus blaming all his problems on them. He`s not taking responsibility for the controversial raises given to staff members. He says he was told to fly first class because it was safer.

HAYES: Right.

HOLLIDAY: I can`t figure that one out but when you fly first class, you get the elbows and you get all the people walking past you, that`s dangerous.

HAYES: Now, that`s my favorite part of the argument about first class, and maybe there`s a security argument. The idea as like, there are people who are saying mean things to me but if I fly first class, then there aren`t people.

HOLLIDAY: It will make it better.

HAYES: Right, which makes you think, well, who are you serving really? The people with a lot of money.

HOLLIDAY: And you know, soundproof phone booth, his apartment, the travel, it is really I have to look at this list to remember all of the things that he`s under fire for. And he`s going to blame his staff for all these things.

HAYES: And you make the point though, David, this is a guy that`s going to go to the Hill. I think the hearing is tomorrow, right? He`s going to go -- this is going to be a brutal hearing. I mean, I think he`s going to be frisked by both Republicans and Democrats and then Ronny Jackson is going to sit and watch that and be like that`s easier than what I`m about to go do.

JOLLY: And they both deserve to get destroyed in these hearings, Chris, without question. Look, there`s a certain level of entitlement among the Trump administration where they don`t believe accountability applies to them. We have seen the historic level of terminations in this administration already, resignations. I think the entire American people would be surprised if this administration doesn`t end with a certain number of people in jail and I don`t mean that is as a quip. I just mean, the reality of the controversies we have seen thus far, there will be criminal culpability among some in the Trump administration.

HOLLIDAY: And I also -- I also think we have to point out, Republicans are not happy with this behavior. They are not defending Scott Pruitt. This is not something either side of the aisle as you said wants to see.

HAYES: There was more to that. Steve Scalice gave a defense statement but there`s more defense of Pruitt though and that has attenuated considerably as more and more stories have come out. It is very notable to me as far as I can tell, no one`s defending Ronny Jackson. I mean, the guy is basically out there by himself and Tester is taking the lead but all the reporting suggests that there are very, very big questions that Republican members of that committee have, as well.

HOLLIDAY: Well, even the White House has backed away from their defense of him. The President -- the news conference with Macron gave a five-minute you know --

HAYES: Who needs it?

HOLLIDAY: Five-minute speech about how great Ronny Jackson was. And then, today the White House is obviously backing away from that and saying as you played it, prepared for everything.

HAYES: Shelby Holliday and David Jolly, thank you both for being with me.

JOLLY: Good to be with you.

HAYES: Next, fireworks at the Supreme Court. The President`s Muslim ban was argued today. We`ll talk about what happened after the break.

(COMMERCIAL BREAK)

HAYES: For the third time a judge has ruled against the Trump administration on DACA. Federal judge John D. Bates who was nominated by Republican President George W. Bush ruled the U.S. must keep the DACA program in place and accept new applications again. He called the decision to end the program "arbitrary and capricious," and slammed the government`s meager legal reasoning. That`s a quote. The ruling came one day before the Trump administration went to the Supreme Court to argue for the travel ban this morning. And that`s now in its third version because of previous legal setbacks. Here to help break down the issues (INAUDIBLE) I`m joined by Civil Rights Attorney Joseph Sellers who won the DACA case in Federal Court yesterday, Joshua Matz, the Co-Author of an Amicus Brief against the Travel Ban and Farhana Khera, the Executive Director for Muslim Advocates who submitted a separate Amicus Brief arguing against the Travel Ban and was at the Supreme Court for oral arguments today. And Farhana, let me start with you. That Travel Ban case, the most anticipated case of the entire year on the Supreme Court docket, what did you think of what you saw today?

FARHANA KHERA, EXECUTIVE DIRECTOR, MUSLIM ADVOCATES: Wow, well, Chris, today was a historic day. And I think what`s at the core of the issue that`s before the court is whether the court will allow the President of the United States to discriminate against a group of people based simply on their religion. And it reminds us, unfortunately, Chris, of a time 75 years ago when the government at that time came before this very same court and said that it had the authority to discriminate against a group of people based on their ethnicity and that led to the internment of Japanese Americans. In the courtroom today, Chris, and I was there, it was -- it was so heartening because not only were there concerned Americans and the American Muslim community but I was inspired to see the widow of the late Justice Thurgood Marshall and Karen Korematsu, the daughter of Fred Korematsu who challenged the internment of Japanese Americans before the Supreme Court and I think their presence is sending an important message to the court to be on the right side of history.

HAYES: Joshua, there`s a question here -- there`s a statutory question which is complicated because as far as I can tell, there`s a bunch of statutes that seem in tension with each other so let`s put that aside and let`s talk about the constitutional question. One of the main arguments comes down to, can you hold the President`s words against him. Basically, when the President calls it a Muslim Ban and his lawyers go do the work and they throw in North Korea and they throw in Venezuela, is it still a Muslim Ban. What do you think of that question?

JOSHUA MATZ, ATTORNEY, KAPLAN AND COMPANY: Well, I think the answer to that question is yes. I also think it`s one of the major issues in the litigation. Everyone agrees that just looking at the four corners of the proclamation itself, it doesn`t single out any kind of discrimination on the basis of religion. The problem is that clearly and consistently and repeatedly over the past couple of years, the President has advertised to the world that what he wants is a policy to keep Muslims out because he doesn`t like them and doesn`t think they`re welcome here. And when the President has traveled the world explaining that he created this policy for that reason, and has repeatedly linked his anti-Muslim statements to the existence of this policy in particular, calling for a larger and more politically incorrect ban that would achieve these goals, I think it`s incumbent on the court to recognize that he has acted on the basis of a forbidden motive.

HAYES: Yes, I should say that there`s a great op-ed in the New York Times based on the (INAUDIBLE) article by full disclosure, my wife who wrote about -- who wrote about exactly this issue about when you can sort of listen to the words of the President and when you can. And obviously, the President`s -- the President`s lawyers, Joseph, end up in this position in which they have to be like, don`t listen to the President. And I feel like that`s a position he puts his lawyers in a lot. And in the DACA case that you`ve been arguing, there`s a world in which they were able to pull this off and not get thrown out of court and not lose as much as they have, but the way they`ve done it has put them in a tough spot.

JOSEPH SELLERS, LEAD COUNSEL ON RECENT DACA CASE: Well, that`s absolutely right. The President`s words come back a haunt him again in exposing motives behind the roll back of the DACA program. But the ruling that was issued last -- yesterday in the federal court in Washington was even simpler. It didn`t rely on the president`s words, it held the president accountable and said that if you want to roll back a program that`s been in place for years, you`d better give a really good reason to justify changing course and consider the impact it`s going to have on the hundreds of thousands of Dreamers in this country who would be forced out of the country.

And I think it`s a very important ruling on the check of the power of the president.

HAYES: Just to be clear here, I mean, I was looking over the ruling. And we`ve seen this DACA thing happen. I mean, when you zoom out, the president has a lot of power over this. The DACA originated with the White House. The rulings keep saying like you can`t just do it, you got to say why you`re doing it. Basically, that`s what the judges keep telling the government, you cannot just do this. Is that right, more or less?

SELLERS: Absolutely right. Not only do they have to give a good reason, but importantly they have to account for its impact on these hundreds of thousands of people who would be forced out of this country disrupting their lives, and it failed to do any of that.

HAYES: There`s sort of an amazing moment for, Farrah, and I want to talk about the travel ban case this morning, The Noel Francisco, who is the solicitor general of the United States closed on this. He is sort of quoting and paraphrasing the the president. Listen to what he says. A lot of people sort of caught their ear. Take a listen.

(BEGIN VIDEO CLIP)

NOEL FRANCISCO, SOLICITOR GENERAL: He has made crystal clear that Muslims in this country are great Americans and there are many, many Muslim country who love this country and he has praised Islam as one of the great countries of the world.

(END VIDEO CLIP)

HAYES: Now, we all misspeak, and Noel Francisco has a very difficult job. But Islam is one of the greatest countries of the world, it struck me as kind of like tonally perfect for what`s going on here.

KHERA: I think that`s right. It`s the idea of trying to blanketly treat people because of their faith rather than treating people individually and understanding the important role that we as individuals and human beings actually contribute to this country. And I think that was something that came out in the hearing today, Chris, was that this ban isn`t just a theoretical legal argument, this is impacting real people, people who are being denied access to medical care, families being separated from fiances, their grandparents, their children, and it`s denying us innovation and, you know, input of academics and scholars in our country.

HAYES: Those are substantive arguments on the merits. I mean, the question is, do you have the power to deny them those things, right. I mean, Joshua, the reporting that was coming out of the court today seemed to indicate a lot of Supreme Court observers thinking that the justices were fairly sympathetic to the Trump administration`s argument.

MATZ: Well, I think it was pretty clear that the four more left leaning justices thought the travel ban was likely unconstitutional, the four more conservative justices, the chief justice and then Justices Alito, Thomas and Gorsuch were openly sympathetic to the administration. Here, as in so many cases, Justice Kennedy, for whom I clerked several years ago, is really likely to be the decider. And he made it very clear at argument that he was not buying many of the statutory arguments that were raised against the travel ban, and in the course of doing that, he suggested that he would be wary of second-guessing the government`s national security determination.

But when it actually comes to the constitutional issue, he just didn`t say very much. In fact, his main question was to express skepticism of the idea that the president could completely be let off the hook for his campaign statements. And so I think it`s hard to predict these things, and I don`t mean to give you a copout, but I just don`t think it was as clear as some folks may think it was.

HAYES: Yeah, no, I think that`s well said. I mean, we should say the solicitor general is basically saying that the candidate comments from the president are out of bounds, which seems to me all together sort of too much. But Joseph, there`s a sort of broader theme here, which is that this administration has really had a lot of setbacks in court. It`s really lost a lot of high profile court battles on some of its most cherished initiatives and priorities. What do you make of that?

SELLERS: I think you`re absolutely right. And I think one of the reasons is that they move ahead quickly on bold initiatives without adequately considering either their consequences or their legal foundation for it. I think one of the reasons is that they move ahead quickly on bold initiatives without adequately considering either their consequences or the legal foundation for it. And then they`re forced to be held accountable for actions that if they had proceed a little more carefully they might have first of all not taken at all and second if they were going to do it, they would have actually done the analysis of the homework. Instead, they rushed ahead without it.

HAYES: Yeah, the White House is usually one of the most lawyered places on the planet. And I am always struck by how underlawyered everything coming out of that White House seems.

SELLERS: I think that`s right. In some ways it`s a lawyer`s nightmare, because the lawyers come in to clean up after the people, the political people take actions that are indefensible.

HAYES: Joseph Sellers, Joshua Matz and Farhana Khera, I learned a lot there. Thank you very much. Thanks for being here.

SELLERS: Thank you.

MATZ: Thank you.

HAYES: Still to come, why the Republican victory in Arizona last night should have the Republicans worried. And some new Mnuchin family photos in tonight`s Thing One, Thing Two next.

(COMMERCIAL BREAK)

HAYES: Thing One tonight, Treasury Secretary Steve Mnuchin and his wife Louise Linton have given us some of the very best photos of the entire Trump era. There was this strangely awkward group shot from the first and second couples from their June wedding last year. These now infamous pics from Mnuchin and Linton`s visit to the bureau of engraving and printing where they posed with sheets of new dollar bills bearing Mnuchin`s signature.

Then, of course, there was Linton`s since deleted Instagram post from a trip to Fort Knox showing her strolling off a government plane decked out in some high-end accessories #tomfordsunnies #hermesscarf #valentinorockstudheels.

Now, that trip caused some controversy, because it took place August 21, the day of the solar eclipse, and Fort Knox just so happens to be near the path of totality, prompting some to ask whether the trip was actually a taxpayer-funded jaunt for Mnuchin and Linton to watch the eclipse, but we never had any proof that they did watch it. Until now. And it`s another winner for the Mnuchin/Linton family photo album. That`s Thing Two in 60 Seconds.

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HAYES: Treasury Secretary Steve Mnuchin shot down any suggestion that his trip to Fort Knox last summer was actually just an eclipse watching excursion for him and his wife funded by public money.

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STEVE MNUCHIN, TREASURY SECRETARY: When I got there, the staff had actually intended that we watch the eclipse on the roof of Fort Knox. And you know, people in Kentucky took this stuff very seriously. Being a New Yorker and California, it was like the eclipse, it was like, really, I don`t have any interest in watching the eclipse. We never went on the roof. I didn`t even stay for the optimal time. I watched the roof 15 minutes ahead of time. I put on the glasses, they`re like paper glasses. I`m like -- I`m worried I`m getting my eyes burned out. I put it on for like two seconds, that was the end of my interest in the eclipse.

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HAYES: Well, he sounds like a lot of fun.

I have to say, I`m a New Yorker and New Yorkers were definitely interested in the eclipse. I mean, I walked back down Flat Bush Avenue with throngs of people looking up at the sun. But, OK, fine, maybe Mnuchin doesn`t like eclipses.

The folks over at Think Progress wanted to know for sure, so they FOIAed the Treasury Department and received this, photographic evidence of Secretary Mnuchin and his wife, Louise Linton, watching the eclipse at Fort Knox. The photo is a little grainy, but that`s definitely a smile on the secretary`s face. And despite the secretary`s skepticism about the protective glasses, they both wore them, unlike someone else in the administration.

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HAYES: All right. So the Republican candidate won last night`s special election in Arizona, but the results, the Republican winning, may be the strongest sign yet of the serious peril facing the president`s party this fall. Republican Debbie Lesko beat Democrat Hiral Tipirneni by just 5.2 points in Arizona`s 8th Congressional District, which the president won by 21 points less than two years ago. So, that`s a swing of almost 16 percentage points in Democrats favor.

And when you look at the district, there are a lot of reasons why that should not have happened in this particular district. For starters, the Arizona 8th is the in the suburbs west of Phoenix, which are historically quite conservative. It`s Maricopa County, former seat of the infamously anti-immigrant ex-sheriff and convicted criminal Joe Arpaio.

There are a lot of retirement communities in the district where residents are generally older and whiter than the rest of the population. And, unlike some previous special elections, the GOP in this case backed a fairly generic candidate, former state legislator, no big skeletons looming in her closet. This was not, in other words, Roy Moore.

Her opponent on the other hand, had never run for office, she`s an Indian immigrant with an unfamiliar name, who ran on a pretty openly progressive platform for such a conservative district, and still, and still national Republicans had to spend $1 million to hold onto the seat while Democrats didn`t spend a dime.

A five-point margin in that race does not bode well for GOP lawmakers around the country, especially in districts that Donald Trump lost or barely won in 2016.

As number cruncher Dave Wasserman put it, there are 147 GOP-held house seats less Republican than the Arizona 8th. It`s time to start rethink how many of those are truly safe in November.

Nevertheless, the president took a victory lap this morning tweeting congratulations to Republican Debbie Lesko on her big win in the special election for Arizona House seat. Debbie will do a great job. Press is so silent.

How the White House spun last night`s results and what they actually might mean right after this.

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UNIDENTIFIED MALE: That`s the same district President Trump won by 21 points in 2016. Why was that race now so close, do you think?

SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: Well, no offense to the candidate, but she`s not Donald Trump. That was a different election. I don`t think you can compare those two. I think the big story here is a Republican won. It doesn`t matter whether you win by 25 points or 2 points, a win is a win, and she`s going to be in congress and the Democrat is not.

(END VIDEO CLIP)

HAYES: To help break down what last night`s narrow Republican victory means for November, I`m joined by MSNBC national correspondent Steve Kornacki; Jess McIntosh, executive editor at progressive news site Share Blue; and Democratic pollster and MSNBC political analyst Cornell Belcher.

Steve, let me start with you. What were your takeaways from last night?

STEVE KORNACKI, MSNBC NATIONAL CORRESPONDENT: I mean, not the first time we`ve seen this kind of -- this a 16 point swing from the Trump margin in this district. We`ve seen swings like this elsewhere. This is the first time where Republicans can`t look at the race and point to some sort of explanation that says, you know what, it`s not a wave, it`s something else.

They were able to look at Kansas last year where this happened and say Brownback is like 15 percent in the polls, it must have been about the governor out there. They looked at Montana, they said, hey, the candidate body slammed a reporter. They looked at South Carolina, they said, you know, 15 point swing there. They said, you know what, it was a very low turnout. We didn`t have our engines turned on for this and we got caught sleeping.

This is a....

JESS MCINTOSH, SHARE BLUE: Alabama.

KORNACKI: In Alabama, they could say...

HAYES: The Roy Moore...

KORNACKI: All -- you can always point to it, and now you`ve got a race where there`s no recent Democratic voting history in this district. This is Republican going back decades. You have a candidate who Republican establishment actually wanted in this race. You had a Democratic candidate who did not make any real strains to separate herself from the Washington establishment, like you saw with Conor Lamb. You got -- and you had mail ballots. Every Republican in the district on this list got a ballot. This was not hard for them to vote. The turnout was pretty good, certainly compared to other races. And you still got the swing.

HAYES: Yeah, and that brings me to something, Cornell, that I`ve notice, which is I feel like there`s increasingly two stories of the mid-terms. If you look at the polling, which is the generic polling, R vs. D, and the president`s approval rating, two markers, they`ve stabilized. And they`re -- you know, they`re in the range, there are, 7 points, 6 points for the margin, 40 percent approval.

If you look at the other data -- recruitment, who is retiring on the Republican side, who is raising money, and what`s happening in the specials, it looks like really bad for the Republicans. Which is it?

CORNELL BELCHER, DEMOCRATIC POLLSTER: I think the underlying factors here are problematic for the Republicans. I mean, it does in some way look like the 2006 wave that we saw with the president`s really low approval ratings, although Donald Trump`s approval ratings are lower than George Bush`s at this time. And right now the generic horse race is 6 or 7 points, which by the way in 2006, in April/May 2006, was actually one point better in generics than we were then.

So, I think there`s going to be some fluctuation there, back and forth. But what`s happening in the suburbs, you know, and Kornacki started to talk about this before, that`s the most interesting part about this, because in 2006 we didn`t even see the sort of movement in the suburbs when we took back the House. But there`s a discomfort particularly among better educated women in the suburbs, and it`s not about the economy, right. And Democrats always want to talk about the economy, economy, economy. Those women are pissed off, and it`s not because they`re doing bad economically, they`re pissed off because what they see coming out of Washington offends their values. And I think Democrats need to speak more to that if we`ve going to have a true wave election.

MCINTOSH: Absolutely. I mean, if the split that used to really matter when you looked at white women was married versus unmarried. And that`s changing a little bit to education.

So, if Republicans -- and remember women are Democratic voters because of women of color. White women are reliable Republican voters, which is the thing that we need to say over and over again, because we haven`t until this year, really.

If Republicans lose unmarried white women and college educated white women, then they`ve lost white women and they simply don`t have enough base to keep going.

Like, when we`re seeing people become invested in special elections, we`re seeing a seachange that could actually broaden beyond mid-terms.

I mean, you log on to Twitter the night of a special election and your college buddy is like do we know Alleghany County yet, this is totally unprecedented.

HAYES: We should say this is extending to special elections in legislative districts, too. And that was one of the most consequential downstream effects for the balance of power in the country at large was 2010, 2014 and what it did to state houses.

Democrats have now flipped I think 40 state house seats, an average Dem swing of plus 11. So, we`re seeing it there, too.

KORNACKI: Yeah, normally you`d say one random state legislative race in Oklahoms or wherever, you`re not going to distill much, discern much about the mood...

HAYES: Right, because...

KORNACKI: You add them all together and that swing we talk about from what the Trump/Clinton margin was in these districts, you average it out, double digits. So, you see it there, too. I will say, look, if you talk to Republicans and you ask them what is their best case read on all of this, I bet one thing they will point to right now is Virginia and New Jersey. And they were not special elections. Those governor`s races, they were regularly scheduled statewide elections, people are used to voting in. Republicans didn`t win those. But the Trump number was basically the same. New Jersey, it was identical. And in Virginia, there was a bit of a surge there in northern Virginia, in those suburbs and a little bit around the area of the state where Northam was from, but otherwise it matched it. So that`s what they -- they hope there`s something that was there.

HAYES: That`s interesting, because -- so, Cornell, you`re shaking your head.

BELCHER: It wasn`t past the grade.

I mean, if you look at -- look, I love our governor candidate in Virginia, but he got more votes than anyone ever in the history of Virginia. That didn`t happen by mistake, that happened but because of the Trump effect and it`s happening because, one you have an energized base of minority voters, and one you have better educated white women in the suburbs breaking away from the Republicans in ways we didn`t see in 2006 when we took back the House. There was a real dislike of what`s -- the division that`s going on in this country.

And, again, it`s not about economics, it`s not about the usual measures that we`re looking at. Women are angry, and they`re taking it to the polls in a way that we haven`t seen it before. And I don`t think Republicans can -- look, the gender gap grows any more, it`s hard to see how they hold on to the House or even the Senate.

HAYES: Well, let`s talk about the Senate for a second, right. Because the House, the House is -- there`s a lot of seats in place. The Senate is a really bad game board for the Democrats.

MCINTOSH: The map is still the map. Like, we can -- we knew walking in-- we all thought in 2016 if we don`t take the Senate back now, there`s no chance we`re going to take it in `18, so it`s really got to be now. Of course, that didn`t happen in `16.

And now that we`re seeing all of this momentum coming for Democratic candidates up and down the ballot, it is tempting to forget that the 2018 Senate map is still the 2018 Senate map. That is a really tough uphill battle to climb, it has to be perfect across the board.

HAYES: Democrats basically have to hold everything, including in places -- and that`s very red states like West Virginia, Montana, North Dakota, even in Mississippi.

MCINTOSH: I think we get Nevada. I think that happens. It`s all the holes that are just. I mean, you have to run the whole board.

BELCHER: But it`s an opportunity also. If you look at the polling right now in Mississippi, Mike Espy is even. That`s crazy.

HAYES: And we should say Tennessee, the first big poll out of Tennessee where the Democrats recruited a pretty marquee candidate, former Democratic governor.

KORNACKI: Yeah, no, a lot of times when you start looking at these races, we say -- boy, it`s a lot to do when you combine it this way. In midterm elections, and this cuts both ways. If it goes against the Democrats, it happens one way, when it goes against the Republicans, like it may this year, they almost -- all the dominoes seems to fall.

We have a track record of -- the best thing that ever happened politically to Joe Manchin, to Claire McCaskill, to Joe Donnelly, to John Tester, to all these folks on the Democratic side up in Trump states in red states in 2018, was Trump winning.

In a Hillary Clinton midterm, Republicans might be looking at getting 60 Senate seats this year, just because of the nature of midterm elections. But it`s the other way. When you`re that opposite party incumbent in the president state, that buyer`s remorse nature of the midterm elections, in the last generation I think the number is three. Three incumbent senators in that position have lost I think in the last generation. It`s very -- your odds are on your side when you`re running with that situation.

HAYES: By the way, Claire McCaskill, who is watching at the Missouri Republican Party...

MCINTOSH: Yeah.

HAYES: Immolates over the governor having now two felony charges against him, one accused of tying a woman up and taking a picture against her consent, and then also misusing his...

MCINTOSH: Yeah, Claire McCaskill is a fantastic senator for Missouri. That aside, she has lucked out like nobody, for real. Like Missouri Republicans being completely dysfunctional in two election cycles now.

But this (inaudible) issue, this is a larger -- the number of Republicans on the national level who are dealing with serious assault charges against women is something that shouldn`t be dismissed, as part of what Cornell was saying about the suburban women being all up in arms. The Republican Party doesn`t care.

HAYES: Another piece of news today is that the Republican governor of Texas, Greg Abbott, is going after the now retired Republican congressman Blake Farenthold, right, who had an $84,000 sexual harassement settlement, paid by public money, right, to pay -- not only pay that, but to pay for the cost of covering a special election.

KORNACKI: Which is coming up.

HAYES: Which is coming up.

Steve Kornacki, Jess McIntosh, and Cornell Belcher, thank you all for joining me.

That is All In for this evening. The Rachel Maddow Show starts right now. Good evening, Rachel.

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